On February 13, 2017 Teva Pharmaceutical Industries Ltd. (NYSE: TEVA, TASE: TEVA) reported results for the year and the quarter ended December 31, 2016 (Press release, Teva, FEB 13, 2017, View Source [SID1234517709]).

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FY 2016
Q4 2016
Revenues $21.9 billion $6.5 billion
Cash flow from operations $5.2 billion $1.4 billion
GAAP EPS $0.07 ($1.10)
Non-GAAP EPS $5.14 $1.38


Teva reaffirms its 2017 full year non-GAAP guidance;
including revenues of $23.8 – 24.5 billion, and
non-GAAP EPS of $4.90 – 5.30
"2016 was a transitional year for Teva – one that included significant achievements, as well as challenges," stated Dr. Yitzhak Peterburg, Interim President and CEO of Teva. "While we continue to manage through a turbulent and constantly evolving industry, we are committed to execute against our strategy with more diversified revenue sources and profit streams, all backed by strong product development engines in both generics and specialty."
"In 2017, our main focus will be extracting synergies related to the Actavis Generics transaction, driving additional efficiencies throughout the organization, supporting cash generation and paying down our debt to maintain a strong balance sheet and delivering on the promise of the specialty pipeline and key generic launches. We are laser focused on execution at this critical juncture and are determined to deliver on our key priorities."
Dr. Peterburg continued, "With the entire Teva team, I am conducting a thorough review of the business to find additional opportunities to enhance value. Our management team is committed to delivering for our shareholders and unlocking the full potential of our pipeline and global business. We remain excited about the future as we strive to create a platform that supports continued growth and value creation for patients, shareholders and healthcare systems around the world."
2016 Annual Results
Revenues in 2016 were $21.9 billion, an increase of 11% compared to 2015, primarily due to the inclusion, following the closing on August 2, of the results of the Actavis Generics business.
Exchange rate differences between 2016 and 2015 decreased revenues by $174 million, decreased GAAP operating income by $81 million and decreased non-GAAP operating income by $55 million. In addition, the Venezuelan bolivar exchange rates that we used and inflation-driven price increases in Venezuela increased revenues by $526 million, increased GAAP operating income by $23 million and increased non-GAAP operating income by $133 million.
In light of the economic conditions in Venezuela, we exclude the 2016 increases in revenues and operating profit in any discussion of currency effects.
GAAP gross profit was $11.9 billion in 2016, up 4% compared to 2015. GAAP gross profit margin for the year was 54.1%, compared to 57.8% in 2015. Non-GAAP gross profit was $13.4 billion in 2016, up 10% compared to 2015. Non-GAAP gross profit margin was 61.3% in 2016, compared to 62.2% in 2015.
Research and Development (R&D) expenses in 2016 were $2.1 billion, an increase of 38% compared to 2015. R&D expenses excluding equity compensation expenses and purchase of in-process R&D in 2016 were $1.7 billion or 7.6% of revenues, compared to $1.4 billion, or 7.3% of revenues, in 2015. R&D expenses related to our generic medicines segment were $659 million, compared to $519 million in 2015. R&D expenses related to our specialty medicines segment were $998 million, compared to $918 million in 2015.
Selling and Marketing (S&M) expenses in 2016 were $3.9 billion, an increase of 11% compared to 2015. S&M expenses excluding amortization of purchased intangible assets and equity compensation expenses were $3.7 million, or 17.0% of revenues, in 2016, compared to $3.4 million, or 17.4% of revenues, in 2015. S&M expenses related to our generic medicines segment were $1.7 billion, an increase of 18% compared to $1.5 billion in 2015. S&M expenses related to our specialty medicines segment were $1.9 billion, a decrease of 1% compared to 2015.
General and Administrative (G&A) expenses in 2016 and in 2015 were $1.2 billion. G&A expenses excluding equity compensation expenses were $1.2 billion in 2016, or 5.4% of revenues, compared to $1.2 billion and 6.0% in 2015.
Operating income was $2.2 billion in 2016 compared to $3.4 billion in 2015. Non-GAAP operating income was $6.8 billion, up 11% compared to $6.2 billion in 2015.
Adjusted EBITDA (non-GAAP operating income, which excludes amortization and certain other items, and excluding depreciation expenses) for 2016 was $7.3 billion, up 11% compared to 2015.
In 2016, financial expenses were $1.3 billion, compared to $1.0 billion in 2015. Non-GAAP financial expenses were $442 million in 2016, compared to $223 million in 2015.
GAAP income tax expenses for 2016 were $521 million or 63% on pre-tax income of $824 million. In 2015, the provision for income taxes was $634 million or 27% on pre-tax income of $2.4 billion. The provision for non-GAAP income taxes for 2016 was $1.1 billion on pre-tax non-GAAP income of $6.4 billion, for an annual tax rate of 17%. The provision for non-GAAP income taxes in 2015 was $1.3 billion on pre-tax non-GAAP income of $6.0 billion, for an annual tax rate of 21%.
GAAP net income attributable to ordinary shareholders and GAAP diluted EPS were $68 million and $0.07, respectively, in 2016, compared to $1.6 billion and $1.82, respectively, in 2015. Non-GAAP net income attributable to ordinary shareholders for calculating diluted EPS and non-GAAP diluted EPS were $5.2 billion and $5.14, respectively in 2016, compared to $4.7 billion and $5.42 in 2015.
Non-GAAP information: Net non-GAAP adjustments in 2016 were $4.9 billion. Non-GAAP net income and non-GAAP EPS for the year were adjusted to exclude the following items:
amortization of purchased intangible assets totaling $993 million, of which $881 million is included in cost of goods sold and the remaining $112 million in selling and marketing expenses;
an impairment of goodwill of $900 million, relating to the acquisition of Rimsa;
legal settlements and loss contingencies of $899 million, primarily $519 million in connection with the FCPA settlement with the DOJ and SEC and $225 million in connection with the ciprofloxacin (Cipro) settlement;
financial expenses of $888 million, including $746 million related to the impairment of our monetary balance sheet items in Venezuela following our decisions to adopt different exchange rates and $99 million related to the impairment of our investment in Mesoblast;
impairment of long-lived assets of $746 million, mainly related to Revascor and Zecuity ($506 million) and to an impairment of property, plant and equipment ($149 million);
R&D-related expenses of $423 million, comprised mainly of an upfront payment of $250 million to Regeneron pursuant to our collaborative agreement to develop and commercialize its pain medication product fasinumab and an upfront payment of $160 million to Celltrion pursuant to our exclusive partnership to commercialize two of Celltrion’s biosimilar products;
inventory step-up of $383 million, related mainly to the acquisition of the Actavis Generics business;
acquisition and integration expenses of $261 million;
restructuring expenses of $245 million;
costs related to regulatory actions taken in facilities of $153 million;
cost of sales adjustment of $133 million, to adjust our inventory balance in Venezuela to reflect the U.S. dollar fair market value of the inventory;
equity compensation of $121 million;
contingent consideration of $83 million;
other non-GAAP items of $49 million;
net gain of $693 million from the divestments of products in connection with the acquisition of the Actavis Generics business;
minority interest adjustment of negative $76 million; and
related tax effect of $593 million.
Teva believes that excluding such items facilitates investors’ understanding of its business. See the attached tables for a reconciliation of the U.S. GAAP results to the adjusted non-GAAP figures.
Cash flow from operations generated during 2016 was $5.2 billion, down 6% compared to $5.5 billion in 2015. Free cash flow, excluding net capital expenditures, was $4.4 billion compared to $4.9 billion in 2015, a decrease of 11%.
Total balance sheet assets were $92.9 billion as of December 31, 2016, compared to $98.7 billion as of September 30, 2016 and $54.2 billion at December 31, 2015. The decrease from September 30, 2016 was mainly due to a decrease of $8.1 billion in identifiable intangible assets, partially offset by an increase of $4.1 billion of goodwill, both related mainly to the Actavis and Rimsa acquisitions.
Cash and investments at December 31, 2016 decreased to $1.9 billion, compared to $2.7 billion at September 30, 2016 and $8.4 billion at December 31, 2015.
As of December 31, 2016, our debt was $35.8 billion, a decrease of $1.1 billion compared to $36.9 billion as of September 30, 2016 and $9.9 billion at December 31, 2015. The portion of total debt classified as short-term as of December 31, 2016 was 9%.
Total shareholders’ equity was $35.0 billion at December 31, 2016, compared to $37.0 billion at September 30, 2016 and $29.9 billion at December 31, 2015.
Fourth Quarter 2016 Results
Revenues in the fourth quarter of 2016 were $6.5 billion, up 33% compared to the fourth quarter of 2015, primarily due to the inclusion, following the closing on August 2, of the results of the Actavis Generics business.
Exchange rate differences between the fourth quarter of 2016 and the fourth quarter of 2015 decreased revenues by $41 million, decreased GAAP operating income by $14 million and decreased non-GAAP operating income by $9 million. In addition, the Venezuelan bolivar exchange rates that we used and inflation-driven price increases in Venezuela increased revenues by $184 million, decreased GAAP operating income by $34 million and increased non-GAAP operating income by $75 million.
In light of the economic conditions in Venezuela, we exclude the 2016 changes in revenues and operating profit in any discussion of currency effects.
GAAP gross profit was $3.4 billion in the fourth quarter of 2016, up 19% compared to the fourth quarter of 2015. GAAP gross profit margin was 52.2% in the quarter, compared to 58.3% in the fourth quarter of 2015. Non-GAAP gross profit was $3.9 billion in the fourth quarter of 2016, up 26% from the fourth quarter of 2015. Non-GAAP gross profit margin was 59.4% in the fourth quarter of 2016, compared to 62.6% in the fourth quarter of 2015.
Research and Development (R&D) expenses for the fourth quarter of 2016 were $684 million, up 53% compared to the fourth quarter of 2015 mainly due to higher R&D expenses for both generics and specialty, as well as the upfront payment of $160 million to Celltrion. R&D expenses excluding equity compensation expenses and purchase of in-process R&D in the fourth quarter of 2016 were $514 million or 7.9% of quarterly revenues, compared to $395 million or 8.1% in the fourth quarter of 2015. R&D expenses related to our generic medicines segment were $211 million, compared to $133 million in the fourth quarter of 2015, an increase of 59%, mainly due to the inclusion of expenses of the Actavis Generics business. R&D expenses related to our specialty medicines segment were $296 million, an increase of 13% compared to $263 million in the fourth quarter of 2015, mainly due to increased spending on our late-stage compound for the treatment of migraine, TEV-48125 (fremanezumab).
Selling and Marketing (S&M) expenses in the fourth quarter of 2016 were $1.1 billion, an increase of 23% compared to the fourth quarter of 2015. S&M expenses excluding amortization of purchased intangible assets and equity compensation expenses were $1.1 billion, or 17.0% of revenues, in the fourth quarter of 2016, compared to $898 million, or 18.4% of revenues, in the fourth quarter of 2015. S&M expenses related to our generic medicines segment were $549 million, an increase of 60% compared to $343 million in the fourth quarter of 2015, mainly due to additional costs related to the inclusion of the Actavis Generics business from August 2016 and the launch of our business venture in Japan in the second quarter of 2016. S&M expenses related to our specialty medicines segment were $506 million, a decrease of 10% compared to $561 million in the fourth quarter of 2015. The decrease was mainly due to decreased investment in specific products such as Nuvigil, which is facing generic competition, and Zecuity, which was withdrawn from the market.
General and Administrative (G&A) expenses in the fourth quarter of 2016 were $311 million, compared to $291 million in the fourth quarter of 2015. G&A expenses excluding equity compensation expenses were $294 million in the fourth quarter of 2016, or 4.5% of revenues, compared to $280 million and 5.7% in the fourth quarter of 2015.
Quarterly GAAP operating loss was $0.1 billion in the fourth quarter of 2016, compared to income of $0.9 billion in the fourth quarter of 2015. Quarterly non-GAAP operating income was $1.9 billion, up 31%, compared to $1.5 billion in the fourth quarter of 2015.
Adjusted EBITDA (non-GAAP operating income, which excludes amortization and certain other items, and excluding depreciation expenses) was $2.1 billion, up 31%, compared to $1.6 billion in the fourth quarter of 2015.
GAAP financial expenses for the fourth quarter of 2016 were $777 million, compared to $70 million in the fourth quarter of 2015. This increase is mainly the result of an impairment of $500 million of our monetary balance sheet items in Venezuela following our decision to begin utilizing a blended exchange rate effective on December 1, 2016, as well as higher interest expenses. Non-GAAP financial expenses were $233 million in the fourth quarter of 2016, compared to $68 million in the fourth quarter of 2015.
GAAP income tax expenses for the fourth quarter of 2016 were $57 million on pre-tax loss of $914 million. In the fourth quarter of 2015, the provision for income taxes was $249 million, or 29% on pre-tax income of $861 million. The provision for non-GAAP income taxes for the fourth quarter of 2016 was $218 million on pre-tax non-GAAP income of $1.7 billion, for a quarterly tax rate of 13%. The provision for non-GAAP income taxes in the fourth quarter of 2015 was $289 million on pre-tax non-GAAP income of $1.4 billion, for a quarterly tax rate of 21%.
GAAP net loss attributable to ordinary shareholders and GAAP diluted EPS were $1.0 billion and a loss of $1.10, respectively, in the fourth quarter of 2016, compared to income of $500 million and EPS of $0.55 in the fourth quarter of 2015. Non-GAAP net income attributable to ordinary shareholders for calculating diluted EPS and non-GAAP diluted EPS were $1.5 billion and $1.38, respectively, in the fourth quarter of 2016, compared to $1.1 billion and $1.28 in the fourth quarter of 2015.
For the fourth quarter of 2016, the weighted average outstanding shares for the fully diluted earnings per share calculation was 1,015 million on a GAAP basis and 1,076 million on a non-GAAP basis. The number of average weighted diluted shares outstanding used for the fully diluted share calculation for the fourth quarter of 2015 was 875 million shares on a GAAP and 888 million on a non-GAAP basis. The increase in the number of shares resulted from our December 2015 equity offerings and from the issuance of shares to Allergan in August 2016 in connection with the closing of the Actavis Generics acquisition. The number of shares on a non-GAAP basis includes the potential dilution resulting from our mandatory convertible preferred shares, which had a dilutive effect on our non-GAAP earnings per share.
As of December 31, 2016, the fully diluted share count for calculating Teva’s market capitalization was approximately 1,079 million shares.
Non-GAAP information: Net non-GAAP adjustments in the fourth quarter of 2016 were $2.5 billion. Non-GAAP net income and non-GAAP EPS for the quarter were adjusted to exclude the following items:
an impairment of goodwill of $900 million, relating to the acquisition of Rimsa;
financial expenses of $544 million, primarily $500 million related to the impairment of our monetary balance sheet items in Venezuela following our decision to adopt a blended exchange rate;
legal settlements and loss contingencies of $225 million in connection with the ciprofloxacin (Cipro) settlement;
amortization of purchased intangible assets totaling $182 million, of which $170 million is included in cost of goods sold and the remaining $12 million in selling and marketing expenses. Amortization expenses were particularly low this quarter due to the impact of the changes in the value of the Actavis and Rimsa intangible assets;
R&D-related expenses of $161 million, comprised mainly of an upfront payment of $160 million to Celltrion pursuant to our exclusive partnership to commercialize two of Celltrion’s biosimilar products;
inventory step-up of $140 million, related mainly to the acquisition of the Actavis Generics business;
cost of sales adjustment of $133 million, to adjust our inventory balance in Venezuela to reflect the U.S. dollar fair market value of the inventory;
impairment of long-lived assets of $132 million, $80 million of which was related to our facility in Godollo, Hungary;
restructuring expenses of $91 million;
acquisition, integration and related expenses including contingent consideration of $75 million;
equity compensation expenses of $38 million;
costs related to regulatory actions taken in facilities of $30 million;
other non-GAAP items of negative $26 million;
minority interest adjustment of negative $11 million; and
related tax effect of $161 million.
Teva believes that excluding such items facilitates investors’ understanding of its business. See the attached tables for a reconciliation of the GAAP results to the adjusted non-GAAP figures.
Cash flow from operations generated during the fourth quarter of 2016 was $1.4 billion, a decrease of 12% compared to the fourth quarter of 2015 mainly due to changes in our working capital. Free cash flow, excluding net capital expenditures, was $1.1 billion, down 19% compared to the fourth quarter of 2015.
Segment Results for the Fourth Quarter 2016
Beginning in the fourth quarter of 2016, and following the acquisition of Actavis Generics, we revised our segment structure so that our generic medicines segment, which includes chemical and therapeutic equivalents of originator medicines in a variety of dosage forms, now includes our OTC business, conducted primarily through PGT, as well as our API manufacturing business.
All data presented has been conformed to the new segment structure.
Generic Medicines Segment
Three Months Ended December 31,
2016 2015
U.S.$ in millions / % of Segment Revenues

Revenues $ 3,716 100.0% $ 2,573 100.0%
Gross profit 1,835 49.4% 1,169 45.4%
R&D expenses 211 5.7% 133 5.2%
S&M expenses 549 14.8% 343 13.3%
Segment profit* $ 1,075 28.9% $ 693 26.9%

*Segment profit consists of gross profit for the segment, less R&D and S&M expenses related to the segment. Segment profit does not include G&A expenses, amortization, inventory step up and certain other items.
Generic Medicines Revenues
Generic medicines revenues in the fourth quarter of 2016 were $3.7 billion, an increase of 44% compared to the fourth quarter of 2015, reflecting the results of the Actavis Generics business from August 2, 2016.
Generic revenues consisted of:
U.S. revenues of $1.4 billion, an increase of 40% compared to the fourth quarter of 2015, mainly due to the inclusion of Actavis Generics with revenues of $630 million.
European revenues of $1.1 billion, an increase of 33%, or 38% in local currency terms, compared to the fourth quarter of 2015, mainly due to the inclusion of Actavis Generics with revenues of $360 million.
ROW revenues of $1.3 billion, an increase of 62%, or 36% in local currency terms, compared to the fourth quarter of 2015. The increase in local currency terms was mainly due to the results of our business venture with Takeda in Japan which commenced operations in April 2016, and the inclusion of $150 million of revenues from Actavis Generics.
Our OTC revenues (which are included in the market revenues above) were $412 million, an increase of 28% compared to $321 million in the fourth quarter of 2015. In local currency terms, revenues increased 7%. PGT’s in-market sales were $530 million in the fourth quarter of 2016, compared to $450 million in the fourth quarter of 2015.
API sales to third parties of $181 million (which are included in the market revenues above), a decrease of 10%, compared to the fourth quarter of 2015, mainly as sales to Actavis Generics are no longer classified as sales to third parties.
Generic medicines revenues comprised 57% of our total revenues in the quarter, compared to 53% in the fourth quarter of 2015.
Generic Medicines Gross Profit
Gross profit of our generic medicines segment in the fourth quarter of 2016 was $1.8 billion, an increase of 57% compared to $1.2 billion in the fourth quarter of 2015. The higher gross profit was mainly a result of the inclusion of Actavis Generics and our business venture with Takeda in Japan, both of which impacted the current quarter but not the fourth quarter of 2015.
Gross profit margin for our generic medicines segment in the fourth quarter of 2016 increased to 49.4%, from 45.4% in the fourth quarter of 2015.
Generic Medicines Profit
Our generic medicines segment generated profit of $1.1 billion in the fourth quarter of 2016, an increase of 55% compared to the fourth quarter of 2015. Generic medicines profitability as a percentage of generic medicines revenues was 28.9% in the fourth quarter of 2016, up from 26.9% in the fourth quarter of 2015.
Specialty Medicines Segment
Three Months Ended December 31,
2016 2015
U.S.$ in millions / % of Segment Revenues

Revenues $ 2,203 100.0% $ 2,114 100.0%
Gross profit 1,926 87.4% 1,855 87.7%
R&D expenses 296 13.4% 263 12.4%
S&M expenses 506 23.0% 561 26.5%
Segment profit* $ 1,124 51.0% $ 1,031 48.8%


*Segment profit consists of gross profit for the segment, less R&D and S&M expenses related to the segment. Segment profit does not include G&A expenses, amortization, inventory step up and certain other items.
Specialty Medicines Revenues
Specialty medicines revenues in the fourth quarter of 2016 were $2.2 billion, up 4% compared to the fourth quarter of 2015. U.S. specialty medicines revenues were $1.7 billion, up 5% compared to the fourth quarter of 2015. European specialty medicines revenues were $384 million, an increase of 5%, or 9% in local currency terms, compared to the fourth quarter of 2015. ROW specialty revenues were $102 million, down 6%, or 4% in local currency terms, compared to the fourth quarter of 2015.
Specialty medicines revenues comprised 34% of our total revenues in the quarter, compared to 43% in the fourth quarter of 2015.
The following table presents revenues by therapeutic area and key products for our specialty medicines segment for the three months ended December 31, 2016 and 2015:

Three Months Ended
December 31,
Percentage
Change
2016 2015 2016 – 2015
U.S. $ in millions
CNS $ 1,243 $ 1,274 (2%)
Copaxone 1,015 960 6%
Azilect 88 80 10%
Nuvigil 25 100 (75%)
Respiratory 325 326 (0%)
ProAir 139 148 (6%)
QVAR 116 119 (3%)
Oncology 268 318 (16%)
Treanda and Bendeka 150 198 (24%)
Women’s Health 122 107 14%
Other Specialty 245 89 175%
Total Specialty Medicines $ 2,203 $ 2,114 4%

Global revenues of Copaxone (20 mg/mL and 40 mg/mL), the leading multiple sclerosis therapy in the U.S. and globally, were $1.0 billion, an increase of 6% compared to the fourth quarter of 2015.
Copaxone revenues in the United States were $829 million, up 9% compared to $760 million in the fourth quarter of 2015, mainly due to a price increase of 7.9% in January 2016. At the end of the fourth quarter of 2016, according to December 2016 IMS data, our U.S. market shares for the Copaxone products in terms of new and total prescriptions were 27.9% and 29.3%, respectively. Copaxone 40 mg/mL accounted for over 84% of total Copaxone prescriptions in the U.S.
Copaxone revenues outside the United States were $186 million, a decrease of 7%, compared to the fourth quarter of 2015 mainly due to loss of tender orders in Russia, partially offset by a volume increase in Europe.
Our global Azilect revenues were $88 million, an increase of 10% compared to the fourth quarter of 2015. Global in-market sales decreased 31%, mainly due to generic competition in certain European markets.
Revenues of our respiratory products were $325 million, in line with results in the fourth quarter of 2015. ProAir revenues in the quarter were $139 million, down 6% compared to the fourth quarter of 2015, due to lower volumes related to changes in our market access. QVAR global revenues were $116 million in the fourth quarter of 2016, down 3% compared to the fourth quarter of 2015, mainly due to net pricing effects.
Revenues of our oncology products were $268 million in the fourth quarter of 2016, down 16% compared to the fourth quarter of 2015. Revenues of Treanda and Bendeka were $150 million, down 24% compared to the fourth quarter of 2015, due to increased competition from other therapies and normalization of inventory levels following the launch of Bendeka.
Specialty Medicines Gross Profit
Gross profit of our specialty medicines segment was $1.9 billion, up 4% compared to the fourth quarter of 2015. Gross profit margin for our specialty medicines segment in the fourth quarter of 2016 was 87.4%, compared to 87.7% in the fourth quarter of 2015.
Specialty Medicines Profit
Our specialty medicines segment profit was $1.1 billion in the fourth quarter of 2016, up 9% compared to the fourth quarter of 2015.
Specialty medicines profit as a percentage of segment revenues was 51.0% in the fourth quarter of 2016, up from 48.8% in the fourth quarter of 2015.
The following tables present information regarding our multiple sclerosis franchise and of our other specialty medicines for the three months ended December 31, 2016 and 2015:

Multiple Sclerosis
Three months ended December 31,
2016 2015
U.S.$ in millions / % of MS Revenues

Revenues $ 1,015 100.0% $ 960 100.0%
Gross profit 927 91.3% 866 90.2%
R&D expenses 30 3.0% 32 3.3%
S&M expenses 81 7.9% 121 12.6%
MS profit $ 816 80.4% $ 713 74.3%


Other Specialty
Three months ended December 31,
2016 2015
U.S.$ in millions / % of Other Specialty Revenues

Revenues $ 1,188 100.0% $ 1,154 100.0%
Gross profit 999 84.1% 989 85.7%
R&D expenses 266 22.4% 231 20.0%
S&M expenses 425 35.8% 440 38.1%
Other Specialty profit $ 308 25.9% $ 318 27.6%

Other Activities
Other revenues, primarily sales of third-party products for which we act as distributor, mostly in the United States via Anda, as well as in Israel and Hungary, sales of medical devices, contract manufacturing services related to products divested in connection with the Actavis Generics acquisition and other miscellaneous items, were $573 million in the fourth quarter of 2016, compared to $194 million, in the fourth quarter of 2015. The increase was mainly related to the inclusion of Anda’s revenues beginning in the fourth quarter of 2016.
Revenues of our other activities comprised 9% of our total revenues in the quarter, compared to 4% in the fourth quarter of 2015.
Outlook for 2017 Non-GAAP Results
Teva reaffirms its 2017 full year non-GAAP guidance, including the items below:
We expect revenues for full year 2017 to be $23.8 – 24.5 billion.
Non-GAAP EPS for 2017 is expected to be $4.90 – 5.30, based on a weighted average number of shares of 1,076 million.
These estimates reflect management`s current expectations for Teva’s performance in 2017. Actual results may vary, whether as a result of exchange rate differences, market conditions or other factors. In addition, the non-GAAP figures exclude the amortization of purchased intangible assets, costs related to certain regulatory actions, inventory step-up, legal settlements and reserves, impairments and related tax effects.
Dividends
On February 7, 2017, the Board of Directors declared a cash dividend of $0.34 per ordinary share for the fourth quarter of 2016. For holders of our ordinary shares that are traded on the Tel Aviv Stock Exchange, the dividend will be converted into new Israeli shekels based on the official exchange rate as of February 13, 2017. The record date will be March 2, 2017, and the payment date will be March 20, 2017. Tax will be withheld at a rate of 15%.
Also, on February 7, 2017, the Board of Directors declared a cash dividend of $17.50 per mandatory convertible preferred share for the fourth quarter of 2016. The record date will be March 1, 2017 and the payment date will be March 15, 2017. Tax will be withheld at a rate of 15%.

On February 13, 2017 OncoMed Pharmaceuticals, Inc. (NASDAQ:OMED), a clinical-stage company focused on discovering and developing novel anti-cancer stem cell and immuno-oncology therapeutics, reported it has enrolled and dosed the first patient in a Phase 1b clinical trial of its anti-DLL4/VEGF bispecific antibody (OMP-305B83) in combination with paclitaxel in patients with platinum-resistant ovarian cancer (Press release, OncoMed, FEB 13, 2017, View Source [SID1234517707]). OncoMed’s anti-DLL4/VEGF bispecific antibody is designed to have anti-angiogenic, anti-cancer stem cell and immuno-modulatory activity.

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The Phase 1b multicenter, open-label, dose-escalation and expansion trial is designed to assess the safety, preliminary efficacy, immunogenicity, pharmacokinetics and biomarker effects of the anti-DLL4/VEGF bispecific antibody plus paclitaxel. OncoMed expects to enroll approximately 30 patients with platinum-resistant ovarian cancer (including fallopian tube or primary peritoneal cancers) who have previously received bevacizumab (Avastin, anti-VEGF) and/or have failed at least two prior therapies. The Phase 1b trial of anti-DLL4/VEGF antibody in patients with ovarian cancer is being conducted at five clinical sites in the United States.

"There are few treatment options available to women whose ovarian cancer is resistant to platinum-based chemotherapy and have failed treatment with bevacizumab or two or more prior therapies," said Robert Stagg, Pharm D., OncoMed’s Senior Vice President, Clinical Research and Development. "We observed evidence of anti-tumor activity in these types of patients in our Phase 1a clinical trial, and we look forward to studying the potential impact of our anti-DLL4/VEGF bispecific combined with chemotherapy in this patient population."

In an ongoing Phase 1a dose escalation and expansion study of 51 patients with previously treated advanced solid tumors, OncoMed’s anti-DLL4/VEGF bispecific antibody was generally well tolerated with hypertension, headache and pulmonary hypertension being the most common drug related toxicities. Single-agent anti-tumor activity was observed. Two of 46 evaluable patients had a partial response and 12 other patients had a reduction in tumor volume. In the Phase 1a trial, five of eight evaluable patients with ovarian cancer had a reduction in tumor volume and remained on therapy for 129-357+ days. Four of these five patients had previously received bevacizumab.1

About anti-DLL4/VEGF Bispecific Antibody (OMP-305B83)
OncoMed’s anti-DLL4/VEGF bispecific antibody is designed to inhibit the function of both DLL4 and VEGF and thereby induce potent anti-tumor responses while mitigating certain angiogenic-related toxicities. It was developed utilizing OncoMed’s BiMAb bispecific platform technology, which enables the design of bispecific antibodies comparable to traditional monoclonal antibodies but possessing dual target-binding specificity. In preclinical studies OncoMed’s anti-DLL4/VEGF bispecific antibody demonstrated robust in vivo anti-tumor efficacy across a range of solid tumor xenografts, including colon, ovarian, lung and pancreatic cancers, among others. Further, in preclinical studies dual inhibition of DLL4 and VEGF appears to exhibit synergistic anti-tumor activity at doses where blockade of either target alone elicited sub-optimal activity.

OncoMed is currently conducting two Phase 1b clinical trials of its anti-DLL4/VEGF bispecific antibody in combination with standard of care chemotherapies: one in patients with metastatic colorectal cancer and a second in women with platinum-resistant ovarian cancer. The anti-DLL4/VEGF bispecific antibody is part of OncoMed’s collaboration with Celgene Corporation.

On February 13, 2017 DelMar Pharmaceuticals, Inc. (NASDAQ: DMPI) ("DelMar" and the "Company"), a biopharmaceutical company focused on the development and commercialization of new cancer therapies, reported its financial results for the quarter ending December 31, 2016, the second quarter of the Company’s 2017 fiscal year (Press release, DelMar Pharmaceuticals, FEB 13, 2017, View Source [SID1234517706]). DelMar’s executive management will host a business update conference call and live webcast for investors, analysts and other interested parties on Wednesday, February 15, 2017 at 4:30 p.m. Eastern Standard Time.

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"During the past several months, we have increased activities related to our upcoming pivotal Phase 3 clinical trial with our lead VAL-083 program in refractory GBM," said Jeffrey Bacha, chairman and chief executive officer of DelMar Pharmaceuticals, Inc. We also undertook key steps toward advancing VAL-083 as an alternative to temozolomide in MGMT-unmethylated GBM and into other solid tumor indications for patients whose tumors exhibit features that make them resistant or unlikely to respond to currently available chemotherapies."

RECENT CORPORATE HIGHLIGHTS

DelMar initiated a new Phase 2 clinical study of VAL-083 in patients with MGMT-unmethylated GBM at first recurrence/progression prior to bevacizumab (Avastin) exposure in collaboration with the University of Texas MD Anderson Cancer Center ("MD Anderson").
DelMar continued the advancement of its VAL-083 lead product development program in refractory GBM toward a pivotal Phase 3 clinical trial. DelMar has developed a proposed study design based on feedback from an End of Phase 2 meeting with the United States Food and Drug Administration ("FDA") and input from its clinical advisors.
The proposed trial will enroll approximately 180 patients with histologically confirmed recurrent GBM who have failed both standard chemo-radiation and bevacizumab with a primary endpoint of overall survival. Patients will be randomized in a 2:1 fashion to receive either VAL-083 or a commonly used salvage chemotherapy at approximately 25 centers. The proposed study is powered at 90% and will include an interim analysis at 50% of events for futility, superiority and sample size readjustment. DelMar estimates that the proposed study will take less than two years from initiation to completion.
DelMar accessed additional funds to support our research programs through additional non-dilutive funding support from the Government of Canada and the exercise of warrants for cash. The Company estimates that current working capital is sufficient to fund our current operations through the end of calendar 2017.
We continued to obtain promising research results supporting the potential of VAL-083 in a range of treatment-resistant cancer indications:
DelMar presented additional data demonstrating that VAL-083 exhibits a mechanism of action distinct from other chemotherapies used in the treatment of GBM at the annual meetings of the European Association of Neuro-Oncology ("EANO") and the Society for NeuroOncology ("SNO");
DelMar presented data demonstrating that VAL-083 overcomes cisplatin-resistance in ovarian cancer cell lines with known p53 mutations and displays synergy with both cisplatin and AstraZeneca’s PARP inhibitor Olaparib against ovarian cancer in vitro at the 11th Biennial Ovarian Cancer Research Symposium;
DelMar presented new non-clinical data supporting the differentiation of VAL-083 in the treatment of lung cancer at the American Association for Cancer Research (AACR) (Free AACR Whitepaper)’s ("AACR") annual meeting and at the IASLC 17th World Congress on Lung Cancer; and
DelMar presented data indicating that VAL-083 offers potential therapeutic alternatives in difficult-to-treat pediatric brain tumors at the AACR (Free AACR Whitepaper) – Advances in Pediatric Research: From Mechanisms and Models to Treatment and Survivorship Conference.
DelMar continued to strengthen its intellectual property portfolio around VAL-083. The Company now holds seven issued US patents and eight issued patents outside of the US. DelMar’s patent filings encompass thirteen patent families in various stages of prosecution and over 100 patent filings globally.
"Our excitement about VAL-083 and its potential to extend survival for bevacizumab-failed GBM patients continues to grow as we take steps toward initiating our planned pivotal Phase 3 trial," said Mr. Bacha.

"The recent initiation of a new Phase 2 clinical trial in collaboration with MD Anderson for bevacizumab-naïve MGMT-unmethylated GBM patients, along with a planned trial in newly diagnosed MGMT-unmethylated GBM patients, represent significant steps toward positioning VAL-083 as the chemotherapy of choice for the approximately two-thirds of newly diagnosed GBM patients whose tumors express high levels of MGMT. MGMT is a DNA repair enzyme linked with resistance to currently available chemotherapies including temozolomide and nitrosoureas."

Mr. Bacha continued, "We are also very pleased with our escalating progress to establish VAL-083’s potential to address chemo-resistance across a range of cancer indications for patients whose tumors exhibit features that make their cancer resistant or unlikely to respond to currently available therapy. Our research demonstrates the potential of VAL-083 to address unmet medical needs in a range of tumor types including GBM, non-small cell lung cancer, ovarian cancer and other solid tumors."

On February 13, 2017 DelMar Pharmaceuticals, Inc. (NASDAQ: DMPI) ("DelMar" and the "Company"), a biopharmaceutical company focused on the development and commercialization of new cancer therapies, reported that patient dosing has commenced in a Phase 2 clinical study of its investigational drug VAL-083 (dianhydrogalactitol) for MGMT-unmethylated Avastin (bevacizumab)-naïve recurrent glioblastoma (Press release, DelMar Pharmaceuticals, FEB 13, 2017, View Source [SID1234517705]).

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The first patient was dosed by DelMar’s collaborators at the University of Texas MD Anderson Cancer Center in Houston Texas.

"The dosing of the first subject in this VAL-083 trial marks an important milestone in the advancement of our clinical development program targeting MGMT-unmethylated GBM," said Jeffrey Bacha, chairman & CEO of DelMar Pharmaceuticals.

"The majority of newly diagnosed GBM patients’ tumors are characterized as MGMT-unmethylated, which is directly correlated with resistance to current standard front-line chemoradiation with temozolomide," added Mr. Bacha. "Our research demonstrates that VAL-083 is active independent of MGMT expression. These data, combined with data from prior clinical trials sponsored by the US National Cancer Institutes that establish VAL-083’s activity against GBM, are the foundation of our belief that VAL-083 may provide a new therapeutic option for GBM patients whose tumors exhibit features making them resistant or unlikely to respond to currently available therapy."

The Phase 2 trial will test safety, tolerability and clinical efficacy of VAL-083 in 48 adult subjects with MGMT-unmethylated GBM whose tumors have recurred following surgery and standard chemo-radiation with temozolomide. Patients will receive 40 mg/m2 VAL-083 (IV) on days 1, 2, and 3 of a 21-day treatment-cycle, for up to twelve 21-day treatment cycles to determine if treatment with VAL-083 improves overall survival compared to historical controls. Further information regarding the clinical trial can be found on DelMar’s website and at clinicaltrials.gov (clinicaltrials.gov identifier: NCT02717962).

Approximately two-thirds of newly diagnosed GBM patients have tumors with an unmethylated MGMT promoter, which is correlated with high expression of the DNA repair enzyme, MGMT. Published studies have documented that expression of MGMT is an important factor in predicting the outcome of GBM patients treated with alkylating agents such as temozolomide (TMZ), carmustine (BCNU), and lomustine (CCNU).

Patients whose tumors exhibit a high expression of MGMT have a poor prognosis and significantly shorter progression free survival (PFS) and overall survival (OS) in comparison to patients with a methylated MGMT promoter and low MGMT expression. In a 2011 study of more than 800 newly diagnosed GBM patients, those with tumors carrying the unmethylated MGMT promoter had a median overall survival of 14 months versus 21 months for those with a methylated MGMT promoter. The difference in progression-free survival – the period after treatment during which the cancer does not worsen – was 5.7 and 8.7 months, respectively.

About VAL-083

VAL-083 is a "first-in-class," small-molecule chemotherapeutic that demonstrated clinical activity against a range of cancers including GBM in historical clinical trials sponsored by the U.S. National Cancer Institutes. DelMar has demonstrated that VAL-083’s anti-tumor activity against GBM is unaffected by the expression of MGMT in vitro. Further details can be found at View Source

VAL-083 has received an orphan drug designation in Europe for the treatment of malignant gliomas and the U.S. FDA Office of Orphan Products has granted an orphan designation to VAL-083 for the treatment of glioma, medulloblastoma and ovarian cancer.

DelMar has also announced plans to advance VAL-083 into a pivotal randomized multi-center Phase 3 clinical trial for the treatment of bevacizumab-failed GBM and into a separate international Phase 2 trial for newly diagnosed MGMT-unmethylated GBM.

DelMar believes that data from its clinical trials, if successful, will form the basis of a new treatment paradigm for the vast majority of GBM patients whose tumors exhibit features that make them unlikely to respond to currently available therapies.

About Glioblastoma Multiforme (GBM)

GBM is the most common and the most lethal form of brain cancer. Approximately 15,000 new cases of GBM are expected to be diagnosed in the United States during 2017. GBM progresses quickly and patients deteriorate rapidly. Common symptoms include headaches, seizures, nausea, weakness, paralysis and personality or cognitive changes such as loss of speech or difficulty in thinking clearly. The majority of GBM patients do not survive for more than two years following diagnosis, and the median survival in newly diagnosed patients with best available treatments is less than 15 months.

On February 13, 2017 Inovio Pharmaceuticals, Inc. (NASDAQ:INO) reported that it has entered into a collaboration and license agreement providing ApolloBio Corporation (NEEQ:430187) with the exclusive right to develop and commercialize VGX-3100, Inovio’s DNA immunotherapy product designed to treat pre-cancers caused by human papillomavirus (HPV), within Greater China (China, Hong Kong, Macao, Taiwan) (Press release, Inovio, FEB 13, 2017, View Source [SID1234517704]). The agreement provides for potential inclusion of the Republic of Korea three years following the effective date.

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Under the collaboration and license agreement, Inovio will receive $15 million in upfront and near term payments comprising an initial $3 million signing fee and a $12 million milestone upon lifting of the VGX-3100 phase 3 pre-initiation clinical hold by the FDA. Under a separate equity agreement, ApolloBio will invest in Inovio common stock subsequent to lifting of the clinical hold at a volume weighted average price encompassing a trading period prior to and following the lifting of the clinical hold. The aggregate investment, which is expected to be completed in the first half of 2017, will not exceed $35 million and may be a lower amount such that ApolloBio will not be the largest shareholder in Inovio. ApolloBio will fund all clinical development costs within the licensed territory, and will pay Inovio up to $20 million based upon the achievement of certain regulatory milestones in the US, China and Korea, and double digit royalties on net sales of VGX-3100. The agreements are subject to People’s Republic of China (PRC) corporate and regulatory approvals, and payments are subject to PRC currency approvals.

This collaboration on VGX-3100 encompasses the treatment and/or prevention of pre-cancerous HPV infections and HPV-driven dysplasias, and excludes HPV-driven cancers and all combinations of VGX-3100 with other immunostimulants.

Dr. J. Joseph Kim, Inovio’s President and Chief Executive Officer, said, “As Inovio continues to focus on the path to regulatory approvals and commercialization strategies in the U.S. and European countries, this agreement opens up Greater China for our lead program and first phase III product. We believe that ApolloBio is a strong partner that brings significant capabilities and expertise relating to product development, the Chinese regulatory landscape, and the healthcare market in China.”

Dr. Weiping Yang, Chief Executive Officer of ApolloBio Corporation, said, “We are delighted to begin 2017 with a strategic collaboration with Inovio. VGX-3100 is the world’s first therapeutic vaccine being developed for HPV pre-cancers. This collaboration, license and equity investment marks our determination to introduce late stage innovative new drugs to meet severely unmet medical needs within the Greater China region.”

About VGX-3100

VGX-3100 is an HPV-specific immunotherapy that is being developed as a non-surgical treatment for high-grade cervical dysplasia and related underlying persistent HPV infection. VGX-3100 works in vivo to activate functional, antigen-specific, CD-8 T-cells to clear persistent HPV 16/18 infection and cause regression of pre-cancerous cervical dysplasia. In a phase II trial, VGX-3100 demonstrated clinical efficacy and was generally well tolerated, without the side effects and obstetric risks associated with surgical excision. VGX-3100 is a first-in-class HPV-specific immunotherapy that targets the underlying cause of cervical dysplasia, providing an opportunity for women to reduce their risk of cervical cancer without undergoing an invasive surgical procedure.

About HPV and Cervical Dysplasia

HPV is the most common sexually transmitted infection and is the main cause of cervical cancer, which kills more than 250,000 women every year worldwide. Among the 300 million women currently infected with HPV, 500,000 will be diagnosed with cervical cancer each year. Two types of HPV (HPV 16 and HPV 18) cause 70% of cervical cancer cases. High-grade cervical dysplasia is also caused by persistent HPV infection and is a pre-cancerous condition that can progress to cervical cancer if left untreated. Globally the number of high-grade cervical dysplasia cases is estimated to be in the range of 10 million.

Currently there are no approved medical treatments for persistent HPV infection or cervical dysplasia. The primary treatment for high-grade cervical dysplasia is surgical excision of the pre-cancerous lesion and a margin of healthy cervical tissue. Because surgical excision does not treat the underlying HPV infection that causes cervical dysplasia, there is a 10-16% risk of disease recurrence. Women with persistent HPV infection after surgical excision remain at high risk for cervical cancer. In addition, surgical treatment is associated with pain and cramping, and a risk for post-surgical bleeding, infection, and pre-term delivery and miscarriages during future pregnancies.