On August 3, 2023 Bausch Health Companies Inc. (NYSE/TSX: BHC) ("Bausch Health" or the "Company" or "we" or "our") reported its second-quarter 2023 financial results and various other key updates from the quarter (Press release, Bausch Health, AUG 3, 2023, View Source [SID1234633737]).

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"We are encouraged by our strong performance in the second quarter as we continue to see the results from our focus on commercial excellence and investments in key businesses with growth opportunities, such as Salix" said Thomas J. Appio, Chief Executive Officer, Bausch Health. "We are also encouraged by various other key positive developments for our business during the quarter, including the favorable motion ruling in respect of Xifaxan and the continued success our initiatives to proactively manage our balance sheet. We also continue to advance our R&D pipeline as we look forward to bringing new products to the patients who can benefit from them," concluded Appio.

Favorable Motion Ruling in Xifaxan Litigation Reinforces Continuing Salix Growth Strategy
In May 2023, the U.S. District Court of Delaware denied Norwich Pharmaceuticals Inc.’s motion for reconsideration in the matter of Salix Pharmaceuticals, LTD et al v. Norwich Pharmaceuticals, Inc., which therefore prevents the U.S. Food and Drug Administration ("FDA") from approving Norwich’s abbreviated new drug application ("ANDA") for Xifaxan (rifaximin) 550 mg before October 2029. Norwich has appealed the denial of its motion for reconsideration. In June 2023, the FDA granted tentative approval for the ANDA, but confirmed that it is enjoined from granting final approval until October 2029. This favorable ruling reinforces Salix’s continuing growth strategy.

1 This is a non-GAAP measure or a non-GAAP ratio. For further information on non-GAAP measures and non-GAAP ratios, please refer to the "Non-GAAP Information" section of this news release. Please also refer to tables at the end of this news release for a reconciliation of this and other non-GAAP measures to the most directly comparable GAAP measure.

On June 5, 2023, Norwich sued the FDA in the United States District Court for the District of Columbia challenging the FDA’s decision to follow the August 10, 2022 final judgment and withhold final approval for the Norwich ANDA until October 2029. The FDA opposed Norwich’s action and the Company intervened in the lawsuit. A decision in the District Court for the District of Columbia is expected by the end of 2023.

Norwich’s appeal of the U.S. District Court of Delaware’s denial of its motion for reconsideration and Bausch Health’s appeal of the IBS-D and polymorph patent rulings from the August 10, 2022 final judgment have been consolidated, and are pending at the Court of Appeals for the Federal Circuit. A decision is expected on the appeals as early as Q1 2024.

The Company remains confident in the strength of the Xifaxan patents and intends to vigorously defend its intellectual property.

Proactive Balance Sheet Initiatives, Including New Accounts Receivable Credit Facility, Further Enhance Liquidity of Bausch Health (excl. Bausch + Lomb) to Greater than $1 Billion
In June 2023, the Company entered into a non-recourse receivables financing facility for up to $600 million with KKR and its credit funds and accounts. Following the closing of the receivables facility Bausch Health (excl. Bausch + Lomb) has liquidity in excess of $1 billion, inclusive of cash and cash equivalents, availability under the Company’s existing revolving credit facility and availability under the receivables facility. The strength of our current liquidity profile, coupled with our continued generation of cash flow from operations, provides the Company with flexibility to assess strategic opportunities to further improve our balance sheet and pursue key growth opportunities.

Update on Potential Bausch + Lomb Distribution
The Company continues to believe that completing a separation of Bausch + Lomb Corporation ("Bausch + Lomb") makes strategic sense and is committed to creating two strong companies following any potential distribution.
As the Company continues to evaluate all relevant factors and circumstances related to any Bausch + Lomb distribution, it is exploring options for optimizing the structure of any Bausch + Lomb distribution, if and when such a distribution is completed. The Company’s initial intent was to effectuate any potential distribution by way of plan of arrangement. The Company has since determined that the optimal way to implement the distribution may instead be through a tax-free reduction of capital, which also provides additional flexibility to the Company and Bausch + Lomb with respect to strategic alternatives after any distribution has occurred. The Company continues to evaluate the structure of any distribution and its other related details. Any distribution of Bausch + Lomb continues to be subject to receipt of applicable shareholder and other required approvals.

Bausch Health (excl. B+L) R&D Update
•RED-C: global program for Reduction of Early Decompensation in Cirrhosis
◦Expect to complete enrollment of two global Phase 3 trials in Q1 2024
◦Received feedback on the program from the National Medical Products Administration in China and we are currently planning to meet with authorities in Japan later this year
•Amiselimod (S1P modulator): treatment of mild to moderate Ulcerative Colitis
◦Phase 2 study completed enrollment in July 2023 and the study is expected to be completed in Q4 2023
•IDP-126: first triple combination product for the treatment of acne vulgaris
◦PDUFA date set for October 2023

◦New Drug Submission was submitted to Health Canada on May 30, 2023
•Clear and Brilliant Touch: fractionated laser device for skin rejuvenation
◦Regulatory submissions on-track in Europe and Canada in 2024 and Asia Pacific in 2025
•Next Generation Fraxel: fractionated laser device for skin resurfacing
◦FDA submission is expected in Q4 2023

Second Quarter 2023 Revenue Performance
Total reported revenues were $2.17 billion for the second quarter of 2023, compared with $1.97 billion in the second quarter of 2022, an increase of $200 million, or 10%. Excluding the unfavorable impact of foreign exchange of $17 million and the favorable impact of acquisitions, divestitures, and discontinuations of $4 million, revenue increased by 11% organically1 compared with the second quarter of 2022.

Reported revenues by segment were as follows:

Three Months Ended June 30, Reported Change
Change at Constant Currency1
(Non-GAAP)
Change in Organic Revenue1
(Non-GAAP)
(in millions) 2023 2022 Amount Pct.
Total Bausch Health Revenues $2,167 $1,967 $200 10 % 11 % 11 %
Bausch Health (excl. B+L) $1,132 $1,026 $106 10 % 10 % 11 %
Salix segment $557 $501 $56 11 % 11 % 11 %
International segment $259 $233 $26 11 % 9 % 11 %
Solta Medical segment $88 $57 $31 54 % 60 % 60 %
Diversified segment $228 $235 ($7) (3 %) (3 %) (3 %)
Bausch + Lomb segment $1,035 $941 $94 10 % 12 % 12 %

Salix Segment
Salix segment reported and organic1 revenues were $557 million for the second quarter of 2023, compared with $501 million for the second quarter of 2022, an increase of $56 million, or 11%. Sales growth was driven by Xifaxan, Relistor, and Trulance.

International Segment
International segment reported revenues were $259 million for the second quarter of 2023, compared with $233 million for the second quarter of 2022, an increase of $26 million, or 11%. Excluding the favorable impact of foreign exchange of $4 million and the favorable impact of divestitures and discontinuations of $4 million, segment revenues increased organically by 11% compared with the second quarter of 2022, led by organic1 growth in Canada and EMEA.

Solta Medical Segment
Solta Medical segment reported revenues were $88 million for the second quarter of 2023, compared with $57 million in the second quarter of 2022, an increase of $31 million, or 54%, which was favorably impacted by COVID-related lockdowns in China in the prior year quarter. Excluding the unfavorable impact of foreign exchange of $3 million, segment revenues increased organically1 by 60% compared with the second quarter of 2022.

Diversified Segment
Diversified segment reported revenues were $228 million for the second quarter of 2023, compared with $235 million for the second quarter of 2022, a decrease of $7 million, or 3% on both a reported and organic basis, primarily attributable to decreases in sales across Neurology and Generics, partially offset by growth in sales in Dermatology and Dentistry.

Bausch + Lomb Segment
Bausch + Lomb segment reported revenues were $1,035 million for the second quarter of 2023, compared with $941 million for the second quarter of 2022, an increase of $94 million, or 10%. Excluding the unfavorable impact of foreign exchange of $18 million, the favorable impact of acquisitions of $2 million and the favorable impact of divestitures and discontinuations of $2 million, the Bausch + Lomb segment revenue increased organically1 by 12%, compared with the second quarter of 2022, driven by increases across all business units.

Consolidated Operating Income
Consolidated operating income was $412 million for the second quarter of 2023, compared with operating income of $161 million for the second quarter of 2022, an increase of $251 million. The change is primarily due to higher revenues and associated gross profit, the benefit of insurance recoveries relating to certain litigation matters, lower amortization of intangible assets, and lower restructuring, integration, separation and IPO costs, partially offset by higher selling, general and administrative expenses and investments in research and development.

Net Income (Loss) Attributable to Bausch Health
Net income attributable to Bausch Health for the second quarter of 2023 was $26 million, compared with a net loss of $145 million for the second quarter of 2022, a favorable change of $171 million. This was primarily due to the increase in income before income taxes of $208 million.

Adjusted net income attributable to Bausch Health (non-GAAP)1 for the second quarter of 2023 was $300 million, compared with $201 million for the second quarter of 2022, an increase of $99 million primarily due to growth in consolidated operating income.

Earnings (Loss) Per Share Attributable to Bausch Health
GAAP earnings per share attributable to Bausch Health for the second quarter of 2023 was $0.07, compared with a loss of $0.40 for the second quarter of 2022.

Adjusted EBITDA Attributable to Bausch Health (non-GAAP)1
Adjusted EBITDA attributable to Bausch Health (non-GAAP)1 was $727 million for the second quarter of 2023, as compared to $701 million for the second quarter of 2022, an increase of $26 million.

Cash Provided by (Used in) Operating Activities
The Company generated $206 million of cash from operating activities in the second quarter of 2023 compared with $123 million in the second quarter of 2022. The increase in cash flow from operations is primarily attributable to (i) a decrease in legal settlements compared to the prior year when payments were made related to the Glumetza Antitrust Litigation in second quarter 2022, (ii) proceeds from insurance recoveries regarding certain legacy litigation matters, (iii) changes in business performance and (iv) a portion of cash interest payments being classified as Cash Flows from Financing activities as a result of the accounting treatment required for the Company’s New Secured Notes issued in September 2022.

Balance Sheet Highlights as of June 30, 2023:
•Cash and cash equivalents of $588 million.
•Bausch Health (excl. B+L) had availability under its 2027 revolving credit facility of $707 million and Bausch + Lomb had availability of approximately $275 million under its revolving credit facility.
•Accounts Receivable Credit Facility provides for an up to $600 million facility for approximately five years. No amounts were drawn as of June 30, 2023.

On August 3, 2023 Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH) (Aurinia or the Company) reported its financial results for the three and six months ended June 30, 2023. Amounts are expressed in U.S. dollars (Press release, Aurinia Pharmaceuticals, AUG 3, 2023, View Source [SID1234633736]).

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Total net revenue was $41.5 million for the three months ended June 30, 2023, compared to $28.2 million in the prior year three months ended June 30, 2022, representing growth of approximately 47% year over year. Year to date net revenue increased to $75.9 million for the six months ended June 30, 2023 compared to $49.8 million for the same time period for 2022, representing growth of approximately 52% period over period.

"We are extremely pleased with our results in the second quarter of 2023. Building on three successful quarters in a row, this represents our most successful quarter to date from a net revenue perspective," said Peter Greenleaf, President, and Chief Executive Officer of Aurinia. "Strong commercial execution continues as we see further utilization of LUPKYNIS (voclosporin) across the lupus nephritis marketplace. Moreover, we are excited by the depth of usage in nephrology and the continued expansion into rheumatology. Our marketing and selling efforts continue to produce patient start forms (PSFs), patients on therapy (POT), wallets shipped, and net product revenue at or near all-time highs."

For the fiscal year 2023, the Company is increasing its net product revenue guidance to a range of $150 – $160 million for net product sales of LUPKYNIS. The guidance range is based on assumptions regarding PSF run rates, consistent conversion rates, time to convert, persistency, and pricing.

Second Quarter 2023 and Recent Highlights

Arthritis & Rheumatology published full results of AURORA 2, a Phase 3, double-blind, placebo-controlled extension study out to 3 years, demonstrating that kidney preservation, sustained renal response, and reductions in steroid use were achieved with LUPKYNIS with mycophenolate mofetil (MMF) and low-dose steroids, compared to MMF and low-dose steroids alone.
A post-hoc, pooled analysis of the Phase 2 AURA-LV and Phase 3 AURORA 1 studies presented at the annual meetings of the European League Against Rheumatism (EULAR) and the European Renal Association (ERA) found that LUPKYNIS with MMF and low-dose steroids resulted in significantly higher renal response rates and earlier and greater reductions in proteinuria in LN patients with high proteinuria, compared to MMF and low-dose steroids alone.
Refined method of use patent (‘991) was issued by the U.S. Patent and Trademark Office and Orange Book listed.
Received reimbursement recommendation from National Institute for Health and Care Excellence (NICE) in the United Kingdom, Swissmedic marketing authorization in Switzerland and most recently reimbursement approval in Italy.
Initiated strategic review of the company in association with J.P. Morgan Securities LLC as our financial advisor.
LUPKYNIS Product Performance Highlights

There were approximately 1,911 patients on LUPKYNIS therapy at June 30, 2023, compared with 1,274 at June 30, 2022, representing an increase of approximately 50% year over year.
Aurinia added 451 patient start forms (PSFs) during the three months ended June 30, 2023, compared to 409 during the three months ended June 30, 2022, representing an increase of approximately 10% over the previous period last year.
As of July 31, 2023, the Company recorded approximately 1,017 PSFs since January 1, 2023.
Conversion rates remain consistent with more than 89% of PSFs converted to patients on therapy.
Time to convert has improved to an all-time high with the large majority (65%) of patients on therapy by 20 days.
As of June 30, 2023, 12 month persistency improved to 54% from 51% at March 31, 2023.
Financial Results for the Three and Six Months Ended June 30, 2023

Total net revenue was $41.5 million and $28.2 million for the three months ended June 30, 2023 and June 30, 2022, respectively. Total net revenue was $75.9 million and $49.8 million for the six months ended June 30, 2023 and June 30, 2022, respectively. The increase is primarily due to an increase in net product revenue from our two main customers for LUPKYNIS driven predominantly by further penetration in the LN market.

Total cost of sales and operating expenses for the three months ended June 30, 2023 and June 30, 2022 were $57.7 million and $64.2 million, respectively. Total cost of sales and operating expenses for the six months ended June 30, 2023 and June 30, 2022 were $121.7 million and $123.7 million, respectively. Further breakdown of operating expense drivers and fluctuations are highlighted in the following paragraphs.

Cost of sales were $1.6 million for the three months ended June 30, 2023 and June 30, 2022. Cost of sales were $2.0 million and $1.9 million for the six months ended June 30, 2023 and June 30, 2022, respectively. Cost of sales for both periods ended June 30, 2023 and June 30, 2022 remained consistent due to an increase of revenues, offset by a write down of FDA process validation batches that occurred during the second quarter of 2022.

Gross margin for the three months ended June 30, 2023 and June 30, 2022 was approximately 96% and 94%, respectively. Gross margin for the six months ended June 30, 2023 and June 30, 2022 was approximately 97% and 96% respectively.

Selling, general and administrative (SG&A) expenses, inclusive of share-based compensation, were $47.1 million and $51.5 million for the three months ended June 30, 2023 and June 30, 2022, respectively. SG&A expenses, inclusive of share-based compensation, were $97.2 million and $96.7 million for the six months ended June 30, 2023 and June 30, 2022, respectively. The primary drivers for the decrease in SG&A expense for the three months ended June 30, 2023 compared to the same period ended June 30, 2022 was a decrease in professional fees and services, including legal fees incurred during the respective quarters, with respect to litigation matters that were taking place in the three months ended June 30, 2022. For the six months ended June 30, 2023 compared to the same period ended June 30, 2022, the increase was due to an increase in share-based compensation expense and marketing expenses offset by a decrease in professional fees and services which includes legal fees.

Non-cash SG&A share-based compensation expense included within SG&A expenses was $9.8 million and $8.9 million for the three months ended June 30, 2023 and June 30, 2022, respectively. Non-cash SG&A share-based compensation expense included within SG&A expenses, was $17.4 million and $14.9 million for the six months ended June 30, 2023 and June 30, 2022, respectively.

Research and development (R&D) expenses, inclusive of share-based compensation, were $12.7 million and $11.5 million for the three months ended June 30, 2023 and June 30, 2022, respectively. R&D expenses, inclusive of share-based compensation expense, were $25.8 million and $24.1 million for the six months ended June 30, 2023 and June 30, 2022, respectively. The primary drivers for the increase for the three and six months ended June 30, 2023 as compared to the same periods ended June 30, 2022, were an increase in salaries and related employee benefit costs, share-based compensation expense and clinical supply and distribution as the Company advances its AUR200 and AUR300 programs and fulfills the post approval FDA commitments related to LUPKYNIS. The increase was partially offset by a decrease in contract research organization costs related to the completion of the AURORA 2 continuation study and drug interaction study, which were substantially completed in 2022.

Non-cash R&D share-based compensation expense included with R&D expense was $2.1 million and $1.1 million for the three months ended June 30, 2023 and June 30, 2022, respectively. Non-cash R&D share-based compensation expense included with R&D expenses was $3.7 million and $2.0 million for the six months ended June 30, 2023 and June 30, 2022, respectively.

Other (income) expense, net was $(3.6) million and $(0.5) million for the three months ended June 30, 2023 and June 30, 2022, respectively. Other (income) expense, net was $(3.3) million and $1.0 million for the six months ended June 30, 2023 and June 30, 2022, respectively. The increase in other income is primarily related to change in fair value assumptions driven predominantly by rising interest rates related to our deferred compensation liability coupled with the foreign exchange gain related to our monoplant finance liability.

Interest expense was $0.1 million for the three and six months ended June 30, 2023 due to the commencement of the monoplant finance lease during the second quarter of 2023. We did not incur interest expense during 2022.

Interest income was $4.1 million and $0.5 million for the three months ended June 30, 2023 and June 30, 2022, respectively. Interest income was $7.9 million and $0.7 million for the six months ended June 30, 2023 and June 30, 2022, respectively. The increase between periods is due to higher yields on our investments as a result of increased interest rates.

For the three months ended June 30, 2023, Aurinia recorded a net loss of $11.5 million or $0.08 net loss per common share, as compared to a net loss of $35.5 million or $0.25 net loss per common share for the three months ended June 30, 2022. For the six months ended June 30, 2023, Aurinia recorded a net loss of $37.7 million or $0.26 net loss per common share, as compared to a net loss of $73.1 million or $0.52 net loss per common share for the six months ended June 30, 2022.

Financial Liquidity at June 30, 2023

As of June 30, 2023, Aurinia had cash, cash equivalents and restricted cash and short-term investments of $350.7 million compared to $389.4 million at December 31, 2022. The decrease is primarily related to the continued investment in commercialization activities and post approval commitments of our approved drug, LUPKYNIS, inventory purchases, advancement of our pipeline and the second capital expenditure payment for the monoplant, partially offset by an increase in cash receipts from sales of LUPKYNIS.

Aurinia believes that it has sufficient financial resources to fund its operations, which include funding commercial activities, such as FDA related post approval commitments, manufacturing and packaging of commercial drug supply, funding its supporting commercial infrastructure, advancing its R&D programs and funding its working capital obligations for at least the next few years.

This press release is intended to be read in conjunction with the Company’s unaudited condensed consolidated financial statements and Management’s Discussion and Analysis for the quarter ended June 30, 2023 in the Company’s Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, including risk factors disclosed therein, which will be accessible on Aurinia’s website at www.auriniapharma.com, on SEDAR at www.sedarplus.ca or on EDGAR at www.sec.gov/edgar.

Conference Call Details

Aurinia will host a conference call and webcast to discuss the quarter ended June 30, 2023 financial results today, Thursday, August 3, 2023 at 8:30 a.m. ET. The audio webcast can be accessed under "News/Events" through the "Investors" section of the Aurinia corporate website at www.auriniapharma.com. In order to participate in the conference call, please dial +1 (888) 645-4404 (Toll-free U.S. & Canada). An audio webcast can be accessed under "News/Events" through the Investors section of the Aurinia corporate website at www.auriniapharma.com. A replay of the webcast will be available on Aurinia’s website.

About Lupus Nephritis

Lupus Nephritis is a serious manifestation of systemic lupus erythematosus (SLE), a chronic and complex autoimmune disease. About 200,000-300,000 people live with SLE in the U.S. and about one-third of these people are diagnosed with lupus nephritis at the time of their SLE diagnosis. About 50 percent of all people with SLE may develop lupus nephritis. If poorly controlled, lupus nephritis can lead to permanent and irreversible tissue damage within the kidney. Black and Asian people with SLE are four times more likely to develop lupus nephritis and Hispanic people are approximately twice as likely to develop the disease compared to White people with SLE. Black and Hispanic people with SLE also tend to develop lupus nephritis earlier and have poorer outcomes, compared to White people with SLE.

On August 3, 2023 Arbutus Biopharma Corporation (Nasdaq: ABUS) ("Arbutus" or the "Company"), a clinical-stage biopharmaceutical company leveraging its extensive virology expertise to develop novel therapeutics that target specific viral diseases, reported second quarter 2023 financial results and provided a corporate update (Press release, Arbutus Biopharma, AUG 3, 2023, View Source [SID1234633735]).

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"In the second quarter of 2023, we achieved two important milestones in our Phase 2a clinical trials that support our efforts in developing AB-729 (imdusiran), our lead RNAi therapeutic, as a cornerstone therapy in a functional cure treatment regimen for HBV," said William Collier, Arbutus President and Chief Executive Officer. "First, we reported data from our Phase 2a clinical trial showing that imdusiran in combination with interferon, is well tolerated and appears to result in continued HBsAg declines in some patients. Second, we made solid progress towards our goal of further stimulating host HBV-associated immunity, as we dosed the first patient in the additional treatment arm of the ongoing Phase 2a trial assessing the addition of low-dose nivolumab, a PD-1 monoclonal antibody, to VTP-300 and imdusiran."

Mr. Collier continued, "Regarding our early-stage HBV assets, we are now prepared to move AB-101 forward into a Phase 1 clinical trial in New Zealand, which we expect to initiate this quarter, and AB-161, our oral RNA destabilizer, is in an on-going Phase 1 clinical trial. Additionally, we are on-track to complete IND-enabling studies with our coronavirus Mpro inhibitor candidate, AB-343, as well as initiate IND-enabling studies for a coronavirus nsp12 inhibitor candidate in the second half of this year."

Pipeline Updates and Key Milestones

Imdusiran (AB-729, RNAi Therapeutic)  

At the European Association for the Study of the Liver (EASL) Congress, we presented data from our on-going Phase 2a clinical trial (AB-729-201), evaluating the safety, tolerability and antiviral activity of the combination of imdusiran and pegylated interferon alfa-2a (IFN) in patients with chronic hepatitis B virus (cHBV). Preliminary data suggests that the addition of IFN to imdusiran was generally well tolerated and appears to result in continued HBsAg declines in some patients. The mean HBsAg decline from baseline during the imdusiran lead-in phase was 1.6 log10 at week 24 of treatment which is comparable to what was previously seen in other imdusiran clinical trials.  Four patients reached HBsAg below the lower limit of quantitation (LLOQ) at some point during IFN treatment. We plan to provide a further update on this clinical trial when we have additional meaningful patient data.
We have completed enrollment in the first group of our Phase 2a clinical trial (AB-729-202) that is evaluating imdusiran, nucleos(t)ide analogue (NA) therapy and Vaccitech’s HBV antigen-specific immunotherapeutic, VTP-300. Preliminary data from patients in the clinical trial are expected in the second half of 2023.

We recently expanded the AB-729-202 clinical trial to enroll 20 patients who will receive imdusiran (60mg every 8 weeks) plus NA therapy for 24 weeks followed by VTP-300 plus up to two doses of low-dose nivolumab (Opdivo). In June 2023, we announced that the first patient received the first dose of imdusiran in this additional arm. Preliminary data from this additional treatment arm are expected in 2024.
AB-161 (Oral RNA destabilizer)

The Phase 1 clinical trial with AB-161 is on-going with single-ascending dose data expected in the second half of 2023. AB-161 is our next-generation oral HBV-specific RNA destabilizer, which is being developed as part of a potential all-oral treatment regimen to functionally cure HBV. Recently reported preclinical data showed that AB-161 provides robust anti-HBV activity including suppression of HBV RNA and HBsAg production in vitro and in vivo.
AB-101 (Oral PD-L1 Inhibitor) 

In April 2023, AB-101 was placed on clinical hold by the U.S. Food and Drug Administration (FDA) during the Investigational New Drug (IND) application review process prior to dosing subjects. In July 2023, the New Zealand Medicine and Medical Device Safety Authority (Medsafe) approved our CTA application for a Phase 1 clinical trial in New Zealand for AB-101, and we believe the protocol approved by Medsafe adequately addresses the clinical trial design and safety monitoring issues raised by the FDA. We are planning to initiate the Phase 1 clinical trial this quarter. We are developing AB-101 to reawaken and boost the immune system of patients with cHBV. Preclinical data generated thus far indicates that AB-101 is highly potent and mediates activation and reinvigoration of HBV-specific T-cells from cHBV patients.
COVID-19 and Pan-Coronavirus Programs

We are continuing to conduct IND-enabling studies with AB-343 and are on track to complete those studies in the second half of 2023.
We are continuing to direct our research efforts to identifying an nsp12 viral polymerase inhibitor clinical candidate. Such a candidate could potentially be combined with AB-343 to achieve better patient treatment outcomes and for use in prophylactic settings.  We expect to nominate an nsp12 inhibitor clinical candidate and initiate IND-enabling studies in the second half of 2023.
Corporate Updates

In July 2023, we announced that Melissa V. Rewolinski, PhD was appointed to the Board of Directors. Melissa brings to the Board more than 20 years of strategic, operational and drug development experience within the pharmaceutical industry.
In July 2023, we announced the promotion of Karen Sims, MD, PhD to Chief Medical Officer. Karen is a board-certified infectious disease physician with more than 12 years of industry experience in conducting and overseeing early stage through global Phase 2 clinical trials. She joined Arbutus in April 2017 and has held positions of increasing seniority, including most recently as Vice President, Clinical Development, before being promoted to Chief Medical Officer.
In July 2023, we also announced the appointment of Christopher Naftzger as General Counsel and Chief Compliance Officer. Chris succeeds Dr. Elizabeth Howard who will continue in an advisory role with respect to the on-going patent infringement litigations. Chris brings more than 25 years of legal experience, including over a decade of experience serving in senior in-house counsel positions with life science companies.
Financial Results

Cash, Cash Equivalents and Investments

As of June 30, 2023, we had cash, cash equivalents and investments in marketable securities of $163.5 million compared to $184.3 million as of December 31, 2022. During the six months ended June 30, 2023, we used $46.9 million in operating activities, which was partially offset by $24.6 million of net proceeds from the issuance of common shares under our "at-the-market" offering program. We expect our 2023 net cash burn to range from between $90 to $95 million, excluding any proceeds received from our "at the market program". We believe our cash runway will be sufficient to fund our operations into the first quarter of 2025.

Revenue

Total revenue was $4.7 million for the three months ended June 30, 2023 compared to $14.2 million for the same period in 2022. The decrease of $9.5 million for the 2023 period was due primarily to lower revenue recognition from our license agreement with Qilu compared to the 2022 period based on lower employee labor hours expended by us in the 2023 period compared to the 2022 period to perform our manufacturing obligations under the license agreement.

Operating Expenses

Research and development expenses were $17.7 million for the three months ended June 30, 2023 compared to $22.9 million for the same period in 2022. The decrease of $5.2 million was due primarily to a decrease in expenses for drug supply manufacturing for our imdusiran, AB-101 and AB-161 clinical trials, as well as a decrease in expenses related to our AB-836 Phase 1a/1b clinical trial, which was discontinued in the fourth quarter of 2022. These were partially offset by an increase in expenses for our coronavirus program, including drug supply manufacturing. General and administrative expenses were $6.0 million for the three months ended June 30, 2023, compared to $5.2 million for the same period in 2022. This increase was due primarily to increases in non-cash stock-based compensation expense and professional fees.

Net Loss

For the three months ended June 30, 2023, our net loss was $17.1 million, or a loss of $0.10 per basic and diluted common share, as compared to a net loss of $14.2 million, or a loss of $0.10 per basic and diluted common share, for the three months ended June 30, 2022.

Outstanding Shares

As of June 30, 2023, we had approximately 166.9 million common shares issued and outstanding, as well as approximately 20.2 million stock options and unvested restricted stock units outstanding. Roivant Sciences Ltd. owned approximately 23% of our outstanding common shares as of June 30, 2023.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(in thousands, except share and per share data)

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Revenue
Collaborations and licenses $ 3,885 $ 12,556 $ 9,394 $ 23,774
Non-cash royalty revenue 766 1,685 1,944 3,048
Total revenue 4,651 14,241 11,338 26,822
Operating expenses
Research and development 17,692 22,942 35,967 41,404
General and administrative 5,980 5,200 11,532 10,092
Change in fair value of contingent consideration (636 ) 208 (363 ) 409
Total operating expenses 23,036 28,350 47,136 51,905
Loss from operations (18,385 ) (14,109 ) (35,798 ) (25,083 )
Other income (loss)
Interest income 1,461 396 2,729 555
Interest expense (171 ) (482 ) (369 ) (988 )
Foreign exchange gain 1 3 5 3
Total other income (loss) 1,291 (83 ) 2,365 (430 )
Loss before income taxes (17,094 ) (14,192 ) (33,433 ) (25,513 )
Income tax expense — — — (4,444 )
Net loss $ (17,094 ) $ (14,192 ) $ (33,433 ) $ (29,957 )
Net loss per common share
Basic and diluted $ (0.10 ) $ (0.10 ) $ (0.20 ) $ (0.20 )
Weighted average number of common shares
Basic and diluted 166,063,284 148,750,048 163,855,661 148,589,711


UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

June 30, 2023 December 31, 2022
Cash, cash equivalents and marketable securities, current $ 152,484 $ 146,913
Accounts receivable and other current assets 6,316 4,226
Total current assets 158,800 151,139
Property and equipment, net of accumulated depreciation 5,370 5,070
Investments in marketable securities, non-current 11,057 37,363
Right of use asset 1,585 1,744
Other non-current assets 11 103
Total assets $ 176,823 $ 195,419

Accounts payable and accrued liabilities $ 8,805 $ 16,029
Deferred license revenue, current 15,327 16,456
Lease liability, current 397 372
Total current liabilities 24,529 32,857
Liability related to sale of future royalties 8,787 10,365
Deferred license revenue, non-current — 5,999
Contingent consideration 7,168 7,531
Lease liability, non-current 1,646 1,815
Total stockholders’ equity 134,693 136,852
Total liabilities and stockholders’ equity $ 176,823 $ 195,419

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Six Months Ended June 30,
2023 2022
Net loss $ (33,433 ) $ (29,957 )
Non-cash items 2,911 3,154
Change in deferred license revenue (7,128 ) 27,815
Other changes in working capital (9,210 ) (686 )
Net cash (used in) provided by operating activities (46,860 ) 326
Net cash provided by (used in) investing activities 18,119 (73,886 )
Issuance of common shares pursuant to Share Purchase Agreement — 10,973
Issuance of common shares pursuant to the Open Market Sale Agreement 24,604 268
Cash provided by other financing activities 555 357
Net cash provided by financing activities 25,159 11,598
Effect of foreign exchange rate changes on cash and cash equivalents 3 —
Decrease in cash and cash equivalents (3,579 ) (61,962 )
Cash and cash equivalents, beginning of period 30,776 109,282
Cash and cash equivalents, end of period 27,197 47,320
Investments in marketable securities 136,344 153,329
Cash, cash equivalents and marketable securities, end of period $ 163,541 $ 200,649

Conference Call and Webcast Today

Arbutus will hold a conference call and webcast today, Thursday, August 3, 2023, at 8:45 AM Eastern Time to provide a corporate update. To dial-in for the conference call by phone, please register using the following link: Registration Link. A live webcast of the conference call can be accessed through the Investors section of Arbutus’ website at www.arbutusbio.com.

An archived webcast will be available on the Arbutus website after the event.

About imdusiran (AB-729)

Imdusiran is an RNA interference (RNAi) therapeutic specifically designed to reduce all HBV viral proteins and antigens including hepatitis B surface antigen which is thought to be a key prerequisite to enable reawakening of a patient’s immune system to respond to the virus. Imdusiran targets hepatocytes using Arbutus’ novel covalently conjugated N-Acetylgalactosamine (GalNAc) delivery technology enabling subcutaneous delivery. Clinical data generated thus far has shown single- and multi-doses of imdusiran to be generally safe and well-tolerated, while also providing meaningful reductions in hepatitis B surface antigen and hepatitis B DNA. Imdusiran is currently in multiple Phase 2a clinical trials.

About AB-101

AB-101 is our lead oral PD-L1 inhibitor candidate that we believe will allow for controlled checkpoint blockade and enable oral dosing, while minimizing the systemic safety issues typically seen with checkpoint antibody therapies. Immune checkpoints such as PD-1/PD-L1 play an important role in the induction and maintenance of immune tolerance and in T-cell activation. Preclinical data generated thus far indicates that AB-101 mediates activation and reinvigoration of HBV-specific T-cells from cHBV patients. We believe AB-101, when used in combination with other approved and investigational agents, could potentially lead to a functional cure in HBV chronically infected patients. We are also exploring oncology applications for our internal PD-L1 portfolio. 

About AB-161

AB-161 is our next generation oral small molecule RNA destabilizer, specifically designed to target the liver. Mechanistically, RNA destabilizers target the host proteins PAPD5/7, which are involved in regulating the stability of HBV RNA transcripts. In doing so, RNA destabilizers lead to the selective degradation of HBV RNAs, thus reducing HBsAg levels and inhibiting viral replication. To provide a proprietary all-oral treatment regimen for patients with cHBV, we believe inclusion of a small molecule RNA destabilizer is key.

About AB-343

AB-343 is our lead coronavirus drug candidate that inhibits the SARS-CoV-2 main protease (Mpro), a validated target for the treatment of COVID-19 and potential future coronavirus outbreaks. In our pre-clinical research conducted to date, AB-343 has shown pan-coronavirus antiviral activity, no reduction in potency against known SARS-CoV-2 variants, robust activity against SARS-CoV-2 Mpro resistant strains, and a favorable drug-drug interaction profile with no need for ritonavir boosting. We see an opportunity to pursue a potential combination therapeutic strategy focusing on Mpro and nsp12 viral polymerase targets to reduce hospitalizations, achieve better patient treatment outcomes and provide pre-exposure prophylactic therapy.

About HBV

Hepatitis B is a potentially life-threatening liver infection caused by the hepatitis B virus (HBV). HBV can cause chronic infection which leads to a higher risk of death from cirrhosis and liver cancer. Chronic HBV infection represents a significant unmet medical need. The World Health Organization estimates that over 290 million people worldwide suffer from chronic HBV infection, while other estimates indicate that approximately 2.4 million people in the United States suffer from chronic HBV infection. Approximately 820,000 people die every year from complications related to chronic HBV infection despite the availability of effective vaccines and current treatment options. 

About Coronaviruses

Coronaviruses are a large family of viruses that range from the common cold to more severe diseases such as severe acute respiratory syndrome (SARS), Middle East respiratory syndrome (MERS), and COVID-19. COVID-19 has caused approximately 7.2 million deaths globally according to an analysis by the Institute for Health Metrics and Evaluation (IHME). As we strive to identify and develop new antiviral small molecules to treat COVID-19 and future coronavirus outbreaks, we have focused our research efforts on two essential targets critical for replication across all coronaviruses – nsp5 protease and nsp12 polymerase.

On August 3, 2023 Amgen (NASDAQ:AMGN) reported financial results for the second quarter of 2023 (Press release, Amgen, AUG 3, 2023, View Source [SID1234633734]).

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"We had a very strong quarter, serving more patients across all geographies and therapeutic categories and delivering record revenues and non-GAAP earnings per share," said Robert A. Bradway, chairman and chief executive officer. "Positive data being shared today illustrates the rapid progress we are making in advancing our pipeline of potential first-in-class medicines."

Key results include:

•Total revenues increased 6% to $7.0 billion in comparison to the second quarter of 2022, resulting from a 6% increase in product sales. Product sales growth was driven by 11% volume growth, partially offset by 2% lower net selling price, 1% lower inventory levels and 1% negative impact from foreign exchange. Excluding the 1% negative impact of foreign exchange on product sales, total revenues increased 7%.
◦Volume growth of 11% included double-digit volume growth from EVENITY (romosozumab-aqqg), BLINCYTO (blinatumomab), Repatha (evolocumab), LUMAKRAS/LUMYKRAS (sotorasib), Vectibix (panitumumab), KYPROLIS (carfilzomib), Nplate (romiplostim) and biosimilar AMJEVITA/AMGEVITA (adalimumab).
◦Ex-U.S. volume grew 16%, including 46% volume growth in the Asia Pacific region.
•GAAP earnings per share (EPS) increased 5% from $2.45 to $2.57, driven by increased revenues and decreased operating expenses following the Q2 2022 impairment charge taken in connection with our divestiture of GENSENTA, a generics business in Turkey, partially offset by higher Q2 2023 nonoperating expenses.
◦GAAP operating income increased from $2.2 billion to $2.7 billion, and GAAP operating margin increased 5.6 percentage points to 40.2%.
•Non-GAAP EPS increased 8% from $4.65 to $5.00, driven by increased revenues, partially offset by higher operating expenses in Q2 2023.
◦Non-GAAP operating income increased from $3.3 billion to $3.5 billion, and non-GAAP operating margin decreased 0.5 percentage points to 52.6%.

AMGEN REPORTS SECOND QUARTER FINANCIAL RESULTS
Page 2
•The Company generated $3.8 billion of free cash flow for the second quarter of 2023 versus $1.7 billion in the second quarter of 2022, driven by timing of tax payments, higher interest income and higher operating income.
References in this release to "non-GAAP" measures, measures presented "on a non-GAAP basis," "free cash flow" (computed by subtracting capital expenditures from operating cash flow) and "total revenues and product sales adjusted for foreign exchange impact" (computed by converting our current period local currency product sales using the prior comparative period foreign exchange rates and comparing that to our current period product sales) refer to non-GAAP financial measures. Adjustments to the most directly comparable GAAP financial measures and other items are presented on the attached reconciliations. Refer to Non-GAAP Financial Measures below for further discussion.

Product Sales Performance

Total product sales increased 6% for the second quarter of 2023 versus the second quarter of 2022. Unit volumes grew 11%, partially offset by 2% lower net selling price, 1% lower inventory levels and 1% negative impact from foreign exchange.

General Medicine

•Repatha sales increased 30% year-over-year to a record $424 million for the second quarter, driven by volume growth of 35%, partially offset by lower net selling price. In the U.S., sales grew 38%, driven by 34% volume growth. Outside the U.S., sales grew 24%, driven by 37% volume growth, partially offset by lower net selling price. Repatha remains the global proprotein convertase subtilisin/kexin type 9 (PCSK9) segment leader, with 2 million patients treated since launch.

•Prolia (denosumab) sales increased 11% year-over-year to a record $1 billion for the second quarter, driven by 11% volume growth. We expect to treat over 7 million patients with Prolia in 2023.

•EVENITY sales increased 47% year-over-year to a record $281 million for the second quarter, primarily driven by strong volume growth across our markets. U.S. volumes grew 47% year-over-year and volumes outside the U.S. grew 64%.

•Aimovig (erenumab-aooe) sales decreased 11% year-over-year for the second quarter, driven by lower net selling price, partially offset by 10% volume growth. For the remainder of 2023, we expect continued year-over-year net selling price declines in order to maintain broad formulary access for patients in response to competitive dynamics.

Inflammation

•TEZSPIRE (tezepelumab-ekko) generated $133 million of sales in the second quarter. Quarter-over-quarter sales increased 39%, driven by 37% volume growth that benefited from the introduction of our self-administered, pre-filled, single-use pen approved by the U.S. Food and Drug Administration (FDA) in the first quarter. Healthcare providers are increasingly recognizing TEZSPIRE’s unique, differentiated profile and its broad potential to treat the 2.5 million patients worldwide with severe asthma who are uncontrolled, without any phenotypic or biomarker limitation.

•TAVNEOS (avacopan) generated $30 million of sales in the second quarter. Quarter-over-quarter sales increased 30%, driven by volume growth. U.S. volumes grew 28% quarter-over-quarter, driven by an increase in new patients starting treatment.

AMGEN REPORTS SECOND QUARTER FINANCIAL RESULTS
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•Otezla (apremilast) sales increased 1% year-over-year for the second quarter, driven by 2% volume growth. In the U.S., Otezla new patient demand was impacted by free drug programs for newly launched topical and systemic competitors. For the remainder of 2023, we expect new patient demand to continue to be impacted by free drug programs from newly launched competition.

We continue to see strong growth potential for Otezla given its established efficacy and safety profile, strong payer coverage with limited prior authorization requirements and ease of administration. Otezla remains the only approved oral systemic therapy with a broad indication and is well-positioned to help the 1.5 million U.S. patients with mild-to-moderate psoriasis that cannot be optimally addressed by a topical and can benefit from a systemic treatment like Otezla.

•Enbrel (etanercept) sales increased 2% year-over-year for the second quarter, driven by favorable changes to estimated sales deductions and higher net selling price, partially offset by lower inventory levels. Year-over-year volume was flat in the second quarter, while the number of new patients starting treatment increased driven by improved payer coverage. For the remainder of 2023, we expect this improved coverage will lead to continued growth in new patients that supports volume, and declining net selling price.

•AMJEVITA/AMGEVITA sales increased 29% year-over-year for the second quarter, driven by 60% volume growth, partially offset by lower inventory levels and net selling price. U.S. sales decreased 63% quarter-over-quarter, driven by a drawdown in inventory levels following the inventory build to support the launch in the first quarter, partially offset by volume growth. Ex-U.S. sales increased 13% year-over-year, driven by 25% volume growth, partially offset by lower net selling price.

Hematology-Oncology

•BLINCYTO sales increased 48% year-over-year to a record $206 million for the second quarter, driven by 36% volume growth supported by strong adoption across academic, community and pediatric centers, as well as higher net selling price.

•Vectibix sales increased 20% year-over-year for the second quarter to a record $248 million, driven by 20% volume growth supported by promotion of the positive data from the Phase 3 PARADIGM trial demonstrating the superiority of Vectibix over bevacizumab in combination with chemotherapy.

•KYPROLIS sales increased 9% year-over-year for the second quarter, driven by 15% volume growth, partially offset by lower net selling price. Volume growth was supported by increased new patient share in the second line setting.

•LUMAKRAS/LUMYKRAS generated $77 million of sales for the second quarter. Year-over-year sales were flat for the second quarter as 20% volume growth was offset by lower net selling price and inventory levels.

•XGEVA (denosumab) sales decreased 1% year-over-year for the second quarter, primarily driven by unfavorable changes to estimated sales deductions, lower inventory levels and unfavorable foreign exchange impact, partially offset by higher net selling price.

•Nplate sales increased 9% year-over-year for the second quarter, driven by 15% volume growth, partially offset by unfavorable foreign exchange impact.

AMGEN REPORTS SECOND QUARTER FINANCIAL RESULTS
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•MVASI (bevacizumab-awwb) sales decreased 19% year-over-year for the second quarter, driven by lower net selling price, partially offset by 7% volume growth. The published second quarter Average Selling Price (ASP) for MVASI in the U.S. declined 28% year-over-year and 12% quarter-over-quarter. Going forward, we expect continued net selling price erosion driven by increased competition.

•KANJINTI (trastuzumab-anns) sales decreased 41% year-over-year for the second quarter, driven by lower net selling price and volume, partially offset by favorable changes to estimated sales deductions. The published second quarter ASP for KANJINTI in the U.S. declined 48% year-over-year and 27% quarter-over-quarter. Going forward, we expect continued net selling price erosion and declining volume driven by increased competition.

Established Products

•Total sales of our established products, which include EPOGEN (epoetin alfa), Aranesp (darbepoetin alfa), Parsabiv (etelcalcetide), and Neulasta (pegfilgrastim), decreased 17% year-over-year for the second quarter, driven by lower net selling price and volume declines. The published second quarter ASP for Neulasta in the U.S. declined 35% year-over-year and 19% quarter-over-quarter. In the aggregate, we expect the year-over-year net selling price and volume erosion for this portfolio of products to continue.

AMGEN REPORTS SECOND QUARTER FINANCIAL RESULTS
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Product Sales Detail by Product and Geographic Region
$Millions, except percentages Q2 ’23 Q2 ’22 YOY Δ
US ROW TOTAL TOTAL TOTAL
Repatha
212 212 424 325 30%
Prolia
691 337 1,028 922 11%
EVENITY
192 89 281 191 47%
Aimovig
78 4 82 92 (11%)
TEZSPIRE
133 — 133 29 *
TAVNEOS
29 1 30 — NM
Otezla
495 105 600 594 1%
Enbrel
1,055 13 1,068 1,051 2%
AMJEVITA/AMGEVITA
19 131 150 116 29%
BLINCYTO
145 61 206 139 48%
Vectibix
118 130 248 207 20%
KYPROLIS
234 112 346 317 9%
LUMAKRAS/LUMYKRAS
50 27 77 77 —%
XGEVA
387 143 530 533 (1%)
Nplate
176 134 310 284 9%
MVASI
123 74 197 243 (19%)
KANJINTI
38 12 50 85 (41%)
EPOGEN
61 — 61 136 (55%)
Aranesp
123 242 365 357 2%
Parsabiv
54 33 87 103 (16%)
Neulasta
199 37 236 310 (24%)
Other products** 124 50 174 170 2%
Total product sales $ 4,736 $ 1,947 $ 6,683 $ 6,281 6%
*Change in excess of 100%
**Consists of AVSOLA, RIABNI, Corlanor, NEUPOGEN, IMLYGIC, Sensipar/Mimpara and BEKEMV, as well as sales by Bergamo and GENSENTA subsidiaries.
NM = not meaningful

Operating Expense, Operating Margin and Tax Rate Analysis
On a GAAP basis:
•Total Operating Expenses decreased 3%. Cost of Sales margin increased 3.1 percentage points, primarily driven by higher profit share, acquisition-related costs and changes in product mix. Research & Development (R&D) expenses increased 7%, due to higher spend in late-stage programs and marketed product support. Selling, General & Administrative (SG&A) expenses decreased 2%, primarily driven by lower marketed product support, partially offset by higher acquisition-related expenses.
•Operating Margin as a percentage of product sales increased 5.6 percentage points to 40.2%.
•Tax Rate increased 0.6 percentage points, primarily driven by the 2022 Puerto Rico tax law change that replaced the excise tax with an income tax beginning in 2023, partially offset by changes in the fair value of our equity investments and net favorable items.

AMGEN REPORTS SECOND QUARTER FINANCIAL RESULTS
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On a non-GAAP basis:
•Total Operating Expenses increased 7%. Cost of Sales margin increased 2.4 percentage points, primarily driven by higher profit share and changes in product mix. R&D expenses increased 7%, due to higher spend in late-stage programs and marketed product support. SG&A expenses decreased 6%, primarily due to lower marketed product support.
•Operating Margin as a percentage of product sales decreased 0.5 percentage points in the second quarter to 52.6%.
•Tax Rate increased 1.7 percentage points, primarily due to the 2022 Puerto Rico tax law change that replaced the excise tax with an income tax beginning in 2023.

$Millions, except percentages GAAP Non-GAAP
Q2 ’23 Q2 ’22 YOY Δ Q2 ’23 Q2 ’22 YOY Δ
Cost of Sales $ 1,813 $ 1,510 20% $ 1,142 $ 926 23%
% of product sales 27.1 % 24.0 % 3.1 pts. 17.1 % 14.7 % 2.4 pts.
Research & Development $ 1,113 $ 1,039 7% $ 1,092 $ 1,020 7%
% of product sales 16.7 % 16.5 % 0.2 pts. 16.3 % 16.2 % 0.1 pts.
Selling, General & Administrative $ 1,294 $ 1,327 (2%) $ 1,237 $ 1,313 (6%)
% of product sales 19.4 % 21.1 % (1.7) pts. 18.5 % 20.9 % (2.4) pts.
Other $ 82 $ 542 (85%) $ — $ — NM
Total Operating Expenses $ 4,302 $ 4,418 (3%) $ 3,471 $ 3,259 7%
Operating Margin
operating income as % of product sales 40.2 % 34.6 % 5.6 pts. 52.6 % 53.1 % (0.5) pts.
Tax Rate 14.6 % 14.0 % 0.6 pts. 16.4 % 14.7 % 1.7 pts.
pts: percentage points
NM = not meaningful

Cash Flow and Balance Sheet
•The Company generated $3.8 billion of free cash flow in the second quarter of 2023 versus $1.7 billion in the second quarter of 2022, driven by timing of tax payments, higher interest income and higher operating income.
•The Company’s second quarter 2023 dividend of $2.13 per share was declared on March 7, 2023, and was paid on June 8, 2023, to all stockholders of record as of May 18, 2023, representing a 10% increase from 2022.
•During the second quarter, there were no repurchases of common stock.
•Cash and investments totaled $34.2 billion and debt outstanding totaled $61.5 billion as of June 30, 2023.

AMGEN REPORTS SECOND QUARTER FINANCIAL RESULTS
Page 7
$Billions, except shares Q2 ’23 Q2 ’22 YOY Δ
Operating Cash Flow $ 4.1 $ 1.9 $ 2.2
Capital Expenditures $ 0.3 $ 0.2 $ 0.0
Free Cash Flow $ 3.8 $ 1.7 $ 2.2
Dividends Paid $ 1.1 $ 1.0 $ 0.1
Share Repurchases $ — $ — $ 0.0
Average Diluted Shares (millions) 537 537 0
Note: Numbers may not add due to rounding

$Billions 6/30/23 12/31/22 YTD Δ
Cash and Investments $ 34.2 $ 9.3 $ 24.9
Debt Outstanding $ 61.5 $ 38.9 $ 22.6
Note: Numbers may not add due to rounding

2023 Guidance (Excludes any contribution from the announced acquisition of Horizon Therapeutics plc)
The Company expects the announced acquisition of Horizon Therapeutics plc (Horizon) to close by mid-December 2023. For the full year 2023, excluding any contribution from the announced acquisition of Horizon, the Company now expects:
•Total revenues in the range of $26.6 billion to $27.4 billion.
•On a GAAP basis, EPS in the range of $14.30 to $15.41, and a tax rate in the range of 17.0% to 18.5%.
•On a non-GAAP basis, EPS in the range of $17.80 to $18.80, and a tax rate in the range of 17.5% to 18.5%.
•Capital expenditures to be approximately $925 million.
•Share repurchases not to exceed $500 million.

Second Quarter Product and Pipeline Update
The Company provided the following updates on selected product and pipeline programs:

Oncology
Tarlatamab (AMG 757)
•Today, the Company announced positive top-line results from the global Phase 2 DeLLphi-301 study, evaluating tarlatamab, a first-in-class DLL3 targeting BiTE molecule, in patients with relapsed or refractory small cell lung cancer (SCLC) who had failed two or more prior lines of treatment. Tarlatamab demonstrated a durable objective response rate (ORR) (primary endpoint) that substantially exceeds what was previously reported in the Phase 1 study. Safety and tolerability were also more favorable compared to the Phase 1 study, with no new safety signals identified. The Company will discuss these potentially registrational data with regulatory agencies to evaluate tarlatamab as a potential treatment for patients with relapsed or refractory SCLC. Detailed results will be presented at an upcoming medical congress.
•DeLLphi-304, a Phase 3 study comparing tarlatamab with standard of care chemotherapy in second-line SCLC, is enrolling patients.
•The Company plans to initiate two additional Phase 3 studies of tarlatamab in earlier lines of SCLC.
•In June, the Company presented data showing that tarlatamab provided durable responses with manageable safety in patients with SCLC irrespective of the presence of brain metastases (BM) at

AMGEN REPORTS SECOND QUARTER FINANCIAL RESULTS
Page 8
baseline. Rate of immune effector cell-associated neurotoxicity syndrome (ICANS) and associated neurologic adverse events (AEs) were comparable between those with treated and stable BM vs those without BM at baseline.
•DeLLphi-300, a Phase 1 study of tarlatamab in relapsed/refractory SCLC, continues to enroll patients.
•DeLLphi-302, a Phase 1b study of tarlatamab in combination with AMG 404, an anti-programmed cell death protein 1 (PD1) monoclonal antibody, in second-line or later SCLC, is ongoing.
•DeLLphi-303, a Phase 1b study of tarlatamab in combination with standard of care in first-line SCLC, continues to enroll patients.
•DeLLpro-300, a Phase 1b study of tarlatamab, in de novo or treatment-emergent neuroendocrine prostate cancer, has completed enrollment.

LUMAKRAS/LUMYKRAS
•The global Phase 3 CodeBreaK 300 study evaluating LUMAKRAS combined with Vectibix vs current standard of care in chemorefractory metastatic KRAS G12C mutated colorectal cancer (CRC) met its primary endpoint of progression-free survival (PFS) for both the 240 mg and 960 mg doses of LUMAKRAS. At comparable doses, efficacy results were consistent with what was observed in CodeBreaK 101 with no new safety signals. The Company will discuss these data with regulatory agencies to evaluate LUMAKRAS in combination with Vectibix as a potential treatment for patients with metastatic KRAS G12C mutated CRC. Detailed results will be presented at an upcoming medical congress.
•The U.S. Food and Drug Administration (FDA) recently granted Breakthrough Therapy Designation to LUMAKRAS in combination with Vectibix for the treatment of patients with metastatic KRAS G12C-mutated CRC, as determined by an FDA approved test, who have received prior chemotherapy, based on data from the previous CodeBreaK 101 study.
•Regulatory review of the LUMAKRAS CodeBreaK 200 Phase 3 confirmatory data, along with data from the Phase 2 dose comparison substudy, continues at the FDA and the European Medicines Agency (EMA). The supplemental New Drug Application (NDA) for full approval of LUMAKRAS for adults with previously treated locally advanced or metastatic KRAS G12C-mutated non-small cell lung cancer (NSCLC) was accepted by the FDA for standard review, and a Prescription Drug User Fee Act (PDUFA) target action date of December 24, 2023 has been set.
•In June, the Company presented data demonstrating that:
i.LUMAKRAS delayed time to central nervous system (CNS) progression, had a longer CNS PFS, and a higher intracranial ORR vs docetaxel in a post-hoc analysis of the Phase 3 CodeBreaK 200 study in advanced NSCLC.
ii.LUMAKRAS improved PFS vs docetaxel across key co-alteration subgroups in the Phase 3 CodeBreaK 200 study in advanced NSCLC.
iii.LUMAKRAS plus Vectibix and FOLFIRI treatment resulted in a confirmed ORR of 55% in previously treated KRAS G12C-mutated metastatic CRC from the CodeBreaK 101 Phase 1b study.
•In June, data from SCARLET, a Phase 2 investigator study sponsored by the West Japan Oncology Group and supported by Amgen, were presented demonstrating that LUMAKRAS in combination with chemotherapy demonstrated an ORR of 89%, as assessed by blinded independent central review, and favorable tolerability in first-line advanced, NSCLC patients with KRAS G12C mutation.
•The Company continues to investigate novel combinations and is advancing a comprehensive global clinical development program in NSCLC, CRC, and other solid tumors to further explore the potential of LUMAKRAS.
•The Company plans to present data from CodeBreaK 101 testing the safety and efficacy of LUMAKRAS in combination with chemotherapy in first-line and second-line KRAS G12C-mutated

AMGEN REPORTS SECOND QUARTER FINANCIAL RESULTS
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advanced NSCLC at the International Association for the Study of Lung Cancer 2023 World Conference on Lung Cancer in September.
•The Company is planning to initiate a Phase 3 study of LUMAKRAS plus chemotherapy in first-line KRAS G12C mutant and programmed cell death protein ligand-1 (PD-L1) negative advanced/metastatic NSCLC in Q3 2023.
•The Company is planning to initiate a Phase 3 study of LUMAKRAS in combination with Vectibix and FOLFIRI in first-line KRAS G12C-mutated CRC.
•The Company will discontinue further enrollment in the study of LUMAKRAS in combination with a PD-1 inhibitor in KRAS G12C mutated NSCLC.

BLINCYTO
•In June, the FDA approved the supplemental Biologics License Application for BLINCYTO for the treatment of adult and pediatric patients with CD19-positive B-cell precursor acute lymphoblastic leukemia (B-ALL) in first or second complete remission with minimal residual disease (MRD) greater than or equal to 0.1%, based on additional data from two Phase 3 studies that were submitted. The approval converts the BLINCYTO accelerated approval to a full approval.
•Global regulatory authority submissions are planned in late 2023 to early 2024 for E1910, a Phase 3 study conducted by the National Cancer Institute, the Eastern Cooperative Oncology Group and the American College of Radiology Imaging Network (ECOG ACRIN) Cancer Research Group that demonstrated superior overall survival with BLINCYTO treatment added to consolidation chemotherapy over standard of care consolidation chemotherapy in newly diagnosed adult patients with Philadelphia chromosome negative (Ph-) B-ALL who were MRD- negative following induction and intensification chemotherapy.
•In May and July, National Comprehensive Cancer Network Clinical Practice Guidelines in Oncology1 (NCCN Guidelines) for B-ALL were updated:
i.The blinatumomab (BLINCYTO)-containing ECOG1910 regimen became the only "preferred regimen" for first-line treatment of Ph-negative adult B-ALL patients.
ii.Blinatumomab (BLINCYTO) was added to multiagent chemotherapy as consolidation in MRD-negative patients, regardless of age or chemotherapy backbone, replacing prior recommendation for multiagent chemotherapy alone.
iii.Blinatumomab (BLINCYTO) in combination with a tyrosine kinase inhibitor was moved to the top of the treatment algorithm for MRD-negative Philadelphia chromosome positive B-ALL adult and adolescent and young adult patients.
•In April, data were published in the New England Journal of Medicine demonstrating that BLINCYTO added to chemotherapy improved two-year survival in lysine (K)-specific methyltransferase 2A (KMT2A)-rearranged B-ALL in infants as compared to historical results with chemotherapy; with BLINCYTO two-year survival of 93% vs chemotherapy two-year survival of 66%.
•Golden Gate, a Phase 3 study of BLINCYTO alternating with low-intensity chemotherapy in older adults with newly diagnosed Ph- B-ALL, continues to enroll patients.
•A Phase 1/2 study of subcutaneous BLINCYTO in adults with relapsed or refractory Ph- B-ALL continues to enroll patients.

Bemarituzumab
•FORTITUDE-101, a Phase 3 study of bemarituzumab, a fibroblast growth factor receptor 2b (FGFR2b) targeting monoclonal antibody, plus chemotherapy in first-line gastric cancer, continues to enroll patients.
•FORTITUDE-102, a Phase 1b/3 study of bemarituzumab plus chemotherapy and nivolumab in first-line gastric cancer, continues to enroll patients in the Phase 3 portion of the study.
•FORTITUDE-103, a Phase 1b study of bemarituzumab plus oral chemotherapy regimens with or without nivolumab in first-line gastric cancer, continues to enroll patients.

AMGEN REPORTS SECOND QUARTER FINANCIAL RESULTS
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•FORTITUDE-201, a Phase 1b study of bemarituzumab monotherapy and in combination with standard of care therapy, in squamous NSCLC with FGFR2b overexpression, continues to enroll patients.
•FORTITUDE-301, a Phase 1b/2 basket study of bemarituzumab monotherapy in solid tumors with FGFR2b overexpression, continues to enroll patients in the Phase 2 portion of the study.

Xaluritamig (AMG 509)
•A Phase 1 dose-escalation/expansion study of xaluritamig, a first-in-class bispecific molecule targeting six-transmembrane epithelial antigen of prostate 1 (STEAP1) in metastatic castrate-resistant prostate cancer (mCRPC) continues to enroll patients. Initial data demonstrating responses will be presented at an upcoming medical congress.

AMG 340
•A Phase 1 dose-escalation study of AMG 340, a lower T-cell affinity BiTE molecule targeting prostate-specific membrane antigen (PSMA), in mCRPC continues to enroll patients.

AMG 193
•A Phase 1/1b/2 study of AMG 193, a first-in-class small molecule methylthioadenosine (MTA)-cooperative protein arginine methyltransferase 5 (PRMT5) inhibitor, continues to enroll patients with advanced methylthioadenosine phosphorylase (MTAP)-null solid tumors. Initial data demonstrating responses in multiple tumor types will be presented at an upcoming medical congress.
•A Phase 1/2 study of AMG 193 in combination with IDE397, an investigational MAT2A inhibitor, is enrolling patients.

General Medicine
Maridebart cafraglutide (formerly AMG 133)
•A Phase 2 study of maridebart cafraglutide, a multispecific molecule that inhibits the gastric inhibitory polypeptide receptor (GIPR) and activates the glucagon like peptide 1 (GLP-1) receptor, in overweight or obese adults with or without type 2 diabetes mellitus continues to enroll patients.

AMG 786
•A small molecule obesity program continues to enroll patients in a Phase 1 study. This molecule has a different target than AMG 133 and is not an incretin-based therapy.

Olpasiran (AMG 890)
•A Phase 3 cardiovascular outcomes study of olpasiran, a potentially best-in-class small interfering ribonucleic acid molecule that reduces lipoprotein(a) (Lp(a)) synthesis in the liver, in participants with atherosclerotic cardiovascular disease and elevated Lp(a), continues to enroll patients.
•The Company plans to present data on the effects of olpasiran on oxidized phospholipids and the long-term efficacy and safety primary results of the OCEAN(a) DOSE extension program at the European Society of Cardiology (ESC) Congress in August.

Repatha
•EVOLVE-MI, a Phase 4 study of Repatha administered immediately following acute myocardial infarction and designed to reduce the risk of cardiovascular events in hospitalized patients, continues to enroll patients.

Prolia
•In May, the Company presented data from a real-world study of nearly half a million postmenopausal women with osteoporosis in the U.S. Medicare program showing that Prolia substantially reduced fracture risk in patients vs oral alendronate. In addition, the same study

AMGEN REPORTS SECOND QUARTER FINANCIAL RESULTS
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showed that longer duration of Prolia treatment was associated with a greater reduction in major osteoporotic fracture risk.

Inflammation
Otezla
•In July, the FDA approved a supplemental NDA revising the U.S. prescribing information for Otezla to add efficacy results in adult subjects with moderate to severe plaque psoriasis of the genital area based upon data from the Phase 3 DISCREET study. The prescribing information was further updated to indicate that the safety profile observed in the Otezla group during the placebo-controlled phase of the DISCREET study was consistent with the previously established safety profile of Otezla in adults with plaque psoriasis.

TEZSPIRE
•In severe asthma, the WAYFINDER Phase 3b study is fully enrolled. The PASSAGE Phase 4 real-world effectiveness study and the SUNRISE Phase 3 study continue to enroll patients.
•A Phase 3 study of TEZSPIRE in chronic rhinosinusitis with nasal polyps continues to enroll patients.
•A Phase 3 study of TEZSPIRE in eosinophilic esophagitis continues to enroll patients.
•A Phase 2b study of TEZSPIRE in chronic spontaneous urticaria is complete, with top-line data anticipated in mid-2023.
•A Phase 2 study of TEZSPIRE in chronic obstructive pulmonary disease is fully enrolled. Data readout is anticipated in H1 2024.

Rocatinlimab (AMG 451 / KHK4083)
•The ROCKET Phase 3 program, composed of seven studies evaluating rocatinlimab, a first-in-class anti-OX40 monoclonal antibody in moderate to severe atopic dermatitis, continues to enroll adult and adolescent patients.
•The Company plans to initiate a Phase 2 study of rocatinlimab in moderate to severe uncontrolled asthma.

Efavaleukin alfa (AMG 592)
•A Phase 2b study of efavaleukin alfa in ulcerative colitis continues to enroll patients.

Ordesekimab (AMG 714 / PRV-015)
•A Phase 2b study of AMG 714, a monoclonal antibody that binds interleukin-15, in nonresponsive celiac disease continues to enroll patients.

Biosimilars
•The Phase 1 portion of a randomized, double-blind pivotal study evaluating pharmacokinetic (PK) similarity of ABP 206 compared with OPDIVO (nivolumab) in resected stage III or stage IV melanoma subjects in the adjuvant setting is enrolling patients.
•A Phase 3 switching study to support an interchangeability designation in the U.S. for ABP 654, an investigational biosimilar to STELARA (ustekinumab), evaluating multiple switches between STELARA and ABP 654 compared with continued use of STELARA in patients with moderate to severe plaque psoriasis, met its primary endpoint of similarity for the primary PK endpoints, based on a prespecified PK similarity range.
•The final analysis from a Phase 3 study evaluating the efficacy and safety of ABP 938, an investigational biosimilar to EYLEA (aflibercept) compared with EYLEA in patients with neovascular age-related macular degeneration, is complete. The results confirmed no clinically meaningful differences in efficacy, safety, and immunogenicity between ABP 938 and EYLEA.
•The FDA accepted the U.S. Biologics License Application for ABP 959, an investigational biosimilar to SOLIRIS (eculizumab).

AMGEN REPORTS SECOND QUARTER FINANCIAL RESULTS
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1National Comprehensive Cancer Network (NCCN) makes no warranties of any kind whatsoever regarding their content, use or application and disclaims any responsibility for their application or use in any way.
TEZSPIRE is being developed in collaboration with AstraZeneca.
Rocatinlimab, formerly AMG 451 / KHK4083 is being developed in collaboration with Kyowa Kirin.
Ordesekimab, formerly AMG 714 and also known as PRV-015, is being developed in collaboration with Provention Bio, a Sanofi company
Xaluritamig formerly AMG 509 is being developed in collaboration with Xencor.
IDE397 is an investigational MAT2A inhibitor from IDEAYA Biosciences.
OPDIVO is a registered trademark of Bristol-Myers Squibb Company.
STELARA is a registered trademark of Janssen Pharmaceutica NV.
EYLEA is a registered trademark of Regeneron Pharmaceuticals, Inc.
SOLIRIS is a registered trademark of Alexion Pharmaceuticals, Inc.

On August 3, 2023 Aligos Therapeutics, Inc. (Nasdaq: ALGS), a clinical stage biopharmaceutical company focused on developing novel therapeutics to address unmet medical needs in liver and viral diseases, reported recent business progress and financial results for the second quarter 2023 (Press release, Aligos Therapeutics, AUG 3, 2023, View Source [SID1234633733]).

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"We continue to make important progress in advancing our portfolio of drug candidates," said Lawrence Blatt, Ph.D., MBA, Chairman & CEO of Aligos Therapeutics. "Phase 2a enabling activities for our lead program in NASH, ALG-055009, are going well and we remain on track to file this important Phase 2a protocol to the US IND in Q4 2023. Additionally, our COVID-19 protease inhibitor, ALG-097558, is now dosing in the clinic in a first in human study and our best-in-class capsid assembly modulator, ALG-000184, continues to generate impressive DNA, RNA, and HBsAg lowering activity as dosing continues in CHB subjects. We look forward to sharing emerging data from these exciting programs at future scientific conferences."

Recent Business Progress

Aligos Portfolio of Drug Candidates

NASH Program (ALG-055009)

Dosing in the Phase 1 first-in-human study is now complete and the database is locked. Data at all dose levels continue to support a favorable risk-benefit profile for ALG-055009
Phase 2a enabling activities (e.g., drug manufacturing, non-clinical studies) are ongoing and on track for a Q4 2023 filing of the Phase 2a protocol
Key design elements/milestones of the Phase 2a study have been formulated and include:
Randomized, double-blind, placebo-controlled trial evaluating dosing for 12 weeks
Evaluation of multiple dose levels of ALG-055009 vs. placebo (gelcap formulation)
Primary endpoint based on change from baseline at 12 weeks in MRI-PDFF
Additional non-invasive biomarkers commonly evaluated in NASH trials will also be assessed
All sites will be in the US
Anticipated top line data: Q4 2024
Stephen Harrison, MD has signed on to be the Phase 2a study’s Principal Investigator
COVID-19 (ALG-097558)

The first-in-human study (ALG-097558-701) clinical trial application was approved in the UK
Dosing in Part 1, which is evaluating single ascending oral doses in healthy volunteers, of this multi-part study is ongoing
Dosing is expected to continue throughout 2023 and early 2024 with topline data anticipated in H1 2024
HBV Programs

Capsid-Assembly Modulator (ALG-000184)

Ongoing cohort data continue to show that 300 mg ALG-000184 + entecavir (ETV) is well tolerated and results in unprecedented HBsAg lowering activity for an oral CHB drug. Specifically, Hou et al., showed at EASL 2023 that a majority of HBeAg positive CHB subjects dosed with 300 mg ALG-000184 + ETV demonstrated declines of ≥0.4 and ≥1.0 log10 IU/mL at 12 and 24 weeks, respectively. The largest HBsAg reduction observed among subjects receiving this regimen was a 2 log10 IU/mL decline in a subject dosed for 36 weeks
Dosing with ALG-000184 + entecavir for up to 96 weeks in HBeAg positive and HBeAg negative CHB subjects is planned
Emerging data will continue to be presented at upcoming scientific conferences
ALG-125755

Dosing in Parts 1 and 2, which evaluated single ascending subcutaneous doses of ALG-125755 in healthy volunteers and virologically suppressed HBeAg negative CHB subjects, respectively, is now complete
Single doses of up to 320 mg ALG-125755:
Were found to be well tolerated with predicted PK
Lowered HBsAg levels across the dose range evaluated, but comparative efficacy data vs. competitor siRNAs are inconclusive
Further clinical evaluation of ALG-125755 is not prioritized with current funding. Further advancement will require partnership of the program.
Corporate

On July 31, 2023, Aligos Therapeutics, Inc. (the "Company") and Janssen Biopharma, LLC ("Janssen") filed a stipulation staying the case in their ongoing legal proceedings. The Company and Janssen have reached an agreement in principle to resolve their disputes and expect to finalize a settlement agreement promptly.
Financial Results for the Second Quarter 2023

Cash, cash equivalents and investments totaled $90.8 million as of June 30, 2023, compared with $125.8 million as of December 31, 2022. We continue to believe our cash balance provides sufficient cash to fund planned operations through the end of 2024.

Net losses for the three months ended June 30, 2023, were $18.8 million or basic and diluted net loss per common share of $(0.43), compared to net losses of $19.9 million or basic and diluted net loss per common share of $(0.47) for the three months ended June 30, 2022.

Research and development (R&D) expenses for the three months ended June 30, 2023, were $16.8 million compared with $16.5 million for the same period of 2022. The increase was primarily due to other costs including facility expenses due to the right-of-use asset impairment, largely offset by a decrease in third party expenses from the reduced manufacturing of drug supply in advance of our NASH program in 2022, and employee-related costs. Total R&D stock-based compensation expense incurred for the three months ended June 30, 2023, was $1.6 million compared with $2.2 million for the same period of 2022.

General and administrative (G&A) expenses for the three months ended June 30, 2023, were $9.2 million compared with $7.6 million for the same period of 2022. The increase in G&A expenses for this comparative period is primarily attributable to an increase in legal and related costs offset by a decrease in facility expenses. Total G&A stock-based compensation expense incurred for the three months ended June 30, 2023, was $1.6 million compared with $1.8 million for the same period of 2022.