On April 30, 2019 Incyte Corporation (Nasdaq:INCY) reported 2019 first quarter financial results and provides a status update on the Company’s development portfolio (Press release, Incyte, APR 30, 2019, View Source [SID1234535459]).

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"Underlying demand for Jakafi is strong, and we look forward to the U.S. Food and Drug Administration’s (FDA) decision on ruxolitinib’s approval in steroid-refractory acute graft-versus-host disease (GVHD)," stated Hervé Hoppenot, Chief Executive Officer, Incyte. "We continue to make progress across multiple programs and towards our key strategic goals of further diversifying our revenue base and accelerating near-term growth. We expect to present data from ruxolitinib cream in patients with vitiligo later in the second quarter and to progress the program into Phase 3 development. In addition, we expect to file a New Drug Application (NDA) with the FDA for pemigatinib and to receive the results from three Phase 3 trials of JAK inhibition in GVHD by the end of this year."

Portfolio Update

Oncology – key highlights

The FDA review of the sNDA seeking approval of ruxolitinib for the treatment of steroid-refractory acute GVHD is ongoing; the Prescription Drug User Fee Act (PDUFA) date is May 24, 2019. Data from the successful REACH1 trial provided the basis for the application, and Incyte is ready for the U.S. launch should ruxolitinib be approved in this new indication.

The Phase 3 GRAVITAS-301 trial of itacitinib as a treatment for patients with newly-diagnosed acute GVHD has now completed enrollment, and results are expected before the end of 2019. If successful, Incyte expects to submit applications seeking marketing approval for itacitinib in major markets globally. GRAVITAS-309, a Phase 3 trial of itacitinib as a treatment for patients with newly-diagnosed chronic GVHD, was launched in January of this year.

Incyte expects to submit the NDA for pemigatinib as a second-line treatment for patients with FGFR2 translocated cholangiocarcinoma in the second half of 2019, and to initiate the Phase 3 trial for the first-line treatment of patients with cholangiocarcinoma in the coming months. The presentation of additional data from FIGHT-202, the Phase 2 trial evaluating pemigatinib as a second-line therapy in patients with cholangiocarcinoma, is planned in the second half of the year. Enrollment in the continuous dosing cohort of the Phase 2 trial of pemigatinib in patients with bladder cancer is expected to complete by the end of 2019, and a Phase 2 tumor agnostic study of pemigatinib is expected to open before the end of 2019.

Indication and status
Ruxolitinib
(JAK1/JAK2)
Steroid-refractory acute GVHD: sNDA under review (REACH1), Phase 3 (REACH2)
Steroid-refractory chronic GVHD: Phase 3 (REACH3)
Essential thrombocythemia: Phase 2 (RESET)
Refractory myelofibrosis: Phase 2 with PI3Kδ, PIM or JAK1 inhibition

Itacitinib
(JAK1)
Treatment-naïve acute GVHD: Phase 3 (GRAVITAS-301) recruitment completed
Treatment-naïve chronic GVHD: Phase 3 (GRAVITAS-309)
NSCLC: Phase 1/2 in combination with EGFR

Pemigatinib
(FGFR1/2/3)
Cholangiocarcinoma: Phase 2 (FIGHT-202), Phase 3 (FIGHT-302) now recruiting
Bladder cancer: Phase 2 (FIGHT-201)
8p11 MPN: Phase 2 (FIGHT-203)
Tumor agnostic: Phase 2 (FIGHT-207) in preparation

Parsaclisib
(PI3Kδ)
Follicular lymphoma: Phase 2 (CITADEL-203)
Marginal zone lymphoma: Phase 2 (CITADEL-204)
Mantle cell lymphoma: Phase 2 (CITADEL-205)

INCMGA0012
(PD-1)1
MSI-high endometrial cancer: Phase 2 (POD1UM-101)
Merkel cell carcinoma: Phase 2 (POD1UM-201)
Anal cancer: Phase 2 (POD1UM-202)

Notes:
1) INCMGA0012 licensed from MacroGenics

Inflammation and autoimmunity (IAI) – key highlights

The primary endpoint was met in the randomized Phase 2 trial of ruxolitinib cream in patients with vitiligo, and Incyte expects data from this trial to be presented at a medical meeting later in the second quarter of 2019. Preparations for the Phase 3 development of ruxolitinib cream in patients with vitiligo are now underway.

Indication and status
Ruxolitinib cream
(JAK1/JAK2)

Atopic dermatitis: Phase 3 (TRuE-AD)
Vitiligo: Phase 3 in preparation (TRuE-V)

INCB54707

(JAK1)

Hidradenitis suppurativa: Phase 2
Itacitinib
(JAK1)

Ulcerative colitis: Phase 2
Parsaclisib
(PI3Kδ)

Autoimmune hemolytic anemia: Phase 2
Sjögren’s syndrome: Phase 2

Plans for the evaluation of PI3Kδ inhibition as a treatment for patients with pemphigus vulgaris have been withdrawn; proof-of-concept trials of PI3Kδ inhibition in autoimmune hemolytic anemia and Sjögren’s syndrome are ongoing.

Discovery and early development – key highlights

The discovery and preclinical characteristics of Incyte’s oral PD-L1 inhibitor program were highlighted in two oral presentations at the recent American Association for Cancer Research (AACR) (Free AACR Whitepaper) annual meeting, the lead compound of which (INCB86550) is now in clinical trials.

Presentations at AACR (Free AACR Whitepaper) also included the generation and characterization of MCLA-145, a bispecific antibody that engages human CD137 and PD-L1. MCLA-145 is expected to enter clinical trials in the second quarter of 2019.

Incyte’s portfolio of earlier-stage clinical candidates is detailed below.

Modality Candidates
Small molecules
INCB01158 (ARG)1, INCB81776 (AXL/MER), INCB62079 (FGFR4), Epacadostat (IDO1),
INCB59872 (LSD1), INCB53914 (PIM), INCB86550 (PD-L1)

Monoclonal antibodies2
INCAGN1876 (GITR), INCAGN2385 (LAG-3), INCAGN1949 (OX40),
INCAGN2390 (TIM-3)

Bispecific antibodies
MCLA-145 (PD-L1xCD137)3

Notes:
1) INCB01158 development in collaboration with Calithera
2) Discovery collaboration with Agenus
3) MCLA-145 development in collaboration with Merus

Partnered – key highlights

Incyte has elected to no longer co-fund the development of baricitinib in order to reallocate capital, over time, to other promising internal projects that could help it reach its objectives of diversification and growth. The Company will continue to receive royalties on global net sales of Olumiant (baricitinib), pursuant to the terms of its agreement with Lilly.

Lilly plans to share data from BREEZE-AD1 and BREEZE-AD2, two Phase 3 trials of baricitinib in patients with moderate-to-severe atopic dermatitis, at future scientific venues later this year, and also expects to provide topline results from other ongoing Phase 3 trials in this indication later in 2019. Lilly no longer plans to initiate Phase 3 development of baricitinib for psoriatic arthritis.

Novartis expects to submit an NDA for capmatinib for the treatment of patients with non-small cell lung cancer (NSCLC) harboring MET exon 14 skipping mutations in the second half of 2019.

Indication and status
Baricitinib
(JAK1/JAK2)1

Atopic dermatitis: Phase 3 (BREEZE-AD)
Systemic lupus erythematosus: Phase 3
Severe alopecia areata: Phase 2/3

Capmatinib (MET)2
NSCLC (with MET exon 14 skipping mutations): NDA expected this year (by Novartis)

Notes:
1) Worldwide rights to baricitinib licensed to Lilly: approved as Olumiant in multiple territories globally for certain patients with moderate to severe rheumatoid arthritis
2) Worldwide rights to capmatinib licensed to Novartis

2019 First-Quarter Financial Results

The financial measures presented in this press release for the three months ended March 31, 2019 and 2018 have been prepared by the Company in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), unless otherwise identified as a Non-GAAP financial measure. Management believes that Non-GAAP information is useful for investors, when considered in conjunction with Incyte’s GAAP disclosures. Management uses such information internally and externally for establishing budgets, operating goals and financial planning purposes. These metrics are also used to manage the Company’s business and monitor performance. The Company adjusts, where appropriate, for expenses in order to reflect the Company’s core operations. The Company believes these adjustments are useful to investors by providing an enhanced understanding of the financial performance of the Company’s core operations. The metrics have been adopted to align the Company with disclosures provided by industry peers.

Beginning in the first quarter of 2019, after reviewing our Reconciliation of GAAP Net Income (Loss) to Selected Non-GAAP Adjusted Information with the U.S. Securities & Exchange Commission, we no longer adjust for upfront consideration and milestones that are part of collaboration agreements with new or existing partners. This revised methodology is reflected in this press release for the three months ended March 31, 2019 and 2018.

Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used in conjunction with and to supplement Incyte’s operating results as reported under GAAP. Non-GAAP measures may be defined and calculated differently by other companies in our industry.

The Company’s 2019 financial guidance related to research and development and selling, general and administrative expenses does not include estimates associated with any potential future strategic transactions.

Revenues For the quarter ended March 31, 2019, GAAP net product revenues of Jakafi were $376 million as compared to $314 million for the same period in 2018, representing 20 percent growth. For the quarter ended March 31, 2019 and 2018, GAAP net product revenues of Iclusig (ponatinib) were $21 million.

For the quarter ended March 31, 2019 and 2018, GAAP product royalties from sales of Jakavi (ruxolitinib), which has been out-licensed to Novartis outside of the United States, were $46 million and $41 million, respectively. For the quarter ended March 31, 2019 and 2018, GAAP product royalties from sales of Olumiant, which has been out-licensed to Lilly globally, were $16 million and $6 million, respectively.

For the quarter ended March 31, 2019 and 2018, GAAP milestone and contract revenues earned from our collaborative partners were $40 million and $0 million, respectively.

For the quarter ended March 31, 2019 and 2018, total GAAP revenues were $498 million and $382 million, respectively.

Cost of product revenues GAAP cost of product revenues for the quarter ended March 31, 2019 and 2018 was $23 million and $18 million, respectively. Non-GAAP cost of product revenues for the quarter ended March 31, 2019 and 2018 was $17 million and $13 million, respectively. Non-GAAP cost of product revenues excludes the amortization of licensed intellectual property for Iclusig relating to the acquisition of the European business of ARIAD Pharmaceuticals, Inc. and the cost of stock-based compensation.

Research and development expenses GAAP research and development expenses for the quarter ended March 31, 2019 and 2018 were $271 million and $303 million, respectively. The decrease in GAAP research and development expenses over the prior year quarter was driven primarily by a decrease in upfront consideration and milestone expenses related to our collaboration agreements and our decision to no longer co-fund the development of baricitinib with Lilly.

Non-GAAP research and development expenses for the quarter ended March 31, 2019 and 2018 were $243 million and $279 million, respectively, including upfront and milestone expenses related to collaborative agreements of $0 million and $12 million, respectively. Non-GAAP research and development expenses for the quarter ended March 31, 2019 and 2018 exclude the cost of stock-based compensation.

Selling, general and administrative expenses GAAP selling, general and administrative expenses for the quarter ended March 31, 2019 and 2018 were $124 million and $121 million, respectively.

Non-GAAP selling, general and administrative expenses for the quarter ended March 31, 2019 and 2018 were $111 million and $109 million, respectively. Non-GAAP selling, general and administrative expenses exclude the cost of stock-based compensation.

Change in fair value of acquisition-related contingent consideration GAAP change in fair value of acquisition-related contingent consideration for the quarter ended March 31, 2019 and 2018 was $7 million.

Unrealized gain on long term investments GAAP unrealized gain on long-term investments for the quarter ended March 31, 2019 and 2018 was $21 million and $23 million, respectively. The unrealized gain on long-term investments represents the fair market value adjustments of the Company’s investments in Agenus, Calithera, Merus and Syros.

Net income (loss) GAAP net income for the quarter ended March 31, 2019 was $102 million, or $0.48 per basic and $0.47 per diluted share, as compared to net loss of $41 million, or $0.19 per basic and diluted share for the same period in 2018.

Non-GAAP net income for the quarter ended March 31, 2019 was $135 million, or $0.63 per basic and $0.62 per diluted share, as compared to Non-GAAP net loss of $15 million, or $0.07 per basic and diluted share for the same period in 2018.

Cash, cash equivalents and marketable securities position As of March 31, 2019 and December 31, 2018, cash, cash equivalents and marketable securities totaled $1.6 billion and $1.4 billion, respectively.

2019 Financial Guidance

(1) Adjusted to exclude the amortization of licensed intellectual property for Iclusig relating to the acquisition of the European business of ARIAD Pharmaceuticals, Inc. and the estimated cost of stock-based compensation.
(2) Adjusted to exclude the estimated cost of stock-based compensation.
(3) Previously, Non-GAAP R&D guidance excluded $30 million upfront consideration and milestones under certain collaboration agreements.
(4) Adjusted to exclude the change in fair value of estimated future royalties relating to sales of Iclusig in the licensed territory relating to the acquisition of the European business of ARIAD Pharmaceuticals, Inc.

Future Non-GAAP financial measures may also exclude impairment of goodwill or other assets, changes in the fair value of equity investments in our collaboration partners, non-cash interest expense related to the amortization of the initial discount on our 2020 Senior Notes and the impact on our tax provision of discrete changes in our valuation allowance position on deferred tax assets.

Conference Call and Webcast Information

Incyte will hold a conference call and webcast this morning at 8:00 a.m. EDT. To access the conference call, please dial 877-407-3042 for domestic callers or 201-389-0864 for international callers. When prompted, provide the conference identification number, 13689554.

If you are unable to participate, a replay of the conference call will be available for 30 days. The replay dial-in number for the United States is 877-660-6853 and the dial-in number for international callers is 201-612-7415. To access the replay you will need the conference identification number, 13689554.

The conference call will also be webcast live and can be accessed at www.incyte.com in the Investors section under "Events and Presentations".

About Incyte

Incyte Corporation is a Wilmington, Delaware-based biopharmaceutical company focused on the discovery, development and commercialization of proprietary therapeutics. For additional information on Incyte, please visit the Company’s website at www.incyte.com.

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About Jakafi (ruxolitinib)

Jakafi is a first-in-class JAK1/JAK2 inhibitor approved by the U.S. Food and Drug Administration for treatment of people with polycythemia vera (PV) who have had an inadequate response to or are intolerant of hydroxyurea. Jakafi is also indicated for treatment of people with intermediate or high-risk myelofibrosis (MF), including primary MF, post–polycythemia vera MF, and post–essential thrombocythemia MF.

Jakafi is marketed by Incyte in the United States and by Novartis as Jakavi (ruxolitinib) outside the United States.

About Iclusig (ponatinib) tablets

Iclusig targets not only native BCR-ABL but also its isoforms that carry mutations that confer resistance to treatment, including the T315I mutation, which has been associated with resistance to other approved TKIs.

In the EU, Iclusig is approved for the treatment of adult patients with chronic phase, accelerated phase or blast phase chronic myeloid leukemia (CML) who are resistant to dasatinib or nilotinib; who are intolerant to dasatinib or nilotinib and for whom subsequent treatment with imatinib is not clinically appropriate; or who have the T315I mutation, or the treatment of adult patients with Philadelphia-chromosome positive acute lymphoblastic leukemia (Ph+ ALL) who are resistant to dasatinib; who are intolerant to dasatinib and for whom subsequent treatment with imatinib is not clinically appropriate; or who have the T315I mutation.

Incyte has an exclusive license from ARIAD Pharmaceuticals, Inc., since acquired by Takeda Pharmaceutical Company Limited, to develop and commercialize Iclusig in the European Union and 22 other countries, including Switzerland, Norway, Turkey, Israel and Russia.

On April 30, 2019 Merck (NYSE:MRK), known as MSD outside the United States and Canada, reported financial results for the first quarter of 2019 (Press release, Merck & Co, APR 30, 2019, View Source [SID1234535458]).

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"Our strong start to 2019, with double-digit sales and EPS growth in the first quarter, demonstrates our execution across all aspects of our business and the strength of our key growth pillars, including oncology and vaccines," said Kenneth C. Frazier, chairman and chief executive officer, Merck. "Our investments in research and development are paying off, and we are confident in our science-driven strategy, growth prospects and ability to sustainably deliver value to patients and shareholders."

Worldwide sales were $10.8 billion for the first quarter of 2019, an increase of 8% compared with the first quarter of 2018; excluding the negative impact from foreign exchange, worldwide sales grew 11%. International sales represented 58% of total sales in the quarter. Performance in international markets was led by China, which had sales growth of 58% compared with the first quarter of 2018, driven by vaccines and oncology. Excluding the unfavorable effect of foreign exchange, sales in China grew by 67%.

GAAP (generally accepted accounting principles) earnings per share assuming dilution (EPS) were $1.12 for the first quarter of 2019. Non-GAAP EPS of $1.22 for the first quarter of 2019 excludes acquisition- and divestiture-related costs, restructuring costs, a net benefit from the settlement of certain federal income tax matters, and certain other items.

Oncology Pipeline Highlights

Merck continued to advance the development programs for KEYTRUDA (pembrolizumab), the company’s anti-PD-1 therapy; Lynparza (olaparib), a PARP inhibitor being co-developed and co-commercialized with AstraZeneca; and Lenvima (lenvatinib mesylate), an orally available tyrosine kinase inhibitor being co-developed and co-commercialized with Eisai Co., Ltd. (Eisai).

KEYTRUDA

Merck announced that the U.S. Food and Drug Administration (FDA) approved KEYTRUDA for the following indications:
first-line treatment in combination with axitinib for advanced renal cell carcinoma, based on the KEYNOTE-426 trial, which showed that the combination reduced the risk of death by nearly half compared to sunitinib;
adjuvant treatment of patients with melanoma with involvement of lymph node(s) following complete resection based on results from the EORTC1325/KEYNOTE-054 trial that showed significant recurrence-free survival benefit with KEYTRUDA; and
first-line treatment of patients with Stage III non-small cell lung cancer (NSCLC) who are not candidates for surgical resection or definitive chemoradiation, or metastatic NSCLC, and whose tumors express PD-L1 (TPS ≥1%), with no EGFR or ALK genomic tumor aberrations, based on the results of the KEYNOTE-042 trial.
Merck announced the European approval of KEYTRUDA in combination with chemotherapy for first-line treatment of metastatic squamous NSCLC, based on data from the KEYNOTE-407 trial.
In April 2019, the European Commission approved a six-week dosing schedule across all current monotherapy indications for KEYTRUDA.
The National Medical Products Administration in China granted conditional approval of KEYTRUDA for the first-line treatment of metastatic nonsquamous NSCLC in combination with chemotherapy based on the KEYNOTE-189 trial. KEYTRUDA is the first anti-PD-1 therapy approved for more than one tumor type in China and the first approved in the first-line treatment setting for metastatic nonsquamous NSCLC.
Merck announced that the FDA granted priority review for each of the following supplemental Biologics License Applications with KEYTRUDA seeking use as:
first-line treatment of patients with recurrent or metastatic head and neck squamous cell carcinoma (HNSCC) as monotherapy or in combination with chemotherapy based on the KEYNOTE-048 trial. The FDA has set a PDUFA date of June 10, 2019; and
third-line treatment of patients with advanced small cell lung cancer (SCLC) as monotherapy based on the KEYNOTE-158 and KEYNOTE-028 trials. The FDA has set a PDUFA date of June 17, 2019.
Merck announced the initiation of three separate pivotal Phase 3 trials in patients with metastatic castration-resistant prostate cancer (mCRPC) evaluating KEYTRUDA in combination with: Lynparza, chemotherapy and anti-hormone agents.
Lynparza

Merck and AstraZeneca announced European approval of Lynparza for the treatment of germline BRCA-mutated HER2-negative advanced breast cancer, based on the Phase 3 OlympiAD trial.
Merck and AstraZeneca announced top-line results from the POLO study in which Lynparza reduced the risk of disease progression or death as first-line maintenance treatment in germline BRCA-mutated metastatic pancreatic cancer. Full results will be presented at the upcoming American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting.
Other Pipeline Highlights

Merck announced FDA acceptance for priority review of a supplemental New Drug Application for ZERBAXA (ceftolozane and tazobactam) for the treatment of adult patients with nosocomial pneumonia, including ventilator-associated pneumonia caused by certain susceptible Gram-negative microorganisms, with a PDUFA date of June 3, 2019. An application also is under review for the same indication with the European Medicines Agency (EMA). These applications were based on results from the Phase 3 ASPECT-NP study which were recently presented at the European Congress of Clinical Microbiology & Infectious Diseases.
Merck announced FDA acceptance for priority review of a New Drug Application for the company’s investigational beta-lactamase inhibitor relebactam in combination with imipenem/cilastatin for the treatment of certain infections caused by certain susceptible Gram-negative bacteria, in adults with limited or no alternative therapies available. The PDUFA date is July 16, 2019. An application also is under review with the EMA.
Merck and NGM Biopharmaceuticals, Inc. announced that Merck exercised its option to extend the research phase of the companies’ collaboration to March 2022. The collaboration is focused on discovering, developing and commercializing novel biologic therapeutics across a range of therapeutic areas.
Merck announced the EMA recently accepted the Marketing Authorization Application for V920 (rVSV∆G-ZEBOV-GP), the company’s investigational vaccine for Ebola Zaire disease. A rolling submission of a Biologics License Application with the FDA is underway.

Pharmaceutical Revenue

First-quarter pharmaceutical sales were $9.7 billion, an increase of 8% compared with the first quarter of 2018; excluding the unfavorable effect of foreign exchange, sales grew 12% in the first quarter. The increase was driven primarily by growth in oncology and vaccines, partially offset by the ongoing impacts of the loss of market exclusivity for several products.

Growth in oncology was driven by a significant increase in sales of KEYTRUDA, reflecting the strong momentum for the treatment of patients with NSCLC and the company’s continued launches with new indications globally. Additionally, oncology sales reflect alliance revenue of $79 million related to Lynparza and $74 million related to Lenvima, representing Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

Growth in vaccines was driven largely by higher sales of GARDASIL [Human Papillomavirus Quadrivalent (Types 6, 11, 16 and 18) Vaccine, Recombinant] and GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant), vaccines to prevent certain cancers and other diseases caused by Human Papillomavirus (HPV), primarily due to the ongoing commercial launch in China. Higher demand in Europe, driven primarily by increased vaccination rates for both boys and girls, as well as the timing of customer purchases in Latin America, also contributed to sales growth. Growth was partially offset by lower sales in the United States reflecting public sector buying patterns.

Growth in pediatric vaccines was driven by VARIVAX (Varicella Virus Vaccine Live), a vaccine to help prevent chickenpox; PROQUAD (Measles, Mumps, Rubella and Varicella Virus Vaccine Live), a combination vaccine to help protect against measles, mumps, rubella and varicella; and M-M-R II (Measles, Mumps and Rubella Virus Vaccine Live), a vaccine to help prevent measles, mumps and rubella, reflecting government tenders in Latin America and higher demand in Europe and the United States.

Performance in hospital acute care reflects strong demand in the United States for BRIDION (sugammadex) Injection 100 mg/mL, a medicine for the reversal of neuromuscular blockade induced by rocuronium bromide or vecuronium bromide in adults undergoing surgery; and the ongoing launch of PREVYMIS (letermovir), a medicine for the prevention of cytomegalovirus (CMV) infection and disease in adult CMV-seropositive recipients of an allogeneic hematopoietic stem cell transplant.

Pharmaceutical sales growth for the quarter was partially offset by the ongoing impacts from the loss of market exclusivity for ZETIA (ezetimibe) and VYTORIN (ezetimibe/simvastatin), medicines for lowering LDL cholesterol; INVANZ (ertapenem sodium), an antibiotic; CANCIDAS (caspofungin acetate for injection), an antifungal; as well as biosimilar competition for REMICADE (infliximab), a treatment for inflammatory diseases, in the company’s marketing territories in Europe. In addition, sales of JANUVIA (sitagliptin) and JANUMET (sitagliptin and metformin HCI), medicines that help lower blood sugar in adults with type 2 diabetes, declined slightly due to continuing pricing pressure in the United States, which more than offset strong demand from international markets.

Animal Health Revenue

Animal Health sales totaled $1.0 billion for the first quarter of 2019, a decrease of 4% compared with the first quarter of 2018. Excluding the unfavorable effect from foreign exchange, Animal Health sales grew 3% in the first quarter. Sales performance reflects higher demand for companion animal products, primarily the BRAVECTO (fluralaner) line of products for parasitic control; and volume growth in livestock products, particularly from sales of new poultry and swine products, which was partially offset by lower ruminant product sales driven by distributor purchasing patterns and the delayed movement of cattle into the feedlots in the United States.

Animal Health segment profits were $415 million in the first quarter of 2019, essentially flat compared with $413 million in the first quarter of 20183. In April 2019, Merck acquired Antelliq Group, a leader in digital animal identification, traceability and monitoring solutions.

GAAP Expense, EPS and Related Information

Gross margin was 71.8% for the first quarter of 2019 compared to 68.3% for the first quarter of 2018. The increase in gross margin for the first quarter of 2019 was primarily driven by lower acquisition- and divestiture-related costs and restructuring costs, which reduced gross margin by 4.1 percentage points in the first quarter of 2019 compared with 7.4 percentage points in the first quarter of 2018. In addition, gross margin was impacted by the favorable effects of foreign exchange and product mix, partially offset by the increased amortization of intangible assets related to collaborations and the unfavorable effects of pricing pressure and royalties.

Selling, general and administrative expenses were $2.4 billion in the first quarter of 2019, a 3% decrease compared to the first quarter of 2018. The decrease primarily reflects lower promotion and selling costs and the favorable effects of foreign exchange, partially offset by higher administrative costs.

Research and development (R&D) expenses were $1.9 billion in the first quarter of 2019 compared with $3.2 billion in the first quarter of 2018. The decline was driven primarily by a $1.4 billion charge recorded in the first quarter of 2018 related to the formation of a collaboration with Eisai, partially offset by higher expenses related to clinical development, including collaborations, and investment in early drug development.

Other (income) expense, net, was $188 million of expense in the first quarter of 2019 compared to $291 million of income in the first quarter of 2018. Other (income) expense, net, in the first quarter of 2019 reflects the unfavorable effects of foreign exchange losses and impairment charges. Other (income) expense, net, in the first quarter of 2018 reflects a legal settlement gain.

The effective income tax rate of 6.7% for the first quarter of 2019 reflects a net tax benefit of $360 million related to the settlement of certain federal income tax matters.

GAAP EPS was $1.12 for the first quarter of 2019 compared with $0.27 for the first quarter of 2018.

Non-GAAP Expense, EPS and Related Information

The non-GAAP gross margin was 75.9% for the first quarter of 2019, compared to 75.7% for the first quarter of 2018. The increase in non-GAAP gross margin reflects the favorable effects of foreign exchange and product mix, partially offset by the increased amortization of intangible assets related to collaborations and the unfavorable effects of pricing pressure and royalties.

Non-GAAP selling, general and administrative expenses were $2.4 billion in the first quarter of 2019, a 3% decrease compared to the first quarter of 2018. The decrease reflects lower promotion and selling costs and the favorable effects of foreign exchange, partially offset by higher administrative costs.

Non-GAAP R&D expenses were $2.0 billion in the first quarter of 2019, a 9% increase compared to the first quarter of 2018. The increase reflects higher expenses related to clinical development, including collaborations, and investment in early drug development.

Non-GAAP other (income) expense, net, was $21 million of expense in the first quarter of 2019 compared to $259 million of income in the first quarter of 2018. Non-GAAP other (income) expense, net, in the first quarter of 2018 reflects a legal settlement gain.

The non-GAAP effective income tax rate was 16.5% for the first quarter of 2019.

Non-GAAP EPS was $1.22 for the first quarter of 2019 compared with $1.05 for the first quarter of 2018.

Financial Outlook

Merck narrowed and raised its full-year 2019 revenue range to be between $43.9 billion and $45.1 billion, including a negative impact from foreign exchange of slightly more than 1% at mid-April exchange rates.

Merck narrowed and raised its full-year 2019 GAAP EPS range to be between $4.02 and $4.14. Merck narrowed and raised its full-year 2019 non-GAAP EPS range to be between $4.67 and $4.79, including a slightly positive impact from foreign exchange at mid-April exchange rates. The non-GAAP range excludes acquisition- and divestiture-related costs, costs related to restructuring programs, a net benefit from the settlement of certain federal income tax matters, and certain other items.

The following table summarizes the company’s full year 2019 financial guidance.

The expected full-year GAAP effective tax rate of 16.5% to 17.5% reflects a net favorable impact of approximately 2.0 percentage points from the above items.

Earnings Conference Call

Investors, journalists and the general public may access a live audio webcast of the call today at 8:00 a.m. EDT on Merck’s website at View Source Institutional investors and analysts can participate in the call by dialing (706) 758-9927 or (877) 381-5782 and using ID code number 8493044. Members of the media are invited to monitor the call by dialing (706) 758-9928 or (800) 399-7917 and using ID code number 8493044. Journalists who wish to ask questions are requested to contact a member of Merck’s Media Relations team at the conclusion of the call.

On April 30, 2019 Oncology Venture A/S reported news on DRP based analyses of biopsies from clinical trials with dovitinib (Press release, Oncology Venture, APR 30, 2019, View Source [SID1234535457]). . In addition to renal, endometrial and GIST tumors Oncology Venture has now also shown in two new indications liver cancer and breast cancer that the DRP can predict the responding patients. Moreover, the first patient has been dosed with 2X‑121 at the Dana Farber Cancer Institute. Boston, US for the treatment of advanced ovarian cancer. Also, Oncology Venture has submitted an IND (Investigational New Drug Application) for LiPlaCis and its DRP to the FDA, with the intention to start a pivotal study in metastatic breast cancer.

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Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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Dovitinib
Oncology Venture’s dovitinib DRP (Drug Response Predictor) has previously proved its ability to identify the best responders based on patient biopsies from clinical trials in renal, endometrial and GIST cancer. New analyses of biopsies from clinical trial cohorts of liver and breast cancer patients resulted in equally good predictability. Oncology Venture has thereby been able to confirm its DRP for dovitinib in five out of five of Novartis’ clinical trials and this without having to invest in own studies.

Oncology Venture aims to apply for a first FDA marketing approval of dovitinib and its companion DRP based on existing data from a pivotal study done by Novartis in patients with renal cancer.

2X-121/PARPi
The first U.S. patient has now been dosed at Dana-Farber Cancer Institute Boston with 2X-121, a PARP inhibitor in development for advanced ovarian cancer. 2X-121 has previously shown promising results in ovarian cancer patients in a phase 1 study performed by EISAI. The DRP selection aimed to find the best responding patients is expected to lift the response rate to outperform currently marketed drugs for the same indication. 2X-121 is also in development for the treatment of metastatic breast cancer.

LiPlaCis
An IND (Investigational New Drug Application) for LiPlaCis in metastatic breast cancer has been submitted to the FDA for the purpose of performing a pivotal study of LiPlaCis and its DRP in patients with metastatic breast cancer. An IDE (Investigational Device Exemption) will follow in this quarter.

In metastatic breast cancer patients with the highest DRP score (top 20%), LiPlaCis treatment resulted in a response rate of 40%. In comparison, the latest product approved by the FDA in this patient group, Halaven, showed a response rate of 12%. LiPlaCis is also being evaluated in an ongoing Phase 2 study in patients with prostate cancer.

For further information, please contact:
For investor inquiries
Ulla Hald Buhl
IR & Communications
E-mail: [email protected]
Telephone +45 21 70 10 49

For media inquiries
Thomas Pedersen
Carrotize PR & Communications
E-mail: [email protected]
Telephone +45 60 62 93 90

About the Drug Response Predictor – DRP Companion Diagnostic
Oncology Venture uses its multi gene DRP to select those patients who by the genetic signature of their cancer are found to have a high likelihood of responding to the drug. The goal is developing the drug for the right patients, and by screening patients before treatment the response rate can be significantly increased. The DRP method builds on the comparison of sensitive vs. resistant human cancer cell lines, including genomic information from cell lines combined with clinical tumor biology and clinical correlates in a systems biology network. DRP is based on messenger RNA from the patient’s biopsies.
DRP has proven its ability to provide a statistically significant prediction of the clinical outcome from drug treatment in cancer patients in 29 out of 37 clinical studies that were examined and is currently demonstrating promising results in an ongoing phase 2 study prospectively using LiPlaCis and its DRP to track, match and treat patients with metastatic breast cancer.
The DRP platform, i.e. the DRP and the PRP tools, can be used in all cancer types and is patented for more than 70 anti-cancer drugs in the US. The PRP is used by Oncology Venture for Personalized Medicine. The DRP is used by Oncology Venture for drug development.

On April 29, 2021 Vibliome Therapeutics, LLC, reported that it closed a $16mm Series A round of financing to advance its proprietary technology supporting the development of small molecule therapeutics targeting clinically-relevant signaling pathways (Press release, Vibliome, APR 29, 2019, View Source [SID1234580056]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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Deerfield Management was the sole investor in the Series A financing round and will be providing operational support. Vibliome has discovered a new systematic approach for the development of small molecule kinase inhibitors with unique profiles and a very high degree of selectivity. The company’s focus on medicinal chemistry gives it a distinct advantage in developing high quality inhibitors against exciting new targets. Vibliome’s technology also supports lead generation for improved inhibitors against validated and novel targets by taking advantage of new mechanisms of binding and dierentiated target combinations. This platform technology is ideally suited to support emerging therapeutic approaches for cancer and other diseases where selective enzyme targeting is needed.

There are over 500 kinases encoded by the human genome which control nearly all cellular functions by phosphorylating proteins. Aberrations in the control of cell metabolism, division, growth and death are hallmarks in the development of cancer, and kinase inhibitors have been shown to be eective in targeting genetic mutations and fusions that drive cancer progression. "The versatility of our chemistry platform oers many opportunities for variation while maintaining a common general architecture," said Robert Goodwin, Vibliome’s CEO. "We are very excited to leverage Deerfield’s support as we develop new therapeutic options for patients, particularly in oncology."

On April 29, 2020 Oncoceutics, Inc. reported that the United States Patent and Trademark Office (USPTO) has issued patent #10,266,533 entitled "7-BENZYL-4-(2-METHYLBENZYL)-2,4,6,7,8,9-HEXAHYDROIMIDAZO [1,2-A]PYRIDO[3,4-E]PYRIMIDIN-5(1H)-ONE, ANALOGS THEREOF, AND SALTS THEREOF AND METHODS FOR THEIR USE IN THERAPY" with an expiration date of January 29, 2036 (Press release, Oncoceutics, APR 29, 2019, View Source [SID1234558357]). This patent covers the composition of matter for ONC213, its di-salt formulation, and its use in the treatment of cancer. In addition to the claims related to ONC213, the patent also contains claims for millions of structurally-related imipridones.

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Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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ONC213 is the fourth molecule in the company’s pipeline of "imipridone" family of anti-cancer small molecules that target G protein-coupled receptors, following ONC201, ONC206 and ONC212. As with other members of the imipridone class, ONC213 has very attractive chemical and biological properties including oral bioavailability, chemical stability and a large therapeutic index.

"We are delighted by the decision of the US Patent Office to grant Composition of Matter to the novel molecule ONC213," said Martin Stogniew, Ph.D., Chief Development Officer of Oncoceutics. "This patent paves the way for future generations of imipridones to enter the clinic and eventually benefit the lives of patients."

ONC213 has demonstrated anti-cancer activity and safety in various preclinical oncology models across hematological malignancies and solid tumors tested in the lab of Principal investigator Dr. Yubin Ge, Associate Professor of Oncology at the Karmanos Cancer Institute and Wayne State University School of Medicine. Results presented at the 61st American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting demonstrated that ONC213 targets leukemic stem cells in patient-derived xenograft mouse models, is well tolerated and combines synergistically with Bcl-2 inhibitor Venetoclax. Dr. Ge recently received a grant from the Kids Without Cancer and the Children’s Hospital of Michigan Foundation to further determine the mechanism of action of ONC213 and enable biomarker selection for clinical studies.

"Our team at the Karmanos Cancer Institute is excited by the potential of ONC213 as a new type of cancer therapy," said Dr. Yubin Ge. "We look forward to continuing development of this novel agent as it makes its way towards the clinic."