On October 25, 2022 "Novartis reported a solid third quarter, with strong YTD operational performance. Our six in-market growth drivers with multi-billion sales potential (Cosentyx, Entresto, Zolgensma, Kisqali, Kesimpta, Leqvio) grew 23% in the quarter and now represent 33% of total IM sales (Press release, Novartis, OCT 25, 2022, View Source,%25%20cc%20(%2D1%25%20USD) [SID1234622352]). Pluvicto and Scemblix launches are progressing well and we are awaiting data in earlier lines of therapy. We announced the planned separation of Sandoz by way of a 100% spin-off, creating the #1 European generics company and a global leader in biosimilars. Looking ahead, we are confident in delivering growth and margin expansion through our new focused "pure-play" Innovative Medicines strategy, underpinned by our five core TAs, technology platforms, priority geographies and a deep, value-oriented pipeline."

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Strategy Update

Our focus

Novartis unveiled a new focused strategy with our transformation into a "pure-play" Innovative Medicines business. We have a clear focus on five core therapeutic areas (cardiovascular, immunology, neuroscience, solid tumors and hematology), with multiple significant in-market and pipeline assets in each of these areas, that address high disease burden and have substantial growth potential. In addition to two established technology platforms (chemistry and biotherapeutics), three emerging platforms (gene & cell therapy, radioligand therapy, and xRNA) are being prioritized for continued investment into new R&D capabilities and manufacturing scale. Geographically, we are focused on growing in our priority geographies – the US, China, Germany and Japan.

Our priorities

Accelerate growth: Renewed attention to deliver high-value medicines (NMEs) and focus on launch excellence, with a rich pipeline across our core therapeutic areas.
Deliver returns: Continuing to embed operational excellence and deliver improved financials. Novartis remains disciplined and shareholder-focused in our approach to capital allocation, with substantial cash generation and a strong capital structure supporting continued flexibility.
Strengthening foundations: Unleashing the power of our people, scaling data science and technology and continuing to build trust with society.

Sandoz strategic review

Novartis concluded the strategic review of Sandoz, announcing a proposed 100% spin-off of Sandoz, its generics and biosimilars division into a new publicly traded standalone company. We believe that the 100% spin-off is in the best interest of shareholders and consistent with the Novartis strategy of focusing as a leading medicines company. The planned spin-off allows Sandoz to leverage its strong brand and sustain its leading global position by continuing to invest in the key strategic areas of Biosimilars, Antibiotics and Generic Medicines. Completion of the transaction is subject to certain conditions, including consultation with works councils and employee representatives (as required), general market conditions, tax rulings and opinions, final Board of Directors endorsement and shareholder approval in line with Swiss corporate law. The transaction is expected to be tax neutral to Novartis.

Sandoz CEO designate announcement

In anticipation of the intended Sandoz spin-off, Richard Saynor, will be appointed CEO designate of Sandoz and step down from the Executive Committee of Novartis with immediate effect. He will continue to report directly to Vas Narasimhan and lead the Sandoz division.

Financials

Third quarter

Net sales were USD 12.5 billion (-4%, +4% cc) in the third quarter, driven by volume growth of 11 percentage points, price erosion of 4 percentage points and the negative impact from generic competition of 3 percentage points.

Operating income was USD 2.2 billion (-33%, -23% cc), mainly due to higher impairments (USD 0.5 billion) and higher restructuring costs (USD 0.4 billion) primarily related to the implementation of the previously announced streamlined organizational model.

Net income was USD 1.6 billion (-43%, -33% cc), mainly due to lower operating income. Excluding the impact of Roche income, net income declined -27% (cc). EPS was USD 0.73 (-41%, -31% cc). Excluding the impact of Roche income, EPS declined -25% (cc).

Core operating income was USD 4.3 billion (-4%, +5% cc), mainly driven by higher sales, partly offset by higher R&D and M&S investments. Core operating income margin was 34.1% of net sales, decreasing by 0.2 percentage points (+0.2 percentage points cc).

Core net income was USD 3.4 billion (-11%, -2% cc), as growth in core operating income was more than offset by the loss of Roche core income. Excluding the impact of Roche core income, core net income grew +7% (cc). Core EPS was USD 1.58 (-8%, +1% cc), benefiting from lower weighted average number of shares outstanding. Excluding the impact of Roche core income, core EPS grew +10% (cc).

Free cash flow amounted to USD 4.2 billion (-6% USD), compared to USD 4.4 billion in the prior year quarter, mainly due to lower operating income adjusted for non-cash items.

Innovative Medicines net sales were USD 10.3 billion (-3%, +4% cc) with volume contributing 12 percentage points to growth. Sales growth was mainly driven by continued strong performance from Entresto, Kesimpta, Kisqali, Cosentyx, and the Pluvicto launch. Generic competition had a negative impact of 4 percentage points, mainly due to Afinitor/Votubia, Gilenya (ex-US), Gleevec/Glivec and Exjade. Pricing had a negative impact of 4 percentage points. Sales in the US were USD 4.1 billion (+8%) and in the rest of the world USD 6.2 billion (-9%, +2% cc).

Sandoz net sales were USD 2.2 billion (-7%, +4% cc) with volume contributing 10 percentage points to growth. Pricing had a negative impact of 6 percentage points. Sales in Europe were USD 1.2 billion (-13%, +1% cc), in the US USD 435 million (-1%) and in the rest of the world USD 647 million (+4%, +14% cc). Global sales of Biopharmaceuticals grew to USD 533 million (+1%, +14% cc) partly benefiting from a one-time revenue deduction adjustment.

Nine months

Net sales were USD 37.9 billion (-1%, +5% cc) in the first nine months, driven by volume growth of 12 percentage points, price erosion of 4 percentage points and the negative impact from generic competition of 3 percentage points.

Operating income was USD 7.2 billion (-21%, -13% cc), mainly due to higher impairments (USD 0.7 billion), higher restructuring costs (USD 0.6 billion) primarily related to the implementation of the previously announced streamlined organizational model and lower divestment gains (USD 0.5 billion).

Net income was USD 5.5 billion (-29%, -20% cc), mainly due to lower operating income. Excluding the impact of Roche income, net income declined -12% (cc). EPS was USD 2.50 (-27%, -19% cc). Excluding the impact of Roche income, EPS declined -10% (cc).

Core operating income was USD 12.6 billion (-1%, +6% cc), mainly driven by higher sales, partly offset by higher R&D and M&S investments. Core operating income margin was 33.4% of net sales, increasing by 0.1 percentage points (+0.5 percentage points cc).

Core net income was USD 10.1 billion (-8%, -1% cc), as growth in core operating income was offset by the loss of Roche core income. Excluding the impact of Roche core income, core net income grew +8% (cc). Core EPS was USD 4.60 (-6%, +2% cc), benefiting from lower weighted average number of shares outstanding. Excluding the impact of Roche core income, core EPS grew +11% (cc).

Free cash flow amounted to USD 8.4 billion (-18% USD), compared to USD 10.3 billion in the prior year period, mainly due to lower divestment proceeds, unfavorable changes in working capital and the loss of Roche annual dividend (prior year USD 0.5 billion).

Innovative Medicines net sales were USD 30.9 billion (-1%, +5% cc) with volume contributing 12 percentage points to growth. Sales growth was mainly driven by continued strong performance from Entresto, Kesimpta, Cosentyx and Kisqali. Generic competition had a negative impact of 3 percentage points, mainly due to Afinitor/Votubia, Gleevec/Glivec, Gilenya (ex-US), Exjade, and Exforge. Pricing had a negative impact of 4 percentage points. Sales in the US were USD 11.7 billion (+6%) and in the rest of the world USD 19.2 billion (-5%, +4% cc).

Sandoz net sales were USD 6.9 billion (-3%, +6% cc) with volume contributing 13 percentage points to growth. Pricing had a negative impact of 7 percentage points. Sales in Europe were USD 3.6 billion (-7%, +5% cc), in the US USD 1.3 billion (-1%) and in the rest of the world USD 2.0 billion (+6%, +12% cc). Sales growth benefited from a strong cough and cold season and a return towards normal business dynamics in the first half of the year. Global sales of Biopharmaceuticals grew to USD 1.6 billion (+1%, +11% cc).

Q3 key growth drivers

Underpinning our financial results in the quarter is a continued focus on key growth drivers (ranked in order of cc contribution to Q3 growth) including:

Entresto (USD 1,135 million, +31% cc) sustained robust demand-led growth in the US, Europe and Japan, with increased patient share across all geographies
Kesimpta (USD 289 million, +172% cc) strong sales growth mainly driven by US launch momentum
Kisqali (USD 327 million, +49% cc) grew strongly across all geographies based on increasing recognition of OS and quality of life benefits in HR+/HER2- advanced breast cancer
Cosentyx (USD 1,274 million, +7% cc) continued volume growth in China, Europe and the US
Pluvicto (USD 80 million) launch progressing well, with more than 120 active centers ordering
Tafinlar + Mekinist (USD 450 million, +16% cc) grew across all geographies, driven by demand in BRAF+ adjuvant melanoma and NSCLC indications
Scemblix (USD 41 million) strong launch uptake demonstrating the high unmet need in CML
Promacta/Revolade (USD 523 million, +7% cc) growth was driven mainly by the US, with increased use in chronic ITP and 1L for severe aplastic anemia
Leqvio (USD 34 million) launch in the US and other markets is ongoing, with focus on patient on-boarding, removing access hurdles and enhancing medical education
Ilaris (USD 272 million, +10% cc) continued growth across all geographies
Mayzent (USD 94 million, +29% cc) sales grew in MS patients showing signs of progression
Piqray (USD 103 million, +26% cc) sales grew mainly in the US, benefiting from indication expansion into PIK3CA-related overgrowth spectrum (PROS)
Lutathera (USD 132 million, +15% cc) saw strong growth across all geographies, with approximately 500 centers actively treating patients globally
Jakavi (USD 386 million, +4% cc) grew mainly in Emerging Growth Markets and Japan, driven by strong demand in myelofibrosis and polycythemia vera
Sandoz Biopharmaceuticals (USD 533 million, +14% cc) continued to grow across all geographies, partly benefiting from a one-time revenue deduction adjustment
Emerging Growth Markets* Overall, grew +9% (cc); China delivered growth (+5% cc, USD 832 million) despite continued COVID-19 related lockdowns in the quarter
*All markets except the US, Canada, Western Europe, Japan, Australia, and New Zealand

R&D update – key developments from the third quarter

New approvals

Scemblix Approved in the EU for adult patients with Philadelphia chromosome-positive CML in chronic phase, previously treated with two or more tyrosine kinase inhibitors
Regulatory updates

Biosimilar natalizumab FDA and EMA accepted sBLA/MAA for proposed first-of-a-kind multiple sclerosis biosimilar natalizumab. The application includes all indications of the reference medicine Tysabri (natalizumab)
Biosimilar adalimumab FDA accepted for review sBLA for high concentration formulation of biosimilar Hyrimoz (adalimumab-adaz). The application includes the indications of the reference medicine Humira (adalimumab) not protected by orphan exclusivity
Ganaplacide/ Lumefantrine FDA granted Fast Track Designation and Orphan Drug Designation for ganaplacide and lumefantrine (combination), which is being co-developed with Medicines for Malaria Venture, for acute, uncomplicated malaria
Results from ongoing trials and other highlights

Iptacopan

In October, Ph3 APPLY-PNH trial met its two primary endpoints for superiority vs anti-C5 treatment in adult paroxysmal nocturnal hemoglobinuria (PNH) patients with residual anemia despite prior anti-C5 treatment
Cosentyx Positive results from two parallel, pivotal Ph3 trials (SUNSHINE and SUNRISE) demonstrated Cosentyx 300 mg resulted in rapid and sustained relief from signs and symptoms of moderate-to-severe hidradenitis suppurativa (HS). A statistically significant proportion of patients achieved HiSCR with Cosentyx 300 mg dosed every two weeks vs placebo at Week 16 in both trials. Cosentyx 300 mg dosed every four weeks was superior to placebo for achieving HiSCR in SUNRISE, but not statistically significantly different in SUNSHINE. Available data support the sustained efficacy delivered by Cosentyx over continuous treatment up to 52 weeks. Safety results were consistent with the well-established Cosentyx safety profile. Data presented at EADV 2022
Kisqali New large pooled exploratory analysis from MONALEESA-2, -3 and -7 reinforces OS benefit (median OS of 63.4 months) with Kisqali + endocrine therapy (ET) vs ET alone (median OS of 51.8 months), in HR+/HER2- aBC patients with visceral metastases, which are typically associated with a poor prognosis. Data presented at ESMO (Free ESMO Whitepaper) 2022
Tislelizumab Ph3 RATIONALE 301 trial demonstrated non-inferior OS for tislelizumab vs sorafenib (median OS: 15.9 months vs 14.1 months) in patients with previously untreated unresectable hepatocellular carcinoma. Tislelizumab demonstrated a favorable safety profile with fewer grade ≥3 adverse events (AEs) and fewer AEs leading to discontinuation. Data presented at ESMO (Free ESMO Whitepaper) 2022
Canakinumab Ph3 CANOPY-A trial did not meet its primary endpoint of disease-free survival in the adjuvant setting in patients with stages II-IIIA and IIIB completely resected NSCLC. No unexpected safety signals were observed
Branaplam Temporarily suspended dosing of study drug in the Ph2b VIBRANT-HD trial in adults with Huntington’s Disease, based on a recommendation from the independent Data Monitoring Committee, following a planned data review. Decision based on findings suggestive of potential peripheral neuropathy in some participants. Study update to be provided following assessment
Denosumab Integrated Ph1/3 clinical trial ROSALIA met primary endpoints, confirming proposed biosimilar denosumab matches reference product in terms of pharmacokinetics, pharmacodynamics, efficacy, safety and immunogenicity in postmenopausal women with osteoporosis
UNR844 Interim analysis of the Ph2b dose ranging study evaluating safety and efficacy in patients aged 45-55 years with presbyopia did not meet its primary endpoint of demonstrating a statistically significant dose response at Month 3. Based on these results, Novartis has taken the decision to discontinue the Ph2b study and UNR844 program
Capital structure and net debt

Retaining a good balance between investment in the business, a strong capital structure and attractive shareholder returns remains a priority.

During the first nine months of 2022, Novartis repurchased a total of 94.2 million shares for USD 8.1 billion on the SIX Swiss Exchange second trading line, including 83.3 million shares (USD 7.2 billion) under the up-to USD 15 billion share buyback announced in December 2021 and 10.9 million shares (USD 0.9 billion) to mitigate dilution related to participation plans of associates. In addition, 1.3 million shares (for an equity value of USD 0.1 billion) were repurchased from associates. In the same period, 11.6 million shares (for an equity value of USD 0.7 billion) were delivered as a result of options exercised and share deliveries related to participation plans of associates. Consequently, the total number of shares outstanding decreased by 83.9 million versus December 31, 2021. These treasury share transactions resulted in an equity decrease of USD 7.5 billion and a net cash outflow of USD 7.9 billion.

As of September 30, 2022, net debt increased to USD 7.7 billion compared to USD 0.9 billion at December 31, 2021. The increase was mainly due to the USD 7.5 billion annual dividend payment and net cash outflow for treasury share transactions of USD 7.9 billion, partially offset by USD 8.4 billion free cash flow during the first nine months of 2022.

As of Q3 2022, the long-term credit rating for the company is A1 with Moody’s Investors Service and AA- with S&P Global Ratings.

2022 outlook

Barring unforeseen events; growth vs prior year in cc

Innovative Medicines Sales expected to grow mid single digit
Core operating income expected to grow mid to high single digit, ahead of sales
Sandoz Sales expected to grow low to mid single digit (revised upwards from low single digit growth)
Core operating income expected to grow low single digit (revised upwards from broadly in line)
Group Sales expected to grow mid single digit
Core operating income expected to grow mid single digit
Our guidance assumes that we see a continuing return to normal global healthcare systems, including prescription dynamics, and no Sandostatin LAR generics enter in the US.

In June 2022, an appeals court held the Gilenya US dosing regimen patent invalid. Novartis will file a petition seeking further review with the US Supreme Court, which denied a motion to stay the issuance of the formal appeal mandate while further review is ongoing. FDA-approved Gilenya generics now launched in the US. In Q3, Gilenya US sales were USD 326 million.

Foreign exchange impact
If late-October exchange rates prevail for the remainder of 2022, the foreign exchange impact for the year would be negative 7 percentage points on net sales and negative 8 percentage points on core operating income. The estimated impact of exchange rates on our results is provided monthly on our website.

1.Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 49 of the Condensed Interim Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year. 2.A reconciliation of 2021 IFRS results and non-IFRS measures core results to exclude the impacts of the 2021 divestment of our Roche investment can be found on page 57 of the Condensed Interim Financial Report. The free cash flow impact represents the dividend received in Q1 2021 from Roche in relation to the distribution of its 2020 net income

On October 25, 2022 Veracyte, Inc. (Nasdaq: VCYT) reported that new data demonstrating that a genomic signature derived from the company’s Decipher GRID database could help determine which men experiencing prostate cancer progression following radical prostatectomy (RP) would benefit from dose-intensified salvage radiotherapy (SRT) (Press release, Veracyte, OCT 25, 2022, View Source [SID1234622350]). The data, from a randomized, phase 3 trial, were presented at the American Society for Radiation Oncology (ASTRO) Annual Meeting 2022 (abstract #160) taking place October 23-26, 2022, in San Antonio, Texas.

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Post-Operative Radiation Therapy Outcomes Score (PORTOS) is a gene-expression signature of 24 DNA damage, repair and immune pathway genes previously shown to predict benefit from postoperative radiotherapy. In the current study, researchers evaluated the biomarker’s predictive ability for SRT dose among 226 men in the prospective open-label, multicenter, randomized phase 3 Swiss Group for Clinical Cancer Research (SAKK) 09/10 trial. This trial, which randomized men with biochemically recurrent disease after RP to conventional or dose-intensified salvage radiotherapy without the addition of androgen deprivation therapy (ADT), did not report a clinical benefit for dose-intensification.

The new data shared at ASTRO show that the subset of men with higher PORTOS scores had substantial improvement in clinical-progression-free survival (CPFS) with the higher dose of SRT (70Gy). Specifically, those men with higher PORTOS scores had an absolute benefit of 45% CPFS at 5 years with dose-intensified SRT compared with the standard dose, while the men with lower PORTOS scores had an absolute benefit of -10% (p-interaction=0.003).

"Our findings suggest that the Decipher PORTOS signature may be a valuable tool to help physicians better identify those prostate cancer patients who should receive dose-intensified salvage radiotherapy when their disease recurs following radical prostatectomy," said Alan Dal Pra, M.D., member of Sylvester Comprehensive Cancer Center, director of Clinical Research and associate professor of radiation oncology at the University of Miami Miller School of Medicine, and lead author on the ASTRO abstract. "Dependent on further studies, this could be the first predictive biomarker to help physicians personalize radiotherapy dose in the postoperative prostate cancer setting."

It is estimated that up to 40 percent of men with intermediate- or high-risk prostate cancer may experience a biochemical disease recurrence after RP, which is characterized by rising levels of serum prostate-specific antigen (PSA).1 For those men who experience a rising PSA, treatment with 64-72 Gy SRT is now standard of care, though treatment with higher doses can lead to greater urinary and bowel side effects.

"This study demonstrates how gene-expression signatures can help identify the men who are most likely to benefit from more radiation, and help inform physician and patient decisions regarding their radiation treatment after surgery," said Elai Davicioni, Ph.D., Veracyte’s medical director for Urology. "We very much value our multi-year research efforts with the Swiss SAKK study group, and look forward to our continued collaborations with leading academic and industry partners to further validate GRID-derived predictive biomarkers that may help physicians better individualize the care of men with prostate cancer."

About Decipher GRID

The Decipher Genomics Resource for Intelligent Discovery (GRID) database includes more than 100,000 whole-transcriptome profiles from patients with urologic cancers and is used by Veracyte and its research partners to help advance understanding of prostate and other urologic cancers. PORTOS is among more than 400 biomarkers that have been discovered or developed using Decipher GRID and are available on a Research Use Only basis to physicians who have ordered the Decipher Prostate Genomic Classifier.

On October 25, 2022 Adaptimmune Therapeutics plc (Nasdaq: ADAP), a leader in cell therapy to treat cancer, reported that GSK will transfer its NY-ESO cell therapy program and the right to the PRAME cell therapy program to Adaptimmune (Press release, Adaptimmune, OCT 25, 2022, View Source [SID1234622349]). This decision was based on Adaptimmune’s deep expertise in engineered T-cell therapies for solid tumor cancer indications, including advanced late-stage assets in its pipeline of products which will be leveraged with the future development of the NY-ESO and PRAME programs. The terms of the transfer are being negotiated.

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"MAGE-A4, NY-ESO and PRAME are amongst the best-characterized and validated TCR T-cell targets in the solid tumor field. With full ownership of these affinity enhanced SPEAR T-cells against each of these targets, we will be able to bring the benefits of cell therapy to an even larger number of people with cancer," said Adrian Rawcliffe, Adaptimmune’s Chief Executive Officer. "While we remain focused on the delivery of our flagship MAGE-A4 program, we are even better positioned with this portfolio to lead the field of engineered T-cells for the treatment of cancer well into the future."

About the Collaboration and License Agreement between Adaptimmune and GSK

Adaptimmune and GSK announced their strategic collaboration and license agreement in June 2014 for up to five programs including the first program, NY-ESO. In September 2017, GSK exercised its option to exclusively license the right to research, develop, and commercialize Adaptimmune’s NY-ESO SPEAR T-cell therapy program, following which two further targets including PRAME, were nominated as collaboration program targets. As part of the transfer of the assets and pending negotiation of the transfer terms it is anticipated that the collaboration and license agreement will terminate, and GSK will cease to have any rights to nominate any additional targets.

On October 25, 2022 Can-Fite BioPharma Ltd. (NYSE American: CANF) (TASE: CFBI), a biotechnology company advancing a pipeline of proprietary small molecule drugs that address inflammatory, cancer and liver diseases, reported that a poster entitled "Complete Response Induced by Namodenoson, an A3 Adenosine Receptor Agonist, in a Patient with Advanced Hepatocellular Carcinoma" will be presented at the American Association for the Study of Liver Diseases’ (AASLD) The Liver Meeting at 1:00 pm on Monday, November 7, 2022 in Washington, D.C (Press release, Can-Fite BioPharma, OCT 25, 2022, View Source [SID1234622348]). The findings are published, Abstract 4413, in the October 2022 supplement of HEPATOLOGY, a premier peer-reviewed journal in the field of liver disease published on behalf of the AASLD.

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Summary of Abstract:
The patient, a 61-year-old woman with hepatocellular carcinoma (HCC), the most common form of liver cancer, and moderate hepatic dysfunction Child-Pugh B (CPB7), participated in Can-Fite’s prior Phase II study. The patient was in the Namodenoson arm of the Phase II study and continued treatment with Namodenoson for 5 years under an Open Label Extension Program. Treatment is ongoing under a Compassionate Use Program established in Romania in August of 2022.

Highlights:

At baseline, computed tomography (CT) scans demonstrated a large HCC tumor in the context of multifocal disease at baseline. Two treatment cycles later (e.g., after approximately 7 weeks) CT demonstrated shrinkage of the tumor mass that was consistent with a partial response.
Within 4 years of treatment, disappearance of the tumor mass, ascites and peritoneal carcinomatosis was observed consistent with a complete response by RECIST 1.1 and mRECIST.
The patient’s alanine transaminase (ALT) and aspartate aminotransferase (AST) levels were elevated at baseline (68 U/L and 44 U/L, respectively), and normalized after 1 treatment cycle. Normal ALT and AST levels were maintained for 5 years.
Serum α-fetoprotein level was 47 ng/ml at baseline, declined to normal levels after 5 cycles of treatment, and reached 1.3 ng/mL at the time of complete response.
No treatment-emergent adverse events were reported.
At the time of reporting this case (5 years from treatment initiation), the response is ongoing as indicated by evaluation of liver functions and imaging studies.
Conclusion:
This case report demonstrates that treatment with Namodenoson can lead to a complete and durable response in patients with HCC and CPB7.

"A Complete Response of HCC in an advanced stage is rare, and we are pleased to report that under treatment with Namodenoson, this patient has now survived more the five years, returning to normal liver function with the disappearance of ascites and peritoneal carcinomatosis," stated Can-Fite CEO Dr. Fishman. "We look forward to sharing our findings on this case with the community of hepatologists at The Liver Meeting in order to advance scientific knowledge and bring to market safe and effective treatments for liver cancer."

Can-Fite’s pivotal Phase III study in patients with advanced liver cancer is open for patient enrolment and will recruit patients in Israel, the U.S., and five countries in Europe. If the study achieves its endpoint, the Company will be in a position to submit Namodenoson for approval with the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA). Namodenoson has Orphan Drug Status with both the FDA and EMA and Fast Track Status with the FDA. A registration plan has been submitted to and accepted by the FDA.

The Liver Meeting, which takes place in Washington, D.C. from November 4 – 8, 2022, brings together clinicians, associates, and scientists from around the world to exchange information on the latest research, discuss new developments in liver treatment and transplantation, and network with leading experts in the field of hepatology.

The HCC drug market is expected to reach $3.8 billion in 2027 in the G8 countries according to DelveInsight.

About Namodenoson
Namodenoson is a small orally bioavailable drug that binds with high affinity and selectivity to the A3 adenosine receptor (A3AR). Namodenoson is being evaluated for two indications, as a second line treatment for hepatocellular carcinoma in a pivotal Phase III study, and as a treatment for non-alcoholic steatohepatitis (NASH) in a Phase IIb study. A3AR is highly expressed in diseased cells whereas low expression is found in normal cells. This differential effect accounts for the excellent safety profile of the drug.

On October 25, 2022 Biogen Inc. (Nasdaq: BIIB) reported third quarter 2022 financial results.
"In the third quarter, Biogen made important progress toward building a foundation for growth while executing against our core business objectives," said Michel Vounatsos, Biogen’s Chief Executive Officer (Press release, Biogen, OCT 25, 2022, View Source [SID1234622347]). "We are excited about the topline results of the Clarity AD trial for lecanemab and believe this potential new therapy could provide a meaningful benefit for Alzheimer’s patients. We also continue to make progress toward delivering new impactful therapies for patients suffering from depression and SOD1 ALS, with important upcoming regulatory milestones."

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Third Quarter 2022 Operating Results
•Third quarter total revenue of $2,508 million decreased 10% versus the prior year at actual currency and 8% at constant currency*. Multiple sclerosis revenue, including royalties on sales of OCREVUS, of $1,621 million decreased 11% versus the prior year at actual currency and 9% at constant currency. SPINRAZA revenue of $431 million decreased 3% versus the prior year at actual currency and increased 2% at constant currency. Biosimilars revenue of $188 million decreased 7% versus the prior year at actual currency and 4% at constant currency. RITUXAN/GAZYVA profits attributable to Biogen were $136 million, a decrease of 10% versus the prior year.

•Third quarter GAAP net income and diluted earnings per share (EPS) attributable to Biogen Inc. were $1,135 million and $7.84, respectively. Third quarter Non-GAAP net income and diluted EPS attributable to Biogen Inc. were $691 million and $4.77, respectively. A reconciliation of GAAP to Non-GAAP financial measures can be found in Table 4 at the end of this news release.

•Third quarter GAAP and Non-GAAP cost of sales was $470 million, as compared to $512 million in the third quarter of 2021. Third quarter 2022 GAAP and Non-GAAP cost of sales includes approximately $12 million of idle capacity charges. Eisai Co., Ltd.’s (Eisai) share of these charges (approximately $5 million) is reflected in collaboration profit sharing.

•Third quarter GAAP and Non-GAAP R&D expense was $549 million, as compared to $702 million in the third quarter of 2021. Third quarter 2021 GAAP and Non-GAAP R&D expense included a $125 million upfront payment to InnoCare Pharma Limited and $39 million of estimated clinical trial close-out costs and manufacturing commitments due to suspended development of BIIB111 in choroideremia and BIIB112 in X-linked retinitis pigmentosa.

•Third quarter GAAP and Non-GAAP SG&A expense was $563 million and $562 million, respectively, as compared to $654 million and $651 million, respectively, in the third quarter of 2021. The decrease in SG&A expense was driven primarily by cost savings initiatives.
1

•Third quarter GAAP and Non-GAAP collaboration profit sharing was a net expense of $45 million, primarily driven by net profit sharing expense related to Biogen’s collaboration with Samsung Bioepis.

•Third quarter GAAP gain of $504 million resulted from Biogen’s sale of its building at 125 Broadway as part of an initiative to optimize its office footprint in Cambridge, MA to align with reduced space requirements under hybrid work models.

•Third quarter GAAP other income was $56 million, primarily driven by net unrealized gains on strategic equity investments of $110 million, partially offset by net interest expense of $36 million. Third quarter Non-GAAP other expense was $55 million, primarily driven by interest expense.

•Third quarter GAAP and Non-GAAP effective tax rates were 17% and 16%, respectively.

* Percentage changes in revenue growth at constant currency are presented excluding the impact of changes in foreign currency exchange rates and hedging gains or losses. The current period’s foreign currency revenue values are converted into U.S. dollars using the average exchange rates from the prior period.
Financial Position
•Third quarter 2022 cash flow from operations was $661 million. Capital expenditures were $59 million, and free cash flow, defined as cash flow from operations less capital expenditures, was $602 million.

•As of September 30, 2022, Biogen had cash, cash equivalents, and marketable securities totaling $5,771 million and $6,279 million in total debt, resulting in net debt of $508 million.

•In the third quarter of 2022 Biogen repurchased approximately 1.2 million shares of the Company’s common stock for a total value of $250 million. As of September 30, 2022, there was $2,050 million remaining under the share repurchase program authorized in October 2020.

•For the third quarter of 2022 the Company’s weighted average diluted shares were 145 million.

Full Year 2022 Financial Guidance
For the full year 2022, Biogen is updating its revenue and Non-GAAP diluted EPS guidance ranges as follows:
Prior Guidance Updated Guidance
Total revenue $9.9 to $10.1 billion $10.0 to $10.15 billion
Non-GAAP diluted EPS $15.25 to $16.75 $16.50 to $17.15

The increase in full year 2022 revenue and Non-GAAP diluted EPS guidance is driven primarily by better-than-expected topline performance and continued cost management.

This guidance assumes continued declines in RITUXAN revenue due to biosimilar competition, as well as continued erosion of TECFIDERA revenue due to generic entry.

Non-GAAP R&D expense is expected to be between $2.2 billion and $2.3 billion, unchanged from prior guidance.

Non-GAAP SG&A expense is expected to be between $2.3 billion and $2.4 billion, unchanged from prior guidance.

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The Non-GAAP tax rate for 2022 is expected to be between 15.5% and 16.5%, unchanged from prior guidance.

This guidance assumes that foreign exchange rates as of September 30, 2022, will remain in effect for the remainder of the year, net of hedging activities.

This financial guidance does not include any impact from potential acquisitions or large business development transactions or pending and future litigation, as all are hard to predict, or any impact of potential tax or healthcare reform. Biogen may incur charges, realize gains or losses, or experience other events or circumstances in 2022 that could cause any of these assumptions to change and/or actual results to vary from this financial guidance.

Biogen does not provide guidance for GAAP reported financial measures (other than revenue) or a reconciliation of forward-looking Non-GAAP financial measures to the most directly comparable GAAP reported financial measures because the Company is unable to predict with reasonable certainty the financial impact of items such as the transaction, integration, and certain other costs related to acquisitions or large business development transactions; unusual gains and losses; potential future asset impairments; gains and losses from our equity security investments; and the ultimate outcome of pending significant litigation without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period. For the same reasons, the Company is unable to address the significance of the unavailable information, which could be material to future results.

Alzheimer’s Disease Updates

•In the third quarter of 2022 Biogen and Eisai announced positive topline results from Eisai’s large global Phase 3 confirmatory Clarity AD clinical trial of lecanemab (BAN2401), an investigational anti-amyloid beta protofibril antibody for the treatment of mild cognitive impairment due to Alzheimer’s disease and mild Alzheimer’s disease (collectively known as early Alzheimer’s disease) with confirmed presence of amyloid pathology in the brain. Lecanemab met the primary endpoint (CDR-SB: Clinical Dementia Rating Scale-Sum of Boxes) and all key secondary endpoints with highly statistically significant results. Eisai will discuss these data with regulatory authorities in the U.S., Japan, and Europe with the aim to file for traditional approval in the US and for marketing authorization applications in Japan and Europe by March 31, 2023. Additionally, Eisai will present the Clarity AD study results on November 29, 2022, at the Clinical Trials on Alzheimer’s Congress and intends to publish the findings in a peer-reviewed medical journal.

•In the third quarter of 2022 Eisai presented new findings at the Alzheimer’s Association International Conference on a subcutaneous formulation of lecanemab and the modeling simulation of the impact of ApoE4 genotype on the incidence of amyloid-related imaging abnormalities – edema/effusion, or ARIA-E, in subjects treated with lecanemab.

Recent Events

•In October 2022 Biogen and Sage Therapeutics presented analyses from the Phase 3 SKYLARK Study of zuranolone, an investigational, oral, once-daily, 14-day treatment in clinical development for adult patients with major depressive disorder (MDD) and postpartum depression (PPD) at the European College of Neuropsychopharmacology Congress (ECNP). The SKYLARK Study, evaluating zuranolone in PPD, achieved the primary and all key secondary endpoints, with study participants demonstrating rapid and significant improvements in depressive symptoms as early as Day 3 that were sustained through Day 45. Additional secondary endpoint data presented at ECNP showed that a higher proportion of participants in the zuranolone 50 mg arm achieved a HAMD-17 response (≥ 50% decrease from baseline HAMD-17 total score) as compared with the placebo arm at Days 3, 8, 15, 21, and 28 (p<0.05 at all time points). Data also showed that a higher proportion of participants in the zuranolone arm achieved HAMD-17 remission (HAMD-17 total score ≤ 7) than in the placebo arm from Day 3 through Day 45 (Day 45 p<0.05).

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•In October 2022 Biogen announced that the first patient was dosed in the global clinical study, AMETHYST, a Phase 2/3 study evaluating the efficacy and safety of litifilimab (also known as BIIB059), a first in-class, humanized IgG1 monoclonal antibody targeting blood dendritic cell antigen 2, as compared to placebo, in participants with cutaneous lupus erythematosus.

•On October 6, 2022, the Advocate General of the Court of Justice of the European Union (CJEU) issued a nonbinding advisory opinion in Biogen’s favor relating to regulatory data protection for TECFIDERA. This opinion recommends that the CJEU set aside the earlier judgement of the European General Court annulling the European Medicine Agency’s decision not to validate an application to market a generic version of TECFIDERA. If the Advocate General’s recommendation is adopted in the final CJEU decision, Biogen expects TECFIDERA to be entitled to the statutory period of market protection through at least February 2024.

•In October 2022 Biogen and Denali Therapeutics Inc. announced that dosing has commenced in the global Phase 3 LIGHTHOUSE study to evaluate the efficacy and safety profile of BIIB122 (DNL151), as compared to placebo in approximately 400 participants with Parkinson’s disease and a confirmed pathogenic mutation in the leucine-rich repeat kinase 2, or LRRK2, gene.

•In the third quarter of 2022 Biogen announced that the European Medicines Agency has accepted the Marketing Authorization Application for BIIB800, a biosimilar candidate referencing RoACTEMRA, an anti-interleukin-6 receptor monoclonal antibody.

•In the third quarter of 2022 Biogen announced that The New England Journal of Medicine published detailed results from the Phase 3 VALOR study and the combined analysis of VALOR and its open label extension study evaluating tofersen for the treatment of superoxide dismutase 1 amyotrophic lateral sclerosis, or SOD1 ALS. 12-month data showed that earlier initiation of tofersen slowed decline across critical measures of function and strength.

•In the third quarter of 2022 Biogen announced that the U.S. Food and Drug Administration (FDA) accepted a New Drug Application for tofersen and granted Priority Review. As part of the ongoing review, Biogen submitted responses to information requests by the FDA, which the FDA considered a Major Amendment to the application that will require additional time for review. As a result, the review period has been extended by three months and the Prescription Drug User Fee Act goal date has been updated from January 25, 2023 to April 25, 2023.

•In the third quarter of 2022 Biogen announced that The New England Journal of Medicine published two manuscripts detailing positive results from the company’s two-part Phase 2 LILAC study, which evaluated litifilimab, an investigational drug, in systemic lupus erythematosus and cutaneous lupus erythematosus.

•In the third quarter of 2022 Biogen and Sage Therapeutics announced new analyses from across the development program for zuranolone. An interim analysis from the ongoing open-label, longitudinal SHORELINE Study in MDD (30 mg cohort n=725, 50 mg cohort n=199) found the median time to the first repeat treatment course for those participants who responded to the initial 14-day treatment course (30 mg, n=489; 50 mg, n=146) was 135 days for the 30 mg cohort and 249 days for the 50 mg cohort. These data further support zuranolone as a potential episodic treatment for people with MDD.

Conference Call and Webcast
The Company’s earnings conference call for the third quarter will be broadcast via the internet at 8:00 a.m. ET on October 25, 2022 and will be accessible through the Investors section of Biogen’s website, www.biogen.com. Supplemental information in the form of a slide presentation is also accessible at the same location on the internet and will be subsequently available on the website for at least one month.