(Filing, 10-Q, Vertex Pharmaceuticals, OCT 30, 2015, View Source [SID:1234507862])

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First half results aligned with management guidance
Underlying revenue +3.8% year-to-year (reported revenue growing +6.2% to 904 billion yen)
Underlying Core Earnings +3.7% year-to-year (operating profit -5.4% to 110.4 billion yen)

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Continued performance of Takeda’s strategic growth drivers in the first half
Gastroenterology underlying revenue +28.7%, oncology up +1.6% year-to-year
Emerging markets underlying revenue +7.1% year-to-year, with particularly strong contributions from Russia and China
Consolidated underlying revenue of gastroenterology, oncology and emerging markets – Takeda’s growth drivers – is +10.0% year-to-year

First half growth supported by innovative new products
Entyvio success continues to support more than $2 billion peak sales target
Brintellix and Adcetris show steady growth
Azilva and Lotriga continue to grow strongly in Japan

Regional performance
Year-to-year underlying revenue growth in U.S. +12.0% (driven by Entyvio and Brintellix), Europe and Canada +1.5% (Entyvio and Adcetris), and emerging markets +7.1% (Russia and China)
Strong growth of new products in Japan. Underlying revenue in Japan decreased by 3.4% year-to-year as a result of increasing generic penetration

Efficiency gains continue
Project Summit achieved 11 billion yen of cost savings in the first half of FY2015
On track to deliver more than 20 billion yen savings this fiscal year

Affirming management guidance for profitable growth in FY2015
Low single-digit underlying revenue growth in FY2015, with underlying core earnings growth higher than underlying revenue growth, and underlying core EPS growth higher than underlying core earnings growth

On October 30, 2015 Christophe Weber, President and Chief Executive Officer of Takeda, reported:
"In the first half of FY2015, Takeda continued its turnaround with underlying revenue growth of 3.8%, led by our growth drivers of gastroenterology, oncology and emerging markets. Operating profit was down in the first half of the year, mainly due to an increase in expenses for several recent launches and in R&D, as planned, but underlying core earnings increased by 3.7%, getting closer to underlying revenue growth (Press release, Takeda, OCT 30, 2015, View Source [SID:1234507916]). On the basis of our first-half results, we confirm our full-year management guidance."

Underlying revenue growth in the first half was +3.8%, Underlying Core Earnings was +3.7% and Underlying Core EPS was +7.9%, with no changes in our management guidance for FY2015. Reported revenue grew +6.2% to 904.0 billion yen. An increase in expenses for new launch products, as well as a decrease in other income related to sale of real estate in 2014, resulted in a year-to-year decline in Operating Profit, Net Profit and EPS, by 6.2 billion yen, 7.1 billion yen and 9 yen, respectively. These measures have improved in the second quarter compared to the first quarter.

Underlying revenue growth was mainly driven by Takeda’s growth drivers, which are gastroenterology, oncology and emerging markets. Gastroenterology grew by +28.7% year-to-year, driven by Entyvio. Oncology revenue, including Velcade and Adcetris, increased by +1.6%. Emerging markets revenue grew by +7.1%, led by Value Brands (branded generics and OTC), with strong growth in Russia and China. Performance in the U.S. (+12.0% underlying revenue growth) and Europe and Canada (+1.5%) also contributed to revenue growth. In Japan, 　products such as Azilva and Lotriga contributed to revenue growth, but as a result of increasing generic competition, total revenue declined -3.4%.

Project Summit – a company-wide strategic initiative to increase efficiency – continued to produce results, with 11 billion yen savings in the first half. Execution of Summit initiatives in recent months include business restructuring programs, further optimization of production capacity utilization, and continued operational efficiency. A new global procurement organization also contributed by leveraging effective external spending. Efficiency initiatives as part of Project Summit remain on track, and Takeda is committed to continued operational efficiency.

Entyvio is expected to be a key global contributor to Takeda’s sales growth over the next few years, and Azilva, Lotriga, and Takecab are the products that are expected to enable Takeda to maintain a leading position in Japan. As part of the ongoing efforts of the R&D organization, ixazomib for relapsed/refractory multiple myeloma was granted accelerated assessment status in Europe in July, and Priority Review status in the U.S. in September 2015. In Japan, Takeda submitted a New Drug Application for the fixed-dose combination tablet of Nesina and metformin, and received approval for Leuplin 24 week depot for the treatment of prostate cancer and premenopausal breast cancer and for Copaxone for the treatment of multiple sclerosis in September 2015.

Takeda confirmed its management guidance for FY2015, leading to long-term sales and profit growth.

On October 30, 2015 AbbVie (NYSE:ABBV) reported financial results for the third quarter ended September 30, 2015 (Press release, AbbVie, OCT 30, 2015, View Source;p=RssLanding&cat=news&id=2104614 [SID:1234507847]).

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"We are pleased with our outperformance in the third quarter and our progress year-to-date. We’ve driven strong commercial, operational and R&D execution, resulting in industry-leading top- and bottom-line performance," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "We are well-positioned to deliver robust EPS growth in 2015 and beyond, and we continue to make significant progress advancing our pipeline and other strategic actions that will help AbbVie achieve top-tier growth over the long term."

Third-Quarter Results

Worldwide sales were $5.944 billion in the third quarter, up 18.4 percent year-over-year. On an operational basis, sales increased 26.2 percent, excluding a 7.8 percent unfavorable impact from foreign exchange rate fluctuations.

Third-quarter sales growth was driven by the continued strength of HUMIRA and other promoted products. Global HUMIRA sales increased 19.6 percent on an operational basis, or 12.1 percent including the impact of foreign exchange rate fluctuations. Strong U.S. HUMIRA growth of 30.4 percent was driven by continued momentum across all three major market categories, rheumatology, dermatology and gastroenterology. International HUMIRA sales in the third quarter grew 7.1 percent on an operational basis, nearly double the rate of growth reported in the second quarter. Reported international HUMIRA sales growth in the quarter was reduced by 16 percent due to unfavorable foreign exchange.

Third-quarter global IMBRUVICA sales were $304 million with U.S. sales of $267 million and international profit sharing of $37 million for the quarter.

Total company sales growth was also driven by $469 million in global VIEKIRA sales, now approved in 61 countries with additional approvals anticipated throughout the remainder of 2015 and into 2016, as well as strong operational growth from Duodopa, Creon and Lupron.

The adjusted gross margin ratio in the third quarter was 83.3 percent, excluding intangible asset amortization and other specified items. Gross margin expansion of 220 basis points was driven by product mix, operating efficiencies and the impact of foreign exchange rates. The gross margin ratio under U.S. generally accepted accounting principles (GAAP) was 80.4 percent.
Adjusted selling, general and administrative (SG&A) expense was 23.0 percent of sales in the third quarter. On a GAAP basis, SG&A was 24.8 percent of sales.

Adjusted research and development (R&D) was 15.4 percent of sales in the quarter, reflecting funding actions in support of our mid- and late-stage pipeline assets. On a GAAP basis, R&D was 23.8 percent of sales.

The adjusted operating margin in the third quarter was 44.9 percent, compared to 38.5 percent in third-quarter 2014. On a GAAP basis, the operating margin was 31.7 percent.

Net interest expense was $197 million dollars, reflecting the impact of debt issued in connection with the Pharmacyclics acquisition. The adjusted tax rate was 21.9 percent in the quarter and 24.8 percent on a GAAP basis.

Adjusted diluted earnings per share, excluding intangible asset amortization expense and other specified items, were $1.13 in the third quarter, up nearly 27 percent. Diluted earnings per share were $0.74 on a GAAP basis.

Announced company’s long-term strategic and financial objectives, including expectations for growth and other financial metrics such as sales targets, operating margin objectives and earnings-per-share growth over our long-range plan. Provided 2016 earnings per share guidance and confirmed intention to host a comprehensive R&D Pipeline Review in Chicago during the 2016 ASCO (Free ASCO Whitepaper) meeting (see separate release issued this morning).

Key Events from the Third Quarter

AbbVie announced that 34 abstracts from its chronic hepatitis C clinical development program have been accepted for presentation at The Liver Meeting, the Annual Meeting of the American Association for the Study of Liver Diseases (AASLD) in San Francisco from November 13-17, 2015. New clinical studies will be presented on AbbVie’s next-generation HCV medicines, ABT-493 and ABT-530, focused on investigating pan-genotypic, ribavirin (RBV)-free, once-daily treatment options that may allow for shorter treatment durations of as little as eight weeks. Presentations will also highlight new data from Phase 3b studies of AbbVie’s VIEKIRA PAK, taken with or without ribavirin (RBV), for adults with genotype 1 (GT1) chronic HCV infection, including studies of GT1 patients with chronic kidney disease and genotype 1b (GT1b) patients with compensated cirrhosis.

The Japanese Ministry of Health, Labour and Welfare (MHLW) approved Viekirax as a new interferon and RBV-free treatment option for adult patients with chronic GT1 HCV infection, including those with compensated liver cirrhosis. Viekirax consists of a 12-week, two direct-acting antiviral, fixed-dose combination of paritaprevir/ritonavir with ombitasvir, dosed once daily. Japan has one of the highest rates of hepatitis C infection in the industrialized world, with approximately 1.5 to 2 million people living with HCV, making it the second largest HCV market globally.

Results from a Phase 2 clinical trial of ABT-494, AbbVie’s internally developed selective JAK1 inhibitor, in rheumatoid arthritis (RA) met its primary endpoint, achieving ACR20 response at week 12, in patients with inadequate response to either methotrexate or TNF inhibitors (ACR20 responses up to 82 percent and ACR50 responses up to 50 percent; ACR20 up to 73 percent and ACR50 responses up to 44 percent, respectively). With the potential to be a best-in-class therapy with an overall favorable safety profile, AbbVie intends to advance a once-daily formulation of ABT-494 into Phase 3 studies for RA by the end of 2015.
AbbVie reported top-line results from a Phase 2b safety and efficacy study of elagolix in patients with uterine fibroids. Preliminary results from the six-month study demonstrated that all of the elagolix treatment arms met the composite primary endpoint. The company plans to move into Phase 3 development in the first quarter of 2016. Elagolix is also in Phase 3 development for the treatment of endometriosis.

AbbVie announced that it submitted a supplemental New Drug Application (sNDA) to the U.S. Food and Drug Administration (FDA) based on results from the head-to-head Phase 3 RESONATE-2 study, which evaluated efficacy and safety of IMBRUVICA versus traditional chemotherapy, chlorambucil, in treatment-naïve chronic lymphocytic leukemia (CLL) patients aged 65 years or older. The RESONATE study (PCYC-1112) found that treatment with IMBRUVICA improved progression-free survival (primary endpoint) and multiple secondary endpoints, including overall survival and overall response rate when used in treatment-naïve patients with CLL. These data have been submitted for publication in a peer-reviewed medical journal and will be presented at an upcoming medical meeting.

Results from a Phase 2 study of venetoclax (ABT-199) found that AbbVie’s investigational medicine met its primary endpoint of achieving overall response rates in patients with relapsed/refractory or previously untreated CLL with 17p deletion genetic mutation. These data are under regulatory review by the FDA and will be submitted to the European Medicines Agency (EMA) before year-end. Full results from the trial will be presented at an upcoming medical meeting.

AbbVie announced that the FDA and European Commission (EC) approved HUMIRA (adalimumab) for the treatment of moderate-to-severe hidradenitis suppurativa (HS) in adult patients. HUMIRA is the first and only approved therapy for people with this chronic, painful inflammatory skin disease in both the U.S. and European Union (EU). HS affects approximately 1 percent of the adult patient population worldwide, with fewer than 200,000 patients in the United States.

The FDA accepted a Biologics License Application (BLA) for elotuzumab, an investigational treatment in patients with relapsed/refractory multiple myeloma, for priority review. Elotuzumab was previously granted breakthrough therapy designation by the FDA and validated by the EMA for accelerated assessment in the EU. Regulatory submissions were based on results from the ELOQUENT-2 trial which found that treatment with elotuzumab in combination with lenalidomide and dexamethasone demonstrated a 30 percent reduction in disease progression.

During the quarter, the FDA approved AbbVie’s TECHNIVIE in combination with RBV for the treatment of adults with genotype 4 (GT4) HCV in the United States. TECHNIVIE is the first and only all-oral, interferon-free, direct-acting antiviral treatment approved in the U.S. for adult patients with GT4 chronic HCV infection.

AbbVie Raises Full-Year 2015 Outlook

AbbVie is raising its adjusted diluted earnings-per-share guidance for the full-year 2015 to $4.26 to $4.28. The company’s 2015 adjusted diluted earnings-per-share guidance excludes $1.10 per share of intangible asset amortization expense, deal costs, integration, and other specified items, and includes $0.20 of dilution related to the Pharmacyclics acquisition. AbbVie’s diluted earnings-per-share guidance is $3.16 to $3.18 on a GAAP basis.

On October 30, 2015 AbbVie (NYSE:ABBV) reported the company’s long-term strategic and financial objectives, including expectations for growth and other financial metrics over its long-range plan, through 2020 (Press release, AbbVie, OCT 30, 2015, View Source;p=RssLanding&cat=news&id=2104612 [SID:1234507848]).

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"AbbVie is well-positioned to deliver strong top- and bottom-line performance through 2020 and beyond," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "We have built a strong foundation, establishing growth platforms in some of the largest and most attractive market segments. And, we have a robust and compelling pipeline which will contribute significantly to our performance over our long-range-plan."

Based on continued strong performance from its existing portfolio of on-market products, including its flagship brands HUMIRA and IMBRUVICA, as well as growth from pipeline products, the company is providing guidance for total company sales of approximately $37 billion in 2020. This reflects roughly 10 percent sales growth, on average, over the five year period. This guidance includes estimated global HUMIRA sales of more than $18 billion in 2020, which the company believes appropriately captures the expected biosimilar dynamics globally. Additionally, the company is projecting its IMBRUVICA revenue will reach approximately $5 billion in 2020, driven by continued growth within the hematologic oncology market.

Since becoming independent, the company’s significant focus on operating efficiencies has resulted in strong improvement of its gross and operating margin profiles. AbbVie is committed to driving continued expansion of operating margin, and is targeting an adjusted operating margin of greater than 50 percent by 2020, with an average of 100-200 basis points of improvement per year. In 2014, AbbVie’s adjusted operating margin was 36.2 percent. Expansion will be driven primarily by ongoing cost savings initiatives, product mix and a reduction in royalty expense associated with HUMIRA in 2017 and 2018. Additionally, the company will drive continued sales leverage from a rapidly growing top-line.

"Our commitment to top-line growth and continued operating margin expansion will drive double-digit earnings-per-share growth on average through 2020," said Richard A. Gonzalez. "AbbVie’s fundamental strategy is strong and we are well-positioned to deliver top-tier financial performance in the years to come."

Company Issues Strong Full-Year 2016 Outlook

AbbVie is issuing diluted earnings-per-share guidance for the full-year 2016 of $4.90 to $5.10 on an adjusted basis. This outlook represents strong double-digit growth versus 2015 and positions AbbVie to be among the industry leaders for growth again next year.

The company will quantify 2016 intangible asset amortization expense and other specified items at a future date.

Company Announces Plans to Host R&D Day

Through internal research and development efforts and strategic licensing and acquisition activities, the company has built a robust pipeline of medicines, with the potential to deliver nearly $30 billion in nominal sales by 2024 (excluding new HUMIRA indications, new IMBRUVICA indications and next-generation HCV, which are considered on-market products for this calculation).

The company is on track to launch more than 20 new products or indications through 2020, including seven approvals that will contribute in 2016 and beyond, including:

IMBRUVICA indication expansion, including first-line chronic lymphocytic leukemia (CLL)
HUMIRA indication expansion, including hidradenitis suppurativa (HS) and uveitis
VIEKIRA approval for genotype 1B patients in Japan
Venetoclax for relapsed/refractory CLL patients with the 17p genetic mutation
Zinbryta for relapsing remitting multiple sclerosis
Elotuzumab for relapsed/refractory multiple myeloma
AbbVie plans to host an R&D Pipeline Review in Chicago during the 2016 ASCO (Free ASCO Whitepaper) meeting. At the event, the company will provide comprehensive detail regarding its research and development programs, including its core programs in immunology, oncology, virology and neurology, in addition to its late stage efforts in women’s health and renal disease, as well as the company’s outlook on the commercial potential of these assets.

Company Declares 12 Percent Dividend Increase

AbbVie also announced today that its board declared an increase in the company’s quarterly cash dividend from $0.51 per share to $0.57 per share beginning with the dividend payable on February 16, 2016 to shareholders of record as of January 15, 2016. This reflects an increase of approximately 12 percent, continuing AbbVie’s strong commitment to returning cash to shareholders through a growing dividend. Since becoming an independent company in 2013, AbbVie has increased its dividend by more than 42 percent.

On October 29, 2015 Baxalta Incorporated (NYSE:BXLT) reported strong third quarter financial results, exceeding its previously-issued sales and earnings guidance (Press release, Baxalta, OCT 29, 2015, View Source [SID:1234507835]). The company also raised its outlook for the second half of 2015 and provided preliminary 2016 guidance.

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"We are already delivering on our promise to patients and shareholders in the short time that we have been an independent, standalone company," said Ludwig Hantson, chief executive officer and president. "Baxalta’s strong financial performance, increasing depth and breadth across the portfolio and meaningful pipeline achievements all validate our company’s compelling growth prospects, vision and commitment to driving shareholder value."

Results for the Third Quarter 2015

In the third quarter, Baxalta generated net income on a GAAP (Generally Accepted Accounting Principles) basis of $309 million and earnings of $0.45 per diluted share. These results include net after-tax special items totaling $76 million, or $0.11 per diluted share, primarily for intangible asset amortization, expenses associated with the company’s separation, certain business development and collaboration-related items, and a gain from the sale of the company’s vaccines business which is classified as a discontinued operation.

On an adjusted pro forma basis, excluding special items, Baxalta reported third quarter net income of $385 million and earnings of $0.56 per diluted share, which exceeded the company’s previously-issued guidance of $0.48 to $0.50 per diluted share. These financial results reflect positive sales momentum from across the portfolio, including meaningful sales contributions, value from new product launches, and strong operational performance.

Positive Sales Momentum Across Market-Leading Portfolio

In the third quarter, Baxalta’s worldwide revenues on a GAAP basis of $1.6 billion advanced 7 percent from the prior-year period. Excluding the impact of foreign currency, sales advanced 16 percent.

On a pro forma basis, worldwide revenues grew 4 percent. Excluding the impact of foreign currency, sales advanced 13 percent, exceeding the company’s previously-issued guidance of growth in the 8 to 10 percent range. Within the United States, sales of $841 million rose 14 percent, and international sales of $754 million declined 5 percent. Excluding foreign currency, international sales increased 12 percent.

Baxalta’s leading hematology and immunology businesses generated double-digit sales growth (excluding the impact of foreign currency) in the quarter. Hematology revenues of $935 million increased 10 percent (excluding the impact of foreign currency) as the company continues to focus on enhancing access and elevating standards of care worldwide. Key drivers of growth include heightened demand for ADVATE [Antihemophilic Factor (Recombinant)], a treatment for hemophilia A, and FEIBA [Anti-Inhibitor Coagulant Complex], an inhibitor treatment. A benefit from newly launched products, such as RIXUBIS [Coagulation Factor IX (Recombinant)] for the treatment of hemophilia B, and OBIZUR [Antihemophilic Factor (Recombinant), Porcine Sequence], for the treatment of acquired hemophilia A, also contributed to performance.

Immunology sales of $626 million advanced 13 percent (excluding the impact of foreign currency) on a pro forma basis. The company continues to capitalize on its broad and differentiated portfolio of immunoglobulin therapies, including HYQVIA [Immune Globulin Infusion 10% (Human) with Recombinant Human Hyaluronidase], and is driving strong sales of specialty biotherapeutics. Baxalta’s new oncology business, which leverages the company’s heritage and expertise in orphan diseases, recorded sales of $34 million in the quarter. This reflects the recent acquisition of ONCASPAR (pegaspargase), a marketed biologic treatment for acute lymphocytic leukemia (ALL).

Nine-Month Sales Results

For the nine-month period, Baxalta reported worldwide revenues on a GAAP basis of $4.4 billion, which increased 3 percent from the prior-year period. Excluding the impact of foreign currency, sales advanced 11 percent.

On a pro forma basis, worldwide revenues for the nine-month period grew 2 percent, and excluding the impact of foreign currency, sales advanced 10 percent. Within the United States, sales of $2.4 billion rose 9 percent, and international sales of $2.1 billion declined 5 percent. Excluding the impact of foreign currency, international sales increased 10 percent.

Advancing Pipeline with Key Milestone Achievements

Baxalta is building a solid track record with an array of meaningful milestone achievements toward its objective of launching 20 new products by 2020.

"We continue to make progress toward our goal of achieving 20 new product launches by 2020 with a rich pipeline of promising late-stage assets, novel mechanisms of action and disruptive technologies," added Hantson. "Successful commercial launches of these products are projected to result in approximately $2.8 billion in risk-adjusted revenues by 2020, and approximately $7 billion on a risk-adjusted basis by 2025, creating enhanced value for patients, customers and shareholders."

Recent highlights include:

Approval in Canada of OBIZUR [Antihemophilic Factor (Recombinant), Porcine Sequence] for the treatment of bleeding episodes in patients with acquired hemophilia A, a very rare and life-threatening acute bleeding disorder. OBIZUR is the first recombinant porcine sequence FVIII treatment specifically designed to enable physicians to monitor treatment response by measuring FVIII activity levels in addition to clinical assessments. The company has also received a positive opinion on OBIZUR from the European Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA), and expects marketing authorization from the European Commission later this year.
Publication of pivotal phase III data for BAX 111 (to be marketed in the U.S. as VONVENDI) in Blood, the journal of the American Society of Hematology (ASH) (Free ASH Whitepaper). The data showed 100 percent of patients treated with this highly purified recombinant von Willebrand factor (rVWF) candidate achieved success in the management of bleeding episodes.1 VONVENDI is currently under review by the FDA and, if approved, would become the first recombinant replacement treatment for managing bleeding episodes for von Willebrand patients.2
FDA submission for approval of an investigational 20% concentration subcutaneous immune globulin (IGSC) treatment for primary immunodeficiencies. As Baxalta expands its immunoglobulin portfolio to address patient needs, the higher potency IG treatment is intended to offer faster infusions with less volume. The product is also under regulatory review in Europe.
Initiation of a pivotal phase III clinical trial in collaboration with Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) in patients with chronic plaque psoriasis for M923, a biosimilar version of HUMIRA (adalimumab). The trial will compare the safety, efficacy and immunogenicity of M923 with HUMIRA, and the companies are targeting first regulatory submission in 2017 and first commercial launch in 2018.
Announcement of plans to submit a new drug application (NDA) to the FDA with partner CTI BioPharma Corp. (NASDAQ: CTIC) for pacritinib, an investigational oral kinase inhibitor with specificity for JAK2 and FLT3 for the treatment of patients with myelofibrosis, in the fourth quarter of 2015. The companies plan to request priority review for the treatment of patients with intermediate and high-risk myelofibrosis with low platelet counts of less than 50,000 per microliter (<50,000/uL) for whom there are no approved treatments.
Completion of the ONCASPAR leukemia portfolio acquisition from Sigma-Tau Finanziaria S.p.A. The acquisition includes ONCASPAR, a marketed biologic treatment for acute lymphocytic leukemia (ALL), the investigational biologic calaspargase pegol, and an established oncology infrastructure with clinical and sales resources.
Financial Outlook for Fourth Quarter and Second Half 2015

For the fourth quarter of 2015, Baxalta expects pro forma sales growth, excluding the impact of foreign currency, of 3 to 5 percent. Including the impact of foreign currency, the company expects pro forma sales to decline 1 to 3 percent. Baxalta also expects fourth quarter 2015 adjusted earnings, before special items, of $0.55 to $0.57 per diluted share.

This guidance translates into an improved outlook for the second half of 2015, which now includes adjusted earnings, before special items, of $1.11 to $1.13 per diluted share. This is an increase from the previously communicated earnings guidance range of $1.02 to $1.04 per diluted share. Also for the second half of 2015, Baxalta now expects pro forma sales growth, excluding the impact of foreign currency, of approximately 8 to 9 percent, compared to its prior guidance of growth in the 5 to 6 percent range. Including the impact of foreign currency, pro forma sales growth is expected to be flat to up 1 percent.

For the full-year 2015, Baxalta projects pro forma sales growth, excluding the impact of foreign currency, of approximately 8 percent, compared to its prior guidance of growth in the 6 to 7 percent range. Including the impact of foreign currency, the company now expects pro forma sales in 2015 to be comparable to 2014.

Preliminary Full-Year 2016 Guidance

Baxalta is also providing preliminary guidance for full-year 2016, which includes pro forma sales growth, excluding the impact of foreign currency, of 8 to 9 percent. Including the impact of foreign currency, the company expects pro forma sales growth of approximately 7 to 8 percent. Based on strong sales momentum and operating performance, Baxalta expects adjusted earnings, before special items, of $2.15 to $2.25 per diluted share for full-year 2016.

"Baxalta has a competitive and compelling financial profile with an outlook that balances accelerating growth with attractive returns," said Robert J. Hombach, chief financial officer and chief operations officer. "We firmly believe that our focus on orphan diseases and underserved conditions combined with numerous new product opportunities uniquely positions us to drive enhanced and sustainable value for our shareholders."

Reconciliation of GAAP and Non-GAAP Results

The company’s guidance for earnings in the fourth quarter of 2015 excludes approximately $0.02 per diluted share of projected intangible asset amortization expense. The company’s adjusted earnings guidance for the second half excludes $0.13 per diluted share of special items comprising $0.11 per diluted share of special items recorded during the third quarter and $0.02 of projected intangible asset amortization expense for the fourth quarter. Reconciling for the inclusion of these items results in expected GAAP earnings of $0.53 to $0.55 per diluted share for the fourth quarter of 2015, and earnings of $0.98 to $1.00 per diluted share for the second half of 2015.

The company’s guidance for full-year 2016 excludes approximately $0.08 per diluted share of projected intangible asset amortization expense. Reconciling for the inclusion of this item results in expected GAAP earnings of $2.07 to $2.17 per diluted share.