West Announces Fourth-Quarter and Full-Year 2018 Results

On February 14, 2018 West Pharmaceutical Services, Inc. (NYSE: WST) reported its financial results for the fourth-quarter and full-year 2018 and provided financial guidance for full-year 2019 (Press release, West Pharmaceutical Services, FEB 14, 2019, View Source [SID1234533322]).

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Executive Summary

Fourth-quarter 2018 reported net sales were $422.5 million, representing growth of 1.7% over last year’s period and constant-currency, organic sales growth of 3.6%. Fourth-quarter 2018 reported net sales included a negative adjustment of $11.3 million associated with a voluntary recall of the Company’s Vial2Bag hospital administration system devices. Excluding that impact, sales would have grown by 4.4% over the same period last year, with constant-currency, organic sales growth of 6.3% over last year.
Fourth-quarter 2018 reported-diluted EPS was $0.69, compared to $0.00 in the same period last year, which included a negative impact of $0.64 from 2017 tax law changes. Fourth-quarter 2018 adjusted-diluted EPS was $0.73, compared to $0.64 in the same period last year.
Full-year 2018 reported net sales were $1.717 billion, representing growth of 7.4% over the prior year and constant-currency, organic sales growth of 5.6%.
Full-year 2018 reported-diluted EPS was $2.74, compared to $1.99 last year. Full-year 2018 adjusted-diluted EPS was $2.81, compared to $2.78 in the prior year. Tax benefits from stock-based compensation contributed $0.19 to full-year 2018 adjusted-diluted EPS, compared to $0.44 to full-year 2017 adjusted-diluted EPS.
On January 24, 2019, the Company issued a voluntary recall of its Vial2Bag products due to reports of potential variable dosing associated with the Vial2Bag DC 13 mm device. Given our focus on patient safety, we are recalling all our Vial2Bag products while continuing our root cause analysis. In 2018, Vial2Bag product sales, excluding the impact of the voluntary recall, would have been approximately $24 million.
The Company is introducing full-year 2019 financial guidance. Based on current foreign currency exchange rates, full-year 2019 net sales are expected to be in a range between $1.795 billion and $1.820 billion. Full-year 2019 adjusted-diluted EPS is expected to be in a range between $2.77 and $2.89. This EPS guidance includes the net impact from foreign currency exchange rates but does not include potential tax benefits from stock-based compensation.
"Adjusted-diluted EPS," "net sales at constant currency" and "organic sales" are Non-GAAP measurements. See discussion under the heading "Non-GAAP Financial Measures" in this release.

Executive Commentary

"Our teams have executed on our market-led strategy that focuses on the containment and delivery of injectable medicines and globalizing our operations. I am pleased with the progress on our strategic priorities, which positions us well for 2019," said Eric M. Green, President and Chief Executive Officer. "We are developing next-generation, high-value components and self-injection devices, which are gaining momentum in customer uptake. Entering its second full-year, our Global Operations team is successfully generating substantial efficiencies and greater plant utilization, while concurrently increasing our industry-leading quality metrics and lowering our capital spending requirements.

"With respect to the voluntary Vial2Bag product recall, we strongly believe that these devices significantly advance the standard of care for medicines delivered by way of infusion. Our teams are working to resupply the market as soon as is reasonably possible, in consultation with the United States Food and Drug Administration and other regulatory bodies."

Mr. Green concluded, "Our diverse product portfolio of high-value products and services, as well as new products and line extensions to be launched this year, are addressing the needs of our distinct customer groups. We expect to grow sales and expand profit margins in line with our long-term financial construct, with full-year 2019 constant-currency organic sales growth in a range between 6% and 8%, full-year 2019 operating profit margin expansion of approximately 100 basis points, and adjusted-diluted EPS in a range between $2.77 and $2.89."

Fourth-Quarter and Full-Year 2018 Financial Results (comparisons to prior-year periods)

Fourth-quarter 2018 reported net sales of $422.5 million grew 1.7% over the prior-year quarter. At constant-currency, organic sales growth was 3.6%. Proprietary Products segment organic sales growth was 3.7%, led by mid-single digit growth in both our Biologics and Generics market units. Pharma market unit organic sales growth was flat, affected by the voluntary recall. High-value product (HVP) sales growth was 1%, with mid-single digit growth in HVP component sales, led by double-digit sales growth in NovaPure, FluroTec and Westar RU components, partially offset by the impact from the voluntary recall. Contract-Manufactured Products segment organic sales growth was 3.1%, as continued growth in diabetes-related diagnostic and delivery devices more than offset a year-over-year decline in consumer products and a strong tooling sales quarter in the prior-year period.

Full-year 2018 reported net sales of $1.717 billion grew 7.4% over the prior year. At constant currency, organic sales growth was 5.6%. Proprietary Products organic sales growth was 3.9% led by high-single digit sales growth in the Generics market unit. The Pharma market unit organic sales grew in the low-single digits, and the Biologics market unit had flat organic sales growth. High-value product sales grew in the mid-single digits, led by NovaPure, FluroTec and Westar RU components. Contract-Manufactured Products segment organic sales growth was 11.6% led by healthcare-related products, partially offset by a decline in consumer-related products.

Fourth-quarter 2018 gross profit margin was 31.5%, an increase of 60 basis points from the prior-year period. Proprietary Product segment gross profit margin increased by 220 basis points due to higher efficiencies and positive sales mix, more than offsetting the impact from the voluntary recall, unabsorbed overhead from the start-up of our Waterford facility and higher raw material costs. Contract-Manufactured Products segment gross profit margin declined by 370 basis points due to unabsorbed overhead from plant consolidation activities, start-up costs associated with the launch of new programs and unfavorable sales mix.

Full-year 2018 gross profit margin was 31.8%, a 30-basis point decline from the prior year. While Proprietary Products segment gross profit margin expanded by 80 basis points, Contract-Manufactured Products segment gross profit margin declined by 280 basis points due to unabsorbed overhead from plant consolidation activities, start-up costs associated with the launch of new programs and unfavorable sales mix.

As of January 1, 2018, the Company adopted new rules for pension accounting. Instead of recognizing pension gains or losses in the "Selling, general and administrative expenses" line on the income statement, these gains or losses are now located "below the line" in nonoperating income. The Company has restated all prior periods to enable more accurate year-over-year comparisons with 2018 performance.

Fourth-quarter 2018 reported operating profit margin was 15.6%. Excluding restructuring costs and related charges, fourth-quarter 2018 adjusted operating profit margin was 15.9%, 140 basis points higher than in the prior-year period.

Full-year 2018 reported operating profit margin was 14.0%. Excluding restructuring and related charges and other charges, full-year 2018 adjusted operating profit margin was 14.5%, a decline of 30 basis points compared to the prior-year period.

Fourth-quarter 2018 reported tax rate was 22.7%. Excluding restructuring and related charges and other charges, the adjusted tax rate was 20.1%. This included $1.1 million of tax benefits associated with stock-based compensation. Excluding these benefits, the adjusted tax rate would have been 21.7%.

Full-year 2018 reported tax rate was 17.2%. On an adjusted basis, the tax rate was 18.2%. This included $14.3 million of tax benefits associated with stock-based compensation. Excluding these benefits, the adjusted effective tax rate would have been 24.0%.

Full-year 2018 operating cash flow was $288.6 million, representing a 9.6% increase over 2017 operating cash flow of $263.3 million. Capital expenditures in 2018 were $104.7 million, a 20% reduction compared to 2017 capital expenditures of $130.8 million.

Full-Year 2019 Financial Guidance

The Company expects full-year 2019 net sales to be in a range between $1.795 billion and $1.820 billion, which includes an estimated negative impact of $30 million based on current foreign currency exchange rates. This range represents an expected constant-currency organic sales growth of 6% to 8% over 2018 reported net sales.

Full-year 2019 adjusted-diluted EPS is expected to be in a range between $2.77 and $2.89, which includes an estimated negative impact of approximately $0.06 to full-year 2019 adjusted-diluted EPS based on current foreign currency exchange rates and excludes potential tax benefits from stock-based compensation. This assumes operating profit margin expansion of approximately 100 basis points.

This adjusted-diluted EPS guidance range assumes a full-year tax rate of 25%, which does not include potential tax benefits from stock-based compensation. We have opted not to forecast 2019 tax benefits from stock-based compensation, as they are out of the Company’s control. Any tax benefits associated with stock-based compensation that we receive in 2019 would provide a positive adjustment to our full-year EPS guidance.

Full-year 2019 capital spending is expected to be in a range between $120 million and $130 million.

Fourth-Quarter 2018 Conference Call

The Company will host a conference call to discuss the results and business expectations at 9:00 a.m. Eastern Time today. To participate on the call please dial 877-930-8295 (U.S.) or 253-336-8738 (International). The conference ID is 2287302.

A live broadcast of the conference call will be available at the Company’s website, www.westpharma.com, in the "Investors" section. Management will refer to a slide presentation during the call, which will be made available on the day of the call. To view the presentation, select "Presentations" in the "Investors" section of the Company’s website.

An online archive of the broadcast will be available at the website three hours after the live call and will be available through Thursday, February 21, 2019, by dialing 855-859-2056 (U.S.) or 404-537-3406 (International) and entering conference ID 2287302.

Verastem Oncology Announces Publication of the Phase 2 DYNAMO Study Results in Indolent Non-Hodgkin Lymphoma in the Journal of Clinical Oncology

On February 14, 2019 Verastem, Inc. (Nasdaq:VSTM) (Verastem Oncology or the Company), a biopharmaceutical company focused on developing and commercializing medicines seeking to improve the survival and quality of life of cancer patients, reported that the results of the Phase 2 DYNAMO study, which evaluated COPIKTRA (duvelisib) capsules in patients with indolent non-Hodgkin lymphoma (iNHL) who were refractory to both rituximab and chemotherapy or radioimmunotherapy, was published online in the [peer-reviewed] Journal of Clinical Oncology (Press release, Verastem, FEB 14, 2019, View Source;p=RssLanding&cat=news&id=2387473 [SID1234533319]). COPIKTRA received accelerated approval from the U.S. Food and Drug Administration on September 24, 2018 for the treatment of adult patients with relapsed or refractory follicular lymphoma (FL) after at least two prior systemic therapies. Additionally, COPIKTRA is indicated for the treatment of adult patients with chronic lymphocytic leukemia (CLL) or small lymphocytic leukemia (SLL) after at least two prior therapies.

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COPIKTRA is an oral inhibitor of phosphoinositide 3-kinase (PI3K), a dual inhibitor of both PI3K-delta and PI3K-gamma. The COPIKTRA New Drug Application (NDA) was supported by clinical data from the open-label, single-arm Phase 2 DYNAMO study (NCT01882803), which evaluated the efficacy and safety of COPIKTRA (25mg twice daily) as a monotherapy in 129 adult patients with various types of iNHL, including follicular lymphoma (FL; n=83), small lymphocytic lymphoma (SLL; n=28) or marginal zone lymphoma (MZL; n=18), whose disease had progressed and who were refractory to rituximab and to either chemotherapy or radioimmunotherapy. The primary endpoint of the study was ORR as assessed by an independent review committee (IRC).

"Indolent non-Hodgkin lymphoma remains largely incurable and often requires multiple lines of treatment after becoming refractory to standard therapies," said Ian Flinn, M.D., Ph.D., Director of the Lymphoma Research Program at Sarah Cannon Research Institute, lead investigator of the Phase 2 DYNAMO study and lead author of the manuscript. "In the DYNAMO study, oral duvelisib monotherapy demonstrated clinically meaningful activity and a manageable safety profile in heavily pretreated, double-refractory iNHL, including in patients with SLL, FL and MZL. Duvelisib is an important addition to the evolving treatment paradigm for patients with FL and we are delighted to have the study results published in this prestigious journal to share with the medical and scientific communities."

While MZL patients were included in the DYNAMO study, COPIKTRA has not been deemed safe and effective by the FDA for use in treating patients suffering from MZL, however, MZL represents a potential new patient indication that may benefit from COPIKTRA.

The National Comprehensive Cancer Network (NCCN) has added COPIKTRA to the Clinical Practice Guidelines in Oncology (NCCN Guidelines) for CLL/SLL, FL and MZL. The NCCN Guidelines are the standard physician resource for determining the appropriate course of treatment for patients.

The full manuscript, titled "DYNAMO: A Phase II Study of Duvelisib (IPI-145) in Patients With Refractory Indolent Non-Hodgkin Lymphoma," (Flinn, et al. DOI: 10.1200/JCO.18.00915) can be accessed here.

Results of the Phase 2 DYNAMO Study in iNHL

The ORR per IRC-assessed response was 47% (95% CI, 38% to 56%). The study met its primary end point (p<0.001). ORR per IRC was 42%, 68%, and 39% in FL, SLL, and MZL subtypes, respectively. Responses were rapid and durable. Median time to response (TTR) was 1.87 months (range, 1.4 to 11.7 months), with 59% and 84% of patients responding by 2 and 4 months, respectively. Median duration of response (DOR) was 10 months (95% CI, 6.5 to 10.5 months), with estimated probabilities of remaining in response at 6 and 12 months of 69% and 35%. Median PFS was 9.5 months (95% CI, 8.1 to 11.8 months), with the probability of surviving and being progression free at 6 months estimated at 62%. Median overall survival (OS) was 28.9 months (95% CI, 21.4 months to not estimable), and OS at 1 year was estimated at 77%. Among the 39 patients with FL who received an R-CHOP (or equivalent) chemoimmunotherapy regimen as first therapy, 30 (77%) experienced early relapse (no response during treatment or progressive disease or time to next treatment less than 2 years). This patient subgroup showed an ORR of 33%, median DOR of 12.6 months and median PFS of 8.2 months. The approval and corresponding label of COPIKTRA in FL was based on the efficacy and safety results from the FL patients (n=83) in DYNAMO that had received at least two prior systemic therapies. The accelerated approval was based on overall response rate (ORR) and continued approval may be contingent upon verification and description of clinical benefit in confirmatory trials. COPIKTRA is not FDA approved for MZL.

COPIKTRA contains a BOXED WARNING for four fatal and/or serious toxicities: infections, diarrhea or colitis, cutaneous reactions, and pneumonitis. More information about these Boxed Warnings and additional Important Safety Information can be found below and in the full Prescribing Information at www.COPIKTRA.com.Verastem Oncology is implementing a Risk Evaluation and Mitigation Strategy to provide appropriate dosing and safety information to better support physicians in managing their patients on COPIKTRA.

COPIKTRA is associated with adverse reactions which may require dose reduction, treatment delay or discontinuation of COPIKTRA. In addition to the BOXED WARNING, COPIKTRA has WARNINGS AND PRECAUTIONS for hepatotoxicity, neutropenia, and embryo-fetal toxicity. The most common ADVERSE REACTIONS (reported in ≥ 20% of patients) were diarrhea or colitis, neutropenia, rash, fatigue, pyrexia, cough, nausea, upper respiratory infection, pneumonia, musculoskeletal pain, and anemia.

Please see important Safety Information provided below and Prescribing Information including BOXED WARNING and Medication Guide at www.COPIKTRAHCP.com/prescribinginformation

About Follicular Lymphoma

Follicular lymphoma (FL) is typically a slow-growing or indolent form of non-Hodgkin lymphoma (NHL) that arises from B-lymphocytes, making it a B-cell lymphoma. This lymphoma subtype accounts for 20 to 30 percent of all NHL cases, with more than 140,000 people in the US with FL and more than 13,000 newly diagnosed patients this year. Common symptoms of FL include enlargement of the lymph nodes in the neck, underarms, abdomen, or groin, as well as fatigue, shortness of breath, night sweats, and weight loss. Often, patients with FL have no obvious symptoms of the disease at diagnosis. Follicular lymphoma is usually not considered to be curable, but more of a chronic disease, with patients living for many years with this form of lymphoma. The potential of additional oral agents, particularly as a monotherapy that can be used in the general community physician’s armamentarium, may hold significant value in the treatment of patients with FL.

About COPIKTRA (duvelisib)

COPIKTRA is an oral inhibitor of phosphoinositide 3-kinase (PI3K), and the first approved dual inhibitor of PI3K-delta and PI3K-gamma, two enzymes known to help support the growth and survival of malignant B-cells. PI3K signaling may lead to the proliferation of malignant B-cells and is thought to play a role in the formation and maintenance of the supportive tumor microenvironment.1,2,3 COPIKTRA is indicated for the treatment of adult patients with relapsed or refractory chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL) after at least two prior therapies and relapsed or refractory follicular lymphoma (FL) after at least two prior systemic therapies. COPIKTRA is also being developed by Verastem Oncology for the treatment of peripheral T-cell lymphoma (PTCL), for which it has received Fast Track status, and is being investigated in combination with other agents through investigator-sponsored studies.4 For more information on COPIKTRA, please visit www.COPIKTRA.com. Information about duvelisib clinical trials can be found on www.clinicaltrials.gov.

Helsinn and MEI Pharma Announce Publication of Phase II Data for Pracinostat in Combination with Azacitidine in the Frontline Treatment of Older AML Patients Unfit for Intensive Chemotherapy, in Blood Advance

On February 14, 2019 Helsinn Group, a Swiss pharmaceutical group focused on building quality cancer care products, and MEI Pharma, Inc. (Nasdaq: MEIP), an oncology company focused on the clinical development of novel therapies for cancer, reported the publication in the medical journal, Blood Advances, published by the American Society of Hematology (ASH) (Free ASH Whitepaper), the results from a Phase II study that evaluated the safety and efficacy of pracinostat, a potent oral pan-histone deacetylase inhibitor (HDACi), in combination with azacitidine, for the treatment of patients suffering from acute myeloid leukemia (AML), who cannot undergo treatment with intensive chemotherapy (IC) (Press release, MEI Pharma, FEB 14, 2019, View Source [SID1234533317]).

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AML is an haematological malignancy mostly diagnosed in older patients, with an average diagnosis age of 67 years of age. Although the cure rate for AML patients ≤60 years using intensive chemotherapy (IC) approaches 35% to 40%, it remains poor in older patients, typically not exceeding 15%.

The full article, just published online, Pracinostat plus azacitidine in older patients with newly diagnosed acute myeloid leukemia: results of a phase II study, G. Garcia-Manero et al., shows the results of the Phase II study, assessing pracinostat combined with azacitidine in patients ≥65 years with newly diagnosed AML and ineligible for standard induction chemotherapy. This was a multicentre, open-label, single-arm, two-stage study enrolling 50 patients, evaluating the treatment with oral pracinostat 60 mg/day, 3 days/week, for 3 consecutive weeks plus intravenous azacitidine 75 mg/m2 daily for 7 days in a 28-day cycle, until discontinuation due to progression, intolerable toxicity, intercurrent illness, or per patient request.

Primary endpoints for the Phase II study were the combined rates of complete remission (CR), CR with incomplete count recovery (CRi), and morphologic leukemia-free state (MLFS). Out of the 50 patients, 26 patients (52%) achieved the primary endpoint, with 42% achieving complete remission.

Ninety-four percent and 90% of patients had at least 1 TEAE related to pracinostat and azacitidine, respectively. The most common treatment-related AEs were nausea (56%), fatigue (40%), thrombocytopenia (38%), and neutropenia (30%). Pracinostat plus azacitidine is a well-tolerated and active regimen in the frontline treatment of older patients with AML unfit for intensive therapy.

This investigational study showed that pracinostat in combination with azacitidine is active in the frontline treatment of older patients with AML, unfit for intensive therapy. The CR rate of 42%, the median overall survival (OS) of 19.1 months, a PFS of 12.6 months and 1-year OS rate of 62% have been evidenced in patients unfit for intensive therapy.

These data have shown that pracinostat in combination with azacitidine is a potential treatment option for the frontline treatment of older AML patients unfit for IC. Based on these results, a Phase III, multicenter, double-blind, randomized study of pracinostat with azacitidine vs placebo with azacitidine (NCT03151408) is ongoing to demonstrate an improvement of pracinostat in combination in this difficult-to-treat AML population.

Dr. Guillermo Garcia-Manero, MD Professor, Department of Leukemia, at MD Anderson Cancer Center in Houston, Texas, US, said: "We are thrilled to be in a position to outline the encouraging results of this Phase II study in Blood Advances, as the data is highly encouraging for older patients suffering from acute myeloid leukemia, and who cannot be treated with intensive chemotherapy. We look forward to continuing with our ongoing Phase III study with pacinostat to show improvement of the pracinostat combination vs azacitidine with placebo, in this difficult-to-treat AML patients population."

Sergio Cantoreggi, PhD, Chief Scientific Officer and Helsinn Group Head of R&D, commented: "The publication of this data in Blood Advances, shows the potential of pracinostat in combination with azacitidine as a safe and effective regimen for difficult-to-treat AML patients. There are only few treatment options for older patients suffering from AML and who are unfit for intensive chemotherapy treatment. We are committed to further investigate the effects of this drug combination in an ongoing Phase III study."

Richard Ghalie, M.D., Senior Vice President, Clinical Development at MEI Pharma added: "AML is a rapidly progressing, often fatal disease, with an urgent need for new treatment options. This Phase II study provided the rationale for our ongoing Phase III study and show the potential for pracinostat, in combination with azacytidine, as a treatment option in this AML population. As such, we’re delighted that these data are being published in Blood Advances."

About Pracinostat

Pracinostat is an oral histone deacetylase ("HDAC") inhibitor that is in a pivotal Phase III study in combination with azacitidine for the treatment of adults with newly diagnosed acute myeloid leukemia ("AML") who are unfit for intensive chemotherapy. It is also being evaluated in a Phase II study in patients with high or very high-risk myelodysplastic syndrome ("MDS"). The U.S. Food and Drug Administration has granted Breakthrough Therapy Designation for pracinostat in combination with azacitidine for the treatment of patients with newly diagnosed AML who are ≥75 years of age or unfit for intensive chemotherapy.

In August 2016, Helsinn and MEI Pharma entered into an exclusive license, development and commercialization agreement for pracinostat in AML and other potential indications.

The agreement provides that Helsinn is primarily responsible for development and commercialization for pracinostat in AML and other indications, including MDS.

Pracinostat is an investigational agent and is not approved for commercial use in the U.S. and any country worldwide

Perrigo Announces Quarterly Dividend

On February 14, 2019 Perrigo Company plc (NYSE; TASE: PRGO), a leading global provider of "Quality, Affordable Self-care Products", reported that its Board of Directors declared a quarterly dividend of $0.19 per share, payable on March 19, 2019 to shareholders of record on March 1, 2019 (Press release, Perrigo Company, FEB 14, 2019, View Source [SID1234533316]).

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The Company is looking forward to sharing its transformation plans and strategy as well as providing its capital allocation plans at an analyst event in the Spring of 2019.

Athenex, Inc. to Report Fourth Quarter and Fiscal Year 2018 Earnings Results on March 11, 2019

On February 14, 2019 Athenex, Inc. (Nasdaq: ATNX), a global biopharmaceutical company dedicated to the discovery, development and commercialization of novel therapies for the treatment of cancer and related conditions, reported that it will release fourth quarter and fiscal year ended December 31, 2018 earnings results on March 11, 2019 before the market opens (Press release, Athenex, FEB 14, 2019, View Source;p=RssLanding&cat=news&id=2387476 [SID1234533315]). The Company will host a conference call and live audio webcast on Monday, March 11, 2019, at 8:30 a.m. Eastern Time to discuss the financial results and provide a business update.

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To participate in the call, dial 877-407-0784 (domestic) or 201-689-8560 (international) fifteen minutes before the conference call begins and reference the conference passcode 13687139. A replay of the call will be accessible two hours after its completion through March 18, 2019 by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering passcode 13687139. The live conference call and replay can also be accessed via audio webcast at the Investor Relations section of the Company’s website, located at www.athenex.com.