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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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
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Telephone +45 21 70 10 49

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Thomas Pedersen
Carrotize PR & Communications
E-mail: [email protected]
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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 30, 2019 Cell Medica, a leader in next-generation cellular immunotherapies for the treatment of cancer, reported that its collaborators from Baylor College of Medicine and Texas Children’s Hospital presented the latest positive progress in the GINAKIT2 trial for children with R/R high risk neuroblastoma at the 22nd Annual Meeting of the American Society of Gene & Cell Therapy (ASGCT) (Free ASGCT Whitepaper) in Washington, D.C (Press release, Cell Medica, APR 30, 2019, View Source [SID1234535473]).*

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Patients were infused with an autologous CAR-NKT therapy, engineered to target GD2+ neuroblastoma cells. Early data from the first two patients at the lowest dose level (3 x 106 CAR-NKT cells/m2) showed substantial in vivo expansion of CAR-NKT cells and subsequent infiltration of CAR-NKT cells into both the solid tumor mass and bone marrow. There was also strong radiological evidence of extensive tumor regression at 4 weeks post infusion in one patient, with further regression observed at 8 weeks. No significant treatment associated toxicities, including cytokine release syndrome or neurotoxicity, were observed.

The CAR construct used in the GINAKIT2 study was also engineered to induce expression of the cytokine, IL-15. Data from in vivo mouse models, also presented at ASGCT (Free ASGCT Whitepaper), showed enhanced persistence of the CAR-NKT cells, which is thought to be important for long-term efficacy.

Dr. Andras Heczey, Principal Investigator, Assistant Professor, Pediatrics-Oncology at Baylor College of Medicine and Physician-Scientist, Texas Children’s Cancer Center commented: "Although it is early in the study, we are pleased to see evidence supporting the activity of CAR-NKT cells. We are looking forward to bringing additional patients onto the trial and treating at higher dose levels."

Dr. Leonid Metelitsa, Professor of Pediatrics, Hematology-Oncology, Baylor College of Medicine and Co-Director, Neuroblastoma Program, Texas Children’s Cancer Center added: "These are early data but, nevertheless, they support the fundamental premise of CAR-NKT cells to effectively home to the site of disease in solid tumors and kill tumor cells. We hope these properties of CAR-NKT cells can be exploited to treat other malignancies and not only using patient-derived cells, but also in the allogeneic (off-the-shelf) setting."

Chris Nowers, Cell Medica’s CEO, said: "Whilst these data are preliminary, it is exciting to see the first clinical evidence of a CAR therapy based on natural killer T cells reducing a solid tumor in a neuroblastoma patient, especially at the lowest dose level. This study will continue to recruit patients and build a clearer picture of the potential of CAR-NKT therapy. Concurrently we are also finalizing additional studies that will explore the potential of our innovative CAR-NKT platform in an off-the-shelf setting."

*The data were presented in two oral presentations "Harnessing Natural and Engineered Properties of iNKT Cells for Adoptive Cancer Immunotherapy", and "NKT Cells Co-expressing a GD2-specific Chimeric Antigen Receptor and IL-15 Show Enhanced In Vivo Persistence and Antitumor Activity Against Neuroblastoma", given by Dr. Metelitsa and Dr. Heczey respectively.

– ENDS –

Notes to Editors

About GINAKIT2

GINAKIT2 is a first-in-human, dose escalation evaluation of CMD-501 in children with relapsed or refractory (R/R) high risk neuroblastoma (NCT03294954) and is the first ever human trial of a genetically engineered Natural Killer T (NKT) cell therapy. Neuroblastomas occur primarily in children and account for 7-10 percent of all pediatric cancers. Ninety percent of patients are younger than 5 years at diagnosis. R/R high risk neuroblastoma is one of the deadliest types of childhood cancer and the current median survival is around 1-3 years. Almost all neuroblastomas express GD2, which is targeted by CMD-501. This study is supported by a grant from Alex’s Lemonade Stand Foundation (ALSF), awarded to Baylor College of Medicine investigators, Drs. Heczey and Metelitsa.

Find out more at: View Source

About CMD-501

CMD-501 is an innovative autologous product in which NKT cells are genetically engineered with a Chimeric Antigen Receptor (CAR) targeting GD2. NKT cells are a subset of T lymphocytes with the cytotoxic and anti-tumor properties of conventional T cells, but with other biological attributes that are expected to improve their ability to attack tumors. GD2 is a molecule expressed on the surface of most neuroblastoma cells.

In collaboration with its partners at BCM, Cell Medica has engineered a GD2-specific CAR construct that is additionally designed to secrete the cytokine IL-15, which has been shown in pre-clinical studies to increase the persistence of CAR-NKT cells and improve their efficacy within the immunosuppressive tumor microenvironment. CMD-501 is an autologous product, meaning that each patient’s own cells are collected, modified and activated outside the body, and then infused back into the same patient. However, NKT cells also have significant potential for so-called off-the-shelf use, where cells from a healthy donor could be prepared in large quantities in advance and used to treat many different patients. Cell Medica is collaborating with BCM to bring an off-the-shelf CAR-NKT cell product into the clinic in the near future.

About ASGCT (Free ASGCT Whitepaper)

The American Society of Gene and Cell Therapy (ASGCT) (Free ASGCT Whitepaper) Annual Meeting provides an international forum where the latest gene and cell therapy developments are presented and critically discussed. As the leading American conference focusing solely on gene and cell therapy, ASGCT (Free ASGCT Whitepaper)’s annual meeting brings together more than 3,400 professionals including scientists, physicians, and patient advocates.

On April 30, 2019 Vividion Therapeutics, a biotechnology company with a revolutionary platform to discover small molecule therapeutics against biologically compelling but previously intractable targets, reported the completion of an oversubscribed $82 Million Series B financing (Press release, Vividion Therapeutics, APR 30, 2019, View Source [SID1234535882]). The financing was led by Nextech Invest, an oncology-focused investment firm, and included participation from additional new investors BVF Partners, Casdin Capital, Mubadala Ventures, Trinitas Capital, Mirae Asset Capital, Altitude Life Science Ventures, and Alexandria Venture Investments. Existing investors ARCH Venture Partners, Versant Ventures, Cardinal Partners and Celgene Corporation also participated in the round.

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In connection with the financing, Jakob Loven, Ph.D., Partner at Nextech Invest, will join the Vividion Board of Directors.

"Vividion’s unique approach has allowed us to discover and advance exquisitely selective small molecules against high value targets that have been extremely challenging to drug historically," said Dr. Diego Miralles, Chief Executive Officer of Vividion Therapeutics. "With over $165 million in cash and a remarkable team, we are well positioned with substantial runway to maximize the multiple opportunities provided by our unique platform, bringing therapeutics to many patients in need."

Vividion Therapeutics has pioneered an approach, based on the work of Professor Benjamin Cravatt at The Scripps Research Institute, that enablesscreening of small molecules against every protein in native biological systems. This unique platform identifies highly selective binders to previously intractable targets, agnostic to protein class and function. These can be developed into drugs utilizing a range of approaches, including direct and allosteric modulation of protein function, and targeted protein degradation. The company’s immediate focus is in oncology and immunology.

"We are witnessing a renaissance in the field of synthetic and medicinal chemistry and the numerous possibilities small molecule drug discovery brings to previously challenging target classes," said Loven. He added: "Vividion has successfully pioneered its platform to reveal druggable opportunities at an unprecedented scale and resolution to open a large range of therapeutic possibilities. We look forward to working with Vividion’s highly experienced team as they continue to build the platform and pipeline toward first-in-class medicines for underserved patients."

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 Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) reported consolidated financial results for the first quarter ended March 31, 2019 and reiterated full-year 2019 financial guidance (Press release, Vertex Pharmaceuticals, APR 30, 2019, View Source [SID1234535474]).

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"Our goal is to develop transformative medicines for all people with CF and other serious diseases and to ensure all eligible patients have access to these medicines as quickly as possible," said Jeffrey Leiden, M.D., Ph.D., Chairman, President and Chief Executive Officer of Vertex. "We have made significant progress toward achieving this goal by rapidly advancing our triple combination regimens through late-stage development, and we remain on track to submit a New Drug Application for one of these medicines in the third quarter of 2019. We also continue to advance our earlier-stage programs targeting AAT, pain, FSGS and sickle cell disease. In the first quarter, we again delivered strong revenue and earnings growth, which further enhances our ability to make significant investments in internal and external innovation."

Total product revenues increased 34% compared to the first quarter of 2018, primarily driven by the uptake of SYMDEKO in the U.S. since launch.

GAAP and Non-GAAP net income increased compared to the first quarter of 2018, largely driven by the strong growth in total product revenues, and was partially offset by increases in operating expenses and income taxes.

Cash, cash equivalents and marketable securities as of March 31, 2019 were $3.5 billion, an increase of approximately $300 million compared to $3.2 billion as of December 31, 2018.

Combined GAAP and non-GAAP R&D and SG&A expenses increased compared to the first quarter of 2018 primarily due to the incremental investment to support the global use of Vertex’s medicines and the expansion of Vertex’s pipeline in CF and other new disease areas.

GAAP and Non-GAAP income taxes increased significantly compared to the first quarter of 2018 due to Vertex’s release of its valuation allowance on the majority of its deferred tax assets in the fourth quarter of 2018. GAAP and non-GAAP income taxes in the first quarter of 2019 include a provision for income taxes on Vertex’s pre-tax income using an estimated effective tax rate approximating statutory rates. This provision for income taxes includes a significant non-cash charge due to Vertex’s ability to offset its pre-tax income against previously benefited net operating losses. Vertex expects its cash paid for income taxes to increase significantly once all of its net operating losses have been utilized to offset its pre-tax income. Refer to "Supplemental Income Tax Information" for discussion of the cash versus non-cash components of Vertex’s provision for income taxes.

Full-Year 2019 Financial Guidance

The company’s total product revenue growth in 2019 is expected to be driven primarily by the full-year impact of the SYMDEKO launch, reimbursement agreements reached in 2018 and label expansions for the company’s CF medicines. The company’s full-year 2019 revenue guidance reflects only markets where its CF medicines are currently reimbursed.

The company’s combined GAAP and non-GAAP R&D and SG&A expense guidance reflects CF development efforts, incremental investment to support the potential launch of a triple combination regimen and investment to support the expansion of Vertex’s pipeline into new disease areas.

In addition, based on the release of the company’s valuation allowance in the fourth quarter of 2018, Vertex has also begun to record a tax provision in 2019 and expects its full-year non-GAAP tax rate to be between 21% and 22%. The vast majority of this tax provision will be a non-cash expense until the company fully utilizes its net operating losses.

Business Highlights

INVESTIGATIONAL CF MEDICINES

Bringing CF medicines to more people as quickly as possible:

Final Phase 3 24-week data are expected in the second quarter of 2019 from the triple combination program. Vertex plans to utilize these data to choose the best triple combination regimen to submit for regulatory approvals globally. The company plans to submit a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) in the third quarter of 2019 and a Marketing Authorization Application (MAA) in Europe in the fourth quarter of 2019 for either the VX-659 or VX-445 triple combination regimen in people with CF who have two F508del mutations and in people with CF who have one F508del mutation and one minimal function mutation.
The company has initiated a Phase 2 dose-ranging study evaluating the once-daily potentiator VX-561 as a monotherapy as requested by the FDA. The study is designed to evaluate multiple doses of VX-561 to support potential Phase 3 development of VX-561 in a once-daily triple combination regimen.
Vertex has initiated a Phase 2 study evaluating the next-generation corrector, VX-121, in combination with VX-561 and tezacaftor as a potential once-daily triple combination regimen.
APPROVED CF MEDICINES

Securing access for Vertex CF medicines:

The company continues to work toward establishing pricing and reimbursement agreements in additional countries outside of the U.S. Highlights in 2019 thus far include:
– Positive recommendation for SYMDEKO in Australia for ages 12+ from the Pharmaceutical Benefits Advisory Committee (PBAC).

– Reimbursement for ORKAMBI in Sweden for ages 2 to 5.

– Expanded pricing agreement for ORKAMBI in Germany to include children ages 6 through 11.

Treating patients at younger ages with CFTR modulators:

Vertex continues to make significant progress toward gaining approval for its CF medicines for use earlier in the course of disease progression. Recent highlights include:
– Approval for KALYDECO in the U.S. for infants ages 6 to <12 months.

– Approval for KALYDECO in Canada for children ages 12 to <24 months.

– Approval for ORKAMBI in the EU for children ages 2 to 5 years old.

– Supplemental New Drug Application (sNDA) submitted in the U.S. for tezacaftor/ivacaftor in children ages 6 to 11 years old.

LATE-STAGE RESEARCH & CLINICAL DEVELOPMENT

Alpha-1 Antitrypsin (AAT) Program:

The FDA has granted Fast Track Designation for VX-814, Vertex’s first small molecule corrector for the treatment of alpha-1 antitrypsin (AAT) deficiency. The company initiated a Phase 1 study of VX-814 in December 2018.
Vertex is advancing other small molecule correctors of AAT through late preclinical development and expects to begin clinical development of a second small molecule AAT corrector in 2019.
Sickle Cell Disease & Beta-Thalassemia:

In February 2019, CRISPR and Vertex announced that the first patient had been treated with CTX001 in a Phase 1/2 clinical study of patients with TDT, marking the first company-sponsored use of a CRISPR/Cas9 therapy in a clinical trial.
In April 2019, Vertex and its partner CRISPR Therapeutics announced that the FDA has granted Fast Track Designation for CTX001, an investigational, autologous, gene-edited hematopoietic stem cell therapy, for the treatment of transfusion-dependent beta thalassemia (TDT).
The companies are also evaluating CTX001 for the treatment of sickle cell disease (SCD) and received Fast Track Designation for CTX001 from the FDA in January 2019 for SCD. The companies announced in February 2019 that the first patient had been enrolled in a Phase 1/2 clinical study of CTX001 in severe SCD in the U.S. and is expected to be infused with CTX001 in mid-2019.
Enrollment in both Phase 1/2 studies of CTX001 in patients with TDT and in patients with severe SCD is ongoing.
Non-GAAP Financial Measures

In this press release, Vertex’s financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. In particular, non-GAAP financial results and guidance exclude from Vertex’s pre-tax income (i) stock-based compensation expense, (ii) revenues and expenses related to business development transactions including collaboration agreements, asset acquisitions and consolidated variable interest entities and (iii) other adjustments, including gains or losses related to the fair value of the company’s strategic investments. The company’s non-GAAP financial results also exclude from its provision for or benefit from income taxes the estimated tax impact related to its non-GAAP adjustments to pre-tax income described above. These results are provided as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help indicate underlying trends in the company’s business, are important in comparing current results with prior period results and provide additional information regarding the company’s financial position. Management also uses these non-GAAP financial measures to establish budgets and operational goals that are communicated internally and externally and to manage the company’s business and to evaluate its performance. The company adjusts, where appropriate, for both revenues and expenses in order to reflect the company’s operations. The company provides guidance regarding product revenues in accordance with GAAP and provides guidance regarding combined research and development and sales, general, and administrative expenses on both a GAAP and non-GAAP basis. The company also provides guidance regarding its anticipated income taxes as a percentage of pre-tax income on a non-GAAP basis. The guidance regarding GAAP research and development expenses and sales, general and administrative expenses does not include estimates associated with any potential future business development activities. A reconciliation of the GAAP financial results to non-GAAP financial results is included in the attached financial information.

Notes and Explanations

1: The company recorded gains of $43.6 million and $95.5 million in the three months ended March 31, 2019 and 2018, respectively, to "Other income, net," related to changes in the fair value of its strategic investments.

2: In the fourth quarter of 2018, the company recorded a non-cash benefit from income taxes of approximately $1.5 billion related to the release of its valuation allowance on the majority of its net operating losses and other deferred tax assets. As a result, the company recorded deferred tax assets of $1.5 billion on its consolidated balance sheet as of December 31, 2018, which were previously subject to its valuation allowance. Starting in the first quarter of 2019, the company began recording a provision for income taxes on its pre-tax income using an estimated effective tax rate that approximates statutory rates. The provision includes a significant non-cash charge due to the company’s ability to offset its pre-tax income against previously benefited net operating losses. The company expects the majority of its tax provision to represent a non-cash expense until its net operating losses have been fully utilized. As of December 31, 2018, the company’s federal net operating losses and credits that were available to offset future pre-tax income were approximately $4.5 billion.

3: During the three months ended March 31, 2018, the company consolidated the financial statements of a variable interest entity, or VIE, because Vertex had licensed the rights to develop the VIE’s most significant intellectual property asset. During the three months ended March 31, 2018, the fair value of the contingent payments payable by Vertex to the VIE increased by $24.0 million. This increase was attributable to noncontrolling interest and resulted in a decrease in net income attributable to Vertex on a dollar-for-dollar basis. The company deconsolidated the VIE as of December 31, 2018; therefore, there were no comparable amounts during the three months ended March 31, 2019.

4: "Other adjustments" in the three months ended March 31, 2019 primarily related to collaborative milestone payments. "Other adjustments" in the three months ended March 31, 2018 primarily related to revenues and expenses attributable to our VIE’s operations and collaboration revenues and payments including those related to the company’s oncology collaboration with Merck KGaA, Darmstadt, Germany.

5: In the three months ended March 31, 2019, "Estimated income taxes related to non-GAAP adjustments to pre-tax income" primarily related to (i) stock-based compensation (including an adjustment for excess tax benefits related to stock-based compensation) and (ii) the increase in the fair value of the company’s strategic investments. In the three months ended March 31, 2018, "Estimated income taxes related to non-GAAP adjustments to pre-tax income" were related to a provision for income taxes attributable to the company’s VIE and excess tax benefits related to stock-based compensation.