On July 26, 2018 Seattle Genetics, Inc. (Nasdaq:SGEN) reported financial results for the second quarter and six months ended June 30, 2018 (Press release, Seattle Genetics, JUL 26, 2018, View Source;p=RssLanding&cat=news&id=2360357 [SID1234527908]). The company also highlighted ADCETRIS (brentuximab vedotin) commercialization and clinical development accomplishments and progress with its late-stage clinical programs for cancer.

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"Our ADCETRIS sales growth in the first full quarter following FDA approval in frontline Stage III or IV classical Hodgkin lymphoma demonstrates a strong reception from the oncology community and our ability to bring the first new treatment option to patients after more than 40 years," said Clay Siegall, Ph.D., President and Chief Executive Officer of Seattle Genetics. "Looking ahead, we expect to report top-line results from the ADCETRIS phase 3 ECHELON-2 trial in frontline CD30-expressing mature T-cell lymphomas early in the fourth quarter that could be another driver of future growth. Our late-stage clinical pipeline comprises three programs in ongoing pivotal trials, including enfortumab vedotin which is positioned for top-line data in the first half of 2019 in metastatic urothelial cancer. Our recent accomplishments and expected near-term milestones highlight our progress toward the goal of becoming a multi-product global oncology company."

ADCETRIS Program Activities

ECHELON-2 Phase 3 Trial: Seattle Genetics has narrowed its guidance and now expects to report top-line data early in the fourth quarter of 2018 from the phase 3 ECHELON-2 clinical trial in frontline CD30-expressing mature T-cell lymphoma, also known as peripheral T-cell lymphoma (PTCL).
ECHELON-1 Data: Multiple posters featuring additional analyses from the ECHELON-1 trial in the treatment of patients with Stage III or IV classical Hodgkin lymphoma (HL) were presented at the 2018 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting held in June. These analyses continued to demonstrate the clinical benefit of the ADCETRIS combination when compared with standard chemotherapy. In March 2018, the U.S. Food and Drug Administration (FDA) approved ADCETRIS in combination with chemotherapy for the treatment of adult patients with previously untreated Stage III or IV classical HL based on the positive results of the phase 3 ECHELON-1 clinical trial.
ADCETRIS is not currently approved for use in frontline PTCL.

Enfortumab Vedotin (EV) Program Activities

EV-201 Pivotal Trial Cohort Enrollment Completed: Seattle Genetics and Astellas completed enrollment in the first cohort of the EV-201 pivotal trial in patients with locally advanced or metastatic urothelial cancer who previously received both a checkpoint inhibitor (PD-1/PD-L1) and a platinum-containing regimen. The companies expect to report top-line data from this cohort in the first half of 2019. Positive data in this cohort could potentially support registration under the FDA’s accelerated approval pathway.
EV-301 Phase 3 Trial Initiated: Seattle Genetics and Astellas initiated a global randomized phase 3 clinical trial called EV-301 for patients with locally advanced or metastatic urothelial cancer who were previously treated with a checkpoint inhibitor (PD-1/PD-L1) and a platinum-containing regimen. EV-301, which is expected to enroll 550 patients, is intended to support global regulatory submissions for approval and serve as a confirmatory trial in the United States.
Tucatinib Program Activities

HER2CLIMB Pivotal Trial: Enrollment is ongoing in the tucatinib HER2CLIMB randomized pivotal trial for patients with HER2-positive (HER2+) metastatic breast cancer who have been previously treated with HER2-targeted agents, including patients with or without brain metastases. Results from a phase 1b trial that support the HER2CLIMB trial were recently published in The Lancet Oncology. The company continues to expect to complete enrollment of HER2CLIMB in 2019.
Expansion of Tucatinib Clinical Program: Seattle Genetics is evaluating opportunities to expand the development of tucatinib in earlier lines of HER2+ metastatic breast cancer based on the results of a separate phase 1b clinical trial of tucatinib that were recently published in JAMA Oncology. The company is also considering development opportunities for tucatinib in the treatment of other HER2+ solid tumors such as colorectal and gastric cancer.
Tisotumab Vedotin (TV) Program Activities

Metastatic Cervical Cancer Trial Initiated: Seattle Genetics and Genmab initiated a phase 2 trial called innovaTV 204 in patients with recurrent and/or metastatic cervical cancer who have relapsed or progressed after standard of care treatment. The trial will enroll approximately 100 patients and is intended to potentially support registration under the FDA’s accelerated approval pathway.
Solid Tumor Trial Initiated: Seattle Genetics and Genmab initiated a phase 2 clinical trial called innovaTV 207 in several types of solid tumors. The trial is intended to inform a potential broad development program.
Other Recent Activities

ADC Collaborator Milestones: Seattle Genetics earned milestone payments totaling $17.0 million under its antibody-drug conjugate (ADC) technology collaborations with AbbVie, Genmab and GlaxoSmithKline, triggered by clinical progress with programs using its technology.
Roger Dansey, M.D., Appointed Chief Medical Officer: Dr. Dansey has extensive experience in cancer drug development, most recently at Merck Inc. where he was Therapeutic Area Head for Late Stage Oncology, and led the registration efforts for KEYTRUDA (pembrolizumab) across multiple tumor types.
Second Quarter and Six Months 2018 Financial Results

Total revenues in the second quarter and six month periods ended June 30, 2018 increased to $170.2 million and $310.8 million, respectively, compared to $108.2 million and $217.4 million for the same periods in 2017. Revenues included:

ADCETRIS net sales for the U.S. and Canada in the second quarter of $122.4 million, a 65 percent increase over net sales of $74.3 million in the second quarter of 2017. ADCETRIS net sales for the U.S. and Canada were $217.8 million for the year-to-date in 2018, a 51 percent increase over net sales of $144.7 million for the same period in 2017. Growth over 2017 reflects recent ADCETRIS label expansions, including cutaneous T-cell lymphoma subtypes in November 2017 and frontline Stage III or IV Hodgkin lymphoma in March 2018.
Royalty revenues in the second quarter of $20.6 million, compared to $12.4 million in the second quarter of 2017. Royalty revenues were $36.2 million for the year-to-date in 2018, compared to $29.4 million for the same period in 2017. Royalty revenues are primarily driven by sales of ADCETRIS outside the U.S. and Canada by Takeda.
Amounts earned under the company’s ADCETRIS and ADC collaborations totaling $27.2 million in the second quarter and $56.7 million for the first six months of 2018, compared to $21.5 million and $43.3 million, respectively, for the same periods in 2017. Collaboration revenues for the second quarter included $17.0 million in product development milestones achieved under the company’s ADC collaborations.
Total costs and expenses for the second quarter of 2018 were $200.5 million, compared to $167.5 million for the second quarter of 2017. For the first six months of 2018, total costs and expenses were $434.9 million, compared to $335.9 million for the same period in 2017. Costs and expenses included:

Research and development expenses in the second quarter of $122.9 million, compared to $114.4 million in the second quarter of 2017. Research and development expenses were $275.4 million for the year-to-date in 2018, compared to $232.6 million for the same period in 2017. The increase for the year-to-date period reflects $35.0 million in upfront costs in the first quarter of 2018 related to technology licensing agreements in addition to increased investment in the company’s pipeline programs.
Selling, general and administrative expenses in the second quarter of $58.3 million, compared to $40.7 million in the second quarter of 2017. Selling, general and administrative expenses were $124.5 million for the year-to-date in 2018, compared to $79.1 million for the same period 2017. The increase for the year-to-date period was primarily due to transaction costs associated with the acquisition of Cascadian Therapeutics and costs to support the launch of ADCETRIS in frontline Hodgkin lymphoma.
Non-cash, share-based compensation cost for the first six months of 2018 was $32.4 million, compared to $32.0 million for the same period in 2017.

Net income for the second quarter of 2018 was $76.3 million, or $0.47 per diluted share, compared to a net loss of $56.4 million, or $0.39 per diluted share, for the second quarter of 2017. Net income in the second quarter of 2018 includes a net gain of $105.5 million primarily associated with Seattle Genetics’ common stock holdings in Immunomedics. For the six months ended June 30, 2018, net loss was $35.4 million, or $0.23 per share, compared to a net loss of $116.4 million, or $0.82 per share, for the six months ended June 30, 2017. Net loss for the year-to-date in 2018 includes a net gain of $86.6 million primarily associated with Seattle Genetics’ common stock holdings in Immunomedics.

As of June 30, 2018, Seattle Genetics had $457.8 million in cash and investments. In addition, the company held stock in Immunomedics and Unum valued at $208.0 million.

2018 Financial Outlook

For the third quarter of 2018, Seattle Genetics expects sales of ADCETRIS to be in the range of $130 million to $135 million. In addition, as a result of milestone achievements and other items that occurred in the first half of 2018, the company is increasing collaboration revenue guidance for the full year in 2018 to a range of $65 million to $75 million, compared to its previous guidance of $55 million to $65 million.

Conference Call Details

Seattle Genetics’ management will host a conference call and webcast to discuss its second quarter financial results and provide an update on business activities. The event will be held today at 1:30 p.m. Pacific Time (PT); 4:30 p.m. Eastern Time (ET). The live event will be available from the Seattle Genetics website at www.seattlegenetics.com, under the Investors section, or by calling 877-260-1479 (domestic) or 334-323-0522 (international). The conference ID is 6908320. A replay of the discussion will be available on July 26, 2018 from the Seattle Genetics website or by calling 888-203-1112 (domestic) or 719-457-0820 (international), using conference ID 6908320. The telephone replay will be available until 5:00 p.m. PT on Monday, July 30, 2018.

On July 26, 2018 Alkermes plc (Nasdaq: ALKS) reported financial results for the second quarter of 2018 (Press release, Alkermes, JUL 26, 2018, View Source [SID1234527893]).

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"Our strong second quarter results were driven by the solid growth of our proprietary commercial products, the continued strength of our royalty and manufacturing business, as well as the receipt of a $50 million payment related to our collaboration with Biogen for BIIB098," commented James Frates, Chief Financial Officer of Alkermes. "The business is performing as planned and today we are reiterating our financial expectations for 2018. As we head into a catalyst-rich second half of the year, we are well-positioned financially to drive value, grow our portfolio of commercial products and advance our late-stage pipeline."

Quarter Ended June 30, 2018 Financial Highlights

• Total revenues for the quarter were $304.6 million. This compared to $218.8 million for the same period in the prior year, representing an increase of 39%. Proprietary product net sales for VIVITROL and ARISTADA were $109.8 million for the quarter, reflecting a 24% increase compared to the same period in the prior year.

• Net loss according to generally accepted accounting principles in the U.S. (GAAP) was $32.6 million for the quarter, or a basic and diluted GAAP net loss per share of $0.21. This compared to GAAP net loss of $43.0 million, or a basic and diluted GAAP net loss per share of $0.28, for the same period in the prior year.

• Non-GAAP net income was $45.6 million for the quarter, or a non-GAAP basic and diluted earnings per share of $0.29. This compared to non-GAAP net income of $1.2 million, or non-GAAP basic and diluted earnings per share of $0.01, for the same period in the prior year.

"VIVITROL and ARISTADA continue to demonstrate solid growth and perform in-line with our expectations. Our proprietary commercial portfolio is a key growth driver for Alkermes, and we are confident about the prospects ahead for these important products," stated Jim Robinson, President and Chief Operating Officer of Alkermes. "In particular, the launch of ARISTADA INITIO is an important opportunity to support continuity of care and address a critical unmet need for patients, as ARISTADA is now the first and only long-acting atypical antipsychotic that can be fully dosed on day one for up to two months. ARISTADA INITIO represents a key addition to the treatment paradigm for schizophrenia and provides a platform to further expand utilization of ARISTADA."

Quarter Ended June 30, 2018 Financial Results

Revenues

• Net sales of VIVITROL were $76.2 million, compared to $66.1 million for the same period in the prior year, representing an increase of approximately 15%.

• Net sales of ARISTADA were $33.6 million, compared to $22.7 million for the same period in the prior year, representing an increase of approximately 48%.

• Manufacturing and royalty revenues from RISPERDAL CONSTA, INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA were $85.2 million, compared to $82.2 million for the same period in the prior year.

• Manufacturing and royalty revenues from AMPYRA/FAMPYRA1 were $19.7 million, compared to $25.3 million for the same period in the prior year.

• License revenues from the collaboration with Biogen for BIIB098 (formerly ALKS 8700) were $48.3 million.

• Research and development revenues were $18.3 million, of which $17.2 million related to the collaboration with Biogen for BIIB098.

Costs and Expenses

• Operating expenses were $304.7 million, compared to $263.4 million for the same period in the prior year, primarily reflecting increased investment in the commercialization of VIVITROL and ARISTADA.

• Other expense during the quarter included a $19.6 million charge due to a decrease in the fair value of contingent consideration related to Recro Pharma, Inc.’s receipt of a complete response letter from the United States (U.S.) Food and Drug Administration (FDA) regarding the New Drug Application (NDA) for IV Meloxicam.

"With a growing proprietary commercial portfolio and partnered royalty and manufacturing business approaching $1 billion in revenue in 2018, Alkermes is in a strong position to create significant long-term value. As we head into the second half of 2018, we are on the threshold of important value inflections across our development portfolio," said Richard Pops, Chief Executive Officer of Alkermes. "For ALKS 5461 for major depressive disorder, the regulatory review is underway and we are preparing for an Advisory Committee meeting in the fourth quarter. For ALKS 3831 for schizophrenia, enrollment of the ENLIGHTEN-2 pivotal study is complete and we expect topline data in the fourth quarter of 2018. In addition, we are on track to submit the NDA for BIIB098 toward year-end, and we look forward to presenting initial data from the ALKS 4230 phase 1 study and expanding into combination therapy later this year."

Recent Events

• ARISTADA INITIO: Following recent FDA approval, ARISTADA INITIO is now commercially available. The ARISTADA INITIO regimen2 provides physicians with an opportunity to initiate patients onto any dose of ARISTADA on day one.

• ALKS 5461: Data on the long-term safety, tolerability and durability of antidepressant effect of ALKS 5461 were presented at the American Psychiatric Association (APA) and American Society of Clinical Psychopharmacology (ASCP) annual meetings.

• ALKS 3831: The company presented data from the ALKS 3831 preclinical program and phase 1 translational medicine study evaluating the metabolic profile of ALKS 3831 compared to olanzapine.

• BIIB098: Alkermes received a $50 million payment from Biogen in June 2018. This payment follows Biogen’s review of preliminary gastrointestinal tolerability data from the ongoing clinical development program for BIIB098.

Financial Expectations for 2018

Alkermes reiterates its financial expectations for 2018 set forth in its press release dated April 26, 2018.

Conference Call

Alkermes will host a conference call and webcast presentation with accompanying slides at 8:30 a.m. ET (1:30 p.m. BST) on Thursday, July 26, 2018, to discuss these financial results and provide an update on the company. The webcast may be accessed on the Investors section of Alkermes’ website at www.alkermes.com. The conference call

may be accessed by dialing +1 888 424 8151 for U.S. callers and +1 847 585 4422 for international callers. The conference call ID number is 6037988. In addition, a replay of the conference call will be available from 11:00 a.m. ET (4:00 p.m. BST) on Thursday, July 26, 2018, through 5:00 p.m. ET (10:00 p.m. BST) on Thursday, Aug. 2, 2018, and may be accessed by visiting Alkermes’ website or by dialing +1 888 843 7419 for U.S. callers and +1 630 652 3042 for international callers. The replay access code is 6037988.

On July 26, 2018 Novocure (NASDAQ:NVCR) reported financial results for the three and six months ended June 30, 2018 (Press release, NovoCure, JUL 26, 2018, View Source [SID1234527909]). The company also highlighted continued commercial momentum for Optune and continued clinical development progress.

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An "active patient" is a patient who is on Optune under a commercial prescription order as of the measurement date, including patients who may be on a temporary break from treatment and who plan to resume treatment in less than 60 days.

A "prescription received" is a commercial order for Optune that is received from a physician certified to treat patients with Optune for a patient not previously on Optune. Orders to renew or extend treatment are not included in this total.

"In the second quarter of 2018, Novocure demonstrated continued commercial momentum for Optune and continued progress on key clinical development programs," noted Asaf Danziger, Novocure’s Chief Executive Officer. "We delivered record quarterly revenue of $61.5 million, up 60 percent from the second quarter 2017 and 18 percent from the first quarter 2018. We continued to see steady growth in prescriptions for patients with newly diagnosed GBM, representing nearly 75% of prescriptions in the second quarter, which we believe is a sign of increasing physician confidence and belief in Optune."

"I am pleased to announce Novocure submitted a local coverage determination reconsideration request to the Medicare DME MACs on June 20. Our decision to file for coverage followed a CMS announcement of new payment rules for DME products earlier in June," said William Doyle, Novocure’s Executive Chairman. "We believe the new CMS payment rules reflect the meaningful progress made during our multi-year dialogue with the agency and provide us with a path forward to secure Medicare coverage and payment for Optune."

"Our STELLAR phase 2 pilot trial data in mesothelioma were accepted for presentation at the upcoming IASLC meeting in late September. Looking ahead, we are on track to start our sixth phase 3 pivotal trial, the INNOVATE 3 trial in recurrent ovarian cancer, later this year and just opened our phase 2 pilot HEPANOVA trial in advanced liver cancer," continued Mr. Doyle. "Novocure is a global oncology company with a proprietary platform technology offering both a growing commercial business today and significant potential for future expansion into new indications. We believe our progress in the second quarter illustrates our ongoing commitment to execution."

Second quarter 2018 operating statistics and financial update

There were 2,169 active patients on Optune at June 30, 2018, representing 49 percent growth versus June 30, 2017, and 8 percent growth versus March 31, 2018. Increased adoption drove the increase in active patients with steady growth in prescriptions for patients with newly diagnosed GBM, who typically have a longer duration of treatment with Optune, and year-over-year prescription growth.

In the United States, there were 1,575 active patients on Optune at June 30, 2018, representing 45 percent growth versus June 30, 2017.
In Germany and other EMEA markets, there were 557 active patients on Optune at June 30, 2018, representing 48 percent growth versus June 30, 2017.
In Japan, there were 37 active patients on Optune at June 30, 2018, representing 3,600 percent growth versus June 30, 2017.
Additionally, 1,244 prescriptions were received in the three months ended June 30, 2018, representing 17 percent growth compared to the same period in 2017, and a 1 percent decline versus the three months ended March 31, 2018. The year-over-year increase in prescriptions was driven primarily by commercial activities in the United States and Germany and initial launch efforts in Japan. We saw steady growth in prescriptions for newly diagnosed GBM with more than 900 Optune prescriptions, nearly 75% of the total, written for patients with newly diagnosed GBM.

In the United States, 947 prescriptions were received in the three months ended June 30, 2018, representing 18 percent growth compared to the same period in 2017.
In Germany and other EMEA markets, 265 prescriptions were received in the three months ended June 30, 2018, representing 4 percent growth compared to the same period in 2017.
In Japan, 32 prescriptions were received in the three months ended June 30, 2018, representing 3,100 percent growth compared to the same period in 2017.
For the three months ended June 30, 2018, net revenues were $61.5 million, representing 60 percent growth versus the same period in 2017. Revenue growth was driven by increased Optune adoption in the United States and Germany, initial launch efforts in Japan and by a decrease in the gross-to-net revenue spread

For the three months ended June 30, 2018, cost of revenues was $19.8 million compared to $13.2 million for the same period in 2017, representing an increase of 51 percent. The increase was primarily driven by the cost of shipping transducer arrays to a higher volume of commercial patients, as well as an increase in field equipment depreciation.

Research, development and clinical trials expenses for the three months ended June 30, 2018, were $11.4 million compared to $9.4 million for the same period in 2017, representing an increase of 21 percent. This was primarily due to an increase in clinical trial and personnel expenses for our LUNAR, METIS, and PANOVA trials and an increase in costs associated with regulatory affairs.

Sales and marketing expenses for the three months ended June 30, 2018, were $19.2 million compared to $16.4 million for the same period in 2017, representing an increase of 17 percent. This was primarily due to increased marketing and market access expenses, increased personnel and facility expenses to support our geographical expansion in Japan and Austria and an increase in share-based compensation.

General and administrative expenses for the three months ended June 30, 2018, were $18.2 million compared to $15.0 million for the same period in 2017, representing an increase of 21 percent. This was primarily due to an increase in non-cash share-based compensation and an increase in professional services.

Personnel costs for the three months ended June 30, 2018, included $10.2 million in non-cash share-based compensation expenses, comprised of $0.3 million in cost of revenues; $1.3 million in research, development and clinical trials; $1.9 million in sales and marketing; and $6.8 million in general and administrative expenses. Total non-cash share-based compensation expenses for the second quarter 2017 were $7.6 million.

Net loss for the three months ended June 30, 2018, was $15.5 million compared to net loss of $21.2 million for the same period in 2017, representing a 27 percent improvement in net income.

At June 30, 2018, we had $114.5 million in cash and cash equivalents and $104.5 million in short-term investments, for a total balance of $219.0 million in cash, cash equivalents and short-term investments. This represents an increase of $2.6 million in cash and investments since March 31, 2018.

Anticipated clinical trial milestones

Phase 2 pilot STELLAR trial in mesothelioma data presentation (2H 2018)
First patient enrollment in phase 2 pilot HEPANOVA trial in advanced liver cancer (2H 2018)
Initiation of phase 3 pivotal trial in recurrent ovarian cancer (2H 2018)
Data collection from phase 3 pivotal METIS trial in brain metastases (2020)
Data collection from phase 3 pivotal LUNAR trial in non-small cell lung cancer (2021)
Data collection from phase 3 pivotal PANOVA 3 trial in locally advanced pancreatic cancer (2022)
Conference call details

Novocure will host a conference call and webcast to discuss second quarter 2018 financial results today, Thursday, July 26, 2018, at 8 a.m. EDT. Analysts and investors can participate in the conference call by dialing 855-442-6895 for domestic callers and 509-960-9037 for international callers, using the conference ID 6554507.

The webcast, earnings slides presented during the webcast and the corporate presentation can be accessed live from the Investor Relations page of Novocure’s website, www.novocure.com/investor-relations, and will be available for at least 14 days following the call.

On July 26, 2018 Amgen (NASDAQ:AMGN) reported financial results for the second quarter of 2018 (Press release, Amgen, JUL 26, 2018, View Source [SID1234527894]). Key results include:

Total revenues increased 4 percent versus the second quarter of 2017 to $6.1 billion.

Product sales grew 2 percent globally. New and recently launched products including Repatha (evolocumab), KYPROLIS (carfilzomib), Prolia (denosumab) and XGEVA (denosumab), showed double-digit growth.

GAAP earnings per share (EPS) increased 20 percent to $3.48 driven by higher product sales, a lower tax rate and lower weighted-average shares outstanding.

GAAP operating income increased 5 percent to $2.8 billion and GAAP operating margin increased 1.5 percentage points to 49.9 percent.

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Non-GAAP EPS increased 17 percent to $3.83 driven by higher product sales, a lower tax rate and lower weighted-average shares outstanding.

Non-GAAP operating income increased 2 percent to $3.1 billion and non-GAAP operating margin decreased 0.1 percentage points to 55.1 percent.

2018 EPS guidance revised to $11.83-$12.62 on a GAAP basis and $13.30-$14.00 on a non-GAAP basis; total revenues guidance revised to $22.5-$23.2 billion.

The Company generated $1.9 billion of free cash flow in the second quarter versus $2.1 billion in the second quarter of 2017.

AMGEN REPORTS SECOND QUARTER 2018 FINANCIAL RESULTS

Product Sales Performance

Total product sales increased 2 percent for the second quarter of 2018 versus the second quarter of 2017.

Repatha sales increased 78 percent driven primarily by higher unit demand, offset partially by net selling price.

BLINCYTO (blinatumomab) sales increased 40 percent driven by higher unit demand.

KYPROLIS sales increased 25 percent driven by higher unit demand, offset partially by net selling price.

Prolia sales increased 21 percent driven primarily by higher unit demand and, to a lesser extent, net selling price.

XGEVA sales increased 14 percent driven primarily by higher unit demand and, to a lesser extent, net selling price.

Nplate (romiplostim) sales increased 9 percent driven by higher unit demand, offset partially by net selling price.

Vectibix (panitumumab) sales increased 3 percent driven primarily by higher unit demand, offset partially by net selling price.

Neulasta (pegfilgrastim) sales increased 1 percent driven by an increase in net selling price and, to a lesser extent, favorable changes in inventory, offset partially by lower unit demand.

Sensipar/Mimpara (cinacalcet) sales decreased 2 percent driven by unfavorable changes in inventory and lower unit demand as a function of Parsabiv uptake, offset partially by higher net selling price.

Parsabiv (etelcalcetide) was launched in the U.S. in the first quarter of 2018.

Enbrel (etanercept) sales decreased 11 percent driven primarily by unfavorable changes in inventory and lower unit demand.

Aranesp (darbepoetin alfa) sales decreased 12 percent driven primarily by the impact of competition on unit demand and, to a lesser extent, net selling price.

EPOGEN (epoetin alfa) sales decreased 14 percent driven primarily by lower net selling price and, to a lesser extent, lower unit demand.

NEUPOGEN (filgrastim) sales decreased 26 percent driven primarily by the impact of competition on unit demand and, to a lesser extent, net selling price.

Operating Expense, Operating Margin and Tax Rate Analysis

On a GAAP basis:

Total Operating Expenses increased 4 percent due to investments in newer and recently launched products, and all expense categories also reflect savings from our transformation and process improvement efforts. Cost of Sales margin decreased by 0.4 points due to favorable royalty cost and lower acquisition-related intangible amortization, partially offset by higher manufacturing cost and unfavorable product mix. Research & Development (R&D) expenses were flat. Selling, General & Administrative (SG&A) expenses increased 12 percent due to investments in product launches and marketed product support.

Operating Margin improved by 1.5 percentage points to 49.9 percent.

Tax Rate decreased by 2.1 percentage points due to the impacts of U.S. corporate tax reform, offset partially by a prior year benefit associated with the effective settlement of certain state and federal tax matters.

AMGEN REPORTS SECOND QUARTER 2018 FINANCIAL RESULTS

On a non-GAAP basis:

Total Operating Expenses increased 7 percent due to investments in newer and recently launched products, and all expense categories also reflect savings from our transformation and process improvement efforts. Cost of Sales margin increased by 0.4 points driven by higher manufacturing cost and unfavorable product mix, partially offset by lower royalty expense. R&D expenses were flat. SG&A expenses increased 14 percent due to investments in product launches and marketed product support.

Operating Margin decreased by 0.1 percentage points to 55.1 percent.

Tax Rate decreased by 3.2 percentage points due to the impacts of U.S. corporate tax reform, offset partially by a prior year benefit associated with the effective settlement of certain state and federal tax matters.

Cash Flow and Balance Sheet

The Company generated $1.9 billion of free cash flow in the second quarter of 2018 versus $2.1 billion in the second quarter of 2017 driven by higher cash taxes resulting from the first installment of the repatriation tax paid in the second quarter of 2018, partially offset by a lower ongoing income tax liability as well as higher net income.

The Company’s second quarter 2018 dividend of $1.32 per share was paid on June 8, 2018, a 15 percent increase versus the second quarter of 2017.

During the second quarter, the Company repurchased 18.2 million shares of common stock at a total cost of $3.2 billion. At the end of the second quarter, the Company had $5.4 billion remaining under its stock repurchase authorization.

2018 Guidance

For the full year 2018, the Company now expects:

•
Total revenues in the range of $22.5 billion to $23.2 billion.

•
Previously, the Company expected total revenues in the range of $21.9 billion to $22.8 billion.

•
On a GAAP basis, EPS in the range of $11.83 to $12.62 and a tax rate in the range of 12.5 percent to 13.5 percent.

•
Previously, the Company expected GAAP EPS in the range of $11.30 to $12.28. Tax rate guidance is unchanged.

•
On a non-GAAP basis, EPS in the range of $13.30 to $14.00 and a tax rate in the range of 13.5 percent to 14.5 percent.

•
Previously, the Company expected non-GAAP EPS in the range of $12.80 to $13.70. Tax rate guidance is unchanged.

•
Capital expenditures to be approximately $750 million.

AMGEN REPORTS SECOND QUARTER 2018 FINANCIAL RESULTS

Page 6

Second Quarter Product and Pipeline Update

The Company provided the following updates on selected product and pipeline programs:

AimovigTM (erenumab-aooe)

•
In May, the U.S. Food and Drug Administration (FDA) approved Aimovig for the preventive treatment of migraine in adults.

•
In June, the Company submitted a supplemental Biologics License Application (BLA) to the FDA for the 140 mg Sureclick autoinjector device and 140 mg prefilled syringe.

KYPROLIS

•
In April, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) adopted a positive opinion recommending a label variation for KYPROLIS to include the overall survival (OS) data from the Phase 3 ASPIRE trial.

•
In June, the FDA approved the supplemental New Drug Application to add the OS data from the Phase 3 ASPIRE trial to the U.S. Prescribing Information.

BLINCYTO

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In June, the European Commission (EC) granted a full marketing authorization for BLINCYTO based on the OS data from the Phase 3 TOWER study in adult patients with Philadelphia chromosome-negative relapsed or refractory B-cell precursor acute lymphoblastic leukemia.

Repatha

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In May, the EC approved a new indication for adults with established atherosclerotic cardiovascular disease (myocardial infarction, stroke or peripheral arterial disease) to reduce cardiovascular risk by lowering lipoprotein cholesterol (LDL-C) levels.

Prolia

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In May and June, the FDA and EC, respectively, approved a new indication for the treatment of glucocorticoid-induced osteoporosis in adults.

EVENITYTM (romosozumab)

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In July, Amgen and UCB announced the resubmission of the BLA to the FDA for the treatment of osteoporosis in postmenopausal women at high risk for fracture.

KANJINTITM (ABP 980)

In May, the EC granted marketing authorization for KANJINTI, a biosimilar to Herceptin (trastuzumab), for the treatment of HER2-positive metastatic breast cancer, HER2-positive early breast cancer and HER2-positive metastatic adenocarcinoma of the stomach or gastroesophageal junction.

In May, the Company received a complete response letter from the FDA on its BLA.

ABP 710 (biosimilar infliximab)

In June, the Company announced results from the primary analysis of a Phase 3 study evaluating the efficacy and safety of biosimilar candidate ABP 710 compared with REMICADE (infliximab) in patients with moderate-to-severe rheumatoid arthritis. The results confirm noninferiority compared to infliximab but could not rule out superiority based on the primary efficacy endpoint.

AMGEN REPORTS SECOND QUARTER 2018 FINANCIAL RESULTS

Page 7

Amgen Announces Succession Plans for Two Executive Officers

As part of Amgen’s planned executive succession to address upcoming retirements, the Company announced that Sean E. Harper, M.D., executive vice president of Research and Development, will be retiring from his current role at Amgen and will be succeeded by David M. Reese, M.D., currently senior vice president of Translational Sciences and Oncology at Amgen. The Company also announced that Anthony C. Hooper, executive vice president of Global Commercial Operations, will be retiring from his current role in September and will be succeeded by Murdo Gordon, chief commercial officer of Bristol-Myers Squibb Company. Details of these plans are the subject of a separate Amgen press release.

EVENITY and KANJINTI trade names provisionally approved by FDA

EVENITY is developed in collaboration with UCB globally, as well as our joint venture partner Astellas in Japan

Aimovig is developed in collaboration with Novartis

Herceptin is a registered trademark of Genentech

Remicade is a registered trademark of Johnson and Johnson

AMGEN REPORTS SECOND QUARTER 2018 FINANCIAL RESULTS

Non-GAAP Financial Measures

In this news release, management has presented its operating results for the second quarters of 2018 and 2017, in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on a non-GAAP basis. In addition, management has presented its full year 2018 EPS and tax rate guidance in accordance with GAAP and on a non-GAAP basis. These non-GAAP financial measures are computed by excluding certain items related to acquisitions, restructuring and certain other items from the related GAAP financial measures. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release. Management has also presented Free Cash Flow (FCF), which is a non-GAAP financial measure, for the second quarters of 2018 and 2017. FCF is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP.

The Company believes that its presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. The Company uses certain non-GAAP financial measures to enhance an investor’s overall understanding of the financial performance and prospects for the future of the Company’s ongoing business activities by facilitating comparisons of results of ongoing business operations among current, past and future periods. The Company believes that FCF provides a further measure of the Company’s liquidity.

The Company uses the non-GAAP financial measures set forth in the news release in connection with its own budgeting and financial planning internally to evaluate the performance of the business, including to allocate resources and to evaluate results relative to incentive compensation targets. The non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

On July 26, 2018 McKesson Corporation (NYSE:MCK) reported that revenues for the first quarter ended June 30, 2018, were $52.6 billion, up 3% compared to $51.1 billion a year ago (Press release, McKesson, JUL 26, 2018, View Source [SID1234527910]). On a constant currency basis, revenues increased 2% over the prior year. On the basis of U.S. generally accepted accounting principles ("GAAP"), first-quarter loss per diluted share from continuing operations was $(0.69), compared to earnings per diluted share of $1.44 a year ago. GAAP loss per diluted share included a pre-tax and after-tax non-cash goodwill impairment charge of $570 million, or $2.81 per diluted share, in the European Pharmaceutical Solutions segment, primarily triggered by additional U.K. government reimbursement reductions announced on June 29, 2018, as well as the change to the company’s segment reporting structure.

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First-quarter Adjusted Earnings per diluted share was $2.90, up 18% compared to $2.46 a year ago, driven by a lower tax rate and share count, and growth in the U.S. Pharmaceutical and Specialty Solutions segment.

For the first quarter, McKesson used $1.1 billion in cash from operations, and invested $145 million internally, resulting in negative free cash flow of $1.2 billion, in line with the company’s expectations. During the quarter, McKesson also paid $826 million for acquisitions, repurchased approximately $300 million of its common stock, paid $71 million in dividends and the company ended the quarter with cash and cash equivalents of $2.2 billion.

"McKesson’s first quarter adjusted earnings results were in line with our expectations. We are, however, disappointed by the recent government-initiated reimbursement cuts in the U.K. These incremental cuts create ongoing challenges in our U.K. retail pharmacy business," said John H. Hammergren, chairman and chief executive officer. "During the quarter, we began executing against our multi-year strategic growth initiative, which included our acquisition of Medical Specialties Distributors. And I am pleased with the initial progress made on transforming our operating model, which will allow us to become a more efficient organization, and drive savings that will help fund investments in our priority growth areas."

New Segment Financial Reporting Effective Fiscal Year 2019

As previously disclosed on May 24, 2018, McKesson revised its reportable segments effective with the first quarter of Fiscal 2019. McKesson’s new reportable segments are:

U.S. Pharmaceutical and Specialty Solutions;
European Pharmaceutical Solutions; and
Medical-Surgical Solutions.
All remaining operating segments and business activities are included in Other. Other primarily includes McKesson Canada, McKesson Prescription Technology Solutions (MRxTS) and the company’s equity method investment in Change Healthcare.

Segment Results

U.S. Pharmaceutical and Specialty Solutions revenues were $41.0 billion for the quarter, up 2%, driven primarily by market growth and acquisitions, partially offset by previously announced customer losses and branded to generic conversions. Segment GAAP operating profit was $543 million and GAAP operating margin was 1.33%. Segment adjusted operating profit was $540 million and adjusted operating margin was 1.32%.

European Pharmaceutical Solutions revenues were $6.9 billion for the quarter, up 9% on a reported basis and 1% on a constant currency basis, driven primarily by market growth and acquisitions, largely offset by the previously disclosed increased competition in France and a reduction in owned retail pharmacies in the U.K. versus the prior year. Segment GAAP operating loss was $560 million and GAAP operating margin was (8.07)%. Segment adjusted operating profit was $74 million and adjusted operating margin was 1.07%. On a constant currency basis, adjusted operating profit was $69 million and adjusted operating margin was 1.07%.

Medical-Surgical Solutions revenues were $1.7 billion for the quarter, up 11%, driven primarily by market growth and an acquisition. Segment GAAP operating profit was $93 million and GAAP operating margin was 5.46%. Segment adjusted operating profit was $125 million and adjusted operating margin was 7.34%.

Other revenues were $3.0 billion for the quarter, up 5% on a reported basis and 1% on a constant currency basis, driven primarily by market growth, mostly offset by the impact of government actions on the McKesson Canada business. Other GAAP operating profit was $114 million and adjusted operating profit was $213 million. On a constant currency basis, adjusted operating profit was $204 million.

Fiscal Year 2019 Outlook

McKesson expects Adjusted Earnings per diluted share of $13.00 to $13.80 for the fiscal year ending March 31, 2019.

McKesson does not provide forward-looking guidance on a GAAP basis as the company is unable to provide a quantitative reconciliation of this forward-looking non-GAAP measure to the most directly comparable forward-looking GAAP measure without unreasonable effort, as items are inherently uncertain and depend on various factors, many of which are beyond the company’s control.

Dividend Declaration

The company’s Board of Directors yesterday declared a regular dividend of $0.39 cents per share of common stock, a 15% increase from $0.34 cents per share in the prior quarter. The dividend will be payable on October 1, 2018, to stockholders of record on September 4, 2018.

Adjusted Earnings

McKesson separately reports financial results on the basis of Adjusted Earnings. Adjusted Earnings is a non-GAAP financial measure defined as GAAP income from continuing operations, excluding amortization of acquisition-related intangible assets, acquisition-related expenses and adjustments, LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring and asset impairment charges, and other adjustments. A reconciliation of McKesson’s GAAP financial results to Adjusted Earnings is provided in Schedules 2 and 3 of the financial statement tables included with this release.

The company does not provide forward-looking guidance on a GAAP basis prospectively as McKesson is unable to provide a quantitative reconciliation of this forward-looking non-GAAP measure to the most directly comparable forward-looking GAAP measure, without unreasonable effort, because McKesson cannot reliably forecast LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring and asset impairment charges, and other adjustments, which are difficult to predict and estimate. These items are inherently uncertain and depend on various factors, many of which are beyond the company’s control, and as such, any associated estimate and its impact on GAAP performance could vary materially.

Constant Currency

McKesson also presents its financial results on a constant currency basis. The company conducts business worldwide in local currencies, including the Euro, British pound and Canadian dollar. As a result, the comparability of the financial results reported in U.S. dollars can be affected by changes in foreign currency exchange rates. Constant currency information is presented to provide a framework for assessing how the company’s business performed excluding the effect of foreign currency exchange rate fluctuations. The supplemental constant currency information of the company’s GAAP financial results and Adjusted Earnings (Non-GAAP) is provided in Schedule 3 of the financial statement tables included with this release.

Free Cash Flow

McKesson also provides free cash flow, a non-GAAP measure. Free cash flow is defined as net cash provided by operating activities less property acquisitions and capitalized software expenditures, as outlined in the company’s condensed consolidated statements of cash flows.

Risk Factors

Except for historical information contained in this press release, matters discussed may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. These statements may be identified by their use of forward-looking terminology such as "believes", "expects", "anticipates", "may", "will", "should", "seeks", "approximately", "intends", "plans", "estimates" or the negative of these words or other comparable terminology. The discussion of financial trends, strategy, plans or intentions may also include forward-looking statements. It is not possible to predict or identify all such risks and uncertainties; however, the most significant of these risks and uncertainties are described in the company’s Form 10-K, Form 10-Q and Form 8-K reports filed with the Securities and Exchange Commission and include, but are not limited to: changes in the U.S. healthcare industry and regulatory environment; managing foreign expansion, including the related operating, economic, political and regulatory risks; changes in the Canadian healthcare industry and regulatory environment; exposure to European economic conditions, including recent austerity measures taken by certain European governments; changes in the European regulatory environment with respect to privacy and data protection regulations; fluctuations in foreign currency exchange rates; the company’s ability to successfully identify, consummate, finance and integrate acquisitions; the performance of the company’s investment in Change Healthcare; the company’s ability to manage and complete divestitures; material adverse resolution of pending legal proceedings; competition and industry consolidation; substantial defaults in payment or a material reduction in purchases by, or the loss of, a large customer or group purchasing organization; the loss of government contracts as a result of compliance or funding challenges; public health issues in the U.S. or abroad; cyberattack, natural disaster, or malfunction of sophisticated internal computer systems to perform as designed; the adequacy of insurance to cover property loss or liability claims; the company’s proprietary products and services may not be adequately protected, and its products and solutions may be found to infringe on the rights of others; system errors or failure of our technology products or services to conform to specifications; disaster or other event causing interruption of customer access to data residing in our service centers; changes in circumstances that could impair our goodwill or intangible assets; new or revised tax legislation or challenges to our tax positions; general economic conditions, including changes in the financial markets that may affect the availability and cost of credit to the company, its customers or suppliers; changes in accounting principles generally accepted in the United States of America; withdrawal from participation in multiemployer pension plans or if such plans are reported to have underfunded liabilities; inability to realize the expected benefits from the company’s restructuring and business process initiatives; difficulties with outsourcing and similar third party relationships; risks associated with the company’s retail expansion; and the company’s inability to keep existing retail store locations or open new retail locations in desirable places. The reader should not place undue reliance on forward-looking statements, which speak only as of the date they are first made. Except to the extent required by law, the company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.

Conference Call Details

The company has scheduled a conference call for today, Thursday, July 26th, at 8:00 AM ET. The dial-in number for individuals wishing to participate on the call is 323-994-2093. Craig Mercer, senior vice president, Investor Relations, is the leader of the call, and the password to join the call is ‘McKesson’. A telephonic replay of this conference call will be available for five calendar days. The dial-in number for individuals wishing to listen to the replay is 719-457-0820 and the pass code is 1175861. An archive of the conference call will also be available on the company’s Investor Relations website at View Source

Shareholders are encouraged to review the company’s filings with the Securities and Exchange Commission.