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Celgene Reports Second Quarter 2019 Operating and Financial Results

On July 30, 2019 Celgene Corporation (NASDAQ: CELG) reported second quarter 2019 total revenue of $4,400 million, a 15 percent increase compared to $3,814 million in the second quarter of 2018 (Press release, Celgene, JUL 30, 2019, View Source [SID1234537885]).

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Based on U.S. GAAP (Generally Accepted Accounting Principles), Celgene reported net income of $1,571 million and diluted earnings per share (EPS) of $2.16 for the second quarter of 2019. For the second quarter of 2018, GAAP net income was $1,045 million and diluted EPS was $1.43.

Adjusted net income for the second quarter of 2019 increased 31 percent to $2,079 million compared to $1,585 million in the second quarter of 2018. For the same period, adjusted diluted EPS increased 32 percent to $2.86 from $2.16.

"Outstanding operating performance in the second quarter supports raising our full-year financial guidance," said Mark J. Alles, Chairman and Chief Executive Officer of Celgene Corporation. "In parallel, we achieved multiple regulatory and clinical milestones expected to generate even more business momentum into the close of our transaction with Bristol-Myers Squibb."

Second Quarter 2019 Financial Highlights

Unless otherwise stated, all comparisons are for the second quarter of 2019 compared to the second quarter of 2018. The adjusted operating expense categories presented below exclude share-based employee compensation expense and collaboration-related upfront expense. Please see the attached Use of Non-GAAP Financial Measures and Reconciliation of GAAP to Adjusted Net Income for further information relevant to the interpretation of adjusted financial measures and reconciliations of these adjusted financial measures to the most comparable GAAP measures, respectively.

Net Product Sales Performance

REVLIMID sales for the second quarter were $2,732 million, an increase of 11 percent year-over-year. U.S. sales were $1,810 million and international sales were $922 million, an increase of 14 percent and 6 percent year-over-year, respectively. REVLIMID sales growth was driven primarily by the adoption of triplet therapy for myeloma resulting in increases in treatment duration and market share.
POMALYST/IMNOVID sales for the second quarter were $619 million, an increase of 22 percent year-over-year. U.S. sales were $447 million and international sales were $172 million, an increase of 31 percent and 4 percent year-over-year, respectively. POMALYST/IMNOVID sales growth was driven primarily by the adoption of triplet therapy for myeloma resulting in increases in treatment duration and market share.
OTEZLA sales for the second quarter were $493 million, an increase of 31 percent year-over-year. U.S. sales were $399 million and international sales were $94 million, an increase of 37 percent and 12 percent year-over-year, respectively. OTEZLA sales growth in the U.S. was driven by increase in demand and customer buying patterns, while international sales were driven by continued expansion in key markets.
ABRAXANE sales for the second quarter were $316 million, an increase of 30 percent year-over-year. U.S. sales were $207 million and international sales were $109 million, an increase of 36 percent and 20 percent year-over-year, respectively. ABRAXANE sales growth was driven primarily by increased demand due to immuno-oncology (IO) combinations in non-small cell lung cancer (NSCLC) and triple-negative breast cancer (TNBC).
In the secondquarter, all other product sales, which include IDHIFA, THALOMID, ISTODAX, VIDAZA and an authorized generic version of VIDAZA drug product primarily sold in the U.S., were $239 million compared to $230 million in the second quarter of 2018.
Research and Development (R&D)

On a GAAP basis, R&D expenses were $1,100 million for the second quarter of 2019 compared to $1,251 million for the same period in 2018. Adjusted R&D expenses were $935 million for the second quarter of 2019 compared to $948 million for the second quarter of 2018. The decrease was driven by a reduction in expenses related to certain collaboration arrangements and regulatory submission-related work on multiple programs almost fully offset by increased investments in ongoing late-stage pipeline programs. Additional R&D expenses (only included on a GAAP basis) decreased in 2019, as outlined in the attached Reconciliation of GAAP to Adjusted Net Income.

Selling, General and Administrative (SG&A)

On a GAAP basis, SG&A expenses were $793 million for the second quarter of 2019 compared to $790 million for the same period in 2018. Adjusted SG&A expenses were $693 million for the second quarter of 2019 compared to $672 million for the second quarter of 2018. The increase was driven primarily by increased pre-launch marketing related expenses partially offset by a decrease in expense related to technology investments completed in 2018. Additional SG&A expense (only included on a GAAP basis) decreased in 2019, as outlined in the attached Reconciliation of GAAP to Adjusted Net Income.

Cash, Cash Equivalents, Marketable Debt Securities and Publicly-Traded Equity Securities

Operating cash flow was $2.2 billion in the second quarter of 2019, compared to $1.2 billion for the second quarter of 2018. Celgene ended the quarter with approximately $9.3 billion in cash, cash equivalents, marketable debt securities and publicly-traded equity securities.

2019 Total Revenue Guidance Raised; Reaffirming 2020 Outlook*

Full-Year 2019 Total Revenue increase driven by POMALYST and ABRAXANE performance
Full-Year 2019 Adjusted Operating Margin and Adjusted Diluted EPS includes potential collaboration-related expenses of approximately $160 million that may be incurred in the second half of 2019
Diluted shares outstanding reflects no planned share repurchases in 2019

* Company reaffirms 2020 outlook: Total revenue of $19.0-$20.0 billion and adjusted diluted EPS of >$12.50 on a standalone basis. Due to pending Bristol-Myers Squibb transaction, Celgene does not anticipate providing any additional updates on our 2020 outlook going forward.

Portfolio Updates

In July, Celgene announced that the U.S. Food and Drug Administration (FDA) approved OTEZLA for the treatment of adult patients with oral ulcers associated with Behçet’s Disease. The approval was based on efficacy and safety results from the phase III RELIEF trial evaluating OTEZLA in adult patients with Behçet’sDisease with active oral ulcers who were previously treated with at least one nonbiologic medication and were candidates for systemic therapy.
In June, Celgene announced that the U.S. FDA accepted the New Drug Application (NDA) for ozanimod for the treatment of patients with relapsing forms of multiple sclerosis (RMS) and set a Prescription Drug User Fee Act (PDUFA) date of March 25, 2020. In addition, the European Medicines Agency (EMA) accepted for review the Marketing Authorization Application (MAA) for ozanimod in relapsing-remitting multiple sclerosis (RRMS). A regulatory decision from the EMA is expected in the first half of 2020. Both applications are based primarily on data from the phase III SUNBEAM and RADIANCE Part B trials evaluating ozanimod in RMS.
In June, Celgene and Acceleron Pharma announced that the U.S. FDA accepted Celgene’s Biologics License Application (BLA) for luspatercept for the treatment of adult patients with very low to intermediate-risk myelodysplastic syndromes (MDS)-associated anemia who have ring sideroblasts and require red blood cell (RBC) transfusions, and for the treatment of adult patients with beta-thalassemia-associated anemia who require RBC transfusions. The FDA granted Priority Review for the evaluation of the beta-thalassemia indication with a PDUFA date of December 4, 2019. The FDA also set a PDUFA date of April 4, 2020 for the MDS indication. In addition, the MAA has been accepted for review by the EMA. The applications are based on data from the pivotal phase III MEDALIST and BELIEVE trials evaluating luspatercept for the treatment of anemia associated with MDS and beta-thalassemia, respectively.
In June, Celgene submitted a supplemental NDA (sNDA) to the U.S. FDA for an OTEZLA label update for the treatment of adult patients with moderate to severe plaque psoriasis to include clinical results from the phase III STYLE study evaluating patients with plaque psoriasis of the scalp.
At the 2019 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting, select data presentations on investigational products included:
First clinical data from the phase I/II trial evaluating CELMoD agent iberdomide (CC-220) in patients with relapsed and/or refractory multiple myeloma (RRMM); The results included encouraging preliminary safety and efficacy data from the ongoing multicenter, open-label, dose-escalation study. A pivotal trial with iberdomide is being planned;
Updated data, including minimal residual disease (MRD), from the ongoing phase I/II TRANSCEND CLL-004 trial evaluating liso-cel in a heavily pretreated patient population with high-risk chronic lymphocytic leukemia (CLL). In this trial, all patients had been previously treated with ibrutinib, and more than half had received prior venetoclax. The phase II pivotal trial with liso-cel in patients with relapsed and/or refractory CLL is ongoing; and,
Updated analysis of data from the phase II JAKARTA2 trial reporting clinically meaningful response rates with fedratinib in patients with myelofibrosis previously treated with ruxolitinib, which utilized a more stringent definition of patients relapsed, refractory, or intolerant to ruxolitinib. The U.S. FDA granted Priority Review designation for the NDA for fedratinib in patients with myelofibrosis with a PDUFA date of September 3, 2019.
In May, Celgene announced that the U.S. FDA approved REVLIMID in combination with a rituximab product (R²) for the treatment of adult patients with previously treated follicular lymphoma or marginal zone lymphoma. The approval was based on data from the phase III AUGMENT trial.
In May, Celgene announced that the European Commission (EC) approved REVLIMID in combination with bortezomib and dexamethasone (RVd) in adult patients with previously untreated multiple myeloma who are not eligible for transplant. The approval for the REVLIMID triplet (RVd) was supported by data from the phase III SWOG S0777 trial. In addition, Celgene announced that the EC approved pomalidomide (POMALYST/IMNOVID) in combination with bortezomib and dexamethasone (PVd) in adult patients with multiple myeloma who have received at least one prior treatment regimen including lenalidomide. The approval of the pomalidomide (POMALYST/IMNOVID) triplet (PVd) was supported by data from the phase III OPTIMISMM trial. Results from the OPTIMISMM trial were recently published in The Lancet Oncology.
In May, Celgene announced that the U.S. FDA granted Breakthrough Therapy Designation (BTD) for POMALYST for the treatment of patients with human immunodeficiency virus (HIV)-positive Kaposi’s sarcoma who have previously received systemic chemotherapy, as well as patients with HIV‐negative Kaposi’s sarcoma. The BTD was granted by the FDA based on data from a clinical trial performed under a Cooperative Research and Development Agreement (CRADA). Celgene plans to submit an sNDA for POMALYST in this disease area by the end of 2019.
In May, Celgene and bluebird bio announced that the New England Journal of Medicine (NEJM) published interim results from CRB-401, the ongoing phase I trial evaluating investigational product ide-cel (bb2121) in patients with RRMM. The manuscript, "Anti-BCMA CAR T Cell Therapy bb2121 in Relapsed/Refractory Multiple Myeloma", published in NEJM includes key safety and efficacy results from the dose escalation and first expansion cohort, including a minimum of six months follow up on all subjects. The BLA submission for ide-cel is expected in the first half of 2020.
Transaction Update

On July 29, 2019, Bristol-Myers Squibb Company (NYSE: BMY) announced that the EC has granted unconditional approval of Bristol-Myers Squibb’s pending acquisition of Celgene. In June, Bristol-Myers Squibb announced the planned divestiture of OTEZLA (apremilast) in light of concerns raised by the U.S. Federal Trade Commission ("FTC").The divestiture would be conditioned upon the closing of the pending transaction between Bristol-Myers Squibb and Celgene. Subject to the satisfaction of customary closing conditions and receipt of regulatory approvals, Bristol-Myers Squibb and Celgene intend to close the pending transaction at the earliest possible date, which the parties currently expect to be at the end of 2019 or the beginning of 2020.

Second Quarter 2019 Earnings Information

Due to the pending transaction with Bristol-Myers Squibb, Celgene is not hosting a conference call in conjunction with its second-quarter 2019 earnings release and does not expect to do so for future quarters. Please direct any questions regarding this press release to Celgene Investor Relations or Celgene Communications.

Astellas Submits Supplemental New Drug Application for Approval of Additional Indication of XTANDI® for the Treatment of Men with Metastatic Hormone-Sensitive Prostate Cancer in Japan

On July 30, 2019 Astellas Pharma Inc. (TSE: 4503, President and CEO: Kenji Yasukawa, Ph.D., "Astellas" ) reported that it has submitted a supplemental new drug application for the oral androgen receptor signaling inhibitor XTANDI (generic name: enzalutamide, "XTANDI") to add the indication for the treatment of men with metastatic hormone-sensitive prostate cancer (mHSPC) in Japan (Press release, Astellas, JUL 30, 2019, View Source [SID1234537884]). XTANDI is currently indicated for the treatment of men castration-resistant prostate cancer (CRPC) in Japan.

The submission is based on results from the Phase 3 ARCHES trial presented at the 2019 Genitourinary Cancers Symposium (ASCO GU) in February and published in The Journal of Clinical Oncology. The study evaluated the efficacy and safety of XTANDI plus androgen deprivation therapy (ADT) versus ADT plus placebo in men with mHSPC. The primary endpoint of radiographic progression-free survival (rPFS) was met in the study.

Additionally, the submission is supported by data from ENZAMET, an Astellas-supported, investigator-sponsored Phase 3 research study led by the Australian and New Zealand Urogenital and Prostate Cancer Trials Group (ANZUP) and sponsored by the University of Sydney. The ENZAMET trial evaluated XTANDI plus ADT versus ADT plus a standard nonsteroidal antiandrogen therapy (bicalutamide, nilutamide or flutamide) in men with mHSPC to provide an active control. The results were presented during the Plenary Session at the 2019 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting in June and simultaneously published in the New England Journal of Medicine. The primary endpoint of overall survival (OS) was met in the ENZAMET trial. The safety analysis of the ARCHES and ENZAMET trials appear consistent with the safety profile of enzalutamide in previous clinical trials in CRPC.

Enzalutamide is currently indicated for the treatment of CRPC in the U.S. and Europe. Data from the ARCHES and ENZAMET studies have also been submitted to the European Medicines Agency (EMA) and to the U.S. Food & Drug Administration (FDA) to potentially support an indication for XTANDI that includes men with mHSPC.

AMGEN REPORTS SECOND QUARTER 2019 FINANCIAL RESULTS

On July 30, 2019 Amgen (NASDAQ:AMGN) reported financial results for the second quarter of 2019 (Press release, Amgen, JUL 30, 2019, View Source [SID1234537883]). Key results include:

Total revenues decreased 3% to $5.9 billion in comparison to the second quarter of 2018 reflecting increasing competition due to patent expirations.

Product sales declined 2% globally. Prolia (denosumab), Repatha (evolocumab), Parsabiv (etelcalcitide) and Aimovig (erenumab-aooe) units grew double-digits or better.

GAAP earnings per share (EPS) increased 3% to $3.57 benefited by lower weighted-average shares outstanding.

GAAP operating income decreased 5% to $2.7 billion and GAAP operating margin decreased 1.9 percentage points to 48.0%.

Non-GAAP EPS increased 4% to $3.97 benefited by lower weighted-average shares outstanding.

Non-GAAP operating income decreased 5% to $3.0 billion and non-GAAP operating margin decreased 1.8 percentage points to 53.3%.

The Company generated $1.3 billion of free cash flow in the second quarter versus $1.9 billion in the second quarter of 2018 driven primarily by an advanced tax deposit payment.

2019 total revenues guidance revised to $22.4-$22.9 billion; EPS guidance to $12.10-$12.71 on a GAAP basis and $13.75-$14.30 on a non-GAAP basis

Product Sales Performance

Total product sales decreased 2% for the second quarter of 2019 versus the second quarter of 2018.

Prolia sales increased 14% driven by higher unit demand.

EVENITY (romosozumab-aqqg) generated $28 million of sales in the second quarter of 2019.

Repatha sales increased 3% driven by higher unit demand, offset partially by net selling price.

Aimovig was launched in the U.S. in the second quarter of 2018 and generated $83 million in sales in the second quarter of 2019.

Parsabiv sales increased 130% driven by higher unit demand, offset partially by net selling price.

KYPROLIS (carfilzomib) sales increased 2% driven by higher unit demand.

XGEVA (denosumab) sales increased 10% driven primarily by higher unit demand.

Vectibix (panitumumab) sales increased 13% driven by higher unit demand.

Nplate (romiplostim) sales increased 12% driven by higher unit demand.

BLINCYTO (blinatumomab) sales increased 30% driven by higher unit demand.

Biosimilar sales generated $82 million in the second quarter of 2019.

Enbrel (etanercept) sales increased 5% driven primarily by net selling price and favorable changes in inventory levels, offset partially by lower unit demand.

Neulasta (pegfilgrastim) sales decreased 25% driven by lower net selling price and the impact of biosimilar competition on unit demand.

NEUPOGEN (filgrastim) sales decreased 26% driven primarily by the impact of competition on unit demand and lower net selling price, offset partially by favorable changes in accounting estimates of sales deductions.

EPOGEN (epoetin alfa) sales decreased 11% driven by lower net selling price.

Aranesp (darbepoetin alfa) sales decreased 8% driven by the impact of competition on unit demand.

Sensipar/Mimpara (cinacalcet) sales decreased 71% driven by the impact of generic competition on unit demand.

Operating Expense, Operating Margin and Tax Rate Analysis
On a GAAP basis:

Total Operating Expenses decreased 1%. Cost of Sales margin increased 0.2 percentage points due primarily to product mix, offset partially by the benefit of Hurricane Maria insurance proceeds and lower manufacturing costs. Research & Development (R&D) expenses increased 6% driven primarily by increased spending in research and early pipeline in support of our oncology programs, offset partially by decreased spending in support of marketed products. Selling, General & Administrative (SG&A) expenses decreased 7% driven primarily by reduced discretionary general and administrative expenses and the end of certain acquisition-related intangible asset amortization charges in 2018.

Operating Margin decreased 1.9 percentage points to 48.0%.

Tax Rate increased 1.7 percentage points due primarily to a prior-year tax benefit associated with intercompany sales under U.S. corporate tax reform.

AMGEN REPORTS SECOND QUARTER 2019 FINANCIAL RESULTS
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On a non-GAAP basis:

Total Operating Expenses decreased 1%. Cost of Sales margin increased 0.1 percentage points due primarily to product mix, offset partially by the benefit of Hurricane Maria insurance proceeds and lower manufacturing costs. R&D expenses increased 7% driven primarily by increased spending in research and early pipeline in support of our oncology programs, offset partially by decreased spending in support of marketed products. Selling, General & Administrative (SG&A) expenses decreased 6% driven primarily by reduced discretionary general and administrative expenses.

Operating Margin decreased 1.8 percentage points to 53.3%.

Tax Rate increased 1.1 percentage points due primarily to a prior-year tax benefit associated with intercompany sales under U.S. corporate tax reform.

Cash Flow and Balance Sheet

The Company generated $1.3 billion of free cash flow in the second quarter of 2019 versus $1.9 billion in the second quarter of 2018 driven primarily by an advanced tax deposit payment.

The Company’s second quarter 2019 dividend of $1.45 per share was declared on March 7, 2019, and was paid on June 7, 2019, to all stockholders of record as of May 17, 2019, representing a 10% increase from 2018.

During the second quarter, the Company repurchased 13.1 million shares of common stock at a total cost of $2.3 billion. At the end of the second quarter, the Company had $4.7 billion remaining under its stock repurchase authorization

al revenues in the range of $22.4 billion to $22.9 billion.

Previously, the Company expected total revenues in the range of $22.0 billion to $22.9 billion.

On a GAAP basis, EPS in the range of $12.10 to $12.71 and a tax rate in the range of 13% to 14%.

Previously, the Company expected GAAP EPS in the range of $11.68 to $12.73 and a tax rate in the range of 13% to 14%.

On a non-GAAP basis, EPS in the range of $13.75 to $14.30 and a tax rate in the range of 14% to 15%.

Previously, the Company expected non-GAAP EPS in the range of $13.25 to $14.30 and a tax rate in the range of 14% to 15%.

Capital expenditures to be approximately $700 million.
Second Quarter Product and Pipeline Update
The Company provided the following updates on selected product and pipeline programs:
Research

In June, Intermountain Healthcare and deCODE genetics, a wholly-owned subsidiary of Amgen based in Iceland, announced a global collaboration that combines Intermountain’s internationally-recognized expertise in precision medicine and clinical care with deCODE’s world-class expertise in human population genetics and will involve the participation of up to half a million individuals.

In July, the Company completed the acquisition of Nuevolution, and is rapidly integrating its world-class DNA-encoded library and other technologies.
Omecamtiv mecarbil

In July, the Phase 3 GALACTIC-HF cardiovascular outcomes clinical trial completed enrollment.

ny discussed long-term efficacy and safety data recently presented at the meetings of the American Academy of Neurology and American Headache Society.

AMG 510

The Company provided a clinical update, including tumor responses in colorectal and appendiceal cancer patients, completion of enrollment in the dose expansion arm and enrollment initiation in the checkpoint inhibitor combination arm of the first-in-human study. Initiation of a potentially registrational monotherapy study is planned for this year.

ABP 798 (biosimilar rituximab)

Results from a Phase 3 study of ABP 798, a biosimilar candidate to Rituxan (rituximab), in patients with Non-Hodgkin’s lymphoma are expected in Q3 2019.

ABP 710 (biosimilar infliximab)

The Company announced that the U.S. Food and Drug Administration (FDA) has set a Dec. 14, 2019, Biosimilar User Fee Act target action date for the Biologics License Application of ABP 710, a biosimilar candidate to REMICADE (infliximab).

Omecamtiv mecarbil is being developed under a collaboration between Amgen and Cytokinetics, with funding and strategic support from Servier
EVENITY is developed in collaboration with UCB globally, as well as our joint venture partner Astellas in Japan
Aimovig is developed in collaboration with Novartis
Rituxan is a registered trademark of Genentech
REMICADE is a registered trademark of Johnson and Johnson

AMGEN REPORTS SECOND QUARTER 2019 FINANCIAL RESULTS
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Non-GAAP Financial Measures
In this news release, management has presented its operating results for the second quarters of 2019 and 2018, in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on a non-GAAP basis. In addition, management has presented its full year 2019 EPS and tax rate guidance in accordance with GAAP and on a non-GAAP basis. These non-GAAP financial measures are computed by excluding certain items related to acquisitions, restructuring and certain other items from the related GAAP financial measures. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release. Management has also presented Free Cash Flow (FCF), which is a non-GAAP financial measure, for the second quarters of 2019 and 2018. FCF is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP.
The Company believes that its presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. The Company uses certain non-GAAP financial measures to enhance an investor’s overall understanding of the financial performance and prospects for the future of the Company’s ongoing business activities by facilitating comparisons of results of ongoing business operations among current, past and future periods. The Company believes that FCF provides a further measure of the Company’s liquidity.
The Company uses the non-GAAP financial measures set forth in the news release in connection with its own budgeting and financial planning internally to evaluate the performance of the business, including to allocate resources and to evaluate results relative to incentive compensation targets. The non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

NewLink Genetics Provides Corporate Update and Reports Second Quarter 2019 Financial Results

On July 30, 2019 NewLink Genetics Corporation (NASDAQ:NLNK) ("NewLink Genetics" or the "Company") reported financial results for the second quarter ended June 30, 2019 and provided an update on clinical and corporate developments, including a transition of management (Press release, NewLink Genetics, JUL 30, 2019, View Source [SID1234537880]). Charles J. Link, Jr, M.D. has chosen to retire from his posts as Chairman, Chief Executive Officer and Chief Scientific Officer, and has also resigned from the Board, effective August 3, 2019. Dr. Link cofounded NewLink Genetics in 1999 and served as the Company’s Chief Scientific Officer until his additional appointment to CEO and Chairman in 2003.

NewLink Genetics’ Board of Directors has established an Office of the CEO. Effective August 3rd, members of the Office of the CEO will lead the company to advance its strategic goals. The Board of Directors has elected Carl Langren, Chief Financial Officer; Eugene Kennedy, M.D., Chief Medical Officer; Brad Powers, General Counsel; and Lori Lawley, Vice President, Finance and Controller to the Office of the CEO. Reporting to the Board of Directors, the members of the Office of the CEO have been given full executive authority and will oversee the execution of the Company’s operations and strategic initiatives.

"I am grateful and deeply honored to have had the opportunity to lead NewLink Genetics and work alongside some incredibly talented people on projects dedicated to patients with great unmet medical need," said Charles J. Link Jr, M.D. "I have confidence that the company and its leadership have the resources to move forward and succeed and I look forward to watching the company’s progress. I plan to enjoy spending more time with my family as well."

"NewLink Genetics is grateful to our co-founder, Charles Link, for his 20 years of service in building the Company," said Thomas A. Raffin, M.D., Lead Independent Director of NewLink Genetics. "The Board of Directors and Company are thankful to Chuck for his many contributions and for fostering our mission of improving the lives of patients and their families. Moving forward, we are fully confident that the leadership team in the Office of the CEO is positioned to advance the Company’s goals following Chuck’s retirement."

NewLink Genetics ended the second quarter with $105.4 million in cash. The Company continues to evaluate potential acquisition, in-licensing, or other opportunities to broaden its pipeline, assist patients, and create value for shareholders.

Clinical Update

The Company presented updated data from a Phase 1 dose-escalation study of NLG802, a prodrug of indoximod, at the Immuno-Oncology 2019 2nd World Congress in Barcelona, Spain, May 23-24, 2019.

Updated results from the cohort of patients with DIPG in the efficacy portion of a Phase 1b study of indoximod for the treatment of pediatric patients with recurrent malignant brain tumors are anticipated later in 2019.

In reference to NewLink Genetics’ partnered Ebola vaccine candidate, Merck recently announced that the licensing application for this vaccine, V920 (rVSV∆G-ZEBOV-GP), is under review at the FDA, the European Medicines Agency (EMA), the World Health Organization (WHO), and African countries. Should this vaccine be approved by the FDA, a Priority Review Voucher (PRV) would be issued, in which NewLink Genetics owns a substantial financial interest.

Financial Results for the Three-Month Period Ended June 30, 2019

Cash Position: NewLink Genetics ended the quarter on June 30, 2019, with cash and cash equivalents totaling $105.4 million compared to $120.7 million on December 31, 2018. The Company projects its cash position is sufficient to fund planned operations through the end of 2021.

R&D Expenses: Research and development expenses for the second quarter of 2019 were $5.2 million, a decrease of $6.9 million from $12.1 million for the same period in 2018. The decrease was primarily due to reductions of $2.4 million in contract research and manufacturing spend, $2.0 million in clinical trial expense, $1.8 million in personnel-related and stock compensation expense, $400,000 in supplies and licensing, and $300,000 in legal and consulting expense.

G&A Expenses: General and administrative expenses in the second quarter of 2019 were $5.6 million, a decrease of $2.3 million from $7.9 million for the same period in 2018. The decrease was due primarily to reductions of $1.9 million in personnel-related and stock compensation expense and $400,000 in supplies.

Net Loss: NewLink Genetics reported a net loss of $(10.1) million or $(0.27) per diluted share for the second quarter of 2019 compared to a net loss of $(17.3) million or $(0.47) per diluted share for the second quarter of 2018.

NewLink Genetics ended the second quarter of 2019 with 37,300,960 shares outstanding.

Lilly Reports Second-Quarter 2019 Financial Results, Raises 2019 EPS Guidance

On July 30, 2019 Eli Lilly and Company (NYSE: LLY) reported financial results for the second quarter of 2019 (Press release, Eli Lilly, JUL 30, 2019, View Source [SID1234537879]).

Certain financial information for 2019 and 2018 is presented on both a reported and a non-GAAP basis. Some numbers in this press release may not add due to rounding. Reported results were prepared in accordance with U.S. generally accepted accounting principles (GAAP), include all revenue and expenses recognized during the periods, and reflect Elanco Animal Health (Elanco) as discontinued operations for all periods presented. Non-GAAP measures reflect adjustments for the items described in the reconciliation tables later in the release, and assume that the disposition of Elanco occurred at the beginning of all periods presented (including the benefit from the reduction in shares of common stock outstanding). The company’s 2019 financial guidance is being provided on both a reported and a non-GAAP basis. The non-GAAP measures are presented to provide additional insights into the underlying trends in the company’s business.

"Lilly’s portfolio of newer medicines reached more patients in the second quarter, allowing the company to grow revenue despite headwinds, including the expiration of the U.S. patent for Cialis," said David A. Ricks, Lilly’s chairman and CEO. "We are continuing to make significant investments in our business to ensure the success of our recent product launches. At the same time, we are expanding investment in our pipeline in order to develop new medicines that have the potential to more effectively treat patients that have diabetes, cancer, autoimmune disorders and other serious conditions."

Key Events Over the Last Three Months

Regulatory

The U.S. Food and Drug Administration (FDA) approved Cyramza as a single agent for the treatment of patients with hepatocellular carcinoma (HCC) who have an alpha-fetoprotein (AFP) of ≥400 ng/mL and have been treated with sorafenib.
The FDA approved Emgality for the treatment of episodic cluster headache in adults.
The FDA approved Baqsimi (glucagon) nasal powder 3 mg for the treatment of severe hypoglycemia in people with diabetes ages four years and above.
The FDA granted Fast Track designation to empagliflozin for the reduction of the risk of cardiovascular death and hospitalization for heart failure in people with chronic heart failure.
Based on an assessment of the totality of subcutaneous tanezumab data and an initial discussion with the FDA during second-quarter 2019, the company and Pfizer have decided to pursue a U.S. regulatory submission for tanezumab in patients with moderate-to-severe osteoarthritis that is expected to be filed with the FDA by the first quarter of 2020, to be followed by potential regulatory filings in the EU and Japan. At this time, regulatory submissions are not planned for tanezumab in patients with moderate-to-severe chronic low back pain. The company and Pfizer intend to maintain an open dialogue with regulatory authorities on potential future regulatory pathways for tanezumab.
Clinical

The company announced that Verzenio demonstrated a statistically significant improvement in overall survival in a Phase 3 clinical trial evaluating Verzenio in combination with fulvestrant for the treatment of women with hormone receptor-positive (HR+), human epidermal growth factor receptor 2-negative (HER2-) advanced or metastatic breast cancer previously treated with endocrine therapy. The results were from a pre-planned interim analysis and are definitive. The company plans to submit these data to regulatory authorities and present the detailed data at an upcoming medical meeting later this year.
The company announced that the clinical trial studying higher investigational doses (3.0 mg and 4.5 mg) of Trulicity met its primary efficacy endpoint of superiority, significantly reducing HbA1c from baseline in people with type 2 diabetes, compared to once-weekly Trulicity 1.5 mg after 36 weeks. The trial also met the secondary efficacy endpoint for superiority on weight reduction. The safety and tolerability profile of the investigational dulaglutide doses was consistent with the known profile of Trulicity 1.5 mg. The clinical trial will continue through 52 weeks to evaluate longer-term safety data and is expected to complete in late 2019. The company plans to submit to regulatory authorities by late 2019 and will share detailed results at a future date.
Business Development/Other Developments

The company announced a license agreement to acquire the exclusive worldwide rights for CNTX-0290 from Centrexion Therapeutics Corporation. CNTX-0290 is a novel, small molecule somatostatin receptor type 4 agonist that is currently being studied in Phase 1 clinical testing as a potential non-opioid treatment for chronic pain conditions.
Second-Quarter Reported Results

In the second quarter of 2019, worldwide revenue was $5.637 billion, an increase of 1 percent compared with the second quarter of 2018. The increase in revenue was driven by a 6 percent increase due to volume, partially offset by a 3 percent decrease due to lower realized prices, and a 2 percent decrease due to the unfavorable impact of foreign exchange rates.

Revenue in the U.S. was essentially flat at $3.253 billion, as increased volume of 5 percent was almost entirely offset by lower realized prices. Increased U.S. volume for key growth products including Trulicity, Taltz, Jardiance, Verzenio, Basaglar, and Emgality, was largely offset by decreased volume for products that have lost exclusivity, including Cialis and Adcirca, as well as the impact from the impending product withdrawal of Lartruvo. U.S. prices were negatively impacted by increased coverage gap funding requirements in Medicare Part D, primarily driven by Trulicity and Humalog.

Revenue outside the U.S. increased 2 percent, to $2.384 billion, driven by increased volume of 9 percent, which was primarily from key growth products, including Trulicity, Olumiant, Taltz, Jardiance, and Verzenio. The increase in revenue due to volume was largely offset by the unfavorable impact of foreign exchange rates and, to a lesser extent, lower realized prices.

Gross margin increased 4 percent, to $4.512 billion, in the second quarter of 2019 compared with the second quarter of 2018. Gross margin as a percent of revenue was 80.0 percent, an increase of 2.1 percentage points compared with the second quarter of 2018. The increase in gross margin percent was primarily due to the favorable effect of foreign exchange rates on international inventories sold, lower intangibles amortization expense and greater manufacturing efficiencies, partially offset by unfavorable product mix and the impact of lower realized prices on revenue.

Operating expenses in the second quarter of 2019, defined as the sum of research and development and marketing, selling, and administrative expenses, increased 8 percent to $2.989 billion compared with the second quarter of 2018. Research and development expenses increased 10 percent to $1.402 billion, or 24.9 percent of revenue, driven by higher development expenses for late-stage assets. Marketing, selling, and administrative expenses increased 7 percent, to $1.586 billion, primarily due to increased marketing expenses to support the recent U.S. launch of Emgality, as well as other key growth products.

In the second quarter of 2019, the company recognized acquired in-process research and development charges of $25.0 million, related to the previously announced business development transaction with Avidity Biosciences, Inc. In the second quarter of 2018, the company recognized acquired in-process research and development charges of $1.624 billion, related to the acquisitions of ARMO BioSciences and AurKa Pharma, as well as a collaboration with Sigilon Therapeutics.

Operating income (loss) in the second quarter of 2019 was income of $1.498 billion, compared to a loss of $4.9 million in the second quarter of 2018. The increase in operating income was primarily driven by lower acquired in-process research and development charges.

Other income (expense) was expense of $32.4 million in the second quarter of 2019, compared with income of $46.6 million in the second quarter of 2018. The decrease in other income was primarily driven by higher net interest expense.

The effective tax rate was 9.5 percent in the second quarter of 2019, reflecting a net discrete tax benefit resulting from the resolution of certain global income tax audits. During the second quarter of 2018, the company incurred $273.3 million of tax expense, despite earning $41.7 million of income before taxes, as a result of the non-deductible acquired in-process research and development charges totaling $1.558 billion related to the acquisitions of ARMO BioSciences and AurKa Pharma.

In the second quarter of 2019, net income and earnings per share were $1.327 billion and $1.44, respectively, compared with a net loss of $259.9 million and loss per share of $0.25 in the second quarter of 2018. The increases in net income and earnings per share in the second quarter of 2019 were primarily driven by lower acquired in-process research and development charges. Earnings per share in the second quarter of 2019 benefited compared to the second quarter of 2018 as a result of the Elanco exchange offer and share repurchases.

Second-Quarter Non-GAAP Measures

On a non-GAAP basis, second-quarter 2019 gross margin increased 2 percent, to $4.563 billion compared with the second quarter of 2018. Gross margin as a percent of revenue was 81.0 percent, an increase of 1.2 percentage points. The increase in gross margin percent was primarily due to the favorable effect of foreign exchange rates on international inventories sold and greater manufacturing efficiencies, partially offset by unfavorable product mix and the impact of lower realized prices on revenue.

Operating income on a non-GAAP basis decreased $122.7 million, or 7 percent, to $1.575 billion in the second quarter of 2019 compared with the second quarter of 2018, due to higher operating expenses, partially offset by higher gross margin.

The effective tax rate on a non-GAAP basis was 10.0 percent in the second quarter of 2019, compared with 16.7 percent in the second quarter of 2018. The lower effective tax rate for the second quarter of 2019 was primarily driven by a net discrete tax benefit resulting from the resolution of certain global income tax audits, as well as timing associated with the impact of U.S. tax reform.

On a non-GAAP basis, in the second quarter of 2019, net income decreased 3 percent, to $1.388 billion, while earnings per share increased 1 percent, to $1.50, compared with $1.431 billion and $1.48, respectively, in the second quarter of 2018. The decrease in net income was driven by lower operating income and, to a lesser extent, lower other income, partially offset by lower tax expense. Earnings per share increased due to a reduction in weighted average shares outstanding resulting from the company’s share repurchase program. Non-GAAP weighted average shares outstanding for both periods have been reduced by the approximately 65 million shares retired in the Elanco exchange offer.

For further detail of non-GAAP measures, see the reconciliation below as well as the Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information table later in this press release.

Numbers may not add due to rounding.

(a) Non-GAAP earnings per share assume that the disposition of Elanco occurred at the beginning of all periods presented and, therefore, exclude the approximately 65.0 million shares of Lilly common stock retired in the Elanco exchange offer.

Year-to-Date Reported Results

For the first six months of 2019, worldwide revenue increased 2 percent, to $10.729 billion, compared with $10.549 billion in the same period in 2018. Reported net income and earnings per share for the first six months of 2019 were $5.569 billion and $5.84, respectively, compared with $957.5 million and $0.92 in the same period of 2018. The increases in net income and earnings per share in the first six months of 2019 were driven primarily by the gain recognized on the disposition of Elanco Animal Health.

Year-to-Date Non-GAAP Measures

For the first six months of 2019, net income and earnings per share, on a non-GAAP basis, were $2.625 billion and $2.83, respectively, compared with $2.721 billion and $2.79 in the same period of 2018.

For further detail of non-GAAP measures, see the reconciliation below as well as the Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information table later in this press release.

Numbers may not add due to rounding.

(a) Humalog includes Insulin Lispro

(b) Jardiance includes Glyxambi and Synjardy

NM – not meaningful; Numbers may not add due to rounding

Trulicity

Second-quarter 2019 worldwide Trulicity revenue was $1.029 billion, an increase of 32 percent compared with the second quarter of 2018. U.S. revenue increased 29 percent, to $792.1 million, driven by increased demand, partially offset by lower realized prices due to higher contracted rebates, increased coverage gap funding requirements in Medicare Part D, and changes in segment mix. Revenue outside the U.S. was $236.4 million, an increase of 41 percent, driven by increased volume, partially offset by the unfavorable impact of foreign exchange rates and, to a lesser extent, lower realized prices.

Humalog

For the second quarter of 2019, worldwide Humalog revenue decreased 12 percent compared with the second quarter of 2018, to $677.6 million. Revenue in the U.S. decreased 15 percent, to $396.1 million, driven by lower realized prices due to higher contracted rebates, increased coverage gap funding requirements in Medicare Part D, and the impact of patient affordability programs, and, to a lesser extent, decreased demand. Revenue outside the U.S. decreased 8 percent, to $281.5 million, driven primarily by the unfavorable impact of foreign exchange rates and, to a lesser extent, decreased volume.

Alimta

For the second quarter of 2019, worldwide Alimta revenue increased 4 percent compared with the second quarter of 2018, to $577.8 million. U.S. revenue increased 21 percent, to $341.7 million, primarily driven by increased demand and, to a lesser extent, the impact of buying patterns. Revenue outside the U.S. decreased 14 percent to $236.1 million, driven by decreased volume resulting from the entry of generic pemetrexed in Germany and, to a lesser extent, the unfavorable impact of foreign exchange rates.

Forteo

For the second quarter of 2019, worldwide Forteo revenue decreased 17 percent compared with the second quarter of 2018, to $360.8 million. U.S. revenue decreased 23 percent, to $172.8 million, driven by decreased demand and, to a lesser extent, lower realized prices. Revenue outside the U.S. decreased 10 percent to $188.0 million, driven by the unfavorable impact of foreign exchange rates and decreased volume.

Humulin

For the second quarter of 2019, worldwide Humulin revenue decreased 7 percent compared with the second quarter of 2018, to $322.6 million. U.S. revenue decreased 8 percent, to $220.1 million, driven by lower realized prices due to higher contracted rebates, changes in segment mix, and increased coverage gap funding in Medicare Part D, partially offset by increased demand. Revenue outside the U.S. decreased 4 percent, to $102.6 million, due to the unfavorable impact of foreign exchange rates and, to a lesser extent, lower realized prices, partially offset by increased volume.

Taltz

For the second quarter of 2019, worldwide Taltz revenue was $353.8 million, an increase of 61 percent compared with the second quarter of 2018. U.S. revenue was $268.1 million, an increase of 54 percent, driven by increased demand. Revenue outside the U.S. was $85.7 million, an increase of 84 percent, primarily driven by increased volume from recent launches, partially offset by the unfavorable impact of foreign exchange rates.

Basaglar

For the second quarter of 2019, Basaglar generated worldwide revenue of $290.7 million, an increase of 44 percent compared with the second quarter of 2018. U.S. revenue was $232.2 million, an increase of 48 percent, driven by higher realized prices and increased demand. Revenue outside the U.S. was $58.6 million, an increase of 29 percent, driven by increased volume, partially offset by the unfavorable impact of foreign exchange rates. Basaglar is part of the company’s alliance with Boehringer Ingelheim, and Lilly reports total sales of Basaglar as revenue, with payments made to Boehringer Ingelheim for its portion of the gross margin reported as cost of sales.

Cialis

For the second quarter of 2019, worldwide Cialis revenue decreased 63 percent compared with the second quarter of 2018, to $200.2 million. U.S. revenue was $35.1 million in the second quarter, a 90 percent decrease compared with the second quarter of 2018, driven by decreased demand due to generic competition. Revenue outside the U.S. decreased 14 percent to $165.1 million, driven by decreased demand due to generic competition, the unfavorable impact of foreign exchange rates and, to a lesser extent, lower realized prices.

Cyramza

For the second quarter of 2019, worldwide Cyramza revenue was $241.8 million, an increase of 11 percent compared with the second quarter of 2018. U.S. revenue was $89.8 million, an increase of 19 percent, primarily driven by increased demand. Revenue outside the U.S. was $152.0 million, an increase of 6 percent, driven by increased volume, partially offset by the unfavorable impact of foreign exchange rates.

Jardiance

The company’s worldwide Jardiance revenue during the second quarter of 2019 was $231.9 million, an increase of 58 percent compared with the second quarter of 2018. U.S. revenue increased 67 percent, to $142.6 million, driven by increased demand. Revenue outside the U.S. was $89.3 million, an increase of 45 percent, driven by increased volume, partially offset by the unfavorable impact of foreign exchange rates. Jardiance is part of the company’s alliance with Boehringer Ingelheim, and Lilly reports as revenue a portion of Jardiance’s gross margin.

Verzenio

For the second quarter of 2019, Verzenio generated worldwide revenue of $133.9 million, an increase of $24.5 million compared with the first quarter of 2019. U.S. revenue was $105.2 million, an increase of $11.7 million compared with the first quarter of 2019, primarily driven by increased demand. Revenue outside the U.S. was $28.7 million, an increase of $12.7 million compared with the first quarter of 2019.

Olumiant

For the second quarter of 2019, Olumiant generated worldwide revenue of $102.4 million. U.S. revenue was $10.7 million. Revenue outside the U.S. was $91.7 million, an increase of $48.7 million compared with the second quarter of 2018, driven by increased demand, partially offset by the unfavorable impact of foreign exchange rates.

Emgality

For the second quarter of 2019, Emgality generated worldwide revenue of $34.3 million, an increase of $20.1 million compared with the first quarter of 2019. U.S. revenue was $33.8 million, an increase of $21.7 million compared with the first quarter of 2019. Emgality launched in certain international markets in the first quarter of 2019 and generated revenue outside of the U.S. of $0.5 million in the second quarter of 2019.

2019 Financial Guidance

The company has updated certain elements of its 2019 financial guidance. On a reported basis, earnings per share for 2019 are now expected to be in the range of $8.58 to $8.68. On a non-GAAP basis, earnings per share are now expected to be in the range of $5.67 to $5.77.

Following the disposition of the company’s remaining ownership in Elanco Animal Health, Elanco’s financial results were no longer included in Lilly’s financial results beginning March 12, 2019. On a reported basis, the 2019 financial guidance outlined below includes the financial results of the Elanco business from January 1, 2019 to March 11, 2019 as discontinued operations, including the gain on the disposition of Elanco. The company’s 2019 non-GAAP financial guidance excludes the discontinued operations results for Elanco.

The company still anticipates 2019 revenue between $22.0 billion and $22.5 billion. Revenue growth is expected to be driven by volume from key growth products including Trulicity, Taltz, Basaglar, Jardiance, Verzenio, Cyramza and Olumiant. Revenue growth is also expected to benefit from the recent launch of Emgality and could benefit from the potential approval and launch of other medicines in 2019. Revenue growth is expected to be partially offset by lower revenue for Cialis and other products that have lost patent exclusivity. Revenue growth is also expected to be partially offset by the negative impact of foreign exchange rates, continued low- to mid-single digit realized price declines in the U.S. driven primarily by rebates and legislated increases to Medicare Part D cost sharing, patient affordability programs, price declines in some international markets and the impact of the impending product withdrawal of Lartruvo.

Gross margin as a percent of revenue rate is still expected to be approximately 79.0 percent on a reported basis and approximately 80.0 percent on a non-GAAP basis.

Non-GAAP adjustments are consistent with the earnings per share table above.

Webcast of Conference Call

As previously announced, investors and the general public can access a live webcast of the second-quarter 2019 financial results conference call through a link on Lilly’s website at www.lilly.com. The conference call will begin at 9:00 a.m. Eastern time (ET) today and will be available for replay via the website.

Lilly is a global healthcare leader that unites caring with discovery to create medicines that make life better for people around the world. We were founded more than a century ago by a man committed to creating high-quality medicines that meet real needs, and today we remain true to that mission in all our work. Across the globe, Lilly employees work to discover and bring life-changing medicines to those who need them, improve the understanding and management of disease, and give back to communities through philanthropy and volunteerism. F-LLY

This press release contains management’