On October 29, 2020 IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in veterinary diagnostics, veterinary practice software and water microbiology testing, reported third quarter results, as well as business and market condition updates related to the 2019 novel coronavirus (COVID-19) pandemic (Press release, IDEXX Laboratories, OCT 29, 2020, View Source [SID1234569456]).

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Third Quarter Results

The Company reports revenues of $722 million for the third quarter of 2020, an increase of 19% on a reported and 18% on an organic basis. Third quarter results were driven by Companion Animal Group ("CAG") Diagnostics recurring revenue growth of 23% reported and 21% organic, supported by similarly high organic gains in both U.S. and International markets, as well as revenue growth of 18% in the Livestock, Poultry and Dairy ("LPD") business. Third quarter growth benefited by approximately 1% from revenues associated with OPTI Medical Systems COVID-19 human PCR testing. Third quarter results were moderated by constrained new CAG instrument placement levels and lower Water business revenues, reflecting pressures on non-compliance water testing, impacted by factors related to the COVID-19 pandemic.

Earnings per diluted share ("EPS") was $1.69 for the third quarter, representing 36% growth on a reported basis and 47% growth on a comparable constant currency basis, which excludes $0.24 per share impact from an ongoing litigation matter involving a royalty claim under an expired patent license agreement and tax benefits from share-based compensation of $0.18 per share. Comparable constant currency growth measures are non-GAAP financial measures and have been modified to exclude the related operating expense impact of $27.5 million, in addition to share-based compensation tax benefits, as described in our footnotes. EPS results reflected benefits from strong CAG Diagnostics recurring revenue growth, which supported gross margin gains and operating expense leverage, augmented by proactive cost control efforts. Overall operating margins improved 70 basis points on a reported basis compared to prior year levels and 470 basis points on a comparable constant currency basis.

"We are very pleased to report excellent third quarter financial results, which reflect impressive global growth in our CAG business and outstanding efforts by the IDEXX team to support the needs of our customers during a dynamic global pandemic environment," said Jay Mazelsky, the Company’s President and Chief Executive Officer. "We are very encouraged by the sustained strong recovery in pet healthcare, which reinforces our optimism in the long-term growth potential for our companion animal diagnostics business and positions us well to deliver continued strong financial results."

Market Trend and COVID-19 Pandemic Impact Update

Companion animal healthcare markets continued to build on the sharp V-shaped recovery seen in the second quarter globally. U.S. veterinary practices have experienced strong clinical demand benefiting from continued solid non-wellness visit growth, incremental growth from postponed wellness visits and an increase in new patient visits. In the U.S., same-store clinical visit growth sustained at 6% within the third quarter, supported by 3% growth in non-wellness visits and 11% growth in wellness visits, benefiting from pent-up demand. Revenue growth at veterinary practices is also benefiting from higher growth in services, including an increasing utilization of diagnostics, which supported 11% growth in same-store practice revenue in the U.S. in the third quarter. Solid same-store clinical visit gains have continued in October, reflected in 5% same-store clinical visit growth for the two-week period ended October 16. U.S. companion animal practice weekly key metrics are available in the Q3 2020 Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors.

Strong global companion animal market trends have supported exceptional demand for CAG diagnostic products and services. Global CAG Diagnostics recurring revenues sustained their growth at high levels through the third quarter reflected in greater than 20% growth early in the quarter and growth closer to 20% in the later part of the quarter, benefiting in part from pent-up demand for wellness diagnostic testing in the U.S..

These trends are encouraging and reflect the resilience of the pet healthcare market. Potential effects related to ongoing COVID-19 case management efforts are challenging to predict and may pressure future revenues should enhanced social distancing policies and higher infection rates impact veterinary clinic operations in certain regions.

In managing IDEXX businesses, the Company continues to provide high levels of service delivery and product support for customers during this time and maintains high health and safety standards to protect its employees and ensure business continuity. In an effort to continue to protect the health and safety of our workforce and their families and communities, the majority of IDEXX employees continue to work remotely and travel continues to be limited.

Third Quarter Performance Highlights

Companion Animal Group

The Companion Animal Group generated 20% reported and 18% organic revenue growth for the quarter, supported by CAG Diagnostics recurring revenue growth of 23% on a reported and 21% on an organic basis. Growth was similarly high across IDEXX’s major modalities in the third quarter, reflecting continued strong growth in clinical visits and related diagnostic products and services. Overall CAG revenue growth was constrained by lower instrument placements, which improved relative to second quarter trends, but continue to be impacted by COVID-19 related restrictions on access to veterinary practices. Despite these constraints, IDEXX achieved 3,173 premium instrument placements, supporting a 14% expansion of IDEXX’s global premium instrument installed base.

IDEXX VetLab consumables generated 23% reported and 22% organic revenue growth, supported by ongoing expansion of our global premium instrument installed base, continued strong customer retention, increases in testing utilization and moderate net price gains.
Reference laboratory diagnostic and consulting services generated 24% reported and 21% organic revenue growth, led by growth in U.S. markets benefiting from strong market growth including high demand for wellness testing, as well as moderate net price realization and benefits from net new customer additions.
Rapid assay products revenues grew 20% on a reported and organic basis, led by high growth in SNAP 4Dx Plus sales volumes in U.S. markets benefiting from strong overall market conditions including high demand for wellness testing.
Veterinary software, services and diagnostic imaging systems revenues grew 4% on a reported and organic basis, supported by double-digit growth in subscription-based service revenues and strong growth in new veterinary software system placements. Overall growth was moderated by declines in diagnostic imaging systems placements.

Water

Water revenues declined 5% on a reported basis and 4% on an organic basis for the quarter, reflecting continued pressures in non-compliance testing volumes impacted by the COVID-19 pandemic.

Livestock, Poultry and Dairy ("LPD")

LPD revenues grew 18% on a reported and organic basis, driven by strong growth in the Asia Pacific region. LPD results were supported by improvements in core swine testing volumes, continued benefits from African Swine Fever diagnostic testing programs in Asia, and growth in poultry testing. These gains were moderated by lower herd health screening levels, compared to strong prior year results.

Gross Profit and Operating Profit

Gross profits increased 23% on a reported and constant currency basis. Gross margin of 58.5% increased 150 basis points compared to prior year period results on a reported basis and 200 basis points on a constant currency basis. Gross margin results reflected reference laboratory productivity gains on high revenue growth, favorable mix from strong consumable revenue and lower instrument revenue, as well as benefits from moderate price gains.

Operating margin was 23.8% in the quarter, 70 basis points higher than the prior year period results on a reported basis and 470 basis points higher on a comparable constant currency basis, supported by operating expense leverage on stronger than expected revenue growth. Operating expenses increased 22% on a reported basis, reflecting the $27.5 million accrual related to the ongoing litigation noted earlier, and increased 9% on a comparable constant currency basis. Operating expenses in the third quarter included a $10 million contribution to establish the IDEXX Foundation, a donor-advised charitable fund, focused on making a positive impact on our communities. Priorities for the IDEXX Foundation will include supporting education in the veterinary and STEM fields, including advancing diversity, equity and inclusion in animal healthcare. Given the strong recovery in its core CAG business, the Company plans to advance prioritized investments in support of its long-term growth strategy and anticipates sustaining a relatively higher rate of operating expense growth moving forward.

2020 and 2021 Financial Outlook

The Company is maintaining suspension of full-year 2020 guidance due to the unpredictability of potential future impacts from the COVID-19 pandemic and is not providing preliminary 2021 guidance at this time.

Conference Call and Webcast Information

IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (EDT) to discuss its third quarter 2020 results and management’s outlook. To participate in the conference call, dial 1-888- 771-4371 or 1-847-585-4405 and reference confirmation number 49967945. Individuals can access a live webcast of the conference call through a link on the IDEXX website, www.idexx.com/investors. An archived edition of the webcast will be available after 1:00 p.m. (EDT) on that day via the same link and will remain available for one year.

On October 29, 2020 Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) reported that the U.S. Food and Drug Administration (FDA) has accepted for priority review the supplemental Biologics License Application (sBLA) for PD-1 inhibitor Libtayo (cemiplimab-rwlc) to treat patients with first-line locally advanced or metastatic non-small cell lung cancer (NSCLC) with ≥50% PD-L1 expression (Press release, Regeneron, OCT 29, 2020, View Source [SID1234569455]). The target action date for the FDA decision is February 28, 2021.

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The sBLA is supported by results from a Phase 3 open-label, randomized, multi-center trial that investigated the first-line treatment of Libtayo monotherapy compared to platinum-doublet chemotherapy in patients with locally advanced or metastatic NSCLC whose tumor cells expressed PD-L1, including those whose cancers had confirmed PD-L1 expression of ≥50% using the PD-L1 IHC 22C3 pharmDx kit. Results were recently presented at the 2020 European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Virtual Congress in September.

The European Medicines Agency (EMA) is also assessing Libtayo in advanced NSCLC with ≥50% PD-L1 expression and a decision is expected in the second quarter of 2021. Libtayo is the first systemic treatment approved in the U.S. and European Union (EU) for adults with metastatic cutaneous squamous cell carcinoma (CSCC) or locally advanced CSCC who are not candidates for curative surgery or curative radiation.

Libtayo is being jointly developed and commercialized by Regeneron and Sanofi under a global collaboration agreement. The use of Libtayo to treat advanced NSCLC is investigational and has not been fully evaluated by any regulatory authority.

About Non-small Cell Lung Cancer
Lung cancer is the leading cause of cancer death worldwide, with more than 2.2 million new cases expected globally, and 228,000 new cases expected in the U.S. in 2020. Approximately 85% of all lung cancers are NSCLC, and an estimated 25% to 30% of these cases are expected to test positive for PD-L1 in ≥50% of tumor cells. While immunotherapies have transformed advanced NSCLC treatment in recent years, there remains an unmet need to optimize the identification and treatment of patients with high PD-L1 expression and offer additional treatment options.

About Libtayo
Libtayo is a fully-human monoclonal antibody targeting the immune checkpoint receptor PD-1 on T-cells. By binding to PD-1, Libtayo has been shown to block cancer cells from using the PD-1 pathway to suppress T-cell activation.

Libtayo was invented using Regeneron’s proprietary VelocImmune technology that utilizes a genetically-engineered mouse platform endowed with a genetically-humanized immune system to produce optimized fully-human antibodies. VelocImmune technology has been used to create multiple antibodies including Dupixent (dupilumab), Praluent (alirocumab) and Kevzara (sarilumab), which are approved in multiple countries around the world. Regeneron previously used these technologies to rapidly develop a treatment for Zaire ebolavirus infection, which is approved by the FDA, and to create a potentially preventative and therapeutic investigational medicine for COVID-19 that was recently submitted to the FDA for an Emergency Use Authorization (EUA).

The extensive clinical program for Libtayo is focused on difficult-to-treat cancers. In skin cancer, this includes trials in adjuvant and neoadjuvant CSCC in addition to a pivotal trial in advanced basal cell carcinoma. Libtayo is also being investigated in pivotal trials in NSCLC (in combination with chemotherapy) and cervical cancer, as well as in trials combining Libtayo with either conventional or novel therapeutic approaches for both solid tumors and blood cancers. These potential uses are investigational, and their safety and efficacy have not been evaluated by any regulatory authority.

IMPORTANT SAFETY INFORMATION AND INDICATION FOR U.S. PATIENTS

What is Libtayo?
Libtayo is a prescription medicine used to treat people with a type of skin cancer called cutaneous squamous cell carcinoma (CSCC) that has spread or cannot be cured by surgery or radiation.

It is not known if Libtayo is safe and effective in children.

What is the most important information I should know about Libtayo?
Libtayo is a medicine that may treat a type of skin cancer by working with your immune system. Libtayo can cause your immune system to attack normal organs and tissues in any area of your body and can affect the way they work. These problems can sometimes become severe or life-threatening and can lead to death. You can have more than one problem at the same time. These problems may happen anytime during treatment or even after your treatment has ended.

Call or see your healthcare provider right away if you develop any symptoms of the following problems or these symptoms get worse:

Lung problems (pneumonitis). Signs and symptoms of pneumonitis may include new or worsening cough, shortness of breath, and chest pain.
Intestinal problems (colitis) that can lead to tears or holes in your intestine. Signs and symptoms of colitis may include diarrhea (loose stools) or more frequent bowel movements than usual; stools that are black, tarry, sticky or that have blood or mucus; and severe stomach-area (abdomen) pain or tenderness.
Liver problems (hepatitis). Signs and symptoms of hepatitis may include yellowing of your skin or the whites of your eyes, severe nausea or vomiting, pain on the right side of your stomach area (abdomen), drowsiness, dark urine (tea colored), bleeding or bruising more easily than normal, and feeling less hungry than usual.
Hormone gland problems (especially the adrenal glands, pituitary, thyroid and pancreas). Signs and symptoms that your hormone glands are not working properly may include headaches that will not go away or unusual headaches, rapid heartbeat, increased sweating, extreme tiredness, weight gain or weight loss, dizziness or fainting, feeling more hungry or thirsty than usual, hair loss, feeling cold, constipation, deeper voice, very low blood pressure, urinating more often than usual, nausea or vomiting, stomach-area (abdomen) pain, and changes in mood or behavior, such as decreased sex drive, irritability, or forgetfulness.
Kidney problems, including nephritis and kidney failure. Signs of these problems may include decrease in your amount of urine, blood in your urine, swelling in your ankles, and loss of appetite.
Skin problems. Signs of these problems may include rash, itching, skin blistering, and painful sores or ulcers in the mouth, nose, throat, or genital area.
Problems in other organs. Signs of these problems may include headache, tiredness or weakness, sleepiness, changes in heartbeat (such as beating fast, seeming to skip a beat, or a pounding sensation), confusion, fever, muscle weakness, balance problems, nausea, vomiting, stiff neck, memory problems, seizures (encephalitis), swollen lymph nodes, rash or tender lumps on skin, cough, shortness of breath, vision changes, or eye pain (sarcoidosis), seeing or hearing things that are not there (hallucinations), severe or persistent muscle pain, severe muscle weakness, low red blood cells (anemia), bruises on the skin or bleeding, and changes in eyesight.
Rejection of a transplanted organ. Your doctor should tell you what signs and symptoms you should report and monitor you, depending on the type of organ transplant that you have had.
Infusion (IV) reactions that can sometimes be severe and life-threatening. Signs of these problems may include chills or shaking, itching or rash, flushing, shortness of breath or wheezing, dizziness, fever, feeling of passing out, back or neck pain, and facial swelling.
Getting medical treatment right away may help keep these problems from becoming more serious.

Your healthcare provider will check you for these problems during your treatment with Libtayo. Your healthcare provider may treat you with corticosteroid or hormone replacement medicines. Your healthcare provider may delay or completely stop treatment if you have severe side effects.

Before you receive Libtayo, tell your healthcare provider about all your medical conditions, including if you:

have immune system problems such as Crohn’s disease, ulcerative colitis, or lupus;
have had an organ transplant;
have lung or breathing problems;
have liver or kidney problems;
have diabetes;
are pregnant or plan to become pregnant; Libtayo can harm your unborn baby
Females who are able to become pregnant:
Your healthcare provider will give you a pregnancy test before you start treatment.
You should use an effective method of birth control during your treatment and for at least 4 months after your last dose of Libtayo. Talk with your healthcare provider about birth control methods that you can use during this time.
Tell your healthcare provider right away if you become pregnant or think you may be pregnant during treatment with Libtayo.
are breastfeeding or plan to breastfeed. It is not known if Libtayo passes into your breast milk. Do not breastfeed during treatment and for at least 4 months after the last dose of Libtayo.
Tell your healthcare provider about all the medicines you take, including prescription and over- the-counter medicines, vitamins, and herbal supplements.

The most common side effects of Libtayo include tiredness, rash, diarrhea, muscle or bone pain, and nausea. These are not all the possible side effects of Libtayo. Call your doctor for medical advice about side effects. You may report side effects to FDA at 1-800-FDA-1088. You may also report side effects to Regeneron Pharmaceuticals and Sanofi at 1-877-542-8296.

On October 29, 2020 Alkermes plc (Nasdaq: ALKS) reported financial results for the third quarter of 2020 and provided updated financial expectations for full-year 2020 (Press release, Alkermes, OCT 29, 2020, View Source [SID1234569453]).

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"Over the past several months, we achieved a number of important milestones in our development programs against the backdrop of strong commercial execution and disciplined management of our expenses. The positive outcome of the ALKS 3831 FDA Advisory Committee meeting and the presentation of accumulating data for ALKS 4230, including monotherapy responses observed in melanoma, were significant achievements that underscore the potential value of these investigational medicines," said Richard Pops, Chief Executive Officer of Alkermes. "As we look ahead, we will continue to focus on our strategic imperatives: commercial execution, including preparations for the potential launch of ALKS 3831, aggressive development of our pipeline candidates, and efficient management of our operating cost structure, as we position the company for long-term value creation."

Quarter Ended Sept. 30, 2020 Financial Highlights

Total revenues for the quarter were $265.0 million, compared to $255.2 million for the same period in the prior year.
Net loss according to generally accepted accounting principles in the U.S. (GAAP) was $0.1 million for the quarter, or a GAAP net loss per share of $0.00. This compared to GAAP net loss of $52.9 million, or a GAAP net loss per share of $0.34, for the same period in the prior year.
Non-GAAP net income was $41.5 million for the quarter, or a non-GAAP basic and diluted earnings per share of $0.26. This compared to non-GAAP net loss of $7.0 million, or a non-GAAP basic and diluted loss per share of $0.04, for the same period in the prior year.
Quarter Ended Sept. 30, 2020 Financial Results

Revenues

Net sales of proprietary products were $142.7 million, compared to $138.8 million for the same period in the prior year.
Net sales of VIVITROL were $80.3 million, compared to $85.2 million for the same period in the prior year, representing a decrease of 6%, due primarily to COVID-19 pandemic-related disruptions. Sequentially, net sales of VIVITROL increased 12%, driven by increased demand during the quarter.
Net sales of ARISTADAi were $62.4 million, compared to $53.6 million for the same period in the prior year, representing an increase of 16%, driven primarily by continued growth of the ARISTADA provider base and growth of the ARISTADA two-month dose.
Manufacturing and royalty revenues were $120.4 million, compared to $103.8 million for the same period in the prior year.
Manufacturing and royalty revenues from RISPERDAL CONSTA, INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA were $87.9 million, compared to $76.7 million for the same period in the prior year, primarily driven by an increase in royalty revenue from INVEGA SUSTENNA and the timing of manufacturing shipments of RISPERDAL CONSTA.
Costs and Expenses

Total operating expenses were $275.7 million, compared to $308.9 million for the same period in the prior year. This decrease reflects the impact of the restructuring implemented in 2019 and expense management measures in 2020.
Research and Development (R&D) expenses were $95.0 million, compared to $107.7 million for the same period in the prior year.
Selling, General and Administrative (SG&A) expenses were $127.7 million, compared to $148.7 million for the same period in the prior year.
Balance Sheet

At Sept. 30, 2020, Alkermes recorded cash, cash equivalents and total investments of $597.2 million, compared to $539.6 million at June 30, 2020, driven by the company’s operating results and changes in working capital. The company’s total debt outstanding as of Sept. 30, 2020 was $275.5 million under its term loan, which matures in March 2023.
"Our third quarter results reflect strong commercial execution, with the sequential growth of both VIVITROL and ARISTADA net sales within a complex and dynamic COVID-19 market environment. Today, we are pleased to be raising our financial guidance for 2020 to reflect this solid performance. Importantly, expectations for 2020 non-GAAP net income are back in line with the expectations provided in February prior to the impact of COVID-19, primarily due to disciplined management of our expenses," commented James Frates, Chief Financial Officer of Alkermes. "As we approach the end of 2020, we believe we are well-positioned to execute on our strategic imperatives to drive long-term profitability and growth."

Financial Expectations for 2020
The following financial expectations for 2020 are based on recent trends and assume that treatment provider practices and patient access to the company’s commercial products continue to normalize. New COVID-19-related restrictions or a resurgence of COVID-19 could impact the company’s ability to meet these expectations. All line items are according to GAAP, except as otherwise noted.
Recent Events

Psychiatry portfolio
In October 2020, announced positive vote outcomes from the joint meeting of the Psychopharmacologic Drugs Advisory Committee and the Drug Safety and Risk Management Advisory Committee, appointed by the U.S. Food and Drug Administration (FDA), on questions relating to ALKS 3831 for the treatment of adults with schizophrenia and for the treatment of adults with bipolar I disorder. The joint advisory committee’s recommendations, while not binding, will be considered by the FDA in its review of the ALKS 3831 New Drug Application (NDA). The Prescription Drug User Fee Act (PDUFA) target action date for the ALKS 3831 NDA is Nov. 15, 2020.
In September 2020, presented new real-world outcomes research and clinical data related to Alkermes’ psychiatry portfolio at the Psych Congress 2020 Virtual Experience, including new outcomes research that analyzed treatment challenges of second-generation antipsychotics, such as weight gain and treatment interruptions, for patients living with schizophrenia or bipolar I disorder.
In August 2020, announced the publication in the peer-reviewed American Journal of Psychiatry of results from the phase 3 ENLIGHTEN-2 clinical trial of ALKS 3831. ENLIGHTEN-2 was a six-month study evaluating the weight gain profile of ALKS 3831 compared to olanzapine in 561 patients with stable schizophrenia. Positive topline data from the ENLIGHTEN-2 study were first reported in November 2018.
ALKS 4230
In September 2020, presented new clinical data updates from ARTISTRY-1, an ongoing phase 1/2 study evaluating Alkermes’ investigational engineered interleukin-2 variant immunotherapy, ALKS 4230, administered intravenously as monotherapy and in combination with the PD-1 inhibitor pembrolizumab in patients with refractory solid tumors, at the 2020 European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Virtual Congress. The company also announced the expansion of the ARTISTRY-1 monotherapy melanoma cohort based on the achievement of protocol-defined efficacy response criteria.
In August 2020, announced the initiation of ARTISTRY-3, a phase 2 study evaluating the clinical and immunologic effects of ALKS 4230 monotherapy administered intravenously on the tumor microenvironment in a variety of advanced, malignant solid tumors.
Conference Call
Alkermes will host a conference call and webcast presentation with accompanying slides at 8:00 a.m. ET (12:00 p.m. GMT) on Thursday, Oct. 29, 2020, to discuss these financial results, financial expectations, and provide an update on the company. The webcast may be accessed on the Investors section of Alkermes’ website at www.alkermes.com. The conference call may be accessed by dialing +1 877 407 2988 for U.S. callers and +1 201 389 0923 for international callers. In addition, a replay of the conference call will be available from 11:00 a.m. ET (3:00 p.m. GMT) on Thursday, Oct. 29, 2020, through Thursday, Nov. 5, 2020, and may be accessed by visiting Alkermes’ website or by dialing +1 877 660 6853 for U.S. callers and +1 201 612 7415 for international callers. The replay conference ID is 13712082.

On October 229, 2020 Rigel Pharmaceuticals, Inc. (Nasdaq: RIGL) reported that it will report its third quarter 2020 financial results after market close on Thursday, November 5, 2020 (Press release, Rigel, OCT 29, 2020, View Source [SID1234569452]). Rigel senior management will follow the announcement with a live conference call and webcast at 4:30pm Eastern Time (1:30pm Pacific Time) to discuss the financial results and give an update on the business.

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Participants can access the live conference call by dialing 1-800-954-0603 (domestic) or 1-415-226-5355 (international). The conference call and accompanying slides will also be webcast live and can be accessed from the Investor Relations section of the company’s website at www.rigel.com. The webcast will be archived and available for replay for 90 days after the call via the Rigel website.

On October 29, 2020 Insmed Incorporated (Nasdaq: INSM), a global biopharmaceutical company on a mission to transform the lives of patients with serious and rare diseases, reported financial results for the third quarter ended September 30, 2020, and provided a business update (Press release, Insmed, OCT 29, 2020, View Source [SID1234569449]).

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"I am pleased to report on a very productive third quarter for Insmed as we made significant progress across our programs while maintaining ARIKAYCE performance in the U.S. amidst the ongoing pandemic," commented Will Lewis, Chair and Chief Executive Officer of Insmed. "Driven by the efforts of a world-class team, we reached several critical milestones for ARIKAYCE, including marketing authorization in the European Union, approval of an sNDA that adds meaningful efficacy data to our U.S. label, and continued advancement of our frontline clinical program. Importantly, we also advanced plans to initiate a global, registrational Phase 3 study of brensocatib in NCFBE and initiated a Phase 1 study of TPIP. As we look ahead to 2021, we believe we are well-positioned to carry this momentum forward and execute on our goals."

Third Quarter 2020 Financial Results

Total revenue for the third quarter ended September 30, 2020, was $43.6 million, comprising U.S. net sales of $42.0 million and ex-U.S. net sales of $1.6 million. This compares to total revenue of $38.9 million for the third quarter of 2019.
Cost of product revenues (excluding amortization of intangible assets) was $10.6 million for the third quarter of 2020, compared to $6.4 million for the third quarter of 2019.
Research and development (R&D) expenses were $41.4 million for the third quarter of 2020, compared to $34.3 million for the third quarter of 2019.
Selling, general, and administrative (SG&A) expenses for the third quarter of 2020 were $46.6 million, compared to $53.3 million for the third quarter of 2019.
For the third quarter of 2020, Insmed reported a GAAP net loss of $63.7 million, or $0.63 per share, compared to a GAAP net loss of $60.7 million, or $0.68 per share, for the third quarter of 2019.
Recent Corporate Developments & Program Highlights

ARIKAYCE Global Advancement

On October 28, 2020, Insmed announced that the European Commission (EC) had granted marketing authorization for ARIKAYCE Liposomal 590 mg Nebuliser Dispersion for the treatment of nontuberculous mycobacterial (NTM) lung infections caused by Mycobacterium avium complex (MAC) in adults with limited treatment options who do not have cystic fibrosis (CF). Consideration should be given to official guidance on the appropriate use of antibacterial agents. The Company plans to launch ARIKAYCE first in Germany, with the United Kingdom and other European markets to follow, subject to local reimbursement processes.

In Japan, Insmed continues to anticipate launching ARIKAYCE in the middle of 2021, pending approval of its new drug application for the treatment of patients with NTM lung disease caused by MAC who did not sufficiently respond to prior treatment.

ARIKAYCE Label Expansion

On October 19, 2020, the U.S. Food and Drug Administration (FDA) approved an sNDA for ARIKAYCE, adding important efficacy data regarding the durability and sustainability of culture conversion to the ARIKAYCE label. The data, which are from the Phase 3 CONVERT study of ARIKAYCE, demonstrate that the addition of ARIKAYCE to guideline-based therapy (GBT) was associated with sustained culture conversion through the end of treatment as well as durable culture conversion three months post-treatment compared with GBT alone.

Insmed also continues to advance plans to pursue regulatory approval of ARIKAYCE as a front-line therapy for patients with MAC lung disease. The Company plans to initiate two clinical trials in the fourth quarter of 2020 that will be conducted in parallel: ENCORE, a pivotal study intended to fulfill the post-marketing requirement to allow full approval of ARIKAYCE in the U.S., and ARISE, an interventional study designed to validate the patient-reported outcome (PRO) tool that will be used to measure efficacy in ENCORE.

Brensocatib Advancement

In September 2020, data from the Phase 2 WILLOW study of brensocatib in patients with NCFBE were published online in the New England Journal of Medicine and presented during a late-breaking session at the European Respiratory Society International Congress 2020.

Insmed remains on track to initiate its planned registrational Phase 3 ASPEN trial of brensocatib in patients with NCFBE by the end of 2020. The Company has also announced plans to advance a clinical development program for brensocatib in patients with CF.

TPIP Advancement

In September 2020, Insmed announced that it had initiated a Phase 1 healthy volunteer trial of TPIP in the United States. The objective of this first-in-human single ascending dose and multiple ascending dose study is to assess the pharmacokinetics and tolerability profile of TPIP. Four dosing strengths have now been completed. Top-line data from the full Phase 1 study are expected in the first quarter of 2021 and the Company has announced plans to initiate a Phase 2a study in patients with pulmonary arterial hypertension (PAH) in early 2021.

Balance Sheet

As of September 30, 2020, Insmed had cash and cash equivalents of $588.8 million. The Company’s total operating expenses for the third quarter of 2020 were $89.2 million. Adjusted operating expenses, a non-GAAP measure defined below, for the third quarter of 2020 were $76.8 million.

The Company plans to continue investing in the following key activities in 2020:

(i)

U.S. commercialization of ARIKAYCE;

(ii)

clinical trial activities, including (a) initiation of ENCORE, the pivotal study intended to allow full approval of ARIKAYCE in the U.S. and, in parallel, ARISE, the interventional study to validate the PRO tool that will be used in ENCORE, (b) initiation of the Phase 3 ASPEN study of brensocatib in patients with NCFBE, and (c) the advancement of TPIP; and

(iii)

expansion in Japan and Europe to support pre-commercial activities for ARIKAYCE in Japan and launch activities for ARIKAYCE in initial European countries.

Conference Call

Insmed will host a conference call beginning today at 8:30 AM Eastern Time. Shareholders and other interested parties may participate in the conference call by dialing (833) 340-0284 (domestic) or (236) 712-2425 (international) and referencing conference ID number 8292364. The call will also be webcast live on the Company’s website at www.insmed.com.

A replay of the conference call will be accessible approximately two hours after its completion through November 12, 2020 by dialing (800) 585-8367 (domestic) or (416) 621-4642 (international) and referencing conference ID number 8292364. A webcast of the call will also be archived for 90 days under the Investor Relations section of the Company’s website at www.insmed.com.

Non-GAAP Financial Measures

In addition to the U.S. generally accepted accounting principles (GAAP) results, this earnings release includes adjusted operating expenses, a non-GAAP financial measure, which Insmed defines as total operating expenses less stock-based compensation expense, depreciation, amortization of intangibles and certain milestones related to ARIKAYCE, which are payable under our amended agreements with Cystic Fibrosis Foundation Therapeutics, Inc. (CFFT). A reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure is presented in the table attached to this press release.

Management believes that this non-GAAP financial measure is useful to both management and investors in analyzing our ongoing business and operating performance. Management believes that providing this non-GAAP information to investors, in addition to the GAAP results, allows investors to view our financial results in the way that management views financial results. Management does not intend the presentation of this non-GAAP financial measure to be considered in isolation or as a substitute for results prepared in accordance with GAAP. In addition, this non-GAAP financial measure may differ from similarly named measures used by other companies.

About ARIKAYCE

ARIKAYCE is approved in the United States as ARIKAYCE (amikacin liposome inhalation suspension) and in the EU as ARIKAYCE Liposomal 590 mg Nebuliser Dispersion. Current international treatment guidelines recommend the use of ARIKAYCE for appropriate patients. ARIKAYCE is a novel, inhaled, once-daily formulation of amikacin, an established antibiotic that was historically administered intravenously and associated with severe toxicity to hearing, balance, and kidney function. Insmed’s proprietary PULMOVANCE liposomal technology enables the delivery of amikacin directly to the lungs, where liposomal amikacin is taken up by lung macrophages where the infection resides, while limiting systemic exposure. ARIKAYCE is administered once daily using the Lamira Nebulizer System manufactured by PARI Pharma GmbH (PARI).

About PARI Pharma and the Lamira Nebulizer System

ARIKAYCE is delivered by a novel inhalation device, the Lamira Nebulizer System, developed by PARI. Lamira is a quiet, portable nebulizer that enables efficient aerosolization of ARIKAYCE via a vibrating, perforated membrane. Based on PARI’s 100-year history working with aerosols, PARI is dedicated to advancing inhalation therapies by developing innovative delivery platforms and new pharmaceutical formulations that work together to improve patient care.

About Brensocatib

Brensocatib is a small molecule, oral, reversible inhibitor of dipeptidyl peptidase 1 (DPP1) being developed by Insmed for the treatment of patients with non-cystic fibrosis bronchiectasis (NCFBE) and other neutrophil-mediated diseases. DPP1 is an enzyme responsible for activating neutrophil serine proteases (NSPs), such as neutrophil elastase, in neutrophils when they are formed in the bone marrow. Neutrophils are the most common type of white blood cell and play an essential role in pathogen destruction and inflammatory mediation. In chronic inflammatory lung diseases, neutrophils accumulate in the airways and result in excessive active NSPs that cause lung destruction and inflammation. Brensocatib may decrease the damaging effects of inflammatory diseases such as bronchiectasis by inhibiting DPP1 and its activation of NSPs.

IMPORTANT SAFETY INFORMATION FOR ARIKAYCE IN THE U.S.

WARNING: RISK OF INCREASED RESPIRATORY ADVERSE REACTIONS

ARIKAYCE has been associated with an increased risk of respiratory adverse reactions, including hypersensitivity pneumonitis, hemoptysis, bronchospasm, and exacerbation of underlying pulmonary disease that have led to hospitalizations in some cases.

Hypersensitivity Pneumonitis has been reported with the use of ARIKAYCE in the clinical trials. Hypersensitivity pneumonitis (reported as allergic alveolitis, pneumonitis, interstitial lung disease, allergic reaction to ARIKAYCE) was reported at a higher frequency in patients treated with ARIKAYCE plus background regimen (3.1%) compared to patients treated with a background regimen alone (0%). Most patients with hypersensitivity pneumonitis discontinued treatment with ARIKAYCE and received treatment with corticosteroids. If hypersensitivity pneumonitis occurs, discontinue ARIKAYCE and manage patients as medically appropriate.

Hemoptysis has been reported with the use of ARIKAYCE in the clinical trials. Hemoptysis was reported at a higher frequency in patients treated with ARIKAYCE plus background regimen (17.9%) compared to patients treated with a background regimen alone (12.5%). If hemoptysis occurs, manage patients as medically appropriate.

Bronchospasm has been reported with the use of ARIKAYCE in the clinical trials. Bronchospasm (reported as asthma, bronchial hyperreactivity, bronchospasm, dyspnea, dyspnea exertional, prolonged expiration, throat tightness, wheezing) was reported at a higher frequency in patients treated with ARIKAYCE plus background regimen (28.7%) compared to patients treated with a background regimen alone (10.7%). If bronchospasm occurs during the use of ARIKAYCE, treat patients as medically appropriate.

Exacerbations of underlying pulmonary disease has been reported with the use of ARIKAYCE in the clinical trials. Exacerbations of underlying pulmonary disease (reported as chronic obstructive pulmonary disease (COPD), infective exacerbation of COPD, infective exacerbation of bronchiectasis) have been reported at a higher frequency in patients treated with ARIKAYCE plus background regimen (14.8%) compared to patients treated with background regimen alone (9.8%). If exacerbations of underlying pulmonary disease occur during the use of ARIKAYCE, treat patients as medically appropriate.

Anaphylaxis and Hypersensitivity Reactions: Serious and potentially life-threatening hypersensitivity reactions, including anaphylaxis, have been reported in patients taking ARIKAYCE. Signs and symptoms include acute onset of skin and mucosal tissue hypersensitivity reactions (hives, itching, flushing, swollen lips/tongue/uvula), respiratory difficulty (shortness of breath, wheezing, stridor, cough), gastrointestinal symptoms (nausea, vomiting, diarrhea, crampy abdominal pain), and cardiovascular signs and symptoms of anaphylaxis (tachycardia, low blood pressure, syncope, incontinence, dizziness). Before therapy with ARIKAYCE is instituted, evaluate for previous hypersensitivity reactions to aminoglycosides. If anaphylaxis or a hypersensitivity reaction occurs, discontinue ARIKAYCE and institute appropriate supportive measures.

Ototoxicity has been reported with the use of ARIKAYCE in the clinical trials. Ototoxicity (including deafness, dizziness, presyncope, tinnitus, and vertigo) were reported with a higher frequency in patients treated with ARIKAYCE plus background regimen (17%) compared to patients treated with background regimen alone (9.8%). This was primarily driven by tinnitus (7.6% in ARIKAYCE plus background regimen vs 0.9% in the background regimen alone arm) and dizziness (6.3% in ARIKAYCE plus background regimen vs 2.7% in the background regimen alone arm). Closely monitor patients with known or suspected auditory or vestibular dysfunction during treatment with ARIKAYCE. If ototoxicity occurs, manage patients as medically appropriate, including potentially discontinuing ARIKAYCE.

Nephrotoxicity was observed during the clinical trials of ARIKAYCE in patients with MAC lung disease but not at a higher frequency than background regimen alone. Nephrotoxicity has been associated with the aminoglycosides. Close monitoring of patients with known or suspected renal dysfunction may be needed when prescribing ARIKAYCE.

Neuromuscular Blockade: Patients with neuromuscular disorders were not enrolled in ARIKAYCE clinical trials. Patients with known or suspected neuromuscular disorders, such as myasthenia gravis, should be closely monitored since aminoglycosides may aggravate muscle weakness by blocking the release of acetylcholine at neuromuscular junctions.

Embryo-Fetal Toxicity: Aminoglycosides can cause fetal harm when administered to a pregnant woman. Aminoglycosides, including ARIKAYCE, may be associated with total, irreversible, bilateral congenital deafness in pediatric patients exposed in utero. Patients who use ARIKAYCE during pregnancy, or become pregnant while taking ARIKAYCE should be apprised of the potential hazard to the fetus.

Contraindications: ARIKAYCE is contraindicated in patients with known hypersensitivity to any aminoglycoside.

Most Common Adverse Reactions: The most common adverse reactions in Trial 1 at an incidence ≥5% for patients using ARIKAYCE plus background regimen compared to patients treated with background regimen alone were dysphonia (47% vs 1%), cough (39% vs 17%), bronchospasm (29% vs 11%), hemoptysis (18% vs 13%), ototoxicity (17% vs 10%), upper airway irritation (17% vs 2%), musculoskeletal pain (17% vs 8%), fatigue and asthenia (16% vs 10%), exacerbation of underlying pulmonary disease (15% vs 10%), diarrhea (13% vs 5%), nausea (12% vs 4%), pneumonia (10% vs 8%), headache (10% vs 5%), pyrexia (7% vs 5%), vomiting (7% vs 4%), rash (6% vs 2%), decreased weight (6% vs 1%), change in sputum (5% vs 1%), and chest discomfort (5% vs 3%).

Drug Interactions: Avoid concomitant use of ARIKAYCE with medications associated with neurotoxicity, nephrotoxicity, and ototoxicity. Some diuretics can enhance aminoglycoside toxicity by altering aminoglycoside concentrations in serum and tissue. Avoid concomitant use of ARIKAYCE with ethacrynic acid, furosemide, urea, or intravenous mannitol.

Overdosage: Adverse reactions specifically associated with overdose of ARIKAYCE have not been identified. Acute toxicity should be treated with immediate withdrawal of ARIKAYCE, and baseline tests of renal function should be undertaken. Hemodialysis may be helpful in removing amikacin from the body. In all cases of suspected overdosage, physicians should contact the Regional Poison Control Center for information about effective treatment.

U.S. INDICATION

LIMITED POPULATION: ARIKAYCE is indicated in adults, who have limited or no alternative treatment options, for the treatment of Mycobacterium avium complex (MAC) lung disease as part of a combination antibacterial drug regimen in patients who do not achieve negative sputum cultures after a minimum of 6 consecutive months of a multidrug background regimen therapy. As only limited clinical safety and effectiveness data for ARIKAYCE are currently available, reserve ARIKAYCE for use in adults who have limited or no alternative treatment options. This drug is indicated for use in a limited and specific population of patients.

This indication is approved under accelerated approval based on achieving sputum culture conversion (defined as 3 consecutive negative monthly sputum cultures) by Month 6. Clinical benefit has not yet been established. Continued approval for this indication may be contingent upon verification and description of clinical benefit in confirmatory trials.

Limitation of Use: ARIKAYCE has only been studied in patients with refractory MAC lung disease defined as patients who did not achieve negative sputum cultures after a minimum of 6 consecutive months of a multidrug background regimen therapy. The use of ARIKAYCE is not recommended for patients with non-refractory MAC lung disease.

Patients are encouraged to report negative side effects of prescription drugs to the FDA. Visit www.fda.gov/medwatch, or call 1–800–FDA–1088. You can also call the Company at 1-844-4-INSMED.