On July 29, 2015 Bayer reported that they continued to grow sales in the second quarter of 2015 and significantly increased earnings (Press release, Bayer, JUL 28, 2015, View Source [SID:1234506732]). "All three subgroups contributed to the gratifying improvement in earnings," said Bayer CEO Dr. Marijn Dekkers when the interim report was published on Wednesday. HealthCare posted considerable sales and earnings gains that were attributable to the further gratifying expansion of business with the recently launched pharmaceutical products and to the positive sales development at Consumer Health. At CropScience, sales matched the strong level of the prior-year quarter, while earnings improved. At MaterialScience, sales were level with the prior-year quarter. Earnings of this subgroup, however, posted a sharp improvement of almost 90 percent, mainly as a result of the improved demand situation and lower raw material costs. The preparations for the planned stock market flotation of MaterialScience are on schedule. Dekkers expressed his continued optimism for the year as a whole: "We are confirming our Group forecast for the operational performance of continuing operations." The Group forecast has been adjusted to take account of the changes in exchange rates as of June 30, 2015.

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Following the signing of the divestiture agreement with Panasonic Healthcare Holdings Co., Ltd. in June 2015, the Diabetes Care business is no longer included in continuing operations. The prior-year figures are restated. Sales of the Bayer Group moved ahead in the second quarter of 2015 by 18.2 percent to EUR 12,090 million (Q2 2014: EUR 10,228 million). After adjusting for currency and portfolio effects (Fx & portfolio adj.), the increase was 3.7 percent. EBITDA before special items rose by 33.2 percent to EUR 2,899 million (Q2 2014: EUR 2,176 million). This good sales development was accompanied by higher R&D and selling expenses. Positive currency effects buoyed earnings by about EUR 260 million. EBIT of the Bayer Group climbed by a substantial 27.7 percent to EUR 1,833 million (Q2 2014: EUR 1,435 million) after net special charges of EUR 255 million (Q2 2014: EUR 48 million). The special charges mainly resulted from the revaluation of other receivables, the integration of acquired businesses, the planned stock market flotation of MaterialScience, efficiency improvement measures and the consolidation of production facilities. Net income advanced by 20.9 percent to EUR 1,152 million (Q2 2014: EUR 953 million) and core earnings per share from continuing operations by 33.8 percent to EUR 1.98 (Q2 2014: EUR 1.48).

Gross cash flow from continuing operations advanced by 30.5 percent to EUR 2,173 million (Q2 2014: EUR 1,665 million) due to the improvement in EBITDA. Net cash flow (total) rose by 22.4 percent to EUR 1,959 million (Q2 2014: EUR 1,601 million) despite an increase in cash tied up in working capital. Net financial debt declined slightly, from EUR 21.3 billion on March 31, 2015, to EUR 21.1 billion on June 30, 2015, following the EUR 1.86 billion dividend payment made in May.

HealthCare: further dynamic growth for recently launched pharmaceutical products

Sales of HealthCare increased by 28.0 percent (Fx & portfolio adj. 8.3 percent) to EUR 5,908 million in the second quarter (Q2 2014: EUR 4,615 million). "This increase was largely due to the gratifying sales performance of our recently launched pharmaceutical products," Dekkers explained. "In the Consumer Health segment, too, we achieved solid organic growth to which all divisions contributed." The considerable reported increase was chiefly attributable to sales of products acquired from Merck & Co., Inc., United States, and to currency effects.

Sales of the Pharmaceuticals segment rose by a substantial 10.7 percent (Fx & portfolio adj.) to EUR 3,492 million. The recently launched products – the anticoagulant Xarelto, the eye medicine Eylea, the cancer drugs Stivarga and Xofigo, and Adempas to treat pulmonary hypertension – continued to experience dynamic growth, posting combined sales of EUR 1,051 million (Q2 2014: EUR 702 million). Sales of Xarelto rose by 42.6 percent (Fx adj.) thanks to substantial volume increases in all regions. Eylea posted further robust gains, with sales up by 49.1 percent (Fx adj.). Among the established best-selling products, the 14.3 percent (Fx adj.) improvement in sales of the blood-clotting drug Kogenate was chiefly attributable to shifts in order patterns. The hormone-releasing intrauterine devices of the Mirena product family posted encouraging development, with sales up by 11.1 percent (Fx adj.). Sales of the multiple sclerosis drug Betaferon/Betaseron were down by 8.8 percent (Fx. adj.) overall, due partly to increased competition in Europe and the United States. The Pharmaceuticals business as a whole grew in all regions on a currency-adjusted basis.

Sales of the Consumer Health segment rose by 4.0 percent (Fx & portfolio adj.) to EUR 2,416 million. At Consumer Care, business with the products acquired from Merck & Co., Inc., United States, totaled EUR 528 million. The Bepanthen/Bepanthol line of skincare products also developed positively, with sales up by 6.9 percent (Fx adj.). The Seresto flea and tick collar made a significant contribution to growth in the Animal Health Division. Sales of the Advantage family of flea, tick and worm control products increased by 3.9 percent (Fx adj.). In the contrast agents and medical equipment business (Medical Care), the MRI contrast agent Gadovist/Gadavist posted significant growth of 12.1 percent (Fx adj.) following its registration in additional indications.

EBITDA before special items of HealthCare increased by a substantial 27.5 percent to EUR 1,675 million (Q2 2014: EUR 1,314 million) thanks to the continued very good business development at Pharmaceuticals and Consumer Health, which at Consumer Care was due mainly to the acquired businesses. There were also positive currency effects of approximately EUR 110 million. Earnings were held back mainly by an increase in research and development expenses at Pharmaceuticals.

CropScience improves earnings despite difficult conditions in Latin America

Sales of the agriculture business (CropScience) increased by 10.2 percent to EUR 2,723 million (Q2 2014: EUR 2,470 million). After adjusting for currency and portfolio effects, sales were level with the strong prior-year quarter (minus 0.6 percent). "CropScience held its own in what remained a difficult market environment, particularly in Latin America," said Dekkers. The subgroup achieved its highest sales growth in the Asia/Pacific region, at 4.9 percent (Fx adj.). Business grew by 2.0 percent (Fx adj.) in North America and 0.9 percent (Fx adj.) in Europe. Sales in the Latin America/Africa/Middle East region moved back by 8.8 percent (Fx adj.).

In Crop Protection, business in the Herbicides unit grew by 5.6 percent (Fx & portfolio adj.). The 11.0 percent (Fx & portfolio adj.) increase in sales of the Seeds unit was due to positive development for vegetables and rice in particular. By contrast, sales at Insecticides showed a considerable decline of 17.7 percent (Fx & portfolio adj.). The SeedGrowth (seed treatments) and Fungicides units also saw their sales decline by 5.1 and 2.4 percent (Fx & portfolio adj.), respectively. On the other hand, sales at Environmental Science advanced by 6.6 percent (Fx & portfolio adj.), mainly as a result of robust growth in products for professional users.

EBITDA before special items of CropScience came in 19.2 percent above the prior-year period at EUR 733 million (Q2 2014: EUR 615 million). This increase was driven by a positive currency effect of about EUR 70 million.

Improved demand and lower raw material prices at MaterialScience

Sales of the high-tech polymers business (MaterialScience) rose by 11.2 percent in the second quarter to EUR 3,185 million (Q2 2014: EUR 2,864 million). After adjusting for currency and portfolio effects, sales were flat with the prior-year quarter (plus 0.6 percent). "Volumes at MaterialScience expanded in all regions. On the other hand, there were negative price effects, particularly for Polyurethanes," Dekkers explained. Raw material prices were down steeply overall against the prior-year period.

Sales of the Polyurethanes unit (foam raw materials) fell by 2.9 percent (Fx & portfolio adj.). Volume increases did not fully offset the sharp decline in selling prices. The Polycarbonates unit (high-tech plastics) raised sales by 5.3 percent (Fx & portfolio adj.) thanks to considerably higher volumes in all regions, which mainly resulted from improved demand in the automotive industry. Selling prices fell overall compared with the prior-year period. Sales in the Coatings, Adhesives, Specialties business unit moved forward by 6.0 percent (Fx & portfolio adj.) as a result of higher volumes. Selling prices as a whole were somewhat below the level of the prior-year period. Sales in the Industrial Operations area receded by 2.6 percent (Fx & portfolio adj.) due to slightly lower selling prices and volumes.

EBITDA before special items of MaterialScience improved significantly by 87.4 percent to EUR 506 million (Q2 2014: EUR 270 million). Appreciable falls in raw material prices more than offset the drop in selling prices. Earnings were additionally buoyed by higher volumes and positive currency effects of around EUR 80 million.

All subgroups post first-half earnings growth

Sales of the Bayer Group increased by 16.5 percent (Fx & portfolio adj. 3.2 percent) to EUR 23,969 million (H1 2014: EUR 20,580 million). HealthCare was the driver of this growth, while CropScience and MaterialScience matched the prior-year levels. EBITDA before special items increased by a significant 19.7 percent to EUR 5,840 million (H1 2014: EUR 4,879 million), with all subgroups, particularly HealthCare and MaterialScience, contributing to this improvement. EBIT climbed by 7.9 percent to EUR 3,777 million (H1 2014: EUR 3,500 million) and net income by 3.3 percent to EUR 2,455 million (H1 2014: EUR 2,376 million). Core earnings per share rose by 18.2 percent to EUR 4.02 (H1 2014: EUR 3.40).

EBITDA before special items targeted to rise by a high-teens percentage in 2015

With respect to the second half of 2015, Bayer is now basing its forecast on the exchange rates prevailing on June 30, 2015. The Diabetes Care business is no longer included in continuing operations and therefore is also not included in the updated forecast. The prior-year figures are restated. Bayer is now planning sales in the region of EUR 47 billion (previously: in the region of EUR 48 billion to EUR 49 billion, of which discontinued operations accounted for approximately EUR 0.9 billion). This still corresponds to a low-single-digit percentage increase on a currency- and portfolio-adjusted basis. The Bayer Group expects currency effects to boost sales by approximately 7 percent (previously: approximately 9 percent) compared with the prior year. It remains the aim to raise EBITDA before special items by a high-teens percentage, allowing for expected positive currency effects of about 5 percent (previously: around 8 percent). Bayer continues to target a high-teens percentage increase in core earnings per share, allowing for expected positive currency effects of around 5 percent (previously: around 7 percent).

Bayer now expects to take special charges in the region of EUR 900 million, with the integration of the acquired consumer care businesses, the planned stock market listing of MaterialScience and the optimization of production structures accounting for most of this amount. As before, Bayer expects net financial debt at year end to be below EUR 20 billion.

HealthCare now expects sales from continuing operations to rise to approximately EUR 23 billion (previously: over EUR 24 billion). This corresponds to a mid-single-digit percentage increase on a currency- and portfolio-adjusted basis. The subgroup plans to raise EBITDA before special items by a low-twenties percentage. In the Pharmaceuticals segment, Bayer continues to expect sales to move ahead to approximately EUR 14 billion. This corresponds to a mid- to high-single-digit percentage increase on a currency- and portfolio-adjusted basis. It is planned to raise sales of the segment’s recently launched products to over EUR 4 billion and its EBITDA before special items by a mid-teens percentage. In the Consumer Health segment, Bayer now expects sales of over EUR 9 billion (previously: over EUR 10 billion), including those of the acquired consumer care businesses but excluding the Diabetes Care business. Sales of this segment are planned to grow by a mid-single-digit percentage on a currency- and portfolio-adjusted basis. Here, EBITDA before special items is anticipated to rise by a mid-thirties percentage, with the acquired consumer care businesses contributing to the increase.

CropScience expects to continue growing faster than the market and aims to raise sales to approximately EUR 10.5 billion (previously: around EUR 11 billion). This corresponds to a low-single-digit percentage increase (previously: a low- to mid-single-digit percentage increase) on a currency- and portfolio-adjusted basis. In view of the weakened market environment, CropScience now plans to improve EBITDA before special items by a mid- to high-single-digit percentage (previously: a low- to mid-teens percentage).

MaterialScience continues to plan further volume growth in 2015 accompanied by declining selling prices. This will lead to lower sales on a currency- and portfolio-adjusted basis. However, the subgroup continues to expect to see a significant increase in EBITDA before special items and aims to return to earning the full cost of capital in 2015. After adjusting for currency and portfolio effects, MaterialScience expects sales in the third quarter of 2015 to come in below the level of the prior-year quarter and expects EBITDA before special items to be above the level of the prior-year quarter but below the preceding quarter.

(Filing, 10-Q, United Therapeutics, JUL 28, 2015, View Source [SID:1234506717])

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(Filing, 10-Q, Celgene, JUL 28, 2015, View Source [SID:1234506730])

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On July 28, 2015 Pfizer Inc. (NYSE: PFE) reported financial results for secondquarter 2015 and announced increases to the midpoints of its 2015 financial guidance(3) ranges for reported revenues(1) and reported(1) and adjusted(2) diluted EPS (Press release, Pfizer, JUL 28, 2015, View Source [SID:1234506718]).

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The company manages its commercial operations through two distinct businesses: an Innovative Products business and an Established Products business. The Innovative Products business is composed of two operating segments: the Global Innovative Pharmaceutical segment (GIP)(4) and the Global Vaccines, Oncology and Consumer Healthcare segment (VOC)(4) . The Established Products business consists of the Global Established Pharmaceutical segment (GEP)(4). Financial results for each of these segments are presented in the Operating Segment Information section.

EXECUTIVE COMMENTARY

Ian Read, Chairman and Chief Executive Officer, stated, "Our second-quarter and year-to-date financial performance is the result of continued business momentum, driven by solid execution of recent product launches in our Innovative Products business, notably Ibrance and Prevnar 13 in adults in the U.S., along with continued growth from Eliquis and Xeljanz, increased focus on and support of growth initiatives within our Established Products business as well as shareholder-friendly capital allocation. For the remainder of 2015, we look forward to completing the pending acquisition of Hospira, Inc. (Hospira), which we expect will meaningfully enhance our Established Products business, particularly in sterile injectables and biosimilars, and continuing to advance our late-stage pipeline in important areas such as oncology and immuno-oncology, vaccines, rare disease, cardiovascular disease and biosimilars. I continue to see both of our businesses as highly focused, well managed and competitively positioned in their key markets."

Frank D’Amelio, Chief Financial Officer, stated, "Overall, I am very pleased with our second-quarter 2015 financial results. We were able to grow revenues by 1% excluding the impact of foreign exchange, marking the third consecutive quarter of operational revenue growth, despite the continued significant negative impact from product losses of exclusivity, primarily Celebrex and Zyvox in the U.S. and Lyrica in certain developed Europe markets.

"As a result of our strong operational performance to date coupled with an improved operational outlook for the remainder of the year, we are raising the midpoint of our 2015 financial guidance(3) range for reported revenues(1) by $500 million and the midpoint of our guidance range for adjusted diluted EPS(2) by $0.04. Changes in foreign exchange rates since mid-April 2015 did not materially impact our latest guidance," Mr. D’Amelio concluded.

QUARTERLY FINANCIAL HIGHLIGHTS (Second-Quarter 2015 vs. Second-Quarter 2014)

Reported revenues(1) decreased $920 million, or 7%, which reflects operational growth of $125 million, or 1%, more than offset by the unfavorable impact of foreign exchange of $1.0 billion, or 8%. Excluding the impact of foreign exchange, adjusted diluted EPS(2) increased by approximately 6%.

Operational revenue growth in developed markets was driven by the performance of several key products, including Prevnar 13 in adults, Eliquis, Ibrance and Xeljanz — all products that are early in their life cycles — as well as from vaccines acquired last year from Baxter International Inc. (Baxter). In emerging markets, revenues increased 6% operationally, reflecting continued strong operational growth, primarily from Lipitor and Prevenar 13.

Operational revenue growth was partially offset primarily by the loss of exclusivity and immediate multi-source generic competition for Celebrex in the U.S. as well as Zyvox in the U.S. and Lyrica in certain developed Europe markets.

Innovative Products Business Highlights

Revenues for the Innovative Products business increased 17% operationally, reflecting the following:

GIP(3) revenues increased 8% operationally, primarily due to strong operational performance of recently launched products, including Eliquis globally and Xeljanz in the U.S., in addition to the continued strong performances of Lyrica in the U.S. and Japan and Viagra in the U.S. Operational growth was partially offset by generic competition for Rapamune in the U.S., which began in October 2014, and by increased competition for BeneFIX in the U.S.

VOC(3) revenues increased 29% operationally, reflecting the following:

– Global Vaccines(3) revenues increased 52% operationally. Prevnar 13 revenue in the U.S. increased 87%, primarily driven by continued strong uptake among adults. International revenues increased 25% operationally, driven by Prevenar 13, which grew 10% operationally, primarily reflecting increased shipments associated with Gavi, the Vaccine Alliance, the favorable impact of Prevenar’s inclusion in additional national immunization programs in certain emerging markets compared with the year-ago quarter, as well as the inclusion in second-quarter 2015 of revenues associated with the acquisition of Baxter’s portfolio of marketed vaccines in Europe.

– Consumer Healthcare(3) revenues decreased 2% operationally, primarily due to the non-recurrence of initial retailer stocking associated with the launch of Nexium 24HR in the U.S. in the prior-year quarter. Excluding Nexium 24HR, the Consumer Healthcare business in the U.S. increased 5%, driven by increased promotional support for key brands. Additionally, revenues from emerging markets increased 11% operationally, primarily driven by China and Venezuela.

– Global Oncology(3) revenues increased 36% operationally, primarily driven by strong momentum following the February 2015 U.S. launch of Ibrance for advanced breast cancer and, to a lesser extent, stronger demand for Sutent, Inlyta and Xalkori in most markets.

Established Products Business Highlights

GEP(3) revenues decreased 14% operationally, primarily due to the loss of exclusivity and immediate launch of multi-source generic competition for Celebrex in the U.S. in December 2014 as well as generic competition for Zyvox in the U.S. beginning in first-half 2015 and for Lyrica in certain developed Europe markets beginning in first-quarter 2015. Revenues for Lipitor in developed markets declined as a result of continued generic competition. Additionally, the co-promotion collaboration for Spiriva has terminated in most countries, including in the U.S. in April 2014. These declines were partially offset by growth in emerging markets, where revenues increased 2% operationally, primarily driven by Lipitor.

Income Statement Highlights

Adjusted cost of sales, adjusted SI&A expenses and adjusted R&D expenses(2) in the aggregate increased $225 million operationally, or 3%, reflecting the following operational factors: – higher adjusted cost of sales(2), primarily reflecting an increase in sales volume partially offset by a decrease in royalty expense;

– higher adjusted SI&A expense(2), primarily reflecting increased investments to support recently launched products and other in-line products, largely offset by continued benefits from cost-reduction and productivity initiatives; and

– higher adjusted R&D expense(2), primarily due to incremental investment in the late-stage pipeline, primarily bococizumab, partially offset by lower clinical trial spend for Trumenba, Prevnar 13 adult, and certain oncology products, as well as the completion of postmarketing commitments for certain in-line products.

The effective tax rate on adjusted income(2) declined 2.3 percentage points to 25.6% from 27.9%. This decline was primarily due to a favorable change in the jurisdictional mix of earnings partially offset by a decline in tax benefits associated with the resolution of certain tax positions pertaining to prior years, with various foreign tax authorities.

The diluted weighted-average shares outstanding declined by 201 million shares compared to the prioryear quarter due to Pfizer’s share repurchase program, including the impact of the $5 billion accelerated share repurchase agreement executed in February 2015 and completed in July 2015.
In addition to the aforementioned factors, second-quarter 2015 reported earnings were primarily impacted by the following:

Unfavorable impacts:
– higher legal charges and acquisition-related costs associated with the pending acquisition of Hospira in second-quarter 2015 compared to the prior-year quarter; and

– higher charges incurred in second-quarter 2015 for business and legal entity alignment activities.

Favorable impacts:
– lower restructuring and other charges associated with cost-reduction and productivity initiatives and lower purchase accounting adjustments in second-quarter 2015 compared to the prior-year quarter; and

– a lower effective tax rate, primarily due to a favorable change in the jurisdictional mix of earnings partially offset by a decline in tax benefits associated with the resolution of certain tax positions pertaining to prior years, with various foreign tax authorities.

RECENT NOTABLE DEVELOPMENTS

Product Developments

Ibrance (palbociclib) — Pfizer announced in May 2015 study results demonstrating palbociclib in combination with fulvestrant was superior to treatment with a standard of care, fulvestrant, by significantly extending progression-free survival (PFS) in women with hormone receptor-positive, human epidermal growth factor receptor 2-negative (HER2-) metastatic breast cancer whose disease has progressed during or after endocrine therapy (Hazard Ratio: 0.42, median PFS: 9.2 vs. 3.8 months, in their respective arms, p<0.000001). Results from the Phase 3 PALOMA-3 study were presented as a late-breaker at the 51st Annual Meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) in June 2015. The PALOMA-3 study met its primary endpoint of PFS at the interim analysis and was stopped early in April 2015 due to efficacy based on an assessment by an independent Data Monitoring Committee. Benefit from palbociclib was demonstrated across all pre-specified subgroups, including both pre/perimenopausal and postmenopausal patients. At the time of the PFS analysis, overall survival (OS) data were immature. The adverse events observed with palbociclib in combination with fulvestrant in PALOMA-3 were consistent with their respective labeled adverse event profiles. Pfizer plans to submit a supplemental New Drug Application to the U.S. Food and Drug Administration (FDA) in fourth-quarter 2015 for potential inclusion of data from the PALOMA-3 study in the U.S. label. Additionally, Pfizer intends to file a Marketing Authorisation Application for palbociclib with the European Medicines Agency (EMA) in third-quarter 2015. The planned EMA submission will include data from the PALOMA-1 study, which evaluated palbociclib plus letrozole in women with estrogen receptor positive, HER2- locally advanced or newly diagnosed metastatic breast cancer, as well as data from the PALOMA-3 study.

Trumenba — Pfizer announced in June 2015 that the U.S. Centers for Disease Control and Prevention’s (CDC) Advisory Committee on Immunization Practices (ACIP) voted to recommend that decisions to vaccinate adolescents and young adults 16 through 23 years of age against serogroup B meningococcal (MenB) disease should be made at the individual level with healthcare providers. Specifically, the ACIP – 7 – voted that a MenB vaccine series may be administered to adolescents and young adults 16 through 23 years of age to provide short-term protection against most strains of MenB disease. The preferred age for MenB vaccination is 16 through 18 years of age. This recommendation expands the CDC’s ACIP February 2015 recommendation for MenB vaccination.

Xeljanz (tofacitinib)

– Pfizer presented in June 2015 more than 20 abstracts at the European League Against Rheumatism Annual Congress (EULAR), including over six years of safety and efficacy data from two long-term extension studies, real-world experience analyses, and clinical, patient-reported and radiographic efficacy outcomes with Xeljanz monotherapy, as well as health economics outcomes research that include patient-preference data for Xeljanz in patients with rheumatoid arthritis (RA). Additionally, results from the Xeljanz 11 mg once daily clinical pharmacology program were presented during the Congress, demonstrating equivalence in key pharmacokinetic parameters to Xeljanz 5 mg twice daily.

– Pfizer presented in June 2015 twelve presentations, including new data on tofacitinib for chronic plaque psoriasis and atopic dermatitis, at the 23rd World Congress of Dermatology meeting. Among the highlights were three late-breaking presentations, including 52-week pooled results from the Oral treatment Psoriasis Trials (OPT) pivotal studies, an integrated safety summary across the OPT development program for oral tofacitinib, and the first presentation of two-year results from OPT Extend, the ongoing long-term extension study of tofacitinib in moderate to severe chronic plaque psoriasis.

– Pfizer announced in July 2015 that the FDA accepted for review Pfizer’s new drug application for Xeljanz 11 mg once daily modified release tablets for the treatment of moderate to severe RA in patients who have had an inadequate response or intolerance to methotrexate. The FDA has provided an anticipated Prescription Drug User Fee Act (PDUFA) action date in February 2016.

Xalkori — Pfizer announced in April 2015 that Xalkori (crizotinib) received Breakthrough Therapy designation by the FDA for the potential treatment of patients with ROS1-positive non-small cell lung cancer (NSCLC). Occurring in approximately one percent of NSCLC cases, ROS1-positive NSCLC represents a particular molecular subgroup of NSCLC. Xalkori currently is approved in the U.S. for the treatment of patients with metastatic NSCLC whose tumors are anaplastic lymphoma kinase (ALK)- positive as detected by a FDA-approved test. Pfizer will work closely with the FDA on the development of Xalkori for ROS1-positive NSCLC and provide the information needed to support a potential regulatory submission.

Pipeline Developments

A comprehensive update of Pfizer’s development pipeline was published today and is now available at www.pfizer.com/pipeline. It includes an overview of Pfizer’s research and a list of compounds in development with targeted indication and phase of development, as well as mechanism of action for candidates from Phase 2 through registration.

At ASCO (Free ASCO Whitepaper) 2015, Pfizer Oncology presented data showcasing the clinical progress of several marketed products and investigational compounds spanning multiple tumor types, including breast cancer, NSCLC and non-Hodgkin’s lymphoma (NHL). Pfizer abstracts included data for two investigational agents, highlighting the depth of Pfizer’s immunotherapy pipeline and heritage in lung cancer and personalized medicine: PF-05082566, a fully humanized monoclonal antibody that stimulates signaling through 4-1BB in patients with CD20+ NHL and the first ever clinical data for PF-06463922, a novel adenosine triphosphate competitive small molecule inhibitor of ALK/ROS1, in patients with advanced ALK+ or ROS1+ NSCLC. Pfizer also presented new analyses from the pivotal Phase 2 PALOMA-1 trial for Ibrance (palbociclib), providing additional data on patient subgroups of interest. The Merck KGaA-Pfizer Alliance also presented 10 abstracts on avelumab, providing the latest preliminary clinical results across various tumor types, including NSCLC and ovarian cancer.

PF-06290510 (Staphylococcus aureus (S. aureus) vaccine candidate) — In July 2015, Pfizer announced enrollment of the first patient in a Phase 2b clinical trial of its investigational S. aureus multi-antigen vaccine in adults undergoing elective spinal fusion surgery. The purpose of the study, named STRIVE (STaphylococcus aureus SuRgical Inpatient Vaccine Efficacy), is to evaluate the safety and efficacy of the vaccine to determine if it prevents postoperative invasive S. aureus infections in patients undergoing elective spinal surgery. The trial is expected to enroll approximately 2,600 patients with final results expected in 2017. PF-06290510 was granted Fast Track designation by the FDA in February 2014.

PF-06425090 (Clostridium difficile (C. difficile) vaccine candidate) — In November 2014, Pfizer disclosed that in a previous Phase 2 study, enrollment and vaccination of further subjects was halted due to several observed cases of severe local reactogenicity (redness). Pfizer has since identified a new path forward using an alternate formulation. In July 2015, Pfizer initiated a new Phase 2 study to evaluate the safety, tolerability and immunogenicity of its investigational C. difficile vaccine in healthy adults 65 to 85 years of age. The trial is expected to enroll approximately 850 patients with final results expected in 2017. PF-06425090 was granted Fast Track designation by the FDA in August 2014.

Lipitor Over-the-Counter (OTC) — A Phase 3 "actual use" trial intended to simulate the OTC use of Lipitor (atorvastatin calcium) 10 mg was completed in December 2014. The study did not meet its primary objectives of demonstrating patient compliance with the direction to check their low-density lipoprotein cholesterol (LDL-C) level and, after checking their LDL-C level, take appropriate action based on their test results. Based on dialogue with the FDA about the program and analysis of this data, the program was terminated.

PF-06410293 — In July 2015, Pfizer began dosing patients in a multinational Phase 3 clinical trial of PF-06410293, a potential biosimilar to Humira(6) (adalimumab). The Phase 3 clinical trial will evaluate the efficacy, safety, and immunogenicity of PF-06410293 plus methotrexate and adalimumab sourced from the EU plus methotrexate in subjects with moderately to severely active rheumatoid arthritis who have had an inadequate response to methotrexate monotherapy.

Rivipansel — Pfizer announced in June 2015 that the first patient has been enrolled in the RESET (Rivipansel: Evaluating Safety, Efficacy and Time to Discharge) study, a Phase 3 clinical trial assessing the efficacy and safety of rivipansel for the treatment of vaso-occlusive crisis in hospitalized individuals with sickle cell disease who are six years of age or older. This multicenter, randomized, double-blind, placebocontrolled, parallel-group study is expected to enroll at least 350 people. Rivipansel has received Orphan Drug and Fast Track status from the FDA, and this study is being conducted under a Special Protocol Assessment, in agreement with the FDA.

Avelumab (MSB0010718C) — Merck KGaA and Pfizer announced in April 2015 the initiation and first patient treated in a Phase 3 study designed to assess the efficacy and safety of the investigational cancer immunotherapy avelumab, compared with docetaxel, in patients with stage IIIb/IV NSCLC who have experienced disease progression after receiving a prior platinum-containing doublet therapy. The Phase 3 study is an open-label, multicenter, 1:1 randomized clinical trial where patients with stage IIIb/IV NSCLC will receive either avelumab or docetaxel, regardless of programmed death-ligand 1 (PD-L1) status. Approximately 650 patients will participate across 290 sites in more than 30 countries in North America, South America, Asia, Africa and Europe. The study is part of the JAVELIN clinical trial program for avelumab.

PF-06439535 — In May 2015, Pfizer began dosing patients in a multinational Phase 3 clinical trial of PF-06439535, a potential biosimilar to Avastin(7) (bevacizumab). The Phase 3 clinical trial will evaluate the efficacy and safety of PF-06439535 plus paclitaxel and carboplatin against Avastin sourced from the EU plus paclitaxel and carboplatin by comparing the best confirmed objective response rate by week 19 in first-line treatment for patients with advanced (unresectable, locally advanced, recurrent or metastatic) non-squamous NSCLC.

Inotuzumab Ozogamicin — Pfizer announced in April 2015 that the Phase 3 INO-VATE ALL study investigating the treatment of inotuzumab ozogamicin met the primary endpoint of complete response or complete response with incomplete blood count recovery (CR/CRi) demonstrating a higher complete – 10 – hematologic remission rate in adult patients with relapsed or refractory CD22-positive acute lymphoblastic leukemia compared to that achieved with standard of care chemotherapy. Pfizer is discussing these data with the FDA and other regulatory agencies. Pfizer is continuing the study to allow for the data on OS, a separate primary endpoint, to mature.

Corporate Developments

Pfizer announced in June 2015 that it has entered into an agreement with GlaxoSmithKline to acquire its quadrivalent meningitis ACWY vaccines, Nimenrix and Mencevax, for a total consideration of approximately $130 million (€115 million). This transaction will add two high-quality and complementary vaccines to Pfizer’s portfolio, allowing the company to reach a broader global population. This transaction is not expected to have any significant impact on Pfizer’s 2015 financial performance. The transaction is subject to customary closing conditions as well as regulatory approvals in several markets, and is expected to close in the second half of 2015.

Pfizer announced in May 2015 that it received a request for additional information from the U.S. Federal Trade Commission (FTC) with respect to its previously announced pending acquisition of Hospira. The request for information from the FTC, often referred to as a "second request," was anticipated as part of the regulatory process under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Pfizer continues to work cooperatively and expeditiously with the FTC in connection with its review. The transaction is subject to customary closing conditions, including regulatory approvals in several jurisdictions. On May 13, 2015, Hospira shareholders voted in favor of the proposal to adopt the merger agreement, which was also a condition to closing the transaction. Pfizer and Hospira continue to expect the transaction to close in the second half of 2015.

In April 2015, Pfizer acquired a minority equity interest in AM-Pharma B.V., a privately held Dutch biopharmaceutical company focused on the development of recombinant human Alkaline Phosphatase for inflammatory diseases, and secured an exclusive option to acquire the remaining equity in the company. Under the terms of the agreement, Pfizer paid $87.5 million for both the exclusive option and the minority equity interest and Pfizer may make additional payments of up to $512.5 million upon exercise of the option and potential launch of any product that may result from this investment.

For additional details, see the attached financial schedules, product revenue tables and disclosure notice.

(1) Reported revenues is defined as revenues in accordance with U.S. generally accepted accounting principles (GAAP). Reported net income is defined as net income attributable to Pfizer Inc. in accordance with U.S. GAAP. Reported diluted earnings per share (EPS) is defined as reported diluted EPS attributable to Pfizer Inc. common shareholders in accordance with U.S. GAAP.

(2) Adjusted income and its components and Adjusted diluted EPS are defined as reported U.S. GAAP net income(1) and its components and reported diluted EPS(1) excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items. Adjusted revenues, Adjusted cost of sales, Adjusted selling, informational and administrative (SI&A) expenses, Adjusted research and development (R&D) expenses and Adjusted other (income)/deductions are income statement line items prepared on the same basis as, and therefore components of, the overall Adjusted income measure. As described under Adjusted income in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of Pfizer’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2015, management uses Adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. We believe that investors’ understanding of our performance is enhanced by disclosing this measure. See the accompanying reconciliations of certain GAAP Reported to non-GAAP Adjusted information for the second quarter and first six months of 2015 and 2014, as well as reconciliations of full-year 2015 guidance for Adjusted income and Adjusted diluted EPS to full-year 2015 guidance for Reported net income(1) and Reported diluted EPS(1) . The Adjusted income and its components and Adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS.

(3) The 2015 financial guidance reflects the following:

Does not assume the completion of any business development transactions not completed as of June 28, 2015, including any one-time upfront payments associated with such transactions. 2015 financial guidance does not reflect any impact from the pending acquisition of Hospira. The transaction is expected to close during the second half of 2015.

Excludes the potential effects of the resolution of litigation-related matters not substantially resolved as of June 28, 2015.

Exchange rates assumed are a blend of the actual exchange rates in effect through second-quarter 2015 and the mid-July 2015 exchange rates for the remainder of the year. Excludes the impact of a potential devaluation of the Venezuelan bolivar.

Guidance for reported revenues(1) reflects the anticipated negative impact of $3.4 billion due to recent and expected generic competition for certain products that have recently lost or are anticipated to soon lose patent protection, partially offset by anticipated revenue growth from certain other products.

Guidance for reported revenues(1) also reflects the anticipated negative impact of $3.3 billion as a result of unfavorable changes in essentially all foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from 2014. The anticipated negative impact on reported(1) and adjusted(2) diluted EPS resulting from unfavorable changes in foreign exchange rates compared to foreign exchange rates from 2014 is approximately $0.19.

Guidance for the effective tax rate on adjusted income(2) does not assume the renewal of the U.S. R&D tax credit. The renewal of the R&D tax credit is not anticipated to have a material impact on the effective tax rate on adjusted income(2) .

Guidance for reported(1) and adjusted diluted EPS(2) assumes diluted weighted-average shares outstanding of approximately 6.25 billion shares, inclusive of share repurchases in 2015. Share repurchases in 2015 were composed of $1.0 billion of shares repurchased through January 30, 2015, a $5.0 billion accelerated share repurchase agreement executed in February 2015 and a $0.2 billion cash payment in July 2015 to satisfy the settlement terms of the accelerated share repurchase agreement. Pfizer elected to settle the terms of the accelerated share repurchase agreement with cash as opposed to the commensurate value in shares. Actual and projected dilution related to employee compensation programs is expected to partially offset these share repurchases.

(4) For a description of the revenues in each business, see the "Our Strategy––Commercial Operations" subsection in the Overview of Our Performance, Operating Environment, Strategy and Outlook section of Pfizer’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2015.

(5) Other includes revenues generated from Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales organization, and revenues related to our transitional manufacturing and supply agreements with Zoetis, Inc.

(6) Humira is a registered U.S. trademark of Abbvie Biotechnology Ltd.

(7) Avastin is a registered U.S. trademark of Genentech, Inc.

On July 28, 2015 Champions Oncology, Inc. (OTC: CSBR), engaged in the development of advanced technology solutions and services to personalize the development and use of oncology drugs, reported its financial results for the year ended April 30, 2015 (Filing, 8-K, Champions Oncology, JUL 28, 2015, View Source [SID:1234506720]).

Fourth Quarter and Recent Business Highlights:

• Quarterly revenue increased 32% over the same prior year period result
• Procured a quarterly record high of more than 140 implants

Joel Ackerman, Champions Oncology CEO, stated, "The end of fiscal 2015 is an opportune time to assess the accomplishments and challenges of the past year. While the Company experienced an anticipated slowdown in revenue growth in the earlier part of the year, the foundation for long term success and operational improvements continued to progress. The $14 million of capital raised during the year demonstrated continued investor confidence in the Company and provides the ability to execute our strategic vision."

Financial Results

For the fourth quarter of 2015, revenue was $3.2 million, as compared to $2.5 million for the three months ended April 30, 2014, an increase of 32%. For the twelve-month period ended April 30, 2015, revenue was $8.9 million, as compared to $11.6 million for the same period of the prior year, a decrease of 23%. Total operating expense for the fourth quarter 2015 was $5.7 million as compared to $4.8 million for the fourth quarter 2014. For the twelve months ended April 30, 2015, total operating expense was $22.1 million, as compared to $17.8 million for the twelve months ended April 30, 2014.

For the fourth quarter of 2015 and 2014, Champions reported a loss from operations of $2.4 million. Excluding stock-based compensation of $0.9 million and $0.8 million for the three months ended April 30, 2015 and 2014, Champions recognized a loss from operations of $1.5 million and $1.4 million respectively. For the twelve months ended April 30, 2015, Champions reported a loss from operations of $13.2 million as compared to a loss from operations of $6.3 million for the twelve months ended April 30, 2014. Excluding stock-based compensation of $3.2 million and $2.8 million for the twelve months ended April 30, 2015 and 2014, Champions recognized a loss from operations of $10.0 million and $3.5 million respectively.

Operating Results

The number of implants during the quarter was 143 consisting of 51 commercial implants and 92 implants from research partnerships and trials. Total implants increased 39% over the same period last year with a 149% increase in implants from research partnerships. The increase in research implants were the result of continued effort to expand our TumorBank by partnering with academic medical centers. These implants will further the Company’s efforts to increase the scale of our platform.

POS revenue was $418,000 and $430,000 for the three months ended April 30, 2015 and 2014, respectively, a decrease of $12,000 or 3%. Core revenue from our TumorGraft technology platform decreased $35,000 or 9%. This decrease is due to the cessation of implant activities in our Singapore entity due to regulatory restrictions. Non-core POS revenue increased $24,000. POS revenue was $1.7 million and $2.3 million for the twelve months ended April 30, 2015 and 2014, respectively, a decrease of $0.6 million or 27%. The decrease is due to a reduction in the number of tests per panel resulting in a $300,000 decrease in panel revenue. Non-core revenue decreased $212,000.

POS cost of sales was $543,000 and $628,000 for the three months ended April 30, 2015 and 2014, respectively, a decrease of $85,000, or 14%. POS cost of sales was $2.73 million for both the twelve months ended April 30, 2015 and 2014. For the three months ended April 30, 2015 and 2014, gross margin for POS was negative 30% and negative 46%, respectively. For the twelve months ended April 30, 2015 and 2014, gross margin for POS was negative 64% and negative 21%, respectively. The decline in gross margin is attributed to the decrease in core POS revenue and a fixed cost component to the cost of sales. Non-core revenue, which has a lower cost of sale and higher margins, declined, contributing to the lower overall margins in POS.

Translational Oncology Solutions (TOS):

TOS revenue was $2.8 million and $2.0 million for the three months ended April 30, 2015 and 2014, respectively, an increase of $0.8 million or 39%. TOS revenue was $7.2 million and $9.3 million for the twelve months ended April 30, 2015 and 2014, respectively, a decrease of $2.1 million, or 23%. The decline is largely due to a slower conversion of bookings to revenue.

TOS cost of sales was $1.7 million and $1.0 million for the three months ended April 30, 2015 and 2014, respectively, an increase of $0.7 million, or 74%. TOS cost of sales was $4.9 million and $3.5 million for the twelve months ended April 30, 2015 and 2014, respectively, an increase of $1.4 million, or 39%. For the three months ended April 30, 2015 and 2014, gross margin for TOS was 41% and 52%, respectively. Gross margin fluctuates from quarter to quarter generally due to the timing of revenue recognition. Gross margin for the quarter was below usual levels due to an increase in TOS studies whose revenue will be recognized upon study completion. For the twelve months ended April 30, 2015 and 2014, gross margin for TOS was 32% and 62%, respectively.

Research and development expense was $1.1 million and $663,000 for the three months ended April 30, 2015 and 2014, respectively. Research and development expense was $4.8 million and $2.3 million for the twelve months ended April 30, 2015 and 2014, respectively. The increase is largely due to investment in characterizing the TumorBank. Sales and marketing expense for the three months ended April 30, 2015 and 2014 was $943,000 and $1.0 million respectively. Sales and marketing expense for the twelve months ended April 30, 2015 and 2014 was $4.3 million and $3.2 million, respectively. The increase was the result of the expansion of the TOS sales force offset by reduced sales and marketing expense for POS. General and administrative expense for the three months ended April 30, 2015 and 2014 was $1.4 million and $1.5 million, respectively. General and administrative expense for the twelve months ended April 30, 2015 and 2014 was $5.3 million and $6.1 million, respectively.

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