On August 8, 2023 Emergent BioSolutions Inc. (NYSE: EBS) reported financial results for the second quarter ended June 30, 2023 (Press release, Emergent BioSolutions, AUG 8, 2023, View Source [SID1234633967]). It also announced strategic steps to reduce investment in and de-emphasize focus on growth in its CDMO business.

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"Emergent has achieved a number of strategic milestones in 2023 that will help America be better prepared to face future public health threats and help to strengthen Emergent’s financial position," said interim Chief Executive Officer Haywood Miller. "These achievements together with actions we announced earlier today will help ensure the sustainability of Emergent and its future growth."

FINANCIAL HIGHLIGHTS (1)

Q2 2023 vs. Q2 2022

($ in millions, except per share amounts) Q2 2023 Q2 2022 % Change
Total Revenues $337.9 $242.7 39%
Net Loss $(261.3) $(56.4) *
Net Loss per Diluted Share $(5.15) $(1.13) *
Adjusted Net Loss (2) $(53.5) $(42.8) 25%
Adjusted Net Loss (2) per Diluted Share $(1.06) $(0.86) 23%
Adjusted EBITDA (2) $55.9 $(28.8) *
Gross Margin % 42% 28%
Adjusted Gross Margin % (2) 43% 28%
* % change is greater than +/- 100%
Year to Date ("YTD") 2023 vs. YTD 2022

($ in millions, except per share amounts) YTD 2023 YTD 2022 % Change
Total Revenues $503.0 $550.2 (9)%
Net Loss $(444.3) $(60.1) *
Net Loss per Diluted Share $(8.80) $(1.19) *
Adjusted Net Loss (2) $(212.3) $(33.7) *
Adjusted Loss (2) per Diluted Share $(4.21) $(0.67) *
Adjusted EBITDA (2) $(44.9) $7.2 *
Gross Margin % 29% 39%
Adjusted Gross Margin % (2) 31% 39%
* % change is greater than +/- 100%
SELECT Q2 2023 AND OTHER RECENT BUSINESS UPDATES

Announced CEO transition with the appointment of Haywood Miller as Interim CEO following the retirement of Robert G. Kramer
Announced U.S. Food and Drug Administration (FDA) approval of CYFENDUSTM (Anthrax Vaccine Adsorbed, Adjuvanted), previously known as AV7909, a two-dose anthrax vaccine for post-exposure prophylaxis use
Finalized the sale of the travel health business to Bavarian Nordic for total consideration of up to $380 million, including receipt of $270 million upfront; currently engaged in facilitating the transfer of assets, people and programs to Bavarian Nordic under a minimum six-month Transition Services Agreement
Completed amendment and maturity extension of the Company’s existing senior secured credit facilities
Awarded a 10-year contract by the Biomedical Advanced Research and Development Authority for advanced development, manufacturing scale-up, and procurement of EbangaTM (ansuvimab-zykl) product, a treatment for Ebola

Q2 2023 FINANCIAL PERFORMANCE (1)

Revenues

Beginning in 2023, the Company is revising the categories used in discussing product/service level revenues. The new categories are:

Anthrax MCM — comprises potential contributions from CYFENDUSTM , previously known as AV7909, BioThrax, Anthrasil and raxibacumab
NARCAN — comprises contributions from NARCAN Nasal Spray
Smallpox MCM — comprises potential contributions from ACAM2000, VIGIV and Tembexa
Other Products — comprises potential contributions from BAT, RSDL, Trobigard, Vaxchora and Vivotif
CDMO — comprises service and lease revenues from the contract development and manufacturing business

($ in millions) Q2 2023 Q2 2022 % Change
Product sales, net (3):
Anthrax MCM
$21.2 $95.8 (78)%
NARCAN
$133.9 $101.6 32%
Smallpox MCM
$123.9 $16.0 *
Other Products
$23.2 $23.8 (3)%
Total product sales, net $302.2 $237.2 27%
Contract development and manufacturing ("CDMO"):
Services
$26.4 $2.7 *
Leases
$2.7 $(4.5) *
Total CDMO $29.1 $(1.8) *
Contracts and grants $6.6 $7.3 (10)%
Total revenues $337.9 $242.7 39%
* % change is greater than +/- 100%
Product Sales, net

Anthrax MCM

For Q2 2023, revenues from Anthrax MCM decreased $74.6 million as compared with Q2 2022. The decrease reflects the impact of timing of sales related to CYFENDUS (Anthrax Vaccine Adsorbed, Adjuvanted), previously known as AV7909, and BioThrax (Anthrax Vaccine Adsorbed), partially offset by an increase in sales of Anthrasil [Anthrax Immune Globulin Intravenous (human)].

NARCAN

For Q2 2023, revenues from NARCAN (naloxone HCl) Nasal Spray increased $32.3 million as compared with Q2 2022. The increase was primarily driven by higher branded NARCAN sales to U.S. public interest channels and Canadian retail sales, partially offset by lower commercial retail sales in the U.S. following the termination of the Company’s relationship with Sandoz related to the authorized generic NARCAN product.

Smallpox MCM

For Q2 2023, revenues from Smallpox MCM increased $107.9 million as compared with Q2 2022. The increase was primarily due to the exercise and full delivery during the quarter of a $120 million option by the U.S. government (USG) to purchase ACAM2000, partially offset by lower VIG sales due to timing.

Other Products

For Q2 2023, revenues from other product sales decreased $0.6 million as compared with Q2 2022. The decrease was primarily due to lower BAT sales, partially offset by higher RSDL sales.

CDMO

CDMO Services

For Q2 2023, revenues from contract development and manufacturing services increased $23.7 million as compared with Q2 2022. The increase was primarily driven by work at the Company’s Canton facility for a CDMO customer and resolution of a customer’s outstanding obligation. In the prior year quarter, there was a reversal of revenue related to the halt in manufacturing under the Janssen Agreement.

CDMO Leases

For Q2 2023, revenues from contract development and manufacturing leases increased $7.2 million as compared with Q2 2022. The lease revenue in the current year quarter is related to the Company’s Canton facility. In the prior year quarter, there was a reversal of revenue recognized related to the Janssen Agreement termination.

Contracts and Grants

For Q2 2023, revenues from contracts and grants decreased $0.7 million as compared with Q2 2022. The decrease was due to changes in the mix and timing of various development initiatives.

Operating Expenses

($ in millions) Q2 2023 Q2 2022 % Change
Cost of product sales $134.9 $91.0 48%
Cost of CDMO $55.7 $78.8 (29)%
Impairment of long-lived assets $306.7 $— NM
Research and development ("R&D") $26.0 $49.8 (48)%
Selling, general and administrative $91.4 $81.1 13%
Amortization of intangible assets $16.1 $14.0 15%
Total operating expenses $630.8 $314.7 *
* % change is greater than +/- 100%
NM – Not Meaningful
Cost of Product Sales

For Q2 2023, cost of product sales increased $43.9 million as compared with Q2 2022. The increase was primarily due to higher sales of ACAM2000 and NARCAN, partially offset by lower sales of CYFENDUS, coupled with higher allocations to product COGS at the Company’s Bayview facility and an increase in Trobigard inventory related costs.

Cost of CDMO

For Q2 2023, cost of CDMO decreased $23.1 million as compared with Q2 2022. The decrease was primarily due to reduced production activities at the Company’s Bayview facility related to the halt in manufacturing under the Janssen Agreement, partially offset by higher costs at its Camden facility related to additional investments in quality enhancements and improvement initiatives as well as increased production at the Company’s Canton facility related to work for a CDMO customer.

Long-Lived Asset Impairment Charge

For Q2 2023, the Company recorded a non-cash impairment charge of $306.7 million related to certain asset groups within our CDMO reporting unit. The asset groups were written down only to the extent their carrying value was higher than their respective fair values. The Company, with the assistance of a third-party valuation firm, applied valuation methods to estimate the fair values for each of the assets within the different asset classes to determine the amount of the impairment.

Prior to recording the impairment charge, the Company performed recoverability tests on the impacted asset groups within the CDMO reporting unit and concluded that the asset groups were not recoverable as the undiscounted expected cash flows did not exceed their carrying values. The indicators for the impairment were related to the deterioration in performance and resulting downward revisions to our internal CDMO forecasts, including future expected cash flows, that took place during the preparation of our financial statements for the quarter ended June 30, 2023.

Research and Development (2)

For Q2 2023, R&D expenses decreased $23.8 million as compared with Q2 2022. The decrease was primarily due to the sale of the Company’s development program for CHIKV VLP to Bavarian Nordic, which was a significant contributor to prior period R&D expense.

Selling, General and Administrative

For Q2 2023, selling, general and administrative expenses increased $10.3 million as compared with Q2 2022. The increase was primarily due to higher professional services fees related to general corporate initiatives, including ongoing organizational transformation consulting and legal remediation efforts.

ADDITIONAL FINANCIAL INFORMATION (1)

Capital Expenditures

($ in millions) Q2 2023 Q2 2022 % Change
Capital expenditures $12.5 $32.1 (61)%
Capital expenditures as a % of total revenues 4% 13% (900) bps
For Q2 2023, gross capital expenditures decreased largely due to lower product development activities across the Company’s facilities.

At-The-Market Equity Offering Program (ATM Program)

In Q2 2023, the Company initiated its "at-the-market" equity offering program (ATM Program). During the quarter ended June 30, 2023, the Company sold 1.1 million shares of its common stock under the ATM Program for gross proceeds of $9.1 million, representing an average price of $8.22 per share.

Segment Information

The Company manages the business with a focus on two reportable segments: the Products segment, which includes the Anthrax MCM products, NARCAN products, Smallpox MCM products and Other products; and, the Services segment, which consists of CDMO services. The Company evaluates the performance of these reportable segments based on revenue and Adjusted Gross Margin, which is a non-GAAP financial measure. Segment revenue includes external customer sales, but does not include inter-segment services. The Company does not allocate contracts and grants, R&D, SG&A, amortization of intangible assets, interest and other income (expense) or taxes to its evaluation of the performance of these segments.

($ in millions)

Products Services
Three Months Ended June 30, Three Months Ended June 30,
2023 2022 % Change 2023 2022 % Change
Revenues $302.2 $237.2 27% $29.1 $(1.8) *

Cost of sales $134.9 $91.0 48% $55.7 $78.8 (29)%
Less: Changes in fair value of contingent consideration $0.4 $1.3 (69)% $— $— NM
Less: Inventory step-up provision $1.9 $— NM $— $— NM
Adjusted cost of sales ** $132.6 $89.7 48% $55.7 $78.8 (29)%

Gross margin *** $167.3 $146.2 14% $(26.6) $(80.6) 67%
Gross margin % *** 55% 62% (91)% NM

Adjusted gross margin **** $169.6 $147.5 15% $(26.6) $(80.6) 67%
Adjusted gross margin % **** 56% 62% (91)% NM
* % change is greater than +/- 100%
** Adjusted cost of sales, which is a non-GAAP financial measure, is calculated as cost of sales less restructuring costs, and other special items and non-cash items related to changes in fair value of contingent consideration and inventory step-up provision. See "Reconciliation of Non-GAAP Measures" for the reconciliation of this non-GAAP measure to the most closely related GAAP financial measure.
*** Gross margin is calculated as revenues less cost of sales. Gross margin % is calculated as gross margin divided by revenues.
**** Adjusted gross margin, which is a non-GAAP financial measure, is calculated as revenues less Adjusted cost of sales. Adjusted gross margin %, which is a non-GAAP financial measure, is calculated as Adjusted gross margin divided by revenues. See "Reconciliation of Non-GAAP Measures" for the reconciliation of these non-GAAP measures to the most closely related GAAP financial measures.
NM – Not Meaningful
For the three months ended June 30, 2023, Product gross margin and Product adjusted gross margin increased $21.1 million and $22.1 million, respectively, as compared to the three months ended June 30, 2022. Product gross margin percentage decreased 7 percentage points to 55% for the three months ended June 30, 2023. The decrease in gross margin percentage was largely due to increases in shutdown related costs and inventory write-offs.

For the three months ended June 30, 2023, Services gross margin increased $54.0 million, as compared to the three months ended June 30, 2022. Services gross margin percentage improved to (91)% for the three months ended June 30, 2023. The improvement in gross margin percentage was primarily due to one-time costs and reserves related to the Janssen Agreement in the prior year quarter, partially offset by additional investments in quality enhancement and improvement initiatives at the Company’s Camden facility in the current year.

($ in millions)

Products Services
Six Months Ended June 30, Six Months Ended June 30,
2023 2022 % Change 2023 2022 % Change
Revenues $445.6 $474.3 (6)% $44.3 $59.0 (25)%

Cost of sales $237.8 $171.3 39% $107.9 $154.4 (30)%
Less: Changes in fair value of contingent consideration $1.9 $1.8 6% $— $— NM
Less: Inventory step-up provision $1.9 $— NM $— $— NM
Less: Restructuring costs $2.0 $— NM $— $— NM
Adjusted cost of sales ** $232.0 $169.5 37% $107.9 $154.4 (30)%

Gross margin *** $207.8 $303.0 (31)% $(63.6) $(95.4) 33%
Gross margin % *** 47% 64% (144)% (162)%

Adjusted gross margin **** $213.6 $304.8 (30)% $(63.6) $(95.4) 33%
Adjusted gross margin % **** 48% 64% (144)% (162 )%
* % change is greater than +/- 100%
** Adjusted cost of sales, which is a non-GAAP financial measure, is calculated as cost of sales less restructuring costs, and other special items and non-cash items related to changes in fair value of contingent consideration and inventory step-up provision. See "Reconciliation of Non-GAAP Measures" for the reconciliation of this non-GAAP measure to the most closely related GAAP financial measure.
*** Gross margin is calculated as revenues less cost of sales. Gross margin % is calculated as gross margin divided by revenues.
**** Adjusted gross margin, which is a non-GAAP financial measure, is calculated as revenues less Adjusted cost of sales. Adjusted gross margin %, which is a non-GAAP financial measure, is calculated as Adjusted gross margin divided by revenues. See "Reconciliation of Non-GAAP Measures" for the reconciliation of these non-GAAP measures to the most closely related GAAP financial measures.
NM – Not Meaningful
For the six months ended June 30, 2023, Product gross margin and Product adjusted gross margin decreased $95.2 million and $91.2 million, respectively, as compared to the six months ended June 30, 2022. Product gross margin percentage decreased 17 percentage points to 47% for the six months ended June 30, 2023. The decrease was largely due to lower sales volumes and higher shutdown related costs and inventory write-offs.

For the six months ended June 30, 2023, Services gross margin increased $31.8 million as compared to the six months ended June 30, 2022. Services gross margin percentage improved 18 percentage points to (144)% for the six months ended June 30, 2023. The improvement was primarily due one-time costs and reserves related to the Janssen agreement in the prior year quarter, partially offset by the full six month impact of additional investments in quality enhancement and improvement initiatives at the Company’s Camden facility in the current year.

2023 FINANCIAL FORECAST

The Company provides the following updated financial forecast for the full year 2023 and initial forecast for total revenues for Q3 2023, in both instances reflecting management’s expectations based on the most current information available and taking into account the actual performance in Q1 and Q2 2023.

Full Year 2023

METRIC ($ in millions) Updated Range (as of 08/08/23) Action Previous Range (as of 05/09/23)
Total Revenues $1,000 – $1,100 REVISED $1,100 – $1,200
Net Loss $(465) – $(415) REVISED $(185) – $(135)
Adjusted Net Loss (2) $(195) – $(145) REVISED $(85) – $(35)
Adjusted EBITDA (2) $50 – $100 REVISED $100 – $150
Adjusted Gross Margin % (2) 36% – 39% REVISED 39% – 42%

Product/Service Level Revenue
Anthrax MCM
$200 – $220 REVISED $260 – $280
NARCAN
$425 – $445 REVISED $360 – $380
Smallpox MCM
$180 – $200 REVISED $235 – $255
Other Products
$100 – $120 REVISED $120 – $140
CDMO
$60 – $80 REVISED $90 – $110
The updated 2023 financial forecast as of 08/08/2023 reflects the following key considerations.

Total Revenues — Revised, reflecting ongoing strength in NARCAN, offset by reduced near term expectations across other products and services.
Anthrax MCM — Revised, reflecting reduced short-term CYFENDUS volume following FDA-approval as procurement transitions from BARDA to the Strategic National Stockpile.
NARCAN — Revised, reflecting continued robust demand from the US Public Interest channel and Canada.
Smallpox MCM — Revised, reflecting recent USG guidance that next procurement of TEMBEXA is deferred to future periods.
Other Products — Revised, reflecting reduced expectations for Trobigard.
CDMO — Revised, reflecting lower anticipated sales at the Camden site.
Adjusted Net Loss and Adjusted EBITDA — Revised, reflecting lower total revenues partially offset by the impact of cost actions announced on August 8, 2023.

Q3 2023

METRIC ($ in millions) Initial Range (as of 08/08/23)
Total Revenues $210 – $250
FOOTNOTES

(1) All financial information incorporated within this release is unaudited.
(2) See "Reconciliation of Non-GAAP Measures" and the reconciliation tables for the definitions and reconciliations of these non-GAAP financial measures to the most closely related GAAP financial measures.
(3) Product sales, net are reported net of variable consideration including returns, rebates, wholesaler fees and prompt pay discounts in accordance with U.S. generally accepted accounting principles.

CONFERENCE CALL, PRESENTATION SUPPLEMENT AND WEBCAST INFORMATION

Company management will host a conference call at 5:00 pm eastern time today, August 8, 2023, to discuss these financial results. The conference call and presentation supplement can be accessed from the Company’s website or through the following:

By phone
Advance registration is required.
Visit https://register.vevent.com/register/BIc94fd6cf2c104ae9a17e49a183e9a781 to register and receive an email with the dial-in number, passcode and registrant ID.

By webcast
Visit View Source

A replay of the call can be accessed from the Emergent website.

On August 8, 2023 Eli Lilly and Company (NYSE: LLY) reported its financial results for the second quarter of 2023 (Press release, Eli Lilly, AUG 8, 2023, View Source [SID1234633966]).

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"Lilly’s financial results in Q2 were led by Mounjaro sales and a strong performance from Growth Products," said David A. Ricks, Lilly’s chair and CEO. "Exciting scientific breakthroughs, such as TRAILBLAZER-ALZ 2 in Alzheimer’s disease and SURMOUNT-3 and -4 in obesity, encourage us to continue to make significant investments that support our new medicines including multiple launches expected by the end of 2023 to help more patients around the world."

Lilly had numerous updates recently on key regulatory, clinical, business development and other events, including:

Positive Phase 3 TRAILBLAZER-ALZ 2 results, which showed donanemab significantly slowed cognitive and functional decline in people with early symptomatic Alzheimer’s disease, as well as donanemab’s submissions for traditional approval to the U.S. Food and Drug Administration (FDA) and European Medicines Agency with regulatory action expected in the U.S. by the end of 2023;
The completed submission of tirzepatide in chronic weight management to the FDA and positive Phase 3 SURMOUNT-3 and -4 results, which showed the highest level of weight loss observed in the SURMOUNT program to date;
The approval of mirikizumab in the European Union and re-submission in the U.S.;
The announcements of agreements to acquire DICE Therapeutics, Inc., Sigilon Therapeutics, Inc. and Versanis Bio, which would advance Lilly’s research and expertise in treatments for autoimmune and cardiometabolic diseases;
FDA approval of Jardiance to lower blood sugar along with diet and exercise in children 10 years and older with type 2 diabetes; and
Allocation of an additional $50 million to the company’s now $300 million Social Impact Venture Capital Portfolio, aimed at making a positive impact on patients and society through for-profit investments.
For additional information on important public announcements, visit the news section of Lilly’s website.

Financial Results

$ in millions, except

per share data

Second Quarter

2023

2022

% Change

Revenue

$8,312.1

$6,488.0

28 %

Net Income – Reported

1,763.2

952.5

85 %

EPS – Reported

1.95

1.05

86 %

Net Income – Non-GAAP

1,904.4

1,131.3

68 %

EPS – Non-GAAP

2.11

1.25

69 %

A discussion of the non-GAAP financial measures is included below under "Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)."

Second-Quarter Reported Results
In Q2 2023, worldwide revenue was $8.31 billion, an increase of 28% compared with Q2 2022, driven by a 29% increase in volume, slightly offset by a 1% decrease from the unfavorable impact of foreign exchange rates. Realized prices remained relatively flat compared with Q2 2022. The volume increase was driven by growth from Mounjaro, Verzenio, Jardiance, and Taltz, as well as $579.0 million from the sale of rights for Baqsimi, partially offset by lower volume from Alimta due to the loss of patent exclusivity. Excluding revenue from Baqsimi, and $129.1 million from the sales of COVID-19 antibodies in 2022, revenue in Q2 2023 increased 22% and worldwide volume increased 23%. New Products contributed $1.00 billion to revenue in Q2 2023. Growth Products revenue increased 16% to $4.93 billion in Q2 2023.

Revenue in the U.S. increased 41% to $5.53 billion, driven by a 39% increase in volume and a 2% increase due to higher realized prices. The increase in U.S. volume was driven by Mounjaro, Verzenio, Jardiance, Trulicity and Taltz, as well as the sale of rights for Baqsimi, partially offset by decreased volume from Alimta and the complete reduction of revenue from COVID-19 antibodies. The higher realized prices in the U.S. were primarily driven by Mounjaro, partially offset by lower realized prices for Trulicity. When excluding Mounjaro, price declined low-single digits for the quarter.

Revenue outside the U.S. increased 9% to $2.78 billion, driven by a 14% increase in volume, partially offset by a 3% decrease from the unfavorable impact of foreign exchange rates and a 3% decrease due to lower realized prices. The increase in volume outside the U.S. was largely driven by Verzenio, Jardiance and Mounjaro. The lower realized prices were primarily driven by Verzenio, Olumiant and Trulicity.

Gross margin increased 29% to $6.50 billion in Q2 2023. Gross margin as a percent of revenue was 78.3%, an increase of 0.3 percentage points. The increase in gross margin percent was primarily driven by product mix, including the sale of rights for Baqsimi, and the amortization of intangible assets, largely offset by increased manufacturing expenses related to labor costs and investments in capacity expansion.

In Q2 2023, research and development expenses increased 32% to $2.36 billion, or 28% of revenue, primarily driven by higher development expenses for late-stage assets and additional investments in early-stage research.

Marketing, selling and administrative expenses increased 18% to $1.93 billion in Q2 2023, primarily driven by costs associated with launches of new products and indications.

In Q2 2023, the company recognized acquired in-process research and development (IPR&D) charges of $97.1 million. In Q2 2022, the company recognized acquired IPR&D charges of $440.4 million.

Other income (expense) was expense of $36.8 million in Q2 2023 compared with expense of $119.2 million in Q2 2022. The decrease in expense was primarily driven by lower net losses on investments in equity securities in Q2 2023 compared with Q2 2022.

The effective tax rate was 15.6% in Q2 2023 compared with 12.7% in Q2 2022. The effective tax rate in Q2 2023 reflected the tax impacts of the new Puerto Rico tax regime and the sale of rights for Baqsimi. The effective tax rate in Q2 2022 was impacted by non-deductible acquired IPR&D charges.

In Q2 2023, net income and earnings per share (EPS) were $1.76 billion and $1.95, respectively, compared with $952.5 million and $1.05 in Q2 2022. EPS in Q2 2023 is inclusive of $0.43 of EPS associated with the sale of rights for Baqsimi and $0.09 of acquired IPR&D charges compared with $0.46 of acquired IPR&D charges in Q2 2022.

Second-Quarter Non-GAAP Measures
On a non-GAAP basis, Q2 2023 gross margin increased 28% to $6.63 billion. Gross margin as a percent of revenue remained relatively flat compared with Q2 2022 at 79.8% as the favorable impact from product mix, including the sale of rights for Baqsimi, was offset by increased manufacturing expenses related to labor costs and investments in capacity expansion.

The effective tax rate on a non-GAAP basis was 16.1% in Q2 2023 compared with 14.2% in Q2 2022. The effective tax rate for Q2 2023 reflected the tax impacts of the new Puerto Rico tax regime and the sale of rights for Baqsimi. The effective tax rate in Q2 2022 was impacted by non-deductible acquired IPR&D charges.

On a non-GAAP basis, Q2 2023 net income and EPS were $1.90 billion and $2.11, respectively, compared with $1.13 billion and $1.25 in Q2 2022. Non-GAAP EPS in Q2 2023 was inclusive of $0.43 of EPS associated with the sale of rights for Baqsimi and $0.09 of acquired IPR&D charges compared with $0.46 of acquired IPR&D charges in Q2 2022.

For further detail on non-GAAP measures, see the reconciliation below as well as the "Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)" table later in this press release.

Second Quarter

2023

2022

% Change

Earnings per share (reported)

$ 1.95

$ 1.05

86 %

Amortization of intangible assets

.11

.11

Net losses on investments in equity securities

.05

.09

Earnings per share (non-GAAP)

$ 2.11

$ 1.25

69 %

Numbers may not add due to rounding.

Acquired IPR&D

.09

.46

(80) %

Selected Revenue Highlights

(Dollars in millions)

Second Quarter

Year-to-Date

Selected Products

2023

2022

% Change

2023

2022

% Change

Trulicity

$ 1,812.5

$ 1,911.9

(5) %

$ 3,789.6

$ 3,653.2

4 %

Verzenio

926.8

588.5

57 %

1,677.7

1,057.9

59 %

Mounjaro

979.7

16.0

NM

1,548.2

16.0

NM

Jardiance(a)

668.3

461.0

45 %

1,245.8

880.4

42 %

Taltz

703.9

606.2

16 %

1,230.8

1,094.3

12 %

Humalog(b)

440.4

447.1

(1) %

901.4

1,065.3

(15) %

Cyramza

260.3

231.3

13 %

497.0

461.5

8 %

Olumiant(c)

218.9

186.2

18 %

447.8

441.8

1 %

Emgality

169.3

157.5

8 %

323.6

306.7

6 %

Tyvyt

103.6

73.6

41 %

164.6

159.0

4 %

Alimta

60.9

227.7

(73) %

119.1

571.7

(79) %

Retevmo

65.4

45.0

45 %

116.8

86.8

35 %

COVID-19 antibodies(d)

—

129.1

(100) %

—

1,598.9

(100) %

Total Revenue

8,312.1

6,488.0

28 %

15,272.1

14,298.0

7 %

(a) Jardiance includes Glyxambi, Synjardy and Trijardy XR

(b) Humalog includes Insulin Lispro

(c) Olumiant includes sales of baricitinib that were made pursuant to Emergency Use Authorization (EUA) or similar
regulatory authorizations

(d) COVID-19 antibodies include sales for bamlanivimab administered alone, for bamlanivimab and etesevimab
administered together, and for bebtelovimab, and were made pursuant to EUAs or similar regulatory authorizations

NM – not meaningful

Trulicity
For Q2 2023, worldwide Trulicity revenue decreased 5% compared with Q2 2022 to $1.81 billion. U.S. revenue decreased 4% to $1.37 billion, driven by lower realized prices due to unfavorable segment mix and higher contracted rebates, partially offset by increased demand. Revenue outside the U.S. decreased 8% to $441.2 million, driven by decreased volume, lower realized prices and the unfavorable impact of foreign exchange rates. Volumes in international markets were affected by actions Lilly has taken to manage strong demand amid tight supply, including measures to minimize existing patient impact.

Verzenio
For Q2 2023, worldwide Verzenio revenue increased 57% compared with Q2 2022 to $926.8 million. U.S. revenue was $588.6 million, an increase of 53%, driven by increased demand and, to a lesser extent, higher realized prices. Revenue outside the U.S. was $338.2 million, an increase of 66%, driven by increased demand, partially offset by lower realized prices and the unfavorable impact of foreign exchange rates.

Mounjaro
For Q2 2023, worldwide Mounjaro revenue was $979.7 million. U.S. revenue was $915.7 million reflecting increased volume and, to a lesser extent, higher realized prices due to decreased utilization of savings card programs as access continues to expand. Lilly has experienced and continues to expect intermittent delays fulfilling orders of certain Mounjaro doses given significant demand. These delays have impacted, and may continue to impact, volume. Mounjaro launched in the U.S. for the treatment of type 2 diabetes in June 2022. Revenue outside the U.S. was $64.0 million.

Jardiance
For Q2 2023, worldwide Jardiance revenue increased 45% compared with Q2 2022 to $668.3 million. U.S. revenue was $386.1 million, an increase of 54%, primarily driven by increased demand. Revenue outside the U.S. was $282.2 million, an increase of 34%, driven by increased volume.

Jardiance is part of the company’s alliance with Boehringer Ingelheim. Lilly reports as revenue royalties received on net sales of Jardiance.

Taltz
For Q2 2023, worldwide Taltz revenue increased 16% compared with Q2 2022 to $703.9 million. U.S. revenue increased 15% to $472.3 million, primarily driven by increased demand. Revenue outside the U.S. increased 19% to $231.6 million, driven by increased volume.

Humalog
For Q2 2023, worldwide Humalog revenue decreased 1% compared with Q2 2022 to $440.4 million. U.S. revenue was $229.8 million, a decrease of 4%, primarily driven by lower realized prices, partially offset by increased demand. Revenue outside the U.S. was $210.6 million, an increase of 1%.

Olumiant
For Q2 2023, worldwide Olumiant revenue increased 18% compared with Q2 2022 to $218.9 million. U.S. revenue increased to $50.8 million, driven by increased demand due to utilization for the treatment of alopecia areata. Revenue outside the U.S. was $168.1 million, a decrease of 4%, driven by lower realized prices and the unfavorable impact of foreign exchange rates, partially offset by increased volume.

Emgality
For Q2 2023, worldwide Emgality revenue increased 8% compared with Q2 2022 to $169.3 million. U.S. revenue increased 9% to $118.8 million, primarily driven by increased demand. Revenue outside the U.S. increased 3% to $50.5 million, primarily driven by increased volume, partially offset by lower realized prices and the unfavorable impact of foreign exchange rates.

2023 Financial Guidance
The company updated its 2023 financial guidance on both a reported and non-GAAP basis.

Revenue guidance increased by $2.2 billion to the range of $33.4 to $33.9 billion. Approximately $1.5 billion of this increase is driven by business development activity, including the sales of rights for the olanzapine portfolio, which closed in July 2023, and Baqsimi, with the remainder reflecting strong underlying business performance.

Gross margin as a percent of revenue guidance increased 1% on both a reported and non-GAAP basis to approximately 78% and 80%, respectively, driven by the sales of rights for the olanzapine portfolio and Baqsimi.

The company’s guidance for marketing, selling and administrative expenses increased by $200 million to the range of $7.2 to $7.4 billion, driven by additional investments in recent launches and preparations for key launches expected in the second half of 2023.

Research and development expenses guidance increased by $600 million to the range of $8.9 to $9.1 billion. Research and development expenses are expected to be impacted by additional investments in the company’s late-stage portfolio and in early-stage research, and incremental expense from previously announced business development activities.

Acquired IPR&D guidance increased by $97 million to $202 million, reflecting charges through Q2 2023.

Other income (expense) guidance was updated to the range of $75 million of expense to $25 million of income on a reported basis, and $0 to $100 million of income on a non-GAAP basis. The reported and non-GAAP guidance updates both reflect increases driven by the interest impact of higher cash balances, and the reported guidance also incorporates net losses on investments in equity securities through Q2 2023.

The estimated effective tax rate increased to 14% to 15%, reflecting the impacts of the sales of rights for the olanzapine portfolio and Baqsimi.

Based on these changes, EPS guidance increased to the range of $9.20 to $9.40 on a reported basis and $9.70 to $9.90 on a non-GAAP basis. The company’s 2023 financial guidance reflects adjustments shown in the reconciliation table below.

2023

Expectations

Earnings per share (reported)

$9.20 to $9.40

Amortization of intangible assets

.44

Net losses on investments in equity securities

.07

Earnings per share (non-GAAP)

$9.70 to $9.90

Numbers may not add due to rounding

The following table summarizes the company’s updated 2023 financial guidance:

2023 Guidance(1)

Prior

Updated

Revenue

$31.2 to $31.7 billion

$33.4 to $33.9 billion

Gross Margin % of Revenue (reported)

Approx. 77%

Approx. 78%

Gross Margin % of Revenue (non-GAAP)

Approx. 79%

Approx. 80%

Marketing, Selling & Administrative

$7.0 to $7.2 billion

$7.2 to $7.4 billion

Research & Development

$8.3 to $8.5 billion

$8.9 to $9.1 billion

Acquired IPR&D

$105 million

$202 million(2)

Other Income/(Expense) (reported)

$(200) to $(100) million

$(75) to $25 million

Other Income/(Expense) (non-GAAP)

$(200) to $(100) million

$0 to $100 million

Tax Rate

Approx. 13%

14% to 15%

Earnings per Share (reported)

$8.18 to $8.38

$9.20 to $9.40

Earnings per Share (non-GAAP)

$8.65 to $8.85

$9.70 to $9.90

(1) Non-GAAP guidance reflects adjustments presented in the earnings per share reconciliation table above.

(2) Guidance does not include acquired IPR&D either incurred, or that may potentially be incurred, after Q2 2023.

Webcast of Conference Call
As previously announced, investors and the general public can access a live webcast of the Q2 2023 financial results conference call through a link on Lilly’s website at investor.lilly.com/webcasts-and-presentations. The conference call will begin at 9 a.m. Eastern time today and will be available for replay via the website.

On August 8, 2023 Eagle Pharmaceuticals, Inc. (Nasdaq: EGRX) ("Eagle" or the "Company") reported financial results for the three and six months ended June 30, 2023 (Press release, Eagle Pharmaceuticals, AUG 8, 2023, View Source [SID1234633965]).

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"We delivered a strong second quarter with impressive earnings and revenue, continuing the positive trajectory from an outstanding 18 months of business performance," stated Scott Tarriff, President and Chief Executive Officer of Eagle Pharmaceuticals. "Our marketed drugs across oncology and our hospital business are performing well. We’re particularly excited with the revenue ramp for Barhemsys and Byfavo; our share of the commercial U.S. pemetrexed market has more than tripled since the end of 2022, and Bendeka and Belrapzo continue to outperform. In light of these and other positive factors, which we believe reflect a broader continuation of strength, we recently raised our full-year 2023 guidance and resumed our share repurchase program."

Adjusted non-GAAP net income, adjusted non-GAAP earnings per share, adjusted non-GAAP EBITDA, adjusted non-GAAP gross margin, adjusted non-GAAP gross profit, adjusted non-GAAP R&D expense and adjusted non-GAAP SG&A expense are non-GAAP financial measures. For descriptions and reconciliations of these non-GAAP financial measures for historical periods to their most comparable GAAP financial measures, please see below and the tables at the end of this press release.

"Our expectation is that the growth that began in 2022 will continue, and we have confidence that 2023 will be another great year for Eagle," stated Tarriff. "Going forward, we intend to build on our sales momentum and also to leverage our commercial infrastructure and working capital position to add complementary products, either through R&D or acquisition."

Recent Business Highlights:

· An estimated 19,000 patients were dosed with Barhemsys or Byfavo during the second quarter of 2023, and 275 health care facilities purchased the products out of a total targeted market of approximately 4,000.2 Combined sales of Barhemsys and Byfavo were $1.2 million, representing approximately 30% sequential growth for the last two quarters. A summary of the sequential quarter sales growth for Barhemsys and Byfavo is provided below:

Description automatically generated with medium confidence

· The Company completed the expansion of its hospital and oncology commercial teams. Eagle believes the new commercial infrastructure of approximately 80 people enables the Company to bring in additional products, through R&D or acquisition, with minimal additional commercialization costs.
· Eagle is scheduled to have a Type C meeting with the U.S. Food and Drug Administration (FDA) in August 2023 for EA-114, its estrogen receptor antagonist product candidate for the treatment of HR+/HER- advanced breast cancer.
· FDA granted Qualified Infectious Disease Product (QIDP) Designation and Fast Track Designation for CAL02, a novel first-in-class anti-toxin drug candidate, being developed to treat severe community-acquired bacterial pneumonia (SCABP) as an adjunctive therapy to standard of care, entitling Eagle to an additional five years of marketing exclusivity upon approval.
· First patients were randomized in a multi-center adaptive, randomized, double-blind, placebo-controlled Phase 2 study designed to assess the efficacy and safety of CAL02 administered intravenously in addition to standard of care in patients with SCABP. The study plans to enroll approximately 276 patients at more than 100 sites in over 20 countries worldwide, with 100 sites expected to be up by year-end in time for the northern hemisphere’s pneumonia season. Depending upon recruitment rates, Eagle anticipates having its 50% interim report around the first half of 2024.

Second Quarter 2023 Financial Results

Total revenue for the second quarter of 2023, was $64.6 million, as compared to $74.1 million for the second quarter of 2022.

Second quarter 2023 royalty revenue was $21.7 million, compared to $24.9 million in the prior year quarter.

A summary of total revenue is outlined below:

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue (in thousands):
Product sales, net $ 42,993 $ 49,201 $ 89,214 $ 139,289
Royalty revenue 21,653 24,935 41,737 50,721
Total revenue $ 64,646 $ 74,136 $ 130,951 $ 190,010

Gross margin was 74% during the second quarter of 2023, compared to 68% in the second quarter of 2022.

R&D expense was $9.8 million for the second quarter of 2023, compared to $11.4 million for the second quarter of 2022. The decrease was primarily due to lower spend on the Company’s EA-114 program, which was in a large-scale study during the second quarter of 2022.

SG&A expenses in the second quarter of 2023 were $27.7 million compared to $36.8 million in the second quarter of 2022. This decrease was driven largely by the non-recurrence of Acacia-related acquisition costs and severance, partially offset by higher personnel related costs given the Company’s expanded hospital and oncology sales teams as well as higher selling and marketing costs for Barhemsys and Byfavo.

Net income for the second quarter of 2023 was $5.2 million, or $0.39 per basic and diluted share, compared to net loss of $(9.5) million, or $(0.74) per basic and diluted share, in the second quarter of 2022, primarily as a result of the factors discussed above.

Adjusted non-GAAP net income for the second quarter of 2023 was $15.5 million, or $1.18 per basic and diluted share, compared to adjusted non-GAAP net income of $20.3 million, or $1.58 per basic and $1.56 per diluted share, in the second quarter of 2022.

Adjusted non-GAAP EBITDA for the second quarter of 2023 was $20.7 million, compared to adjusted non-GAAP EBITDA of $25.9 million in the second quarter of 2022.

2023 Full-Year Guidance

The Company reiterated its recently announced raised guidance as follows:

· Adjusted non-GAAP EBITDA of $78.0-$84.0 million
· Adjusted non-GAAP earnings per share of $4.40-$4.70
· Adjusted non-GAAP R&D expense of $41.0-$45.0 million
· Adjusted non-GAAP SG&A expense of $86.0-$90.0 million

Liquidity

As of June 30, 2023, Eagle had $15.4 million in cash and cash equivalents, $115.1 million in accounts receivable, net, and $71.3 million in outstanding debt on the Company’s $150.0 million credit facility with JPMorgan. As of June 30, 2023, the Company had drawn $25.0 million on its $100.0 million revolving credit facility, which is included in outstanding debt.

As of June 30, 2023, Eagle had working capital of $100.6 million, after significant direct investment in R&D to fund the Company’s promising product candidates, the acquisition of Acacia Pharma Inc.’s outstanding shares and debt in 2022, and the purchase of an equity stake in and option to acquire Enalare Therapeutics Inc.

Conference Call

As previously announced, Eagle management will host its second quarter 2023 conference call as follows:

Date Tuesday, August 8, 2023
Time 8:30 a.m. ET
Toll free (U.S.) 800-343-4136
International 203-518-9814
Webcast (live and replay) www.eagleus.com, under the "Investor Relations" section

On August 8, 2023 Eagle Pharmaceuticals, Inc. (Nasdaq: EGRX) ("Eagle" or the "Company") reported financial results for the three and six months ended June 30, 2023 (Press release, Eagle Pharmaceuticals, AUG 8, 2023, View Source [SID1234633965]).

"We delivered a strong second quarter with impressive earnings and revenue, continuing the positive trajectory from an outstanding 18 months of business performance," stated Scott Tarriff, President and Chief Executive Officer of Eagle Pharmaceuticals. "Our marketed drugs across oncology and our hospital business are performing well. We’re particularly excited with the revenue ramp for Barhemsys and Byfavo; our share of the commercial U.S. pemetrexed market has more than tripled since the end of 2022, and Bendeka and Belrapzo continue to outperform. In light of these and other positive factors, which we believe reflect a broader continuation of strength, we recently raised our full-year 2023 guidance and resumed our share repurchase program."

Adjusted non-GAAP net income, adjusted non-GAAP earnings per share, adjusted non-GAAP EBITDA, adjusted non-GAAP gross margin, adjusted non-GAAP gross profit, adjusted non-GAAP R&D expense and adjusted non-GAAP SG&A expense are non-GAAP financial measures. For descriptions and reconciliations of these non-GAAP financial measures for historical periods to their most comparable GAAP financial measures, please see below and the tables at the end of this press release.

"Our expectation is that the growth that began in 2022 will continue, and we have confidence that 2023 will be another great year for Eagle," stated Tarriff. "Going forward, we intend to build on our sales momentum and also to leverage our commercial infrastructure and working capital position to add complementary products, either through R&D or acquisition."

Recent Business Highlights:

· An estimated 19,000 patients were dosed with Barhemsys or Byfavo during the second quarter of 2023, and 275 health care facilities purchased the products out of a total targeted market of approximately 4,000.2 Combined sales of Barhemsys and Byfavo were $1.2 million, representing approximately 30% sequential growth for the last two quarters. A summary of the sequential quarter sales growth for Barhemsys and Byfavo is provided below:

Description automatically generated with medium confidence

· The Company completed the expansion of its hospital and oncology commercial teams. Eagle believes the new commercial infrastructure of approximately 80 people enables the Company to bring in additional products, through R&D or acquisition, with minimal additional commercialization costs.
· Eagle is scheduled to have a Type C meeting with the U.S. Food and Drug Administration (FDA) in August 2023 for EA-114, its estrogen receptor antagonist product candidate for the treatment of HR+/HER- advanced breast cancer.
· FDA granted Qualified Infectious Disease Product (QIDP) Designation and Fast Track Designation for CAL02, a novel first-in-class anti-toxin drug candidate, being developed to treat severe community-acquired bacterial pneumonia (SCABP) as an adjunctive therapy to standard of care, entitling Eagle to an additional five years of marketing exclusivity upon approval.
· First patients were randomized in a multi-center adaptive, randomized, double-blind, placebo-controlled Phase 2 study designed to assess the efficacy and safety of CAL02 administered intravenously in addition to standard of care in patients with SCABP. The study plans to enroll approximately 276 patients at more than 100 sites in over 20 countries worldwide, with 100 sites expected to be up by year-end in time for the northern hemisphere’s pneumonia season. Depending upon recruitment rates, Eagle anticipates having its 50% interim report around the first half of 2024.

Second Quarter 2023 Financial Results

Total revenue for the second quarter of 2023, was $64.6 million, as compared to $74.1 million for the second quarter of 2022.

Second quarter 2023 royalty revenue was $21.7 million, compared to $24.9 million in the prior year quarter.

A summary of total revenue is outlined below:

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue (in thousands):
Product sales, net $ 42,993 $ 49,201 $ 89,214 $ 139,289
Royalty revenue 21,653 24,935 41,737 50,721
Total revenue $ 64,646 $ 74,136 $ 130,951 $ 190,010

Gross margin was 74% during the second quarter of 2023, compared to 68% in the second quarter of 2022.

R&D expense was $9.8 million for the second quarter of 2023, compared to $11.4 million for the second quarter of 2022. The decrease was primarily due to lower spend on the Company’s EA-114 program, which was in a large-scale study during the second quarter of 2022.

SG&A expenses in the second quarter of 2023 were $27.7 million compared to $36.8 million in the second quarter of 2022. This decrease was driven largely by the non-recurrence of Acacia-related acquisition costs and severance, partially offset by higher personnel related costs given the Company’s expanded hospital and oncology sales teams as well as higher selling and marketing costs for Barhemsys and Byfavo.

Net income for the second quarter of 2023 was $5.2 million, or $0.39 per basic and diluted share, compared to net loss of $(9.5) million, or $(0.74) per basic and diluted share, in the second quarter of 2022, primarily as a result of the factors discussed above.

Adjusted non-GAAP net income for the second quarter of 2023 was $15.5 million, or $1.18 per basic and diluted share, compared to adjusted non-GAAP net income of $20.3 million, or $1.58 per basic and $1.56 per diluted share, in the second quarter of 2022.

Adjusted non-GAAP EBITDA for the second quarter of 2023 was $20.7 million, compared to adjusted non-GAAP EBITDA of $25.9 million in the second quarter of 2022.

2023 Full-Year Guidance

The Company reiterated its recently announced raised guidance as follows:

· Adjusted non-GAAP EBITDA of $78.0-$84.0 million
· Adjusted non-GAAP earnings per share of $4.40-$4.70
· Adjusted non-GAAP R&D expense of $41.0-$45.0 million
· Adjusted non-GAAP SG&A expense of $86.0-$90.0 million

Liquidity

As of June 30, 2023, Eagle had $15.4 million in cash and cash equivalents, $115.1 million in accounts receivable, net, and $71.3 million in outstanding debt on the Company’s $150.0 million credit facility with JPMorgan. As of June 30, 2023, the Company had drawn $25.0 million on its $100.0 million revolving credit facility, which is included in outstanding debt.

As of June 30, 2023, Eagle had working capital of $100.6 million, after significant direct investment in R&D to fund the Company’s promising product candidates, the acquisition of Acacia Pharma Inc.’s outstanding shares and debt in 2022, and the purchase of an equity stake in and option to acquire Enalare Therapeutics Inc.

Conference Call

As previously announced, Eagle management will host its second quarter 2023 conference call as follows:

Date Tuesday, August 8, 2023
Time 8:30 a.m. ET
Toll free (U.S.) 800-343-4136
International 203-518-9814
Webcast (live and replay) www.eagleus.com, under the "Investor Relations" section

On August 8, 2023 CytomX Therapeutics, Inc. (Nasdaq: CTMX), a leader in the field of conditionally activated, localized biologics, reported second quarter 2023 financial results and provided a business update (Press release, CytomX Therapeutics, AUG 8, 2023, View Source [SID1234633964]).

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"In recent months, we have continued to advance our innovative Probody Therapeutic pipeline, while making significant progress with our partners across a wide range of programs and therapeutic modalities," said Sean McCarthy, D.Phil., chief executive officer and chairman of CytomX Therapeutics. "With a recent strategic financing completed with long-term CytomX shareholder, BVF Partners, we have strengthened our financial position and extended our cash runway into the second half of 2025."

Continued Dr. McCarthy, "During Q2 we also further strengthened our management team with the addition of Dr. Wayne Chu as Chief Medical Officer and the advancement of Dawn Benson to Senior Vice President of Quality and Product Manufacturing. Wayne’s extensive experience in oncology drug development across multiple therapeutic formats will be invaluable as we optimize our clinical development strategy and execution across our broad pipeline. Dawn’s contributions to CytomX during her tenure to date, and her 25-year biotech career leading quality and manufacturing-related activities, uniquely qualify her for this expanded role. We are poised to enter a period of considerable opportunity for CytomX in which we expect to reach multiple clinical milestones for key pipeline programs over the next 12 to 18 months."

Second Quarter Business Highlights and Recent Developments

Pipeline

CX-904, T-cell-engaging bispecific (TCB) targeted to EGFRxCD3, progressing towards initiation of backfill cohorts by the end of 2023 with initial Phase 1 dose escalation data anticipated in the first half of 2024 – CX-904 is a conditionally activated TCB designed to target the epidermal growth factor receptor (EGFR) on cancer cells and the CD3 receptor on T cells within the tumor microenvironment. CX-904 is partnered with Amgen in a global co-development alliance and is being evaluated by CytomX in an ongoing Phase 1 study in patients with advanced solid tumors. The primary goal of the ongoing initial dose escalation portion of the study is to assess safety and reach dose levels and exposures by the end of 2023 that support enrollment into backfill cohorts in select EGFR positive tumors. Initial Phase 1 dose escalation data for CX-904 is anticipated in the first half of 2024. Also, a decision to initiate expansion cohorts is anticipated in 2024, which will support future selection of the recommended Phase 2 dose.

IND filings for CX-2051 (EpCAM-directed ADC) and CX-801 (Interferon alpha-2b) expected in the fourth quarter of 2023 – CytomX’s next wave of molecules to enter the clinic leverage validated anti-cancer pathways and mechanisms of action that have historically been limited in their potential due to systemic toxicities. The molecular design of CX-2051 and CX-801 incorporated CytomX’s platform expertise and clinical learnings to optimize the predicted therapeutic index and potentially broaden the clinical utility of these promising targets through tumor localized conditional activation.

Continued progress in Phase 2 clinical evaluation of Bristol Myers Squibb’s Anti-CTLA-4 non-fucosylated Probody, BMS-986288 – In Q1 2023, BMS prioritized the BMS-986288 Probody program as its lead next-generation CTLA-4 program and advanced the program to Phase 2. BMS-986288 is a masked version of a non-fucosylated anti-CTLA-4 antibody, BMS-986218, which is designed to be a more potent version of ipilimumab (YERVOY). The non-fucosylated Probody, BMS-986288, utilizes CytomX’s masking technology to potentially localize the potent effect of a non-fucosylated CLTA-4 antibody to tumors while reducing systemic toxicity. The Phase 2 clinical evaluation of BMS-986288 is ongoing and includes a study arm evaluating third line or later colorectal cancer. CytomX and BMS also continue to collaborate on multiple preclinical research programs.
Corporate

Strategic financing extends cash runway into the 2nd half of 2025 and through multiple potential clinical milestones – In July 2023, CytomX entered into an agreement with BVF Partners L.P. ("BVF") for a private placement that resulted in initial gross proceeds of approximately $30.0 million. In the private placement, CytomX sold pre-funded warrants and accompanying tranche warrants at a combined price of $2.08 per share. CytomX also has the potential to receive up to an additional $60.0 million if all tranche warrants are fully exercised for cash.

Yu-Waye (Wayne) Chu, M.D., joins CytomX as Chief Medical Officer – In July 2023, CytomX announced the appointment of Yu-Waye (Wayne) Chu, M.D., as Chief Medical Officer (CMO). Dr. Chu joins CytomX with over 20 years of experience in oncology, in roles ranging from research to medicine to global clinical development. His drug development experiences have contributed to multiple approvals and span therapeutic modalities including antibody drug conjugates, checkpoint inhibitors, and bispecific immunotherapies. As CMO, Dr. Chu will oversee clinical development of the Company’s diversified portfolio of Probody therapeutic candidates.

Dawn Benson promoted to Senior Vice President of Quality and Product Manufacturing – In July 2023, CytomX announced the promotion of Dawn Benson from Vice President of Quality to Senior Vice President of Quality and Product Manufacturing. Ms. Benson brings more than 25 years of CMC experience in the biotechnology industry. Prior to joining CytomX, she was the Senior Vice President, Head of Quality at Coherus BioSciences and also has held various leadership positions at Sutro Biopharma, Jazz Pharmaceuticals, VaxGen and Nabi Biopharmaceuticals (acquired by Biotest Pharmaceuticals). Ms. Benson graduated from the University of North Carolina at Wilmington with a Bachelor of Chemistry and Biology.

Continued progress in strategic alliances – As a core component of the company business model, CytomX has leveraged strategic partnerships to extend the reach of its science, broaden its pipeline, and bring non-dilutive capital to the company. As part of this initiative, CytomX currently has five major partnerships, including the two most recently announced partnerships with Regeneron and Moderna. CytomX continues to make progress across its partnered research activities which has extended the reach of the Company’s technology and pipeline and provides for potential to build value through the achievement of future milestones and royalties over time.
Priorities for 2023

CX-904 (EGFRxCD3): Continue patient enrollment and dose escalation in ongoing Phase 1 study and initiate backfill cohorts by the end of 2023
File 2 New INDs (wholly-owned): CX-801 (IFNa2b) and CX-2051 (EpCAM) INDs projected in the fourth quarter of 2023
Next-Generation CTLA-4 Program: Continued clinical progress for BMS-986288
CX-2029 (CD71): Determine next steps for CD71 program, including CX-2029
Collaborations: Continuation of drug discovery activities within R&D alliances including those with our newest collaborators, Regeneron and Moderna

Second Quarter 2023 Financial Results

Cash, cash equivalents and investments totaled $180.9 million as of June 30, 2023, compared to $204.5 million as of March 31, 2023. The cash balance as of June 30, 2023 does not include approximately $30.0 million of gross proceeds from the financing transaction that closed with BVF Partners L.P. in July of 2023.

Total revenue was $24.7 million for the three months ended June 30, 2023, compared to $12.9 million for the corresponding period in 2022 and was driven primarily by a higher percentage of completion for research programs in the Bristol Myers Squibb collaboration, partially offset by a reduction in revenue from the AbbVie collaboration as a result of termination of the AbbVie CD71 agreement in the first quarter of 2023.

Research and development expenses decreased by $10.5 million during the three months ended June 30, 2023 to $20.7 million, compared to $31.2 million for the corresponding period in 2022. The reduction in research and development expenses was primarily due to a decrease in personnel related expenses, as well as winding down of laboratory contract services and clinical study activities related to the CX-2009 and CX-2029 programs, partially offset by an increase in laboratory contract services related to IND enabling activities.

General and administrative expenses decreased by $4.3 million during the three months ended June 30, 2023 to $7.4 million, compared to $11.7 million for the corresponding period in 2022. The reduction in general and administrative expenses was primarily due to a decrease in personnel related expenses as a result of the workforce reduction in 2022 and patent related legal expenses.

Conference Call & Webcast
CytomX management will host a conference call and simultaneous webcast today at 5 p.m. EDT (2 p.m. PDT) to discuss the financial results and provide a business update. Participants may access the live webcast of the conference call from the Events and Presentations page of CytomX’s website at View Source Participants may register for the conference call here and are advised to do so at least 10 minutes prior to joining the call. An archived replay of the webcast will be available on the company’s website.