On November 1, 2018 Roche (SIX: RO, ROG; OTCQX: RHHBY) reported that the randomised phase III CLL14 study, which evaluated fixed-duration Venclexta/Venclyxto (venetoclax) in combination with Gazyva/Gazyvaro (obinutuzumab) in people with previously untreated chronic lymphocytic leukaemia (CLL) and co-existing medical conditions, met its primary endpoint and showed a statistically significant reduction in the risk of disease worsening or death (PFS; as assessed by investigator) compared to standard-of-care Gazyva/Gazyvaro plus chlorambucil (Press release, Hoffmann-La Roche, NOV 1, 2018, View Source [SID1234530512]). The results showed that no new safety signals or increase in known toxicities of Venclexta/Venclyxto or Gazyva/Gazyvaro were observed with the treatment combination.

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"People with chronic lymphocytic leukaemia continue to need more treatment options because some patients are unable to tolerate chemotherapy regimens due to their underlying health," said Sandra Horning, MD, Roche’s Chief Medical Officer and Head of Global Product Development. "CLL14 is the first study to show superior progression-free survival for Venclexta/Venclyxto plus Gazyva/Gazyvaro compared to a standard-of-care regimen. We will work with health authorities to bring this potential chemotherapy-free treatment option to people who need it as quickly as possible."

Data from the CLL14 study will be submitted to global health authorities. Venclexta in combination with Rituxan (rituximab) has been approved by the US Food and Drug Administration (FDA) for the treatment of people with CLL or small lymphocytic lymphoma, with or without 17p deletion, who have received at least one prior therapy. Venclyxto in combination with MabThera (rituximab) has recently been approved in Europe for people with previously treated CLL, who have received at least one prior therapy, based on results from the randomised phase III MURANO study.

A robust clinical development programme for Venclexta/Venclyxto is ongoing in several types of blood cancer, including acute myeloid leukaemia and multiple myeloma. Gazyva/Gazyvaro continues to be investigated in combination with approved and investigational Roche and non-Roche molecules in CLL and follicular lymphoma.

Venclexta/Venclyxto (venetoclax) is being developed by AbbVie and Roche. It is jointly commercialised by AbbVie and Genentech, a member of the Roche Group, in the United States and commercialised by AbbVie outside of the United States.

About the CLL14 study
CLL14 (NCT02242942) is a randomised phase III study evaluating the combination of fixed-duration Venclexta/Venclyxto plus Gazyva/Gazyvaro compared to Gazyva/Gazyvaro plus chlorambucil in patients with previously untreated chronic lymphocytic leukaemia (CLL) with coexisting medical conditions. 432 patients with previously untreated CLL were randomly assigned to receive either Venclexta/Venclyxto plus Gazyva/Gazyvaro (Arm A) or Gazyva/Gazyvaro plus chlorambucil (Arm B). The primary endpoint of the study is investigator-assessed progression free survival (PFS). Secondary endpoints include PFS assessed by independent review committee, best overall response, complete response, duration of response, overall survival, event-free survival, time to next CLL treatment, minimal residual disease status and safety. The CLL14 study is being conducted in cooperation with the German CLL Study Group (GCLLSG), headed by Michael Hallek, MD, University of Cologne.

About Venclexta/Venclyxto (venetoclax)
Venclexta/Venclyxto is a first-in-class targeted medicine designed to selectively bind and inhibit the B-cell lymphoma-2 (BCL-2) protein. In some blood cancers and other tumours, BCL-2 builds up and prevents cancer cells from dying or self-destructing, a process called apoptosis. Venclexta/Venclyxto blocks the BCL – 2 protein and works to restore the process of apoptosis.

Venclexta/Venclyxto is being developed by AbbVie and Roche. It is jointly commercialised by AbbVie and Genentech, a member of the Roche Group, in the United States and by AbbVie outside of the United States. Together, the companies are committed to research with Venclexta/Venclyxto, which is currently being studied in clinical trials across several types of blood and other cancers.

In the United States, Venclexta has been granted four Breakthrough Therapy Designations by the FDA: in combination with Rituxan for people with relapsed or refractory chronic lymphocytic leukaemia (CLL); as a monotherapy for people with relapsed or refractory CLL with 17p deletion; in combination with hypomethylating agents (azacitidine or decitabine) for people with untreated acute myeloid leukaemia (AML) ineligible for intensive chemotherapy; and in combination with low-dose cytarabine for people with untreated AML ineligible for intensive chemotherapy. A supplemental New Drug Application has been submitted to the FDA for Venclexta, in combination with a hypomethylating agent or in combination with low dose cytarabine, for the treatment of people with previously untreated AML who are ineligible for intensive chemotherapy.

Venclexta/Venclyxto is approved in more than 50 countries. Roche and AbbVie are currently working with regulatory agencies around the world to bring this medicine to additional eligible patients in need.

About Gazyva/Gazyvaro (obinutuzumab)
Gazyva/Gazyvaro is an engineered monoclonal antibody designed to bind to CD20, a protein expressed on certain B-cells (a type of white blood cell), but not on stem cells or plasma cells. Gazyva/Gazyvaro is designed to attack and destroy targeted B-cells both directly and together with the body’s immune system. Gazyva is marketed as Gazyvaro in the EU and Switzerland.

Gazyva/Gazyvaro is currently approved in more than 90 countries in combination with chlorambucil for people with previously untreated chronic lymphocytic leukaemia, in more than 80 countries in combination with bendamustine for people with certain types of previously treated follicular lymphoma and in more than 70 countries in combination with chemotherapy for previously untreated follicular lymphoma.

Additional combination studies investigating Gazyva/Gazyvaro with other approved or investigational medicines, including cancer immunotherapies and small molecule inhibitors, are underway across a range of blood cancers.

About the German CLL Study Group (GCLLSG)
Founded in 1996 and headed by Dr. Michael Hallek, the GCLLSG has been running various phase III, phase II and phase I trials in chronic lymphocytic leukaemia (CLL) with the goal to provide optimal treatment to patients suffering from this disease. Among those were landmark trials like the CLL8 and the CLL11 trials which led to the current standard-of-care in CLL. For many years, GCLLSG has been aiming to improve not just the treatment of younger and physically fit patients, but also that of elderly and less fit patients. These patients are generally underrepresented in clinical trials although they constitute the majority of CLL patients treated by doctors in daily practice. The GCLLSG is an independent non-profit research organisation supported by the German Cancer Aid (Deutsche Krebshilfe). www.dcllsg.de

On November 1, 2018 Exelixis, Inc. (Nasdaq: EXEL) reported financial results for the third quarter of 2018 and provided an update on progress toward fulfilling its key corporate objectives, as well as commercial and clinical development milestones (Press release, Exelixis, NOV 1, 2018, View Source;p=RssLanding&cat=news&id=2374950 [SID1234530511]).

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"In the third quarter of 2018, we continued to grow our commercial business and make significant clinical development and regulatory progress for our pipeline," said Michael M. Morrissey, Ph.D., President and Chief Executive Officer of Exelixis. "Cabozantinib franchise net product revenues during the quarter were $162.9 million, which represents a 12 percent increase compared to the second quarter of 2018. We also initiated the next wave of cabozantinib pivotal trials with the announcement of the COSMIC-311 study in differentiated thyroid cancer and expect additional pivotal trials launching later this year and into 2019. This will include studies evaluating cabozantinib in combination with leading immunotherapies, an approach supported by encouraging clinical data, including phase 1b dose escalation results of cabozantinib plus atezolizumab in advanced renal cell carcinoma presented at the 2018 European Society for Medical Oncology Congress last month."

Dr. Morrissey continued: "Our team’s hard work provides strong momentum as we close out the year and move into 2019. In particular, we look forward to the U.S. Food and Drug Administration’s upcoming decision on our supplemental New Drug Application for CABOMETYX in previously-treated advanced hepatocellular carcinoma, which has a January 14, 2019 action date, and for which we are fully launch ready. We are also pleased with Ipsen’s regulatory progress, including gaining a positive opinion in the European Union for previously-treated hepatocellular carcinoma, and Canadian regulatory approval for advanced renal cell carcinoma. Each of these milestones has the potential to support broadened access to CABOMETYX in key regions, and underscores our commitment to making Exelixis-discovered medicines globally available to cancer patients in need."

Third Quarter 2018 Financial Results

Total revenues for the quarter ended September 30, 2018 were $225.4 million, compared to $152.5 million for the comparable period in 2017.

Total revenues include net product revenues of $162.9 million for the quarter ended September 30, 2018, compared to $96.4 million for the comparable period in 2017, representing a 69 percent increase year-over-year. The increase in net product revenues reflects the continued growth of CABOMETYX in the U.S. for the treatment of advanced renal cell carcinoma (RCC).

Total revenues also include collaboration revenues of $62.5 million for the quarter ended September 30, 2018 compared to $56.1 million for the comparable period in 2017. Collaboration revenues for the quarter ended September 30, 2018 included the recognition of milestone revenue of $36.9 million and $5.0 million from our collaboration with Ipsen Pharma SAS (Ipsen) for the anticipated approval of CABOMETYX for previously-treated hepatocellular carcinoma (HCC) in the European Union and the approval by Health Canada of CABOMETYX for previously-treated RCC, respectively. Collaboration revenues also included $11.7 million in royalties earned from Ipsen and Genentech and $6.9 million in development cost reimbursements under our collaboration agreements with Ipsen and Takeda Pharmaceutical Company Ltd. Collaboration revenues for the quarter ended September 30, 2017 included two milestones totaling $45.0 million from our collaboration with Ipsen.

Research and development expenses for the quarter ended September 30, 2018 were $44.7 million, compared to $28.5 million for the comparable period in 2017. The increase in research and development expenses was primarily related to increases in clinical trial costs and personnel expenses. The increase in clinical trial costs was primarily due to increased costs associated with: CheckMate 9ER, a phase 3 pivotal trial of cabozantinib plus immunotherapy in patients with previously-untreated RCC that is being conducted with Bristol-Myers Squibb Company; COSMIC-311, a phase 3 pivotal trial of cabozantinib in patients with radioiodine-refractory differentiated thyroid cancer (DTC) who have progressed after prior VEGFR-targeted therapy; and the preparation for further pivotal phase 3 trials that are expected to be initiated in the coming months. The increase in personnel expenses was primarily due to increases in headcount to support our expanded development and discovery efforts.

Selling, general and administrative expenses for the quarter ended September 30, 2018 were $48.1 million, compared to $38.1 million for the comparable period in 2017. The increase in selling, general and administrative expenses was primarily related to increases in personnel expenses and stock-based compensation. The increase in personnel expenses was primarily due to increases in general and administrative headcount to support the company’s commercial and research and development organizations. The increase in stock-based compensation was primarily due to the increase in headcount.

Net income for the quarter ended September 30, 2018 was $126.6 million, or $0.42 per share, basic and $0.41 per share, diluted, compared to $81.4 million, or $0.28 per share, basic and $0.26 per share, diluted, for the comparable period in 2017. The increase in net income was primarily the result of increases in net product revenues and collaboration revenues, which was partially offset by the increases in research and development and selling, general and administrative expenses.

Cash and cash equivalents, short- and long-term investments and short- and long-term restricted cash and investments totaled $750.3 million at September 30, 2018, as compared to $457.2 million at December 31, 2017.

2018 Financial Guidance

The company is updating its guidance that total costs and operating expenses for the full year will be between $410 million and $420 million. This guidance includes approximately $50 million of non-cash costs and expenses related primarily to stock-based compensation expense.

Cabozantinib Highlights

Strong Growth in Cabozantinib Franchise Net Revenues. Net product revenues generated by the cabozantinib franchise were $162.9 million during the third quarter of 2018, an increase of 69 percent year-over-year. During the third quarter of 2018, CABOMETYX generated $158.3 million in net product revenues and COMETRIQ (cabozantinib) capsules for the treatment of patients with progressive, metastatic medullary thyroid cancer generated an additional $4.7 million in net product revenues.

CELESTIAL Phase 3 Pivotal Trial Results Published in The New England Journal of Medicine (NEJM). In July, Exelixis announced that NEJM published positive results from the CELESTIAL phase 3 pivotal trial of cabozantinib in patients with previously-treated advanced HCC. As previously announced and presented, the data demonstrate that cabozantinib provided a statistically significant and clinically meaningful improvement in overall survival versus placebo.

National Comprehensive Cancer Network (NCCN) Updates Clinical Practice Guidelines with New Recommendations for CABOMETYX. In September, the NCCN updated its Clinical Practice Guidelines to recommend CABOMETYX for the treatment of advanced RCC regardless of patient risk status (favorable-, intermediate-, and poor-risk). With the updates, CABOMETYX is the only tyrosine kinase inhibitor (TKI) indicated for the treatment of advanced RCC with NCCN-preferred status for intermediate- and poor-risk groups in the first-line setting, and the only TKI with preferred status for patients who have progressed on prior therapy.

In a separate update to the Clinical Practice Guidelines for Hepatobiliary Cancers, the NCCN also added cabozantinib as a Category 1 option for the treatment of patients with HCC (Child-Pugh Class A only) who have been previously treated with sorafenib. CABOMETYX is not a U.S. Food and Drug Administration (FDA) approved therapy for previously-treated advanced HCC. In May 2018, the FDA accepted Exelixis’ supplemental New Drug Application (sNDA) for CABOMETYX in this disease setting, assigning a Prescription Drug User Fee Act date of January 14, 2019.

Health Canada Approves CABOMETYX for Previously-treated Advanced RCC. In September, Ipsen announced approval by Health Canada of CABOMETYX for the treatment of adults with advanced RCC who have received prior vascular endothelial growth factor-targeted therapy. Health Canada had granted CABOMETYX priority review status, which provided an accelerated review of Ipsen’s new drug submission. Under the collaboration agreement with Ipsen, Exelixis is eligible to receive a $5.0 million milestone for the Health Canada approval, which was recognized as revenue in the third quarter of 2018.

Positive Committee for Medicinal Products for Human Use (CHMP) Opinion for CABOMETYX for Previously-treated HCC. In September, Ipsen announced that it received a positive opinion from the CHMP, the scientific committee of the European Medicines Agency, for CABOMETYX as a monotherapy for the treatment of HCC in adults who have been previously treated with sorafenib. The positive CHMP opinion will now be reviewed by the European Commission (EC), which has the authority to approve medicines for the European Union. The CHMP opinion was based on results from the CELESTIAL phase 3 pivotal trial. Under the collaboration agreement with Ipsen, Exelixis is eligible to receive a milestone payment of $40.0 million for the approval of CABOMETYX for previously-treated HCC, of which $36.9 million was recognized as revenue in the third quarter of 2018. Payment of the full $40.0 million is expected to be received within 70 days of an approval decision by the EC.

Initiation of COSMIC-311, Phase 3 Pivotal Trial of Cabozantinib in Patients with Radioiodine-refractory DTC Who Have Progressed After Prior VEGFR-Targeted Therapy. After the quarter ended, in October, Exelixis announced the initiation of COSMIC-311, a multicenter, randomized, double-blind, placebo-controlled phase 3 pivotal trial that aims to enroll approximately 300 patients at approximately 150 sites globally. The co-primary endpoints of the trial are progression-free survival and objective response rate. The American Cancer Society estimates that approximately 54,000 new cases of thyroid cancer will be diagnosed in the United States in 2018.1 DTC accounts for approximately 90 percent of all thyroid cancers.2

Cabozantinib Data at the 2018 European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Congress. After the quarter ended, in October, data from clinical trials of cabozantinib were featured in 13 presentations at the 2018 ESMO (Free ESMO Whitepaper) Congress in Munich, Germany. Notable results included further analyses from the CELESTIAL phase 3 pivotal trial, as well as single-agent and combination data for cabozantinib in a variety of tumor types and disease settings. One poster presentation highlighted results from the dose escalation stage of the phase 1b COSMIC-021 study of cabozantinib in combination with atezolizumab in previously-untreated advanced RCC, demonstrating that this therapy combination was well tolerated and showed encouraging anti-tumor activity in advanced RCC. A second poster presentation, reviewed during a discussion session, evaluated the effect of PD-L1 status on clinical outcomes with cabozantinib in advanced RCC in the CABOSUN and METEOR trials, and showed improved outcomes regardless of PD-L1 expression relative to sunitinib or everolimus, the respective comparator arms for each trial. Another poster presentation evaluated the activity of cabozantinib in patients with advanced RCC who had progressed on immune checkpoint inhibitor (ICI) therapy, finding that cabozantinib was active in patients previously-treated with ICIs, either alone or in combination with anti-VEGF or other therapies.

CABOMETYX as a Treatment for Advanced RCC Approved in Brazil and Taiwan. After the quarter ended, in October, Ipsen received approvals from both the Agência Nacional de Vigilância Sanitária in Brazil for CABOMETYX as a treatment for both previously-treated and previously-untreated advanced RCC and from the Taiwan Food and Drug Administration for CABOMETYX as a treatment for patients with advanced RCC who have received prior anti-angiogenic therapy.

Corporate Highlights

Inclusion on Standard & Poor’s (S&P) MidCap 400 Index. On July 2, Exelixis began trading as a member of the S&P MidCap 400 classified under S&P’s Global Industry Classification Standard Biotechnology Sub-Industry index. The index, which is distinct from the large-cap S&P 500, measures the performance of profitable mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.

Basis of Presentation

Exelixis has adopted a 52- or 53-week fiscal year that generally ends on the Friday closest to December 31st. For convenience, references in this press release as of and for the fiscal periods ended September 28, 2018, December 29, 2017 and September 29, 2017 are indicated as being as of and for the periods ended September 30, 2018, December 31, 2017 and September 30, 2017, respectively.

Conference Call and Webcast

Exelixis management will discuss the company’s financial results for the third quarter of 2018 and provide a general business update during a conference call beginning at 5:00 p.m. EDT / 2:00 p.m. PDT today, Thursday, November 1, 2018.

To access the webcast link, log onto www.exelixis.com and proceed to the News & Events / Event Calendar page under the Investors & Media heading. Please connect to the company’s website at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to listen to the webcast. Alternatively, please call 855-793-2457 (domestic) or 631-485-4921 (international) and provide the conference call passcode 1043999 to join by phone.

A telephone replay will be available until 8:00 p.m. EDT / 5:00 p.m. PDT on November 3, 2018. Access numbers for the telephone replay are: 855-859-2056 (domestic) and 404-537-3406 (international); the passcode is 1043999. A webcast replay will also be archived on www.exelixis.com for one year.

On November 1, 2018 Emergent BioSolutions Inc. (NYSE: EBS) reported financial results for the quarter and nine months ended September 30, 2018 (Press release, Emergent BioSolutions, NOV 1, 2018, View Source;p=RssLanding&cat=news&id=2374998 [SID1234530510]).

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"Our financial and operational performance is solidly in line with expectations and we are confident in a strong finish to the year, driven by our organic business as well as the impact of the PaxVax and Adapt Pharma acquisitions," said Daniel J. Abdun-Nabi, CEO of Emergent BioSolutions. He continued, "Strategically, we have broadened our reach into the public health threats market, strengthened our portfolio of unique products, and expanded the patients and customers that we serve. Operationally, we have added substantial manufacturing and sales capabilities, diversified our product development pipeline, and strengthened our pool of engaged and talented employees. Financially, we now expect to achieve our 2020 revenue goal of at least $1 billion in 2019, a full year ahead of schedule, bolstering our ability to create long-term shareholder value."

Richard S. Lindahl, CFO of Emergent BioSolutions, said, "The acquisitions of Adapt Pharma and PaxVax create a step-change forward for Emergent. On a combined basis, we expect the two entities to contribute between $270 and $300 million of incremental revenue and to be accretive to adjusted net income and adjusted EBITDA in 2019. We are actively engaged in integration and our entire team is excited to move forward together as we continue to diversify our revenue sources, realize scale efficiencies and drive strong cash flow from the now larger Emergent business operations."

Q3 2018 AND RECENT BUSINESS ACCOMPLISHMENTS

Acquisitions

Acquired specialty vaccines company PaxVax and its U.S. Food and Drug Administration (FDA) approved vaccines for typhoid, Vivotif (Typhoid Vaccine Live Oral Ty21a), and cholera, Vaxchora (Cholera Vaccine, Live, Oral), along with a development pipeline focused on infectious disease vaccines and related U.S.- and Europe-based manufacturing infrastructure.

Acquired Adapt Pharma and its flagship product NARCAN (naloxone HCl) Nasal Spray, the first and only needle-free presentation of naloxone approved by the FDA and Health Canada, for the emergency treatment of known or suspected opioid overdose, and the leading community-use option for naloxone delivery.
Product Development

Initiated a Phase 1 clinical study of ZIKV-IG, the Company’s anti-Zika virus immune globulin being developed as a therapeutic intervention against Zika virus disease; the candidate was granted Fast Track designation by the FDA in December 2017.
Financing

To fund the recent acquisitions of PaxVax and Adapt Pharma and pay related fees, costs, and expenses for both transactions, the Company incurred a total of $768 million of debt; this debt was incurred pursuant to an amended and restated credit facility that provides up to $1.05 billion of financing through a $600 million revolver and a $450 million term loan.
2018 FINANCIAL PERFORMANCE

(I) Quarter Ended September 30, 2018 (Unaudited)

Revenues

Total Revenues

For Q3 2018, total revenues were $173.7 million, an increase of 16% over 2017. Total revenues reflect a significant increase in product sales.

Product Sales

For Q3 2018, product sales were $133.3 million, an increase of $19.0 million or 17% as compared to 2017. The increase primarily reflects sales of ACAM2000, (Smallpox (Vaccinia) Vaccine, Live) and Raxibacumab injection, a fully human monoclonal antibody, both acquired in Q4 2017, (included in Other product sales).

(in millions)
(unaudited) Three Months Ended
September 30,
2018 2017 % Change
Product Sales
BioThrax $45.9 $83.5 (45%)
Other 87.4 30.8 184%
Total Product Sales $133.3 $114.3 17%

Contract Manufacturing

For Q3 2018, revenue from the Company’s contract manufacturing operations was $22.2 million, an increase of $3.3 million or 17% as compared to 2017. The increase primarily reflects increased manufacturing services for existing commercial customers at the Company’s Camden site.

Contracts and Grants

For Q3 2018, revenue from the Company’s development-based contracts and grants was $18.2 million, an increase of $2.0 million or 12% as compared to 2017. The increase primarily reflects increased R&D activities related to certain ongoing funded development programs.

Operating Expenses

Cost of Product Sales and Contract Manufacturing

For Q3 2018, cost of product sales and contract manufacturing was $73.2 million, an increase of $28.7 million or 64% as compared to 2017. The increase primarily reflects the impact of an increase in Other product sales associated principally with ACAM2000 and Raxibacumab, which were acquired in the fourth quarter of 2017, offset by lower BioThrax (Anthrax Vaccine Adsorbed) sales during the quarter.

Research and Development (Gross and Net)

For Q3 2018, gross R&D expenses were $37.0 million, an increase of $14.3 million or 63% as compared to 2017. The increase primarily reflects an increase in costs associated with contract development services.

For Q3 2018, net R&D expense, which reflects investments made in development programs that are not currently funded in whole or in part by third-party partners and is calculated as gross research and development expenses minus contracts and grants revenue, was $18.8 million, an increase of $12.3 million or 189% as compared to 2017. The increase primarily reflects investment in process improvements related to ACAM2000 at the Canton site and increased costs associated with the Phase 2 clinical trial for the FLU-IGIV program. The Q3 2018 net R&D expense was 12% of net revenue (total revenue less contracts & grants).

(in millions)
(unaudited) Three Months Ended
September 30,
2018 2017 % Change
Research and Development Expenses $37.0 $22.7 63%
Adjustments:
– Contracts and grants revenue $18.2 $16.2 12%
Net Research and Development Expenses $18.8 $6.5 189%

Selling, General and Administrative

For Q3 2018, selling, general and administrative expenses were $42.1 million, an increase of $7.6 million or 22% as compared to 2017. The increase primarily reflects higher acquisition related (diligence and legal) costs associated with the PaxVax and Adapt Pharma transactions.

Income Taxes

For Q3 2018, the provision for income tax expense in the amount of $0.6 million includes a discrete benefit of $5.6 million primarily related to finalizing positions taken on the Company’s 2017 U.S. federal and state income tax filings and stock compensation activity, resulting in an effective tax rate of 3%.

Net Income & Adjusted Net Income

For Q3 2018, the Company recorded net income of $20.9 million, or $0.41 per diluted share, versus net income of $33.6 million, or $0.68 per diluted share, in 2017. (1)

For Q3 2018, the Company recorded adjusted net income of $28.2 million, or $0.55 per diluted share, versus adjusted net income of $37.1 million, or $0.73 per diluted share, in 2017. (2)

EBITDA & Adjusted EBITDA

For Q3 2018, the Company recorded EBITDA of $34.4 million, or $0.67 per diluted share, versus $57.5 million, or $1.14 per diluted share, in 2017. (2)

For Q3 2018, the Company recorded adjusted EBITDA of $39.6 million, or $0.77 per diluted share, versus $60.5 million, or $1.20 per diluted share, in 2017. (2)

(II) Nine Months Ended September 30, 2018 (Unaudited)

Revenues

Total Revenues

For the nine months of 2018, total revenues were $511.7 million, an increase of $144.6 million or 39% over 2017. Total revenues reflect a significant increase in product sales and contract development and manufacturing services revenue.

Product Sales

For the nine months of 2018, product sales were $389.1 million, an increase of $129.2 million or 50% as compared to 2017. The increase primarily reflects sales of ACAM2000 and Raxibacumab, both acquired in Q4 2017.

For the nine months of 2018, revenue from the Company’s contract manufacturing operations was $72.0 million, an increase of $19.3 million or 37% as compared to 2017. The increase primarily reflects the completion of a milestone related to the expansion of certain contract manufacturing capabilities at the Company’s Lansing site and manufacturing services at the Company’s Canton site.

Contracts and Grants

For the nine months of 2018, revenue from the Company’s development-based contracts and grants was $50.6 million, a decrease of $3.9 million or 7% as compared to 2017. The decrease primarily reflects a reduction in revenue associated with the successful completion of multiple U.S. government development contracts, as well as reduced R&D activities related to certain ongoing funded development programs.

Operating Expenses

Cost of Product Sales and Contract Manufacturing

For the nine months of 2018, cost of product sales and contract manufacturing was $220.4 million, an increase of $95.0 million or 76% as compared to 2017. The increase primarily reflects the impact of an increase in Other product sales associated principally with ACAM2000 and Raxibacumab, which were acquired in the fourth quarter of 2017, and increased CMO revenue, offset by lower BioThrax sales during the period.

Research and Development (Gross and Net)

For the nine months of 2018, gross R&D expenses were $90.8 million, an increase of $21.9 million or 32% as compared to 2017. The increase primarily reflects an increase in costs associated with contract development services.

For the nine months of 2018, net R&D expense was $40.2 million, an increase of $25.8 million or 179% as compared to 2017. The increase primarily reflects investment in process improvements related to ACAM2000 at the Canton site and increased costs associated with the Phase 2 clinical trial for the FLU-IGIV program. The nine months of 2018 net R&D expense was 9% of net revenue (total revenue less contracts & grants).

Selling, General and Administrative

For the nine months of 2018, selling, general and administrative expenses were $121.8 million, an increase of $20.3 million or 20% as compared to 2017. The increase primarily reflects higher acquisition related (diligence and legal) costs associated with the PaxVax and Adapt Pharma transactions, as well as non-capitalized costs associated with critical IT systems improvements and higher non-cash compensation expenses associated with the Company’s equity awards program.

Income Taxes

For the nine months of 2018, the provision for income tax expense in the amount of $11.8 million includes a discrete benefit of $8.7 million primarily related to stock compensation activity and finalizing positions taken on the Company’s 2017 US federal and state income tax filings, resulting in an effective tax rate of 15%.

Net Income & Adjusted Net Income

For the nine months of 2018, the Company recorded net income of $66.2 million, or $1.29 per diluted share, versus net income of $48.7 million, or $1.03 per diluted share, in 2017. (1)

For the nine months of 2018, the Company recorded adjusted net income of $81.4 million, or $1.59 per diluted share, versus adjusted net income of $57.8 million, or $1.15 per diluted share, in 2017. (2)

EBITDA & Adjusted EBITDA

For the nine months of 2018, the Company recorded EBITDA of $116.7 million, or $2.28 per diluted share, versus $100.8 million, or $2.01 per diluted share, in 2017. (2)

For the nine months of 2018, the Company recorded adjusted EBITDA of $123.9 million, or $2.42 per diluted share, versus $108.7 million, or $2.17 per diluted share, in 2017. (2)

2018 FINANCIAL FORECAST & OPERATIONAL GOALS

The company is revising its financial forecast for 2018. The revised forecast reflects:

the strength of the organic business performance (excluding acquisitions, financing and other related costs), which is expected to be at the higher end of the previous forecast;
the incremental impact in the fourth quarter of the operations of PaxVax and Adapt Pharma;
a total of approximately $50 million in pre-tax transaction and integration costs, preliminary purchase accounting impacts and additional interest expense related to these recent acquisitions; and
an estimated effective tax rate of approximately 22% to 23%.

The Company is also reaffirming its full year 2018 operational goals.

OPERATIONAL GOAL Status
• Advance NuThrax development to enable Emergency Use Authorization filing with the FDA in 2018 • PPQ lots work in process; EUA submission on track to be filed by year end
• Complete ACAM2000 deliveries and establish a multi-year follow-on contract with the U.S. government • Deliveries on track; Follow-on contract negotiations underway
• Deliver Raxibacumab doses under current contract; advance technology transfer to the Company’s Bayview facility in Baltimore, Maryland • Deliveries on track; Technology transfer on track
• Progress pipeline to have at least four product candidates in advanced development • Completed
• Complete an acquisition that generates revenue within 12 months of closing • Completed

FOOTNOTES

(1) See "Calculation of Diluted Earnings Per Share."
(2) See "Reconciliation of Net Income to Adjusted Net Income, EBITDA and Adjusted EBITDA" for a definition of terms and a reconciliation table.
(3) The Company reintroduced the use of Adjusted EBITDA following the closing of the acquisitions of PaxVax and Adapt Pharma, which excludes additional specified items that can be highly variable and the non-cash impact of certain purchase accounting adjustments, in order to provide a more complete understanding of factors and trends affecting the Company’s business.

CONFERENCE CALL AND WEBCAST INFORMATION

Company management will host a conference call at 5:00 pm (Eastern Time) today, November 1, 2018, to discuss these financial results. This conference call can be accessed live by telephone or through Emergent’s website:

Live Teleconference Information:
Dial in: [US] (855) 766-6521; [International] (262) 912-6157
Conference ID: 93346559
Live Webcast Information:
Visit View Source for the live webcast feed

On November 1, 2018 CTI BioPharma Corp. (NASDAQ:CTIC) reported financial results for the third quarter and nine months ended September 30, 2018 (Press release, CTI BioPharma, NOV 1, 2018, View Source;p=RssLanding&cat=news&id=2374745 [SID1234530509]).

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In October 2018, CTI BioPharma announced the continuation of the PAC203 Phase 2 study without modification, following a planned second interim review by an Independent Data Monitoring Committee (IDMC). The IDMC did not identify significant drug- or dose-related safety concerns and specifically did not identify any concerns around hemorrhagic or cardiac toxicity. A complete dataset from the full enrollment of 150 patients (including efficacy, safety, pharmacokinetic and pharmacodynamic data) will now be used to determine the optimal dose of pacritinib for further clinical development. The PAC203 study is expected to complete enrollment by the end of 2018, with the next planned interim safety review to be conducted in the first quarter of 2019. Top-line data from the study are expected in the second quarter of 2019. The Company has scheduled a Type C meeting with the U.S. Food and Drug Administration (FDA) to take place before the end of the year to discuss the design of a new registrational Phase 3 study of pacritinib in myelofibrosis patients with severe thrombocytopenia (platelet counts of less than 50,000 per microliter). Following the identification of the optimal dose from the PAC203 study, the Company expects to begin Phase 3 patient recruitment mid-year in 2019.

In the third quarter of 2018, the Company submitted comprehensive responses to the Day 180 List of Outstanding Issues from the European Medicines Agency (EMA) regarding the marketing authorization application (MAA) for pacritinib. These responses include new data from the PAC203 trial. The Company expects an opinion from the EMA Committee for Medicinal Products for Human Use (CHMP) on the MAA for pacritinib by the end of 2018.

"We continue to progress with pacritinib development and look forward to our meeting with the FDA to discuss the design of a registrational Phase 3 trial expected to address the needs of myelofibrosis patients with severe thrombocytopenia," commented Adam R. Craig, M.D., Ph.D., President and Chief Executive Officer of CTI BioPharma. "Regarding PAC203, we expect to determine the optimal dose of pacritinib in the first half of 2019 and initiate patient recruitment for the Phase 3 trial in mid-2019, adapting the PAC203 study from a Phase 2 to a Phase 3."

Third Quarter Financial Results
Total revenues for the third quarter and nine months ended September 30, 2018, were $0.7 million and $11.8 million, respectively, compared to $1.7 million and $24.7 million for the respective periods in 2017. The decrease in total revenues for the third quarter in 2018 compared to the same period in 2017 is primarily due to the recognition of license and contract revenue in 2017 related to the achievement of a regulatory milestone under the license and collaboration agreement for PIXUVRI with Servier. The decrease in total revenues for the nine months ended September 30, 2018 compared to the same period in 2017 is primarily due to license and contract revenue that included the recognition of payments received from the expansion of the license and collaboration agreement for PIXUVRI with Servier in 2017.

GAAP operating loss was $14.8 million and $33.1 million for the third quarter and nine months ended September 30, 2018, respectively, compared to GAAP operating loss of $11.8 million and $25.8 million for the respective periods in 2017. Non-GAAP operating loss, which excludes non-cash share-based compensation expense, for the third quarter and nine months ended September 30, 2018, was $12.2 million and $28.2 million, respectively, compared to non-GAAP operating loss of $10.4 million and $21.5 million for the respective periods in 2017. Non-cash share-based compensation expense for the third quarter and nine months ended September 30, 2018, was $2.5 million and $4.9 million, respectively, compared to $1.4 million and $4.3 million for the respective periods in 2017. Operating loss in the third quarter of 2018 as compared to the same period in 2017 resulted primarily from the decrease in license and contract revenue as mentioned above and a decrease in selling, general and administrative expenses. Operating loss for the nine months ended September 30, 2018, as compared to the same period in 2017 resulted primarily from the decrease in license and contract revenue as mentioned above and an increase in research and development expenses. For information on CTI BioPharma’s use of non-GAAP operating loss and a reconciliation of such measure to GAAP operating loss, see the section below titled "Non-GAAP Financial Measures."

Net loss attributable to common stockholders for the third quarter of 2018 was $14.8 million, or $(0.26) per share, compared to $12.0 million, or $(0.28) per share, for the same period in 2017. Net loss attributable to common stockholders for the nine months ended September 30, 2018, was $30.2 million, or $(0.55) per share, compared to a net loss of $30.8 million, or $(0.90) per share, for the same period in 2017.

As of September 30, 2018, cash, cash equivalents and short-term investments totaled $80.9 million, compared to $43.2 million as of December 31, 2017.

Conference Call Information
CTI BioPharma management will host a conference call to review its third quarter 2018 financial results and provide an update on business activities. The event will be held today at 1:30 p.m. PT / 4:30 p.m. ET. Participants can access the call at 877-260-1479 (domestic) or +1 334-323-0522 (international). To access the live audio webcast or the subsequent archived recording, visit www.ctibiopharma.com. Webcast and telephone replays of the conference call will be available approximately two hours after completion of the call. Callers can access the replay by dialing 1-888-203-1112 (domestic) or +1 719-457-0820 (international). The access code for the replay is 4559931. The telephone replay will be available until November 8, 2018.

On November 1, 2018 Constellation Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company using its expertise in epigenetics to discover and develop novel therapeutics, reported that it has received Fast Track designation from the United States Food and Drug Administration (FDA) for CPI-0610 in treatment of myelofibrosis (MF) based on preliminary results from the Company’s Phase 2 study, MANIFEST (Press release, Constellation Pharmaceuticals, NOV 1, 2018, View Source [SID1234530508]).

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Constellation is developing CPI-0610 with the goal of providing a new treatment option for patients with MF who have progressed after treatment with Jakafi (ruxolitinib), the only approved therapy for MF. Enrollment is ongoing in the Phase 2 portion of the open-label Phase 1/2 MANIFEST clinical trial, which is exploring CPI-0610’s potential both as a monotherapy and as a combination therapy with Jakafi. As previously reported, preliminary data demonstrated clinical activity, such as spleen volume reduction, symptom improvement, increase in hemoglobin levels, and conversion to transfusion independent status in a patient who was transfusion dependent. Constellation recently expanded the MANIFEST study to include a third cohort, designed to evaluate CPI-0610 as a first-line therapy in combination with ruxolitinib in JAK 1/2-inhibitor-naïve MF patients.

"We believe there is an opportunity to improve the standard of care for MF patients with agents that modify the underlying disease," said Adrian Senderowicz, Senior Vice President and Chief Medical Officer of Constellation Pharmaceuticals. "This Fast Track designation highlights CPI-0610’s potential to address a significant unmet need. Based on promising early data and our progress with site initiation and patient enrollment, we continue to expect to determine proof of concept in mid-2019."

The FDA grants Fast Track designation to facilitate the development and expedite the review of drugs to treat serious or life-threatening diseases and fill unmet medical needs. A drug that receives Fast Track designation is

eligible for more frequent meetings with the FDA to discuss the drug’s development plan and ensure collection of appropriate data needed to support drug approval, more frequent written communication about the design of the proposed clinical trials and use of biomarkers, eligibility for accelerated approval and priority review, and rolling review.

About Myelofibrosis

MF is part of a collection of progressive blood cancers known as myeloproliferative neoplasms and is associated with significantly reduced quality of life and shortened survival. As the disease progresses, the bone marrow produces fewer red blood cells. Within one year of diagnosis, the incidence of thrombocytopenia (a condition characterized by low platelet counts in the blood) and severe anemia (a condition characterized by low red blood cell counts) and the need for red blood cell transfusion increase significantly. Among other complications, most patients with MF have enlarged spleens, as well as many other physical symptoms, including abdominal discomfort, bone pain, and extreme fatigue.

About CPI-0610

CPI-0610 is a potent and selective small molecule designed to promote anti-tumor activity by selectively inhibiting the function of BET proteins to decrease the expression of abnormally expressed genes in cancer. Constellation’s epigenetics platform includes a deep understanding of the biological contexts in which BET proteins operate, including cancer pathways that are highly sensitive to CPI-0610. The results from preclinical studies, as well as translational insights from the successful first-in-human study of CPI-0610, led to prioritizing the clinical development of CPI-0610 in myelofibrosis (MF). Enrollment is ongoing in the Phase 2 portion of the open-label Phase 1/2 MANIFEST clinical trial of CPI-0610, either as a monotherapy or in combination with ruxolitinib, in patients with MF who are refractory or intolerant or have relapsed or lost response to the standard of care. MANIFEST also includes a third cohort designed to evaluate treatment with CPI-0610 in combination with ruxolitinib as a first-line therapy in JAK 1/2-inhibitor-naïve MF patients. The company expects to determine proof of concept for CPI-0610 in MF in mid-2019.