On August 17, 2020 WuXi Biologics (Cayman) Inc. ("WuXi Biologics" or "the Group," stock code: 2269.HK), a leading global open-access biologics technology platform company offering end-to-end solutions for biologics discovery, development and manufacturing, reported its unaudited interim results for the six months ended June 30, 2020 (Press release, WuXi Biologics, AUG 17, 2020, View Source [SID1234563729]).

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2020 Interim Financial Highlights

Revenue: Achieved strong revenue growth of 21.0% year-on-year to RMB1,944.1 million despite the adverse impact of COVID-19, which caused two months of low productivity and a loss of revenue due to the delay of the regulatory inspection and global clinical trials. During this difficult time, the Group not only fulfilled previous commitments to our customers without missing any key project milestones, but also actively engaged in developing potential treatments for COVID-19, adding more than 10 COVID-19 projects within three months. This fully demonstrates how the Group’s leading technology platforms, competitive development timeline, and excellent track record have contributed to increased market share.
Gross profit and gross profit margin: Despite the ramp-up of three new manufacturing facilities and the adverse impact of COVID-19, gross profit increased by 17.3% year-on-year to RMB787.3 million, achieving an excellent gross profit margin of 40.5%. The strong growth of gross profit was attributable to the Group’s robust increase in the number of integrated projects, improved capacity utilization, operational efficiency and cost optimization at our existing sites, and the favourable impact from the appreciation of USD against RMB, partially offset by the increase of share-based compensation (SBC) costs.
Net profit, profit attributable to owners of the Company and net profit margin: Net profit grew by 62.6% year-on-year to RMB730.7 million, with net profit margin up by 960 basis points to 37.6%. By excluding the minority interest of the loss from its non-wholly owned subsidiaries, profit attributable to owners of the Company grew by 63.6% year-on-year to RMB736.1 million. Besides the robust results achieved in revenue and gross profit mentioned above, the following components also contributed to the significant growth of net profit: gains from investments and foreign exchange fluctuations; income tax refunds; other non-operating income recorded.
Adjusted net profit increased by 40.7% year-on-year to RMB734.0 million, with adjusted net profit margin up 540 basis points to 37.8%.
Diluted Earnings Per Share (EPS) increased by 55.9% from RMB0.34 to RMB0.53.
Adjusted diluted EPS increased by 38.5% from RMB0.39 to RMB0.54.
2020 Interim Operational Highlights

Despite experiencing the COVID-19 pandemic during the reporting period and facing significant business development challenges, the Group continued to gain more market share and recorded remarkable growth in the number of integrated projects. From June 30, 2019 to June 30, 2020, the number of projects increased from 224 to 286, in which late-phase (phase III) projects increased from 15 to 19.
Total backlog grew significantly from US$5,102 million as of December 31, 2019 to US$9,464.0 million as of June 30, 2020, with service backlog surging from US$1,686.0 million as of December 31, 2019 to US$5,773.0 million as of June 30, 2020. This was mainly driven by the signing of a long-term vaccine manufacturing contract and the addition of COVID-19 projects.
Four projects were transferred from global competitors, demonstrating that the value of the Group’s integrated enabling platform has been recognized by customers. Two of four projects are late-phase projects which will further establish a solid foundation for future commercial manufacturing. In addition, the Group signed the first commercial manufacturing project at the recently acquired Drug Product (DP) facility in Germany.
Amidst the pandemic, the Group received an increased number of inquiries for both regular discovery, development and manufacturing service in addition to the global COVID-19 neutralization antibody programs. The Group secured more than 10 COVID-19 projects within only three months, thus providing revenue upsides for the second half of this year and throughout 2021. The Group also successfully enabled three COVID-19 antibody IND filings during the reporting period and we will assist customers in bringing even more COVID-19 therapeutics into the clinic throughout the second half of this year.
The Group further shortened the standard IND project timeline from 15 months to 12 months, and as short as 2.5 months for a COVID-19 project. Providing these expedited project development timelines benefit patients around the world and offer another demonstration of how our extensive capacity and capabilities enable our clients and partners to bring novel biologics to the clinic and beyond.
The WuXiBody bispecific platform and the Group’s antibody-drug conjugates (ADC) platform were utilized by our customers and contributed to the Group’s growth. As of June 30, 2020, the WuXiBody platform has been used in 26 projects, and there are 30 ADC projects in development. These technology platforms will facilitate the Group’s expansion into more strategic collaborations with customers and better implement our "Follow-the-Molecule" strategy.
WuXi Vaccines, the Group’s subsidiary that serves as a vaccine contract development and manufacturing organization (CDMO), signed an approximately US$3 billion long-term manufacturing contract with a global vaccine leader and commenced the construction of a dedicated vaccine facility in Ireland. Vaccine CDMO is one of the next growth areas for the Group and will contribute substantially with expanded opportunities in the future.
The Group’s facility in Suzhou has received the European Medicines Agency (EMA) Good Manufacturing Practices (GMP) certificate, making the Group one of the few third-party biosafety testing providers certified by the EMA in China and the Asia-Pacific region.
As a global company, the Group continued to implement its "Global Dual Sourcing within WuXi Bio" strategy through various investments around the world. During the reporting period, the Group announced two biopharmaceutical clinical and manufacturing facilities in the U.S. and completed the acquisition of a biologics drug product (DP) manufacturing facility in Germany. These efforts helped the Group more effectively expand its global footprint and enable partners to develop and manufacture biologics via our industry leading supply chain.
The Group completed the weather-tight seal of its biologics drug substance (DS) manufacturing facility in Ireland only 10 months after initiating the facility’s construction. This timeline is another testament of our ability to construct facilities at "WuXi Bio Speed".
Despite the uncertainties of the COVID-19 pandemic, the Group’s business remained strong but it did not hinder our ability to retain and increase our talent base. As of June 30, 2020, the Group’s total number of employees reached 5,694, with over 2,400 scientists.
The Group will be included into the Hang Seng Index (HSI) in September 2020 only three years after its listing. This remarkable achievement makes the Group one of only three healthcare companies among HSI 50 constituents.
Employees’ safety and wellbeing are top priorities for the Group. During the initial outbreak of COVID-19 in China, the Group activated the Business Continuity Plan (BCP) and offered comprehensive solutions to ensure smooth business operations and to progress projects without missing milestones. As a result, a total of 38 new integrated projects have been added to the pipeline, including more than 10 COVID-19 related projects, which allowed the group to gain more market share. The Group’s advanced innovative technology platforms continued to play a significant role in enabling more partners, contributing more milestone payments and introducing more projects into the "Follow-the-Molecule" strategy.

Continues to Strengthen Technology Platforms to Better Enable Partners around the World

As an enabling platform, WuXi Biologics continues to improve its multiple technology platforms to expedite biologics discovery, development and manufacturing and enable our partners worldwide. The Group’s various technology platforms reinforce our industry-leading position, help increase market share and drive sustainable future growth.

The Group’s WuXiBodyTM bispecific antibody platform and ADC platform have quickly gained global market acceptance since their debut. As of June 30, 2020, the Group has secured 30 ADC projects and 26 WuXiBodyTM projects globally, reflecting customers’ recognition of the Group’s innovative technologies. Among the 30 ADC projects in the pipeline, 14 have reached IND stage, which will be the next wave of the global biologics innovation.

As one of the most efficient and high quality development platforms in the industry, the Group continued to challenge the business norm and further reduced the standard IND project timeline from 15 months to 12 months, and broke the industry record again with a 2.5-month timeline for a COVID-19 IND project. These competitive timelines validate our best-in-class technology platform and our ability to execute at a high level, which solidifies our industry-leading position.

WuXi Vaccines Begins to Unveil its Potential, Another High-growth Engine

Focusing on vaccine CDMO, WuXi Vaccines, a subsidiary of the Group, established a strategic partnership with a global vaccine leader by signing a 20-year vaccine production and supply contract at a total consideration of approximately US$3 billion. A WuXi Vaccines facility is under construction in Ireland to manufacture vaccines for the global market.

This strategic partnership has a historical significance for WuXi Biologics as it kicks off a new cooperation model for the global vaccine industry. This also marked the first important milestone just a year after the Group entered the vaccine business. The vaccine CDMO subsidiary is expected to witness enormous development opportunities and will thus continue to drive sustainable high growth for the Group.

Accelerates Global Footprints via Facility Expansion in the U.S. and Europe

As a global company, the Group continued to accelerate its global development by expanding its presence in the U.S. and Europe. The global capacity expansion allowed the Group to quickly respond to customers’ demands and cope with the market demands raised by unexpected challenges, such as COVID-19. The Group acquired a manufacturing facility in Germany and also expanded labs, clinical and manufacturing facilities in U.S., allowing it to better implement its "Global Dual Sourcing within WuXi Bio", namely to offer quality services to global customers and serve patients through a robust supply chain.

Construction of the main building of the Group’s biologics manufacturing site in Ireland was completed within ten months of its commencement. This manufacturing facility will house a 6,000L perfusion bioreactor (MFG6) thus pioneering the adoption of "next generation biologics production technology" (continuous manufacturing). In addition, the site will house 48,000L fed-batch cell culture bioreactor capacity (MFG7). Both MFG6 and MFG7 will implement the Group’s "scale-out" manufacturing paradigm by using single-use bioreactors for large-scale commercial manufacturing.

WuXi Biologics completed the acquisition of Bayer’s final drug product manufacturing facility in Leverkusen, Germany. This is also the Group’s second manufacturing facility in Europe.

As part of further expansion in the U.S. market, WuXi Biologics purchased a parcel of land to build a new commercial manufacturing facility in Worcester, Massachusetts, leased a 33,000-square-foot site to establish a process development lab in King of Prussia, Pennsylvania, and signed a 10-year lease for a clinical manufacturing facility in Cranbury, New Jersey. These sites will facilitate the Group’s positioning to build an open-access platform with the most comprehensive capabilities and technologies in the global biologics industry that can enable partners and benefit patients worldwide.

Actively Embraces Change and Turns Challenges into Opportunities

Faced with the COVID-19 pandemic, the Group promptly responded and leveraged its well-established BCP to bring business back to normal. The Group focused on keeping its employees safe and supporting our global customers’ work from home, while ensuring that projects progressed. The Group received high satisfaction from customers and this in turn improved even further customer retention. In addition, the Group made great contributions to the treatment and prevention of COVID-19 globally and witnessed rising demand for its outsourcing services due to the Group’s demonstrated timely response and extensive capacity and capabilities. The Group mobilized a dedicated R&D and manufacturing team with over 1,000 people and initiated projects on Chinese New Year’s Eve to enable the development of potential treatments for COVID-19.

Dr. Chris Chen, CEO of WuXi Biologics, said, "COVID-19 continues to challenge all of us in the global community, bringing great suffering to so many as well as an uncertain global economic outlook. WuXi Biologics also suffered from the pandemic that lead to two-month of low productivity and loss of revenue due to the delay of the regulatory inspection and global clinical trials. However, thanks to dedications from our employees and trust from our global customers, the Group delivered impressive performance which is beyond our expectations. Besides, the Group was selected as a constituent of HSI only three years after our listing, thus marking another great milestone for the Group. During the first half of 2020, WuXi Biologics delivered all key milestones for our global customers and took strong measures to enhance operational efficiency throughout the company. Our business relationships with our global customers significantly improved due to our strong project execution and performance during the worse period of the COVID-19 pandemic in China. Furthermore, we signed over 10 global COVID-19 neutralization mAb programs, allocated over 1,000 staff to work on these urgent programs and successfully enabled our partners to submit three COVID-19 antibody INDs within 3-5 months, at global record pace. As China recovered from the pandemic and due to an already booming innovative drug development trend in the domestic market, we have seen outstanding revenue growth in China. North America remains our most important market despite revenue growth slowdown due to the impact of the pandemic. The twelve newly added integrated projects from North America demonstrates that our business momentum from this market remains strong. Our industry-leading speed of execution and world-class quality has allowed us to win more customers from these established markets. Meanwhile, we have seen substantial growth from the rest of the world that also contributed to our overall business growth from these diversified markets. During this critical period, we leveraged our enabling platform to help our customers work from home and progress various projects to later stages. We broke another record by adding 38 integrated projects to our pipeline in the first six months of 2020. Our "Follow-the-molecule" strategy continues to be a proven driving force in maintaining our business momentum and in delivering sustainable high growth."

Dr. Chris Chen added, "By leveraging the Group’s world leading technology and excellent, highly-trained talent pool, the Group continues to shorten the R&D timeline and reduce manufacturing costs for customers. The disruptions caused by this pandemic have highlighted the need for extensive manufacturing capacities throughout the globe world and a robust global supply chain. Our strategy of establishing dual manufacturing sites worldwide in the past 3 years puts our customers in the most favourable situation during this unexpected crisis. Together, we can turn challenges into opportunities. Our capacity expansions in the U.S. and Europe will enable the Group to capture new opportunities, meet increasing demands from existing clients and attract potential business partners. Our integrated platform has been well accepted by our global customers who, by giving us new projects, demonstrates their faith in our ability to execute and deliver. This faith in our ability to deliver is witnessed as well by the increase in late-phase projects that went from 15 to 19 during this reporting period. The WuXiBody bispecific platform and ADC platform continue to play a significant role and drive additional growth. Furthermore, the contract signed by WuXi Vaccines and a global vaccine leader marks a huge leap in the vaccine CDMO business and delivers another driver of growth. With cutting-edge technology platforms, global capacity expansions, premier quality standards, experienced scientific teams and a proven track record, we are confident in achieving sustainable high growth in the foreseeable future."

Dr. Ge Li, Chairman of WuXi Biologics, concluded: "The COVID-19 pandemic has made this year challenging with unprecedented impact. The global communities are in urgent need of treatments to address the greatest health challenges posed by the pandemic. This is the reason we are investing approximately US$1 billion and continue to expand our capacities in U.S., Ireland and Germany to enable our global customers and partners for their drug discovery and development efforts and ultimately to benefit patients worldwide. We have made great strides over the past years and even throughout this difficult time to ultimately reach our vision of ‘Every drug can be made and every disease can be treated’."

2020 Interim Results

Revenue increased by 21.0% year-on-year to RMB1,944.1 million for the six months ended June 30, 2020. The major revenue growth drivers were: (i) immediate and effective implementation of Business Continuity Plan to minimize the impact of the COVID-19 pandemic on its business and operations; (ii) strong growth in development and manufacturing revenue resulting from improved utilization of existing sites; and (iii) more customer projects were added to the Group’s pipeline, expediting the development and manufacturing of potential treatments related to COVID-19 in support of its global customers.

Gross Profit increased by 17.3% to RMB787.3 million for the six months ended June 30, 2020. During the late second half of 2019, we commenced the production at three new sites, allowing the Group to gain new capabilities and capacities for biologics and antibody drug conjugates and a new state-of-the-art drug product fill facility. Despite the ramp-up of new facilities and the adverse impact from COVID-19, our gross profit continued to increase by 17.3% year-on-year to RMB787.3 million, achieving an excellent gross profit margin of 40.5%. The strong growth in gross profit was attributable to: (i) the Group’s robust increase in the number of integrated projects and improvement in capacity utilization, (ii) operational efficiency and cost optimization at our existing manufacturing facilities, (iii) favourable impact from the appreciation of USD against RMB, and (iv) partially offset by the ramp-up costs of newly commenced production sites and the increase of share-based compensation costs.

Operating Profit increased by 6.6% year-on-year to RMB411.1 million. The growth rate of operating profit was slightly slower than the growth of gross profit, mainly due to: (i) the increase of staff related costs and administrative expenses to support the set-up of new sites in the U.S. and Europe and the Group’s expansion into new business such as vaccines, antibody drug conjugates (ADC) production and microbial, (ii) to strengthen the Group’s corporate infrastructures such as IT infrastructure and enterprise solutions; and (iii) the Group’s continuous efforts to enhance the capability of the business development team.

Net Profit surged by 62.6% year-on-year to RMB730.7 million for the six months ended June 30, 2020, with net profit margin up 960 basis points to 37.6% for the first half of 2020. The significant increase in net profit margin was primarily attributable to (i) the Group’s robust increase in the number of integrated projects and, as a result, strong growth in revenue and gross profit; (ii) gains from investments and foreign exchange fluctuation; (iii) income tax refund; and (iv) partially offset by the increase of administrative expenses mentioned above and impairment provision recorded for doubtful accounts.

Adjusted Net Profit, by excluding the impact of (i) foreign exchange gain, and (ii) share-based compensation costs, increased by 40.7% year-on-year to RMB734.0 million for the first half of 2020. Adjusted net profit margin went up 540 basis points from 32.4% for the first half of 2019 to 37.8% of same period this year.

Basic and Diluted EPS were RMB0.57 and RMB0.53, increasing 54.1% and 55.9% year-on-year respectively.

Adjusted Diluted EPS increased by 38.5% year-on-year to RMB0.54.

On August 17, 2020 China Biologic Products Holdings, Inc. (NASDAQ: CBPO, "China Biologic" or the "Company"), a leading fully integrated plasma-based biopharmaceutical company in China, reported its unaudited financial results for the second quarter of 2020 (Press release, China Biologic Products, AUG 17, 2020, View Source [SID1234563728]).

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Second Quarter 2020 Financial Highlights

Total sales in the second quarter of 2020 decreased by 14.9% in RMB terms and 18.1% in USD terms to $111.1 million from $135.7 million in the same quarter of 2019.
Gross profit decreased by 16.0% to $76.4 million from $90.9 million in the same quarter of 2019. Gross margin increased to 68.8% from 67.0% in the same quarter of 2019.
Income from operations decreased by 11.4% to $42.7 million from $48.2 million in the same quarter of 2019. Operating margin increased to 38.4% from 35.5% in the same quarter of 2019.
Non-GAAP adjusted income from operations decreased by 5.8% in RMB terms and 9.3% in USD terms to $51.4 million from $56.7 million in the same quarter of 2019.
Net income attributable to the Company decreased by 14.2% to $35.7 million from $41.6 million in the same quarter of 2019. Diluted earnings per share decreased to $0.91 compared to $1.06 in the same quarter of 2019.
Non-GAAP adjusted net income attributable to the Company decreased by 7.2% in RMB terms and 10.9% in USD terms to $43.4 million from $48.7 million in the same quarter of 2019. Non-GAAP adjusted earnings per diluted share decreased to $1.11 from $1.24 in the same quarter of 2019.
NOTE: Detailed financial statements and information are available through this link: View Source

"In line with our previous estimates, our revenue and net income declined during the second quarter reflecting the combined impact of the ongoing COVID-19 pandemic and our adjusted sales focus," said Joseph Chow, Chairman and CEO of China Biologic. "Although a decline in demand and an increase in supply have led to increased competition in our core markets, and while many hospitals are maintaining strict precautionary measures against the pandemic which limits our promotional activities, we have gained market share across most of our major products within direct sales channels. For certain major products in our distribution channels, we are taking a conservative approach in order to better align inventory with market demand for the second half of 2020. "

"We continue to focus on optimizing the efficiency of our distribution network and lowering our credit exposure by eliminating smaller non-performing distributors, evidenced by our continued improvement in accounts receivable turnover, which is quite important during this difficult time amid COVID-19. We are also implementing online enterprise management and logistics systems as we adjust our operational strategies to adapt to the challenging new environment. These measures together with our efforts to reduce operating costs have helped us to further improve our operating margin. We are also exploring more channels to improve overall plasma supply and fill the gap in both internal collection and outsourced plasma volumes. We will continue to make every effort to maintain our track record of providing high-quality products to our patients, investing in new product development, and bringing better healthcare to society."

Recent Updates

Obtained Approval to Build a New Collection Station

In April 2020, China Biologic received approval from the Health Commission of Shandong Province to build a new plasma collection station in Yangxin County, Binzhou City of Shandong Province.

Coagulation Factor IX Approved for Manufacturing

In July 2020, China Biologic received the certificate of approval for manufacturing coagulation factor IX. The Company began the clinical trial in 2017 for this first-to-market plasma-based product in China, which will further improve China Biologic’s plasma fractionation utilization and contribute to its long-term financial growth. China Biologic has begun manufacturing coagulation factor IX and expects to launch the product in the third quarter of 2020.

Huitian’s Manufacturing Permit Revoked

In July 2020, Xi’an Huitian Blood Products Co., Ltd. ("Huitian"), a PRC company in which China Biologic holds an indirect minority equity interest, received an administrative order from the Shaanxi Medical Products Administration revoking Huitian’s pharmaceutical manufacturing permit due to its failure to meet certain good manufacturing practice standards in its production of pharmaceutical products.

Huitian is a plasma products company based in Xi’an, Shaanxi Province, and China Biologic indirectly holds 35% of its equity interest. The Company records its equity investment in Huitian as equity in income of equity method investee in the Company’s consolidated statements of comprehensive income. In 2017, 2018 and 2019, such equity in income of equity method investee was $3.5 million, $2.4 million and $1.6 million, respectively, accounting for 5.2%, 1.8% and 1.1%, respectively, of the total net income attributable to China Biologic.

Conference Call

The Company will host a conference call at 7:30 am Eastern Time on Tuesday, August 18, which is 7:30 p.m. Beijing Time on August 18, 2020, to discuss its second quarter 2020 results and answer questions from investors. Listeners may access the call by dialing:

A telephone replay will be available one hour after the conclusion of the conference all through August 25, 2020. The dial-in details are:

A live and archived webcast of the conference call will be available through the Company’s investor relations website at View Source

On August 17, 2020 Oita Chuo Pacific Management have commented on Sanofi S.A. reported that agreeing to acquire U.S. biotech firm Principia Biopharma Inc. in a deal worth $3.4 billion, as the French drug manufacturer shifts towards innovative treatments to boost growth under latest Chief Executive Officer Paul Hudson (Press release, Principia Biopharma, AUG 17, 2020, View Source [SID1234563724]).

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According to data collected by Oita Chuo Pacific Management, the all-cash-deal will see Sanofi take full ownership of the company, which focuses on therapies for multiple sclerosis and a host of autoimmune conditions.

"Sanofi has agreed to pay $100 per share, which represents a 10% premium over Principia’s closing price on Friday, which this year climbed almost 66%. The cumulative equity value of the deal is estimated at $3.7 billion," commented Head of Wealth Management at Oita Chuo Pacific Management, Jonathan Marshall. "Shares in Sanofi were up 0.5% early Monday in Paris," he added.

The acquisition is this year’s second-largest pharmaceutical deal following Gilead Sciences Inc agreeing to purchase cancer therapy maker Forty Seven Inc. for $4.9 billion in March, and will provide Sanofi with a pipeline of drugs known as BTK inhibitors which are produced to treat autoimmune conditions. Hudson is aiming to reshape the Paris-based company by focusing on rapidly-expanding areas with which innovative medicines are commanding higher prices.

The move follows the pharmaceutical giants promise in December to purchase Synthorx Inc. for $2.5 billion. Hudson revealed a new strategy for the company late last year, announcing it would conclude its search for new diabetes and heart disease medicines, helping save over $2 billion, and concentrate on innovation-ready areas such as cancer.

With this deal, Sanofi will secure drugs, including the BTK inhibitor SAR442168 for multiple sclerosis and other diseases of the central nervous system. In February, patients with multiple sclerosis were found to have benefited in Phase 2 trials, which led Hudson to say the therapy could target half of the $20 billion market for incurable disease therapies.

Headquartered in San Francisco, Principia is producing a therapy called Rilzabrutinib for the treatment of immune-system conditions and is evaluating the use of the medicine in patients with pemphigus, a group of rare diseases that cause skin and mucous membrane blistering.

"Through this acquisition, Sanofi will be able to grow and intensify the development of BTK inhibitors across multiple indications. Principia is a perfect match for Sanofi," commented Michael Knight, Head of Corporate Equities at Oita Chuo Pacific Management.

After announcing the disposal of its stake in Regeneron Pharmaceuticals Inc., Sanofi could potentially spend up to $50 billion on further acquisitions, including targeted cancer and gene therapy technologies.

On August 17, 2020 Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), reported that the Journal of Clinical Oncology has published results from its Phase 1 study of QINLOCK, the Company’s switch-control tyrosine kinase inhibitor, in patients with second-line through fourth-line plus gastrointestinal stromal tumor (GIST) (Press release, Deciphera Pharmaceuticals, AUG 17, 2020, View Source [SID1234563723]). The article, entitled "Switch control inhibition of KIT and PDGFRA in patients with advanced gastrointestinal stromal tumor (GIST): a phase 1 study of ripretinib," is now available online and will be published in a future print issue of Journal of Clinical Oncology.

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"QINLOCK continues to demonstrate encouraging clinical benefit in earlier lines of treatment following imatinib therapy," said Matthew L. Sherman, MD, Executive Vice President and Chief Medical Officer of Deciphera. "We believe that these positive results strongly support the ongoing INTRIGUE pivotal Phase 3 study, which is our registration-enabling study in patients with second-line GIST. We are committed to unlocking the full potential of QINLOCK to benefit patients and look forward to completion of enrollment in the INTRIGUE study, expected later this year."

The publication highlighted results from the Company’s ongoing Phase 1 study of ripretinib in patients with second-line through fourth-line plus GIST. These published results are from 142 GIST patients receiving 150 mg of ripretinib once daily (QD) as the starting dose, which is the dose utilized in both of the Company’s registration-enabling trials, INVICTUS and the ongoing INTRIGUE study, as of an August 31, 2019 data cutoff date. Results were consistent with those previously presented at the 2019 AACR (Free AACR Whitepaper)-NCI-EORTC AACR-NCI-EORTC (Free AACR-NCI-EORTC Whitepaper) International Conference on Molecular Targets and Cancer Therapeutics (EORTC-NCI-AACR) (Free ASGCT Whitepaper) (Free EORTC-NCI-AACR Whitepaper).

The table below includes local, investigator-assessed objective response rate (ORR) by best response as determined by Response Evaluation Criteria in Solid Tumors (RECIST) version 1.1, median duration of response, and median progression free survival (mPFS).

Line of Therapy

2nd Line
(n=31)

3rd Line
(n=28)

≥4th Line
(n=83)

ORR (confirmed responses only)

19.4%

14.3%

7.2%

Median Duration of Response

18.4 months

NE(1)

17.5 months

mPFS

10.7 months

8.3 months

5.5 months

(1) NE = not estimable.

Ripretinib was generally well tolerated with adverse events consistent with previously presented Phase 1 data in patients with GIST. Grade 3 or 4 treatment-emergent adverse events (TEAEs) in >5% of patients were increase in lipase level (n=25; 18%), anemia (n=10; 7%), hypertension (n=8; 6%) and abdominal pain (n=13; 9%).

About QINLOCK (ripretinib)

QINLOCK is a switch-control tyrosine kinase inhibitor that was engineered to broadly inhibit KIT and PDGFRα mutated kinases by using a unique dual mechanism of action that regulates the kinase switch pocket and activation loop. QINLOCK inhibits primary and secondary KIT mutations in exons 9, 11, 13, 14, 17, and 18 involved in GIST, as well as the primary exon 17 D816V mutation involved in systemic mastocytosis, or SM. QINLOCK also inhibits primary PDGFRα mutations in exons 12, 14, and 18, including the exon 18 D842V mutation, involved in a subset of GIST.

QINLOCK is approved by the U.S. FDA for the treatment of adult patients with advanced GIST who have received prior treatment with 3 or more kinase inhibitors, including imatinib. It is also approved by Health Canada for the treatment of adult patients with advanced GIST who have received prior treatment with imatinib, sunitinib, and regorafenib and by the Australian Therapeutic Goods Administration for the treatment of adult patients with advanced GIST who have received prior treatment with 3 or more kinase inhibitors, including imatinib.

Deciphera Pharmaceuticals is developing QINLOCK for the treatment of KIT and/or PDGFRα-driven cancers, including GIST, SM, and other cancers. Deciphera Pharmaceuticals has an exclusive license agreement with Zai Lab (Shanghai) Co., Ltd. for the development and commercialization of QINLOCK in Greater China (Mainland China, Hong Kong, Macau, and Taiwan). Deciphera Pharmaceuticals retains development and commercial rights for QINLOCK in the rest of the world.

U.S. Indication and Important Safety Information About QINLOCK

Indications and Usage

QINLOCK (ripretinib) is a kinase inhibitor indicated for the treatment of adult patients with advanced gastrointestinal stromal tumor (GIST) who have received prior treatment with 3 or more kinase inhibitors, including imatinib. For more information visit QINLOCK.com.

Important Safety Information

There are no contraindications for QINLOCK.

Palmar-plantar erythrodysesthesia syndrome (PPES): In INVICTUS, Grade 1-2 PPES occurred in 21% of the 85 patients who received QINLOCK. PPES led to dose discontinuation in 1.2% of patients, dose interruption in 2.4% of patients, and dose reduction in 1.2% of patients. Based on severity, withhold QINLOCK and then resume at same or reduced dose.

New Primary Cutaneous Malignancies: In INVICTUS, cutaneous squamous cell carcinoma (cuSCC) occurred in 4.7% of the 85 patients who received QINLOCK with a median time to event of 4.6 months (range 3.8 to 6 months). In the pooled safety population, cuSCC and keratoacanthoma occurred in 7% and 1.9% of 351 patients, respectively. In INVICTUS, melanoma occurred in 2.4% of the 85 patients who received QINLOCK. In the pooled safety population, melanoma occurred in 0.9% of 351 patients. Perform dermatologic evaluations when initiating QINLOCK and routinely during treatment. Manage suspicious skin lesions with excision and dermatopathologic evaluation. Continue QINLOCK at the same dose.

Hypertension: In INVICTUS, Grade 1-3 hypertension occurred in 14% of the 85 patients who received QINLOCK, including Grade 3 hypertension in 7% of patients. Do not initiate QINLOCK in patients with uncontrolled hypertension. Monitor blood pressure as clinically indicated. Based on severity, withhold QINLOCK and then resume at same or reduced dose or permanently discontinue.

Cardiac Dysfunction: In INVICTUS, cardiac failure occurred in 1.2% of the 85 patients who received QINLOCK. In the pooled safety population, cardiac dysfunction (including cardiac failure, acute left ventricular failure, diastolic dysfunction, and ventricular hypertrophy) occurred in 1.7% of 351 patients, including Grade 3 adverse reactions in 1.1% of patients.

In INVICTUS, Grade 3 decreased ejection fraction occurred in 2.6% of the 77 patients who received QINLOCK and who had a baseline and at least one post-baseline echocardiogram. Grade 3 decreased ejection fraction occurred in 3.4% of the 263 patients in the pooled safety population who received QINLOCK and who had a baseline and at least one post-baseline echocardiogram.

In INVICTUS, cardiac dysfunction led to dose discontinuation in 1.2% of the 85 patients who received QINLOCK. The safety of QINLOCK has not been assessed in patients with a baseline ejection fraction below 50%. Assess ejection fraction by echocardiogram or MUGA scan prior to initiating QINLOCK and during treatment, as clinically indicated. Permanently discontinue QINLOCK for Grade 3 or 4 left ventricular systolic dysfunction.

Risk of Impaired Wound Healing: QINLOCK has the potential to adversely affect wound healing. Withhold QINLOCK for at least 1 week prior to elective surgery. Do not administer for at least 2 weeks following major surgery and until adequate wound healing. The safety of resumption of QINLOCK after resolution of wound healing complications has not been established.

Embryo-Fetal Toxicity: QINLOCK can cause fetal harm when administered to a pregnant woman. Advise pregnant women of the potential risk to a fetus. Advise females of reproductive potential and males with female partners of reproductive potential to use effective contraception during treatment and for at least 1 week after the final dose. Because of the potential for serious adverse reactions in the breastfed child, advise women not to breastfeed during treatment and for at least 1 week after the final dose. QINLOCK may impair fertility in males of reproductive potential.

Adverse Reactions: The most common adverse reactions (≥20%) were alopecia, fatigue, nausea, abdominal pain, constipation, myalgia, diarrhea, decreased appetite, PPES, and vomiting. The most common Grade 3 or 4 laboratory abnormalities (≥4%) were increased lipase and decreased phosphate.

The safety and effectiveness of QINLOCK in pediatric patients have not been established.

Administer strong CYP3A inhibitors with caution. Monitor patients who are administered strong CYP3A inhibitors more frequently for adverse reactions. Avoid concomitant use with strong CYP3A inducers.

Please click here to see the full U.S. Prescribing Information for QINLOCK.

About the INVICTUS Phase 3 Study

INVICTUS is a Phase 3 randomized, double-blind, placebo-controlled, international, multicenter clinical study evaluating the safety, tolerability, and efficacy of QINLOCK compared to placebo in patients with advanced GIST whose previous therapies have included imatinib, sunitinib, and regorafenib. Patients were randomized 2:1 to either 150 mg of QINLOCK or placebo once daily. The primary efficacy endpoint is progression-free survival (PFS) as determined by independent radiologic review using modified Response Evaluation Criteria in Solid Tumors (RECIST). The median PFS in the study was 6.3 months compared to 1.0 month in the placebo arm and significantly reduced the risk of disease progression or death by 85% (hazard ratio of 0.15, p<0.0001). Secondary endpoints as determined by independent radiologic review using modified RECIST include Objective Response Rate (ORR) and Overall Survival (OS). QINLOCK demonstrated an ORR of 9.4% compared with 0% for placebo (p =0.0504). QINLOCK also demonstrated a median OS of 15.1 months compared to 6.6 months in the placebo arm and reduced the risk of death by 64% (hazard ratio of 0.36).

About GIST

Gastrointestinal stromal tumor (GIST) is a cancer affecting the digestive tract or nearby structures within the abdomen, most often presenting in the stomach or small intestine. GIST is the most common sarcoma of the gastrointestinal tract, with approximately 4,000 to 6,000 new GIST cases each year in the United States and a similar incidence rate in European and other countries. Most cases of GIST are driven by a spectrum of mutations. The most common primary mutations are in KIT kinase, representing approximately 80% of cases, or in PDGFRα kinase, representing approximately 6% of cases. Current therapies are unable to inhibit the full spectrum of primary and secondary mutations, which drives resistance and disease progression. Estimates for 5-year survival range from 48% to 90%, depending on the stage of the disease at diagnosis.

On August 17, 2020 Gilead Sciences, Inc. (Nasdaq: GILD) and Tango Therapeutics reported an expanded strategic collaboration focused on the discovery, development and commercialization of innovative targeted immune evasion therapies for patients with cancer (Press release, Gilead Sciences, AUG 17, 2020, View Source [SID1234563722]).

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Under the expanded multi-year collaboration, which builds on an agreement signed in 2018, Tango will continue to leverage its proprietary, CRISPR-enabled functional genomics target discovery platform to identify novel immune evasion targets. The number of targets covered will expand from five to 15. Gilead will have options to worldwide rights for programs directed at these targets over the next seven years. Gilead will also have the right to pay option extension fees for Tango to lead activities through early clinical development, to which Gilead will retain its option rights. Tango will have the option to co-develop and co-promote the lead products for up to five programs in the United States.

"Since we signed the original agreement two years ago, we have been very pleased with the productivity of the collaboration and with the quality of scientific discovery that has come from this partnership," said William A. Lee, PhD, Executive Vice President of Research at Gilead Sciences. "We are looking forward to working with Tango to run additional cancer context dependent screens to identify a broader set of targets based on our immuno-oncology strategy."

"Gilead has been a valuable strategic partner and strong scientific collaborator and we look forward to advancing programs beyond target validation under this expanded collaboration," said Barbara Weber, MD, President and Chief Executive Officer of Tango Therapeutics. "The productivity of our platform allows us to generate multiple targets for the collaboration while continuing to discover and develop targets independently, with the shared goal of bringing transformational therapies to patients."

The collaboration excludes Tango’s lead programs, including one program that is expected to be in investigational new drug (IND) applicatation-enabling studies next year. Tango also retains the rights to identify targets outside the immune evasion space as it continues to build its wholly owned pipeline.

Under the terms of the collaboration, Gilead will make a $125 million upfront payment to Tango and a $20 million equity investment in the company. In addition, Gilead will have the right to option up to 15 programs over the seven-year collaboration for up to $410 million per program in opt-in, extension and milestone payments. Tango will also be eligible to receive up to low double-digit tiered royalties on net sales. For those products that Tango opts to co-develop and co-promote, the parties will equally split profits and losses, as well as development costs, in the U.S., and Tango will be eligible to receive milestone payments and royalties on ex-U.S. sales.