On November 7, 2018 Horizon Pharma plc (NASDAQ: HZNP) reported its third-quarter 2018 financial results, confirmed its full-year 2018 net sales guidance range and increased its adjusted EBITDA guidance range (Press release, Horizon Pharma, NOV 7, 2018, View Source [SID1234530843]).

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"We generated record quarterly net sales for the Company and for our orphan and rheumatology segment, driven by accelerating KRYSTEXXA growth and continued strong performance from our rare disease medicines," said Timothy P. Walbert, chairman, president and chief executive officer, Horizon Pharma plc.

"Our clinical programs continue to advance, with the recent presentation of new teprotumumab Phase 2 data that underscore the durable efficacy observed in thyroid eye disease," continued Walbert. "We are also working to maximize the role of KRYSTEXXA to help more patients, including adapting our MIRROR immunomodulation clinical trial based on promising recent data to support the potential for registration. These advancements, in addition to potential asset acquisition opportunities, support our strategy to build a robust pipeline enabling sustainable long-term growth."

Third-Quarter and Recent Company Highlights

New Phase 2 Teprotumumab Data Presented at American Thyroid Associationand American Academy of Ophthalmology: At Week 24, 71.4 percent (30 of 42) of patients responded with reductions in proptosis (eye bulging) of 2mm or more and 61.9 percent of patients (26 of 42) responded with improvement of at least one grade in diplopia (double vision), which is considered a clinically meaningful change. At Week 72, 48 weeks following the study completion and nearly a year off therapy, 53.3 percent of the Week 24 proptosis responders maintained the reductions and 69.2 percent of patients with diplopia improvement maintained the benefit. These results demonstrate that teprotumumab has the potential to be a disease-modifying therapy.

Teprotumumab is a fully human monoclonal antibody IGF-1R inhibitor in Phase 3 development for the treatment of thyroid eye disease (TED), in which the muscles and fatty tissue behind the eye become inflamed, which can lead to proptosis and diplopia as well as quality-of-life issues.
New KRYSTEXXA Immunomodulation Data Presented at American College of Rheumatology/Association of Rheumatology Health Professionals (ACR): At the 2018 ACR meeting in October, investigators shared results from a case series of nine sequential patients with uncontrolled gout (chronic gout that is refractory to conventional therapies), evaluating the administration of KRYSTEXXA with the immunomodulator methotrexate to improve the durability of KRYSTEXXA response. The study states that of the nine patients followed out to five months, all nine were responders as defined by >80 percent of serum uric acid levels being maintained at goal <6.0 mg/dL during the observation period.

In its clinical trial MIRROR (Methotrexate to Increase Response Rates in Patients with UncontrolledGOut Receiving KRYSTEXXA), the Company is evaluating the administration of KRYSTEXXA with methotrexate to potentially improve the durability of response rate. Following the external case series data, the Company is adapting its MIRROR trial to support the potential for registration. Methotrexate has been shown to reduce anti-drug antibodies when combined with biologics and is the immunomodulator most commonly used by rheumatologists.
Uncontrolled Gout and KRYSTEXXA Data Presented at ACR and American Society of Nephrology (ASN): The Company participated in both the ACR and ASN medical meetings, all in October. At ACR, multiple studies were shared demonstrating the extensive burden of uncontrolled gout and its impact on patients. At ASN, multiple studies were shared demonstrating that people who have undergone a kidney transplant experience higher rates of uncontrolled gout compared to other renal disease patients and mortality rates were higher in kidney transplant recipients diagnosed with gout.
Intellectual Property Update:The Company settled litigation with Par Pharmaceutical (part of Endo International), the first generic filer on RAVICTI. Par’s license to enter the market with a generic version of RAVICTI would begin on July 1, 2025.
Research and Development Programs

Orphan Candidates and Programs:

Teprotumumab: The pivotal Phase 3 confirmatory study, OPTIC, is evaluating teprotumumab for the treatment of moderate-to-severe active TED, which has no FDA-approved treatments. OPTIC completed enrollment on Sept. 4, 2018, and topline results are expected in the second quarter of 2019. OPTIC-X, a 48-week open-label extension study in which participants may receive up to eight additional infusions of teprotumumab, continues to enroll patients. The objective of OPTIC-X is to evaluate the potential for retreatment and longer treatment with teprotumumab.
Rheumatology Pipeline Candidates and Programs:

KRYSTEXXA Immunomodulation Studies: The evaluation of the use of immunomodulation therapies to enhance the response rate to KRYSTEXXA is being studied in MIRROR, as well as two investigator-initiated trials. The three trials are evaluating different immunomodulators, each of which are used by rheumatologists.
MIRROR: a Horizon Pharma-sponsored multicenter, efficacy and safety study for KRYSTEXXA co-administered with methotrexate to evaluate the impact of methotrexate on response rate. Enrollment began in the fourth quarter of 2018. The Company is currently adapting the MIRROR clinical trial design to support the potential for registration and expects to begin enrolling patients into the adapted protocol in the second quarter of 2019
Two additional investigator-initiated trials co-administerKRYSTEXXA withmycophenolate mofetil (MMF) and with azathioprine.
Next-generation Biologic Programs for Uncontrolled Gout: The Company is pursuing two development programs for next-generation biologics for uncontrolled gout, HZN-003 and PASylated uricase technology, to support and sustain the Company’s market leadership in uncontrolled gout. The programs are exploring the use of optimized uricase technology as well as optimized PEGylation and PASylation technology.
Third-Quarter Financial Results

Note:For additional detail and reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, please refer to the tables at the end of this release.

Net Sales: Third-quarter 2018 net sales were $325.3 million, an increase of 20 percent, driven by continued strong growth of the Company’s orphan and rheumatology medicines.
Gross Profit: Under U.S. GAAP in the third quarter of 2018, the gross profit ratio was 69.6 percent compared to 53.8 percent in the third quarter of 2017. The non-GAAP gross profit ratio in the third quarter of 2018 was 91.2 percent compared to 89.6 percent in the third quarter of 2017.
Operating Expenses: R&D expenses were 6.5 percent of net sales and selling, general and administrative (SG&A) expenses were 49.7 percent of net sales. Non-GAAP R&D expenses were 5.9 percent of net sales and non-GAAP SG&A expenses were 39.3 percent of net sales.
Income Tax Rate: In the third quarter of 2018, the income tax benefit rate on a GAAP basis was 7.0 percent and the income tax expense rate on a non-GAAP basis was 10.1 percent.
Net Income: On a GAAP basis in the third quarter of 2018, net income was $26.0 million. Third-quarter 2018 non-GAAP net income was $112.6 million.
Adjusted EBITDA: Third-quarter 2018 adjusted EBITDA was $149.9 million.
Earnings (Loss) per Share: On a GAAP basis in the third quarter of 2018, diluted earnings per share was $0.15; in the third quarter of 2017, diluted loss per share was $0.39. Non-GAAP diluted earnings per share in the third quarter of 2018 and 2017 were $0.65 and $0.26, respectively. Weighted average shares outstanding used for calculating GAAP diluted earnings per share and non-GAAP diluted earnings per share in the third quarter of 2018 were 167.0 million and 172.5 million, respectively.
Third-Quarter Segment Results

Management uses net sales and segment operating income to evaluate the performance of the Company’s two segments. While segment operating income contains certain adjustments to the directly comparable GAAP figures in the Company’s consolidated financial results, it is considered to be prepared in accordance with GAAP for purposes of presenting the Company’s segment operating results.

(1) On June 23, 2017, Horizon Pharma completed the divestiture of a European subsidiary that owned the marketing rights to PROCYSBI and QUINSAIR in Europe, the Middle East and Africa (EMEA) to Chiesi Farmaceutici S.p.A. Horizon Pharma retains marketing rights for the two medicines in the United States, Canada, Latin America and Asia. Year-to-date 2017 net sales of PROCYSBI and QUINSAIR in EMEA were $9.5 million.
Third-quarter 2018 net sales of the orphan and rheumatology segment were $219.9 million, an increase of 25.3 percent over the prior year’s quarter, driven by continued strong KRYSTEXXA growth as well as growth of RAVICTI and PROCYSBI. Third-quarter 2018 orphan and rheumatology segment operating income was $91.5 million, an increase of 39.5 percent.

Third-quarter 2018 net sales of the primary care segment were $105.4 million and operating income was $58.0 million.
Cash Flow Statement and Balance Sheet Highlights

On a GAAP basis in the third quarter of 2018, operating cash flow was $84.9 million. Non-GAAP operating cash flow was $95.6 million.
The Company had cash and cash equivalents of $807.0 million as of Sept. 30, 2018.
As of Sept. 30, 2018, the total principal amount of debt outstanding was $1.993 billion, which consists of $818 million in senior secured term loans due 2024; $300 million senior notes due 2024; $475 million senior notes due 2023 and $400 million exchangeable senior notes due 2022. As of Sept. 30, 2018, net debt was $1.186 billion.
Full-Year 2018 Guidance

The Company confirmed its full-year 2018 net sales guidance of $1.170 billion to $1.200 billion and continues to project full-year 2018 net sales growth for KRYSTEXXA of more than 65 percent. The Company increased its full-year 2018 adjusted EBITDA guidance range to $420 million to $430 million, from $400 million to $420 million.

Webcast

At 8 a.m. EST / 1 p.m. IST today, the Company will host a live webcast to review its financial and operating results and provide a general business update. The live webcast and a replay may be accessed at View Source Please connect to the Company’s website at least 15 minutes prior to the live webcast to ensure adequate time for any software download that may be needed to access the webcast. A replay of the webcast will be available approximately two hours after the live webcast.

On November 7, 2018 Sierra Oncology, Inc. (Nasdaq: SRRA), a clinical stage drug development company focused on advancing targeted therapeutics for the treatment of patients with significant unmet needs in hematology and oncology, reported that Dr. Nick Glover, President and Chief Executive Officer, will present an overview of the company entitled "Targeted Therapeutics for Hematology & Oncology" at the Jefferies 2018 London Healthcare Conference in London, United Kingdom (Press release, Sierra Oncology, NOV 7, 2018, View Source [SID1234530842]). The presentation is scheduled for 5:20 p.m. Greenwich Mean Time (GMT) on Wednesday, November 14. A live audio webcast and archive of the presentation will be accessible through www.sierraoncology.com.

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On November 7, 2018 Mirati Therapeutics, Inc. (NASDAQ: MRTX), a clinical stage targeted oncology company, reported that it will present at the 27th Annual Credit Suisse Healthcare Conference in Scottsdale, Arizona on Wednesday, November 14th at 1:40 p.m. MST/ 12:40 p.m. PST. Charles M. Baum, M.D., Ph.D., President and Chief Executive Officer will present a corporate overview at the conference (Press release, Mirati, NOV 7, 2018, View Source [SID1234530832]).

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The presentation will be webcast and made available through the "Investors" section of www.mirati.com, and replays will be made available for 90 days following the events.

On November 7, 2018 Arbutus Biopharma Corporation (Nasdaq: ABUS), an industry-leading Hepatitis B Virus (HBV) therapeutic solutions company, reported its 2018 third quarter financial results and provides a corporate update (Press release, Arbutus Biopharma, NOV 7, 2018, View Source [SID1234530831]).

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"Arbutus is committed to developing a cure for chronic Hepatitis B by employing a combination of therapeutic agents, acting in concert," said Dr. Mark J Murray, President and Chief Executive Officer of Arbutus. "We are currently focused on the combination AB-506, our second-generation capsid inhibitor designed to block HBV DNA replication and AB-729, our second-generation RNAi agent designed to reduce HBsAg."

Dr. Murray added, "We believe a combination of these two agents, with their distinct antiviral mechanisms, combined with an approved nucleoside, has the potential to offer HBV patients a more effective, durable and finite treatment regimen."

Recent Updates and Upcoming Clinical Milestones

Phase 1a/1b clinical trial of AB-506, Arbutus’ second generation oral capsid inhibitor, successfully progressed through healthy volunteers into the 28 day HBV patient phase. Top-line results of the phase 1a/1b clinical trial are expected in the second quarter of 2019. AB-506 is designed to inhibit HBV DNA replication with a mode of action complementary to nucleoside analogues. AB-506 is also designed to inhibit the formation of new cccDNA, the viral structure which resides in the cell nucleus.

The company is actively developing orally delivered RNA-destabilizers that have shown compelling anti-viral effects in multiple preclinical models. Based on recent nonclinical safety findings with our lead RNA-destabilizer, AB-452, we have delayed the planned initiation of a Phase 1a/1b clinical trial to devote additional time to further characterize the compound before potentially initiating clinical trials. While further characterizing these recent AB-452 observations, we are advancing backup compounds.

Arbutus is developing a second-generation RNAi agent, AB-729, a subcutaneously-administered GalNAc conjugate, targeting HBV replication and HBsAg antigen production. In preclinical models AB-729 exhibits potent and durable reductions in HBsAg. This agent is expected to enter clinical trials in Q2 2019 and may subsequently be combined with AB-506.

ARB-1467, one of our early LNP delivered, intravenous administered, RNAi agents targeting HBV, is currently in a 30-week trial in HBV patients, in combination with tenofovir and PEG-IFN. To date, six HBV patients have enrolled and been treated. Two of these patients have met the predetermined criteria to proceed into the PEG-IFN treatment phase of the trial. The results from this proof-of-concept trial suggest that this regimen has the potential to drive HBsAg levels to undetectable in some patients thus confirming our hypothesis that a combination of multiple mechanisms will be required to improve clinical outcomes for HBV patients. While the trial remains open to enrollment, the Company does not plan to advance this program beyond this trial. We intend to present results from this trial in a future scientific meeting.

Dr. Gaston Picchio, formerly Janssen’s Infectious Diseases & Vaccines VP Hepatitis Disease Area Leader, has joined as Arbutus’ Chief Development Officer and adds antiviral drug development expertise.

James Meyers and Myrtle Potter were appointed to the Arbutus Board of Directors, replacing Herbert Conrad and Dr. William Symonds. Dr. Symonds remains with Arbutus as Chairman of its Clinical Advisory Board.
ONPATTRO Royalty Entitlement

ONPATTRO is an RNAi therapeutic that has been developed for the treatment of hereditary ATTR (hATTR) amyloidosis, and has been approved by the FDA and the EMA. Arbutus has a royalty entitlement on global sales of ONPATTRO for the LNP technology licensed by Arbutus to Alnylam for this product.

Financial Results

Cash, Cash Equivalents and Investments

As of September 30, 2018, Arbutus had cash, cash equivalents and short-term investments totaling $142.0 million, as compared to $139.0 million in cash and cash equivalents, short-term investments, and restricted investments at December 31, 2017. The increased cash balance was the result of $66.4 million of gross proceeds received in Q1 2018 from the second tranche of Series A participating convertible preferred shares ("Preferred Shares") issued to Roivant, offset by the repayment of a $12.6 million promissory note to Wells Fargo and cash used in operations.

Net Loss

For Q3 2018, net loss attributable to common shares was $27.0 million ($0.49 basic and diluted loss per common share) as compared to $11.6 million ($0.21 basic and diluted loss per common share) for Q3 2017. The Company recorded a non-cash expense for the impairment of intangible assets of $14.8 million ($10.5 million net of tax benefit) in Q3 2018 for the indefinite deferral of further development of its AB-423 program, due to the successful progression of its AB-506 program.

Revenue

Revenue was $1.6 million in Q3 2018 as compared to $6.9 million in Q3 2017.

In October 2017, Arbutus entered into a license agreement with Gritstone that entitles Gritstone to research, develop, manufacture and commercialize products with the Company’s LNP technology in exchange for an upfront license payment and potential future milestone and royalty payments. In April 2018, as part of the license agreement for Arbutus’ delivery technologies, Genevant gained the right to receive 50% of future revenues from Gritstone. As Genevant is now the principal provider of services to Gritstone, the Company is now recording revenues from Gritstone on a net basis. Arbutus received a milestone payment from Gritstone of $2.5 million, of which Arbutus recorded its share, $1.25 million, as revenue in Q3 of 2018.

The $6.9 million in revenue in Q3 2017 was primarily related to the release of deferred revenue from an Alexion up-front payment. Upon review of its portfolio in July 2017, Alexion decided to discontinue development of mRNA therapeutics and therefore the LNP license with Arbutus.

Research, Development, Collaborations and Contracts Expenses

Research, development, collaborations and contracts expenses increased to $16.6 million in Q3 2018 from $15.5 million in Q3 2017. Program R&D expenses have increased as Arbutus’ pipeline expands and advances into the clinic. In the first half of 2018 the Company initiated a Phase I clinical trial in healthy volunteers for AB-506 (capsid inhibitor) and has progressed this trial into HBV patients in Q4 2018. Given the progression of AB-506, the Company decided to indefinitely defer additional clinical evaluation of AB-423 in favor of focusing on the next generation capsid agent. In Q3 2018, Arbutus continued to incur costs related to its clinical programs including IND/CTA-enabling work and CTA regulatory filings for AB-452 (HBV RNA Destabilizer), pre-IND/CTA work on AB-729 (GalNAc-RNAi), as well as the ongoing clinical trial of ARB-1467 in combination with nucs and interferon. In addition, Arbutus continues to incur research costs related to discovery and pre-clinical programs.

General and Administrative

General and administrative expenses were $2.6 million in Q3 2018, as compared to $3.7 million in Q3 2017. General and administrative expenses decreased in Q3 2018 compared to Q3 2017 due primarily to a decrease in non-cash compensation expense related to the expiry in Q3 2017 of repurchase rights connected with certain common shares issued as part of the total consideration for the acquisition of Arbutus Inc.

Decrease in fair value of contingent consideration

Contingent consideration is a liability assumed by the Company from its acquisition of Enantigen in October 2014. Under the stock purchase agreement, Arbutus Inc. agreed to pay certain amounts to Enantigen’s selling stockholders upon the achievement of certain triggering events related to Enantigen’s two programs in pre-clinical development related to HBV therapies. In Q3 2018 the Company recorded a non-cash decrease in this contingent consideration of $5.8 million. This was primarily due to the Company’s decision to indefinitely defer clinical development of AB-423 thereby reducing the probability of achieving future development milestones, as well as a recalibration in the expected timing of future sales milestones, resulting in a reduction in the estimated fair value of the liability.

Equity investment loss

On April 11, 2018, the Company entered into an agreement with Roivant Sciences ("Roivant") to launch Genevant Sciences ("Genevant"), a jointly-owned company focused on the discovery, development, and commercialization of a broad range of RNA-based therapeutics enabled by Arbutus’ proprietary lipid nanoparticle ("LNP") and ligand conjugate delivery technologies. The Company determined that since the agreement stipulates that significant decisions relating to the management of Genevant must be shared between the Principal Shareholders (being the Company and Roivant), the Company does not control Genevant but does exercise significant influence over it and, will therefore, account for its investment in Genevant using the equity method. On April 11, 2018, the Company and Roivant each received a 50% ownership interest in Genevant. As a result of the subsequent investment in Genevant completed in June 2018 by Roivant and other parties, the Company owned approximately 40% of the common equity of Genevant as of September 30, 2018.

The Company’s proportionate share of the Genevant’s loss was $2.8 million in Q3 2018. Financial results of Genevant are recorded on a one-quarter lag basis.

Outstanding Shares

The Company had 55.5 million common shares issued and outstanding at September 30, 2018. In addition, the Company had 6.7 million options outstanding and 1.164 million Series A participating convertible preferred shares outstanding, which (including the annual 8.75% coupon) will be mandatorily convertible into 22.6 million common shares on October 18, 2021. Assuming the outstanding options and convertible preferred shares were fully converted, the Company would have had 84.8 million common shares outstanding at September 30, 2018.

Conference Call Today

Arbutus will hold a conference call and webcast today, Wednesday, November 7, 2018 at 4:30 PM Eastern Time (1:30 PM Pacific Time) to provide a corporate update. You can access a live webcast of the call through the Investors section of Arbutus’ website at www.arbutusbio.com. Alternatively, you can dial 1-866-393-1607 or 1-914-495-8556 and reference conference ID 2628189.

An archived webcast will be available on the Arbutus website after the event. Alternatively, you may access a replay of the conference call by calling 1-855-859-2056 or 1-404-537-3406, and reference conference ID 2628189.

On November 7, 2018 Sysmex Corporation reported that actual financial results during the six months ended September 30, 2018, differed in some respects from the forecast announced on May 9, 2018 (Press release, Sysmex, NOV 7, 2018, View Source [SID1234530822]). In addition, Sysmex
has revised its financial forecast for the full fiscal year ending March 31, 2019. These differences are described below.

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1. Differences between Actual and Forecast of Consolidated Financial Results for the Six Months Ended September 30, 2018 (April 1, 2018 to September 30, 2018)

Reasons for the Differences and Revision
On the consolidated sales front, in the first six months of the fiscal year ending March 31, 2019, sales in the Japan and EMEA regions were lower than previously forecast. As for profit, we worked to curtail selling, general and administrative expenses, but these reductions were unable to overcome the impact on profits of lower-than-expected sales. In addition, we recorded an exchange loss. As a result, operating profit, profit before tax and profit attributable to owners of the parent were lower than previously forecast.

Consequently, we have revised downward our forecast for the full fiscal year ending March 31, 2019, as we now expect sales, operating profit, profit before tax and profit attributable to owners of the parent to be below our previously forecast figures.

The foreign exchange assumptions used for calculating financial forecasts from the third quarter onward remain unchanged from our initial assumptions, at US$1.00 = ¥110 and €1 = ¥130.