On August 9, 2018 Amneal Pharmaceuticals, Inc. (NYSE: AMRX) (the "Company") reported its results for the quarter ended June 30, 2018 (Press release, Amneal Pharmaceuticals, AUG 9, 2018, View Source [SID1234528584]).

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"We delivered solid sequential growth across our Generics and Specialty Pharma businesses on a combined adjusted basis compared to the first quarter of 2018 as we began to realize the benefits of our recent transformative combination with Impax," said Rob Stewart, President and CEO of Amneal.

"On a sequential basis, our Generics business delivered solid growth as we capitalized on the 16 product launches during the first six months of 2018, including generic versions of gConcerta, (methylphenidate HCI ER), Mephyton (phytonadione) and Welchol (colesevelam). We also benefited from higher sales of generic versions of Vagifem (yuvafem), Aggrenox (aspirin and extended-release dipyridamole) and Voltaren Gel 1% (diclofenac sodium gel), which more than offset the seasonal decline in sales of generic gTamiflu (oseltamivir phosphate).

In our Specialty Pharma business, we achieved sequential growth from sales of key products Rytary and Zomig nasal spray and across our anthelmintic product franchise.

We have made significant progress with the integration of Impax and continue to anticipate delivering at least $200 million in annual synergies within three years of the May 4th closing. Although we are revising our 2018 guidance to reflect the delayed timing of deliveries of our Epinephrine Auto-Injector product from our third-party manufacturer and the timing of certain key launches, we remain confident in the long-term growth potential for Amneal as we leverage our enhanced portfolio and focus on driving commercial and operational excellence initiatives to fuel organic growth, generate savings and strong cash flow, and deliver long-term returns for our shareholders."

Summary of GAAP and Combined Adjusted Results

1 Current year financials reflect the results of Amneal Pharmaceuticals LLC consolidating the results of Impax Laboratories, LLC from the transaction closing date on May 4, 2018. Prior year GAAP results represent Amneal Pharmaceuticals LLC only.

2 Assumes the combination between Amneal Pharmaceuticals LLC and Impax Laboratories, LLC occurred on the first day of the quarter presented.

"NM" is used when the variance is not meaningful because it is immaterial in absolute or percentage terms.

The Company’s financial results are presented in accordance with GAAP, which includes the results of Amneal Pharmaceuticals LLC consolidating the results of Impax Laboratories, LLC ("Impax") from the transaction closing date of May 4, 2018. Management believes that using additional non-GAAP measures on a combined company basis will facilitate the evaluation of the financial performance of the Company and its ongoing operations. The adjusted results presented combine the results of Amneal with Impax as if the closing date had occurred on the first day of all periods presented. All combined business results presented in this News Release are unaudited. Such combined business results are not prepared in accordance with Article 11 of Regulation S-X. Refer to the "Non-GAAP Financial Measures" section for additional information, including reconciliations of all GAAP to non-GAAP financial measures.

GAAP Basis Results

GAAP net revenue in the second quarter of 2018 was $413.8 million, an increase of 59.2%, compared to the second quarter of 2017, primarily due to the combination with Impax on May 4, 2018.
GAAP net loss in the second quarter of 2018 was $250.1 million, compared to net income of $37.7 million for the second quarter of 2017. The second quarter’s results were impacted by the May 4th combination with Impax and include charges relating to the vesting of profit participation units ("PPUs"), special employee bonuses and restructuring charges as a result of the combination.
GAAP diluted EPS in the second quarter of 2018 was a loss of $0.15, due to the PPU, bonus and restructuring charges noted above. GAAP diluted EPS for the second quarter of 2017 is not available as Amneal Pharmaceuticals LLC was a privately-held company for the period presented.
Non-GAAP Combined Results

Combined adjusted net revenue in the second quarter of 2018 was $462.3 million, a decrease of 2.5%, compared to the second quarter of 2017, primarily due to a 6.4% decline in combined net revenue for the Generics business, partially offset by a 24.1% increase in combined net revenue for the Specialty Pharma business revenue.
Combined adjusted net income in the second quarter of 2018 was $70.1 million, an increase of 12.3%, compared to the second quarter of 2017, primarily due to favorable product sales mix.
Earnings before interest, taxes, depreciation and amortization (EBITDA) was a loss of $204.0 million in the second quarter of 2018, compared to a gain of $89.0 million in the second quarter of 2017, primarily due to the PPU, bonus and restructuring charges noted above. Combined adjusted EBITDA in the second quarter of 2018 was $138.8 million, an increase of 16.8%, compared to the second quarter of 2017, primarily due to a more favorable product sales mix.
Combined adjusted diluted EPS in the second quarter of 2018 was $0.24.
Business Segment Information

The Company has two reportable segments, the Generics business and the Specialty Pharma business and does not allocate general corporate services to either segment.

Generics Business Information

The following Consolidated Statements of Operations table reconciles the Generics Business GAAP results to combined results. (Unaudited; In thousands)

Three months ended June 30, 2018

(a) Adjusted gross profit is calculated as total revenues less adjusted cost of goods sold. Adjusted gross margin is calculated as adjusted gross profit divided by total revenues. Refer to the "Non-GAAP Financial Measures" for a reconciliation of GAAP to non-GAAP items.

GAAP Results

Generics business revenues increased 39.2% for the second quarter of 2018, compared to the prior year period. The increase is primarily attributable to increased sales of Aspirin Dipyridamole ER due to higher volume, higher demand for Diclofenac Sodium Gel 1%, new launches including Methylphenidate ER Tabs and Phytonadione, and additional revenue from the combination with Impax.

Gross margin for the second quarter of 2018 was 41.5%, compared to 47.6% for the second quarter of 2017, primarily due to higher cost of sales due to purchase accounting adjustments as well as the fact that the Impax portfolio contains products with relatively lower profit margins.

Non-GAAP Combined Results

Generics business combined net revenue in the second quarter of 2018 was $382.8 million, a decrease of 6.8%, compared to $410.8 million in the prior year period. The decrease is primarily due to revenue reductions from lower sales of Epinephrine Auto-Injector due to an ongoing supply shortage at the Company’s third-party manufacturer, increased competition on Budesonide, Lidocaine, Yuvafem and Fenofibrate, and the impact of discontinued products. The decrease was partially offset by increased revenue from new product launches and increased sales of Aspirin Dipyridamole ER and Diclofenac Sodium Gel 1%.

Gross margin for the second quarter of 2018 on a combined basis was 37.0%, compared to 40.3% for the second quarter of 2017, primarily due to a charge for inventory step-up. Adjusted gross margin on a combined adjusted basis was 48.4% for the second quarter of 2018, compared to 50.0% in the prior year period.

Specialty Pharma Business Information

The following Consolidated Statements of Operations table reconciles the Specialty Pharma business GAAP results to combined results. (Unaudited; In thousands)

Three months ended June 30, 2018

(a) Adjusted gross profit is calculated as total revenues less adjusted cost of goods sold. Adjusted gross margin is calculated as adjusted gross profit divided by total revenues. Refer to the "Non-GAAP Financial Measures" for a reconciliation of GAAP to non-GAAP items.

GAAP Results

The Specialty Pharma business is comprised of the Impax Specialty business acquired on May 4, 2018 and the Gemini Laboratories, LLC business acquired on May 7, 2018. Prior to these two transactions, Amneal did not have a specialty business.

Non-GAAP Combined Results

Specialty Pharma business combined net revenue in the second quarter 2018 was $79.6 million, an increase of 25.5%, compared to $63.4 million in the prior year period, driven by higher revenue from Rytary, Zomig and the anthelmintic products franchise.

Gross margin for the second quarter of 2018 on a combined basis was 61.5%, compared to 60.2% for the second quarter of 2017. Adjusted gross margin on a combined adjusted basis was 79.2% for the second quarter of 2018, compared to 69.4% in the prior year period, primarily due to favorable product sales mix.

Corporate and Other Information

General and administrative expenses in the second quarter of 2018 were $22.8 million, an increase of $10.7 million, compared to the second quarter of 2018. The increase was primarily due to general and administrative expenses of the Impax organization since the closing of the combination, which includes certain public company costs that will remain on a go-forward basis. The increase is also attributable to stock-based compensation.

Non-GAAP Combined Results

General and administrative expenses in the second quarter of 2018 were $31.1 million, a decrease of 22.1%, compared to the second quarter of 2017, primarily due to cost synergies as a result of the business combination with Impax.

Other Information

Interest expense, net for the second quarter of 2018 was $36.6 million, compared to $17.7 million in the second quarter of 2018, due to an increase in long-term debt as a result of the business combination with Impax.

2018 Financial Guidance

Amneal’s full year 2018 estimates are based on management’s current expectations, including with respect to prescription trends, pricing levels, inventory levels, and the anticipated timing of future product launches and events. The Company does not provide forward-looking guidance metrics as outlined below on a GAAP basis. Consequently, the Company cannot provide a reconciliation between non-GAAP expectations and corresponding GAAP measures without unreasonable efforts because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items required for the reconciliation. The items include, but are not limited to, acquisition-related expenses, restructuring expenses, asset impairments and certain and other gains and losses. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP reported results for the guidance period. The following statements are forward looking and actual results could differ materially depending on market conditions and the factors set forth under "Safe Harbor" below.

2018 Key Guidance Assumptions

Revised full year 2018 adjusted EBITDA and adjusted EPS guidance primarily due to the delayed timing of deliveries of Epinephrine Auto-Injector
Generics business growth driven by new product launches which are expected to more than offset additional competition on existing portfolio
Launched 22 products through August 8, 2018. Potential opportunity to launch an additional 25 generic products the remainder of the year
Specialty Pharma business growth driven by Rytary, Zomig nasal spray and Emverm
Targeting synergies of $30 to $35 million
Approximately 50% R&D, 30% SG&A, 20% Manufacturing
Financial Guidance

Conference Call Information

Amneal will hold a conference call on August 9, 2018 at 8:30 a.m. Eastern Time to discuss its results. The call and presentation can also be accessed via a live Webcast through the Investor Relations section of Amneal’s Web site at View Source, or directly at View Source The number to call from within the United States is (877) 356-3814 and (706) 758-0033 internationally. The conference ID is 3045719. A replay of the conference call will be available shortly after the call for a period of seven days. To access the replay, dial (855) 859-2056 (in the U.S.) and (404) 537-3406 (international callers).

On August 9, 2018 i2 Pharmaceuticals, Inc., a biopharmaceutical company focused on next generation discovery and development of therapeutics with a focus on personalized cancer treatment, reported the appointment of David Stover, Ph.D., as Chief Executive Officer, effective July 1, 2018 (Press release, i2 Pharmaceuticals, AUG 9, 2018, View Source [SID1234528583]). Dr. Stover brings to i2 over 25 years of experience in both small-molecule and biologics drug discovery and development.

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"Dave is an accomplished pharmaceutical researcher and scientist with considerable experience in the development of novel antibody-based therapeutics," stated Bruce Eaton, Ph.D., i2’s Chairman of the Board. "We are extremely pleased to have Dave at the helm of the Company as we enter a strategic growth-phase driving our new business opportunities in antibody therapeutics."

Dr. Stover commented, "I am excited for this opportunity and look forward to working with the i2 team, Board members and advisors as we seek to optimize the value of the Company’s unique and proprietary suite of transformative technologies and assets. Our goal at i2 is to leverage the breadth of i2’s cutting edge discovery technologies to develop new novel-antibody based therapeutics."

Prior to joining i2 Pharma, Dr. Stover was most recently head of Agensys, Inc., an Astellas Pharma affiliate focused on antibody and antibody drug conjugate development, where he led a team of 240 employees in the research, clinical manufacturing and development of five investigational new drugs and four clinical proof of concepts during a 5-year period. Dr. Stover also founded the Oncology Biologics department at Novartis, where he served as its director, developing three clinical product candidates. Previously, he held the position of vice president of drug discovery at MDS Proteomics, where he managed research sites in Cambridge, MA, Charlottesville, VA and Toronto. Earlier in his career, Dr. Stover was the first employee and director of biochemistry at Kinetix Pharmaceuticals, a small-molecule kinase inhibitor company that was acquired by Amgen in 2000.

Dr. Stover earned his Ph.D. in Biochemistry at the University of Washington and holds a Bachelor of Science degree in Zoology from Duke University.

On August 9, 2018 JHL Biotech has reported it received a positive Scientific Advice from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) related to the EU approval pathway for its proposed bevacizumab biosimilar, JHL1149 to treat patients with non-small cell lung cancer (NSCLC) (Press release, JHL Biotech, AUG 9, 2018, View Source [SID1234528582]).

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The EMA, like other regulatory authorities such as the U.S. Food and Drug Administration and State Drug Administration of China (SDA), adopts the principle of a step-wise approach and the totality of the evidence from all studies in regulating the development and approval of biosimilars. In its correspondence to JHL, the EMA confirmed it agrees with JHL’s development approach, clinical development proposal, and study design of the global Phase III clinical study for JHL1149 in patients with non-small cell lung cancer (NSCLC). Based on the EMA’s review of these factors, the results of the Phase III clinical study will be acceptable for the submission of a Marketing Authorization Application as a biosimilar product, assuming the Phase III trial is completed successfully

On August 9, 2018 Portola Pharmaceuticals, Inc. (Nasdaq: PTLA) reported financial results for the three months ended June 30, 2018 and provided a corporate update (Press release, Portola Pharmaceuticals, AUG 9, 2018, View Source;p=RssLanding&cat=news&id=2363072 [SID1234528581]).

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"The second quarter of 2018 brought a significant addition to our product suite with the U.S. Food and Drug Administration’s Accelerated Approval of Andexxa and the initiation of our Early Supply Program. Together with Bevyxxa, we now have two FDA-approved, first-and-only medicines for their indications in the field of thrombosis with the potential to impact public health," said Mardi Dier, interim co-president and chief financial officer of Portola. "In the second half of the year, we remain focused on continuing to lay the foundation for the U.S. launch of Bevyxxa and preparing for a number of significant milestones, including our regulatory submission in the U.S. for the Generation 2 Andexxa product, review and potential approval for andexanet alfa in Europe, and determining the development and regulatory path forward for cerdulatinib, our Syk/JAK inhibitor and the third novel compound discovered in our labs."

Second Quarter 2018 Financial Results
Total revenue for the second quarter of 2018 was $4.0 million, compared with $3.8 million for the second quarter of 2017. This includes $1.7 million in collaboration and license revenue earned under Portola’s collaboration and license agreements with Bristol-Myers Squibb Company, Pfizer, Bayer Pharma, Janssen Pharmaceuticals and Daiichi Sankyo, as well as $2.2 million from initial sales of Andexxa in the U.S. under the Company’s Early Supply Program launched in May 2018, and $33,000 in product revenue from sales of Bevyxxa, which launched in the U.S. in January 2018.

Total operating expenses for the second quarter of 2018 were $107.7 million, compared with $69.6 million for the same period in 2017. Total operating expenses for the second quarter of 2018 included $13.2 million in stock-based compensation expense, compared with $13.3 million for the same period in 2017.

Research and development expenses were $66.4 million for the second quarter of 2018, compared with $49.3 million for the second quarter of 2017. The increase is due to the second Generation 2 Andexxa commercial manufacturing campaign. Selling, general and administrative expenses for the second quarter of 2018 were $40.2 million, compared with $20.3 million for the same period in 2017. The increase is due to the build-out of the field force and marketing spend for the Andexxa Early Supply Program and the Bevyxxa launch.

For the second quarter of 2018, Portola reported a net loss of $106.2 million, or $1.61 net loss per share, compared with a net loss of $69.7 million, or $1.22 net loss per share, for the same period in 2017. Shares used to compute net loss per share attributable to common stockholders were 65.9 million for the second quarter of 2018 compared with 57.1 million for the same period in 2017.

Cash, cash equivalents and investments at June 30, 2018 totaled $456.7 million, compared with $534.2 million as of December 31, 2017.

Based on the FDA approval of Andexxa in May 2018, the Company earned an additional $100 million milestone payment from its royalty-based financing arrangement with Health Care Royalty Partners.

Recent Achievements and Events

Received Accelerated Approval from the FDA for Andexxa and initiated commercial launch under the Early Supply Program.
Completed the second successful manufacturing campaign of Generation 2 Andexxa product.
Continued progress with the Bevyxxa U.S. commercial launch, including formulary wins, reimbursement coverage and physician education.
New interim results from the ongoing Phase 2a study of cerdulatinib presented at the 2018 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting and 23rd Congress of the European Hematology Association (EHA) (Free EHA Whitepaper).
Four abstracts presented at the International Society on Thrombosis and Haemostasis (ISTH) meeting.
Received New Technology Add-on Payment for Andexxa from the Centers for Medicare and Medicaid Services.
Upcoming Milestones

Eight abstracts to be presented at the European Society of Cardiology (ESC) meeting.
Submit Prior Approval Supplement (PAS) for Generation 2 Andexxa product by the end of August, positioning the Company for a broader commercial launch in early 2019, upon FDA approval.
On track to deliver additional data to European regulatory authorities in the fourth quarter, with potential for European approval of andexanet alfa in the first half of 2019.
Ongoing discussion with the FDA on the potential regulatory pathway for cerdulatinib.
Conference Call Details
Portola will host a conference call today, Thursday, August 9, 2018, at 8:30 a.m. ET, during which time management will discuss the second quarter 2018 financial results, updates on the U.S. launches of Andexxa and Bevyxxa, and other matters. The live call can be accessed by phone by dialing (844) 452-6828 from the U.S. and Canada or 1 (765) 507-2588 internationally and using the passcode 6650817. The webcast can be accessed live on the Investor Relations section of the Company’s website at View Source It will be archived for 30 days following the call.

On August 9, 2018 Castle Biosciences, Inc., the skin cancer diagnostics company providing molecular diagnostics to improve cancer management decisions, reported the publication of an independent study from a dermatology practice, in a prospectively collected cohort, showing that the DecisionDx-Melanoma prognostic test can accurately identify patients at high and low risk of metastasis and death from melanoma (Press release, Castle Biosciences, AUG 9, 2018, View Source [SID1234528575]). Patients identified as high risk were found to be 22 times more likely to develop metastasis than those with a low-risk test result. Overall this 256-patient study is consistent with previous prospective and retrospective studies and confirms the prognostic value of the DecisionDx-Melanoma test. The study was authored by Dr. Bradley Greenhaw and colleagues and published in Dermatologic Surgery.

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Study Findings:

High negative predictive value of 98.6% provides a high degree of confidence in a low risk of metastasis for Class 1 patients.
Class 2 patients were 22 times more likely to develop metastasis than patients with a Class 1 result.
The 5-year melanoma-specific survival (MSS) rate was also significantly different between groups with 99% survival for Class 1 patients and 79% survival for Class 2 patients (p<0.0001).
The authors indicate that they now offer the DecisionDx-Melanoma test to all patients with invasive cutaneous melanoma and provide more intensive follow-up for Class 2 patients to support timely detection of metastasis and earlier intervention with therapy.
"These robust findings from an independent study demonstrating that the DecisionDx-Melanoma test can identify early-stage melanoma patients who are at high risk for metastasis and death are consistent with previous retrospective and prospective studies," said lead author Bradley Greenhaw, M.D., Dermatology Center of North Mississippi, Tupelo, Mississippi. "In this dermatology practice, as in many others across the country, the DecisionDx-Melanoma test has been incorporated into practice protocols to improve patient management decisions based on recurrence risk beyond clinicopathologic staging alone."

Study Details:

The study was conducted at a single dermatology center and included 256 patients who were identified using the center’s prospectively collected melanoma registry. Patients were diagnosed with cutaneous melanoma during the previous 5 years and were prospectively tested with DecisionDx-Melanoma as part of their initial diagnostic work-up or tested as part of their follow-up care. Retrospective chart review was used in cases of missing data in the registry.
86% of patients had American Joint Committee on Cancer (AJCC) Stage I melanoma, and 14% had Stage II disease.
214 patients had a Class 1 DecisionDx-Melanoma test result; 42 patients were Class 2. Mean follow-up time was 23 months.
The paper can be accessed at the Dermatologic Surgery website.

About DecisionDx-Melanoma

The DecisionDx-Melanoma test uses tumor biology to predict individual risk of melanoma recurrence and sentinel lymph node positivity independent of traditional factors. Using tissue from the primary melanoma, the test measures the expression of 31 genes. The test has been validated in three multi-center studies that have included 690 patients and have demonstrated consistent results. Performance has also been confirmed in four prospective studies including 702 patients. The consistent high performance and accuracy demonstrated in these studies, which combined have included over 1,300 patients, provides confidence in disease management plans that incorporate DecisionDx-Melanoma test results.

Prediction of the likelihood of sentinel lymph node positivity has also been validated in two prospective multicenter studies that included over 1,400 patients. Impact on patient management plans for one of every two patients tested has been demonstrated in multi-center and single-center studies. More information about the test and disease can be found at www.SkinMelanoma.com.