on November 6, 2018 Bristol-Myers Squibb Company (NYSE: BMY) reported that the U.S. Food and Drug Administration (FDA) approved Empliciti (elotuzumab) injection for intravenous use in combination with pomalidomide and dexamethasone (EPd) for the treatment of adult patients with multiple myeloma who have received at least two prior therapies, including lenalidomide and a proteasome inhibitor (Press release, Bristol-Myers Squibb, NOV 6, 2018, View Source [SID1234530777]).1 In ELOQUENT-3, a randomized, open-label, Phase 2 trial, EPd demonstrated benefit in patients with relapsed or refractory multiple myeloma, doubling both median progression-free survival (PFS) and overall response rate (ORR) versus pomalidomide and dexamethasone (Pd).1

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"Empliciti plus pomalidomide and dexamethasone has been proven to extend the time that certain patients live without disease progression, giving health care professionals an effective new tool to tackle this relentless cancer,"1,2 said Joseph E. Eid, M.D., senior vice president and head of Medical, Bristol-Myers Squibb. "Today’s approval reinforces the importance of Immuno-Oncology in blood cancers and expands the role of Empliciti to address the needs of relapsed or refractory multiple myeloma patients."

Empliciti with pomalidomide and dexamethasone is associated with Warnings and Precautions related to: infusion reactions, infections, secondary primary malignancies, hepatotoxicity, interference with determination of complete response, pregnancy/females and males of reproductive potential and adverse reactions.1 Please see the detailed important safety information below.

Following priority review by the FDA, EPd is the first triplet combination to be approved based on a randomized clinical trial using Pd as a comparator.3,4 Results from the trial include:

Progression-free survival (primary endpoint, investigator-assessed): 1,3 EPd reduced the risk of disease progression by 46% (hazard ratio [HR]: 0.54; 95% confidence interval [CI]: 0.34 to 0.86, p=0.0078), demonstrating a median PFS of 10.25 months (95% CI: 5.59 to non-estimable [NE]) vs. 4.67 months (95% CI: 2.83 to 7.16) for Pd alone after a minimum follow-up of 9.1 months.1
Overall response rate (secondary endpoint, investigator-assessed): 1,3 Response rates doubled in patients receiving EPd (53.3%; n=32/60 [95% CI: 40.0 to 66.3]) compared with patients receiving Pd alone (26.3%; n=15/57 [95% CI: 15.5 to 39.7]; p=0.0029), with very good partial responses or better seen in 20% of EPd-treated patients (n=12) and 8.8% of Pd-treated patients (n=5).1
Safety: Serious adverse reactions were reported in 22% of patients treated with EPd and in 15% of patients treated with Pd.1 Discontinuation of any component of the treatment regimen due to adverse reactions occurred in 5.0% of patients in the EPd arm, compared to 1.8% of patients in the control arm.1
"Despite remarkable recent innovations with novel therapies for the treatment of multiple myeloma, many patients still face poor outcomes, and particularly in the relapsed and relapsed, refractory setting,"5 said Paul Richardson, M.D., clinical program leader and director of clinical research of the Jerome Lipper Multiple Myeloma Center at Dana-Farber Cancer Institute. "This new regimen of elotuzumab combined with pomalidomide and dexamethasone not only extended the time to disease progression versus a standard of care but also doubled the response rate in some patients whose prior treatments had failed them.1,6 Thus to be able to offer an alternative with a meaningful clinical benefit is an important and significant milestone for our patients."1,4

Approximately 31,000 people in the United States will be diagnosed with multiple myeloma this year.7 A common characteristic for many patients is that they experience multiple relapses, which means that the cancer returns after a period of remission.8,9

"Relapse can be overwhelming and extremely challenging for multiple myeloma patients, particularly after they have already tried several therapies,"10 said Paul Giusti, president and chief executive officer of the Multiple Myeloma Research Foundation. "Empliciti, in combination with pomalidomide and dexamethasone, is an exciting new option for patients with relapsed or refractory myeloma."

Bristol-Myers Squibb and AbbVie are co-developing Empliciti, with Bristol-Myers Squibb solely responsible for commercial activities.

About ELOQUENT-3

ELOQUENT-3 was a randomized, open-label Phase 2 study evaluating the addition of Empliciti to pomalidomide and dexamethasone versus pomalidomide and dexamethasone in 117 patients with multiple myeloma who received two or more prior therapies and were either refractory or relapsed and refractory to lenalidomide and a proteasome inhibitor.1,3,4 Patients were randomized 1:1 to receive either EPd (n=60) or Pd (n=57) in 28-day cycles until disease progression or unacceptable toxicity.1 The approved dose of Empliciti, when used in combination with pomalidomide and dexamethasone, is 10 mg/kg administered intravenously every week for the first two 28-day cycles, followed by 20 mg/kg every four weeks until disease progression or unacceptable toxicity.1

The primary efficacy outcome measure of the trial was PFS as determined by the investigator.1,3 The secondary efficacy outcome measure of ORR included complete, stringent-complete, very good partial and partial response rates as determined by investigator assessment, based on the International Myeloma Working Group criteria.1,3 Data from the ELOQUENT-3 trial were presented at the 23rd Congress of the European Hematology Association (EHA) (Free EHA Whitepaper) in June 2018.4

Select Safety Profile for the ELOQUENT-3 Trial

The most frequent serious adverse reactions in the population evaluated for safety (n=60 in the EPd arm and n=55 in the Pd arm) were pneumonia (13% vs. 11%) and respiratory tract infection (7% vs. 3.6%).1 Infusion reactions were reported in 3.3% of patients treated with EPd.1 Adverse reactions that occurred with a >/=10% incidence for Empliciti plus pomalidomide and dexamethasone-treated patients and >/=5% incidence than pomalidomide and dexamethasone-treated patients were constipation (22% vs. 11%), hyperglycemia (20% vs. 15%), pneumonia (18% vs. 13%), diarrhea (18% vs. 9%), respiratory tract infection (17% vs. 9%), bone pain (15% vs. 9%), dyspnea (15% vs. 7%), muscle spasms (13% vs. 5%), edema peripheral (13% vs. 7%) and lymphopenia (10% vs. 1.8%).1

INDICATIONS

EMPLICITI (elotuzumab) is indicated in combination with lenalidomide and dexamethasone for the treatment of adult patients with multiple myeloma who have received one to three prior therapies.

EMPLICITI is indicated in combination with pomalidomide and dexamethasone for the treatment of adult patients with multiple myeloma who have received at least two prior therapies including lenalidomide and a proteasome inhibitor.

EMPLICITI is available for injection for intravenous use in 300 mg and 400 mg vials.

IMPORTANT SAFETY INFORMATION

Infusion Reactions

Infusion reactions were reported in 10% of patients treated with EMPLICITI in the ELOQUENT-2 trial [EMPLICITI + lenalidomide + dexamethasone (ERd) vs lenalidomide + dexamethasone (Rd)] and 3.3% in the ELOQUENT-3 trial [EMPLICITI + pomalidomide + dexamethasone (EPd) vs pomalidomide + dexamethasone (Pd)].
In the ELOQUENT-2 trial, all infusion reactions were Grade 3 or lower, with Grade 3 infusion reactions occurring in 1% of patients. The most common symptoms included fever, chills, and hypertension. Bradycardia and hypotension also developed during infusions. In the trial, 5% of patients required interruption of the administration of EMPLICITI for a median of 25 minutes due to infusion reactions, and 1% of patients discontinued due to infusion reactions. Of the patients who experienced an infusion reaction, 70% (23/33) had them during the first dose.
In the ELOQUENT-3 trial, the only infusion reaction symptom was chest discomfort (2%), which was Grade 1. All the patients who experienced an infusion reaction had them during the first treatment cycle.
If a Grade 2 or higher infusion reaction occurs, interrupt the EMPLICITI infusion and institute appropriate medical and supportive measures. If the infusion reaction recurs, stop the EMPLICITI infusion and do not restart it on that day. Severe infusion reactions may require permanent discontinuation of EMPLICITI therapy and emergency treatment.
Premedicate with dexamethasone, H1 blocker, H2 blocker, and acetaminophen prior to EMPLICITI infusion.
Infections

In the ELOQUENT-2 trial (N=635), infections were reported in 81% of patients in the ERd arm and 74% in the Rd arm. Grade 3-4 infections were 28% (ERd) and 24% (Rd). Discontinuations due to infections were 3.5% (ERd) and 4.1% (Rd). Fatal infections were 2.5% (ERd) and 2.2% (Rd). Opportunistic infections were reported in 22% (ERd) and 13% (Rd). Fungal infections were 10% (ERd) and 5% (Rd). Herpes zoster was 14% (ERd) and 7% (Rd).
In the ELOQUENT-3 trial (N=115), infections were reported in 65% of patients in both the EPd arm and the Pd arm. Grade 3-4 infections were reported in 13% (EPd) and 22% (Pd). Discontinuations due to infections were 7% (EPd) and 5% (Pd). Fatal infections were 5% (EPd) and 3.6% (Pd). Opportunistic infections were reported in 10% (EPd) and 9% (Pd). Herpes zoster was reported in 5% (EPd) and 1.8% (Pd).
Monitor patients for development of infections and treat promptly.
Second Primary Malignancies

In the ELOQUENT-2 trial (N=635), invasive second primary malignancies (SPM) were 9% (ERd) and 6% (Rd). The rate of hematologic malignancies was the same between ERd and Rd treatment arms (1.6%). Solid tumors were reported in 3.5% (ERd) and 2.2% (Rd). Skin cancer was reported in 4.4% (ERd) and 2.8% (Rd).
In the ELOQUENT-3 trial (N=115), invasive SPMs were 0% (EPd) and 1.8% (Pd).
Monitor patients for the development of SPMs.
Hepatotoxicity

In the ELOQUENT-2 trial (N=635), AST/ALT >3X the upper limit, total bilirubin >2X the upper limit, and alkaline phosphatase <2X the upper limit were 2.5% (ERd) vs 0.6% (Rd). Of 8 patients experiencing hepatotoxicity, 2 patients discontinued treatment while 6 patients had resolution and continued. Monitor liver enzymes periodically. Stop EMPLICITI upon ≥Grade 3 elevation of liver enzymes. Continuation of treatment may be considered after return to baseline values.
Interference with Determination of Complete Response

EMPLICITI is a humanized IgG kappa monoclonal antibody that can be detected on both the serum protein electrophoresis and immunofixation assays used for the clinical monitoring of endogenous M-protein. This interference can impact the determination of complete response and possibly relapse from complete response in patients with IgG kappa myeloma protein.
Pregnancy/Females and Males of Reproductive Potential

There are no available data on EMPLICITI use in pregnant women to inform a drug-associated risk of major birth defects and miscarriage.
There is a risk of fetal harm, including severe life-threatening human birth defects, associated with lenalidomide and pomalidomide, and they are contraindicated for use in pregnancy. Refer to the respective product full prescribing information for requirements regarding contraception and the prohibitions against blood and/or sperm donation due to presence and transmission in blood and/or semen and for additional information.
Adverse Reactions

ELOQUENT-2 trial:
Serious adverse reactions were 65% (ERd) and 57% (Rd). The most frequent serious adverse reactions in the ERd arm compared to the Rd arm were: pneumonia (15%, 11%), pyrexia (7%, 5%), respiratory tract infection (3.1%, 1.3%), anemia (2.8%, 1.9%), pulmonary embolism (3.1%, 2.5%), and acute renal failure (2.5%, 1.9%).
The most common adverse reactions in ERd and Rd, respectively (≥20%) were fatigue (62%, 52%), diarrhea (47%, 36%), pyrexia (37%, 25%), constipation (36%, 27%), cough (34%, 19%), peripheral neuropathy (27%, 21%), nasopharyngitis (25%, 19%), upper respiratory tract infection (23%, 17%), decreased appetite (21%, 13%), and pneumonia (20%, 14%).
ELOQUENT-3 trial:
Serious adverse reactions were 22% (EPd) and 15% (Pd). The most frequent serious adverse reactions in the EPd arm compared to the Pd arm were: pneumonia (13%, 11%) and respiratory tract infection (7%, 3.6%).
The most common adverse reactions in EPd arm (≥20% EPd) and Pd, respectively, were constipation (22%, 11%) and hyperglycemia (20%, 15%).
Please see the full Prescribing Information .

About Empliciti

Empliciti is an immunostimulatory antibody that specifically targets Signaling Lymphocyte Activation Molecule Family member 7 (SLAMF7), a cell-surface glycoprotein. SLAMF7 is expressed on myeloma cells independent of cytogenetic abnormalities. SLAMF7 also is expressed on Natural Killer cells, plasma cells and at lower levels on specific immune cell subsets of differentiated cells within the hematopoietic lineage.

Empliciti has a dual mechanism-of-action. It directly activates the immune system through Natural Killer cells via the SLAMF7 pathway. Empliciti also targets SLAMF7 on myeloma cells, tagging these malignant cells for Natural Killer cell-mediated destruction via antibody-dependent cellular toxicity.

Empliciti was initially approved by the FDA in 2015 in combination with lenalidomide and dexamethasone for the treatment of patients with multiple myeloma who have received one to three prior therapies.

Bristol-Myers Squibb & Immuno-Oncology: Advancing Oncology Research

At Bristol-Myers Squibb, patients are at the center of everything we do. Our vision for the future of cancer care is focused on researching and developing transformational medicines, including Immuno-Oncology (I-O) therapeutic approaches, for hard-to-treat cancers that could potentially improve outcomes for these patients.

We are leading the integrated scientific understanding of both tumor cell and immune system pathways, through our extensive portfolio of investigational compounds and approved agents. Our differentiated clinical development program is studying broad patient populations across more than 50 types of cancers with 24 clinical-stage molecules designed to target different immune system pathways. Our deep expertise and innovative clinical trial designs position us to advance the I-O/I-O, I-O/chemotherapy, I-O/targeted therapies and I-O/radiation therapies across multiple tumors and potentially deliver the next wave of therapies with a sense of urgency. We also continue to pioneer research that will help facilitate a deeper understanding of the role of immune biomarkers and how a patient’s tumor biology can be used as a guide for treatment decisions throughout their journey.

We understand making the promise of transformational medicines like I-O therapies a reality for the many patients who may benefit from these therapies requires not only innovation on our part but also close collaboration with leading experts in the field. Our partnerships with academia, government, advocacy and biotech companies support our collective goal of providing new treatment options to advance the standards of clinical practice.

About Bristol-Myers Squibb’s Patient Access Support

Bristol-Myers Squibb remains committed to providing assistance so that cancer patients who need our medicines can access them and expedite time to therapy.

BMS Access Support, the Bristol-Myers Squibb patient access and reimbursement program, is designed to help appropriate patients initiate and maintain access to BMS medicines during their treatment journey. BMS Access Support offers benefit investigation, prior authorization assistance, as well as co-pay assistance for eligible, commercially insured patients. More information about our access and reimbursement support can be obtained by calling BMS Access Support at 1-800-861-0048 or by visiting www.bmsaccesssupport.com.

On November 6, 2018 Halozyme Therapeutics, Inc. (NASDAQ: HALO), a biotechnology company developing novel oncology and drug-delivery therapies, reported financial results for the third quarter ended September 30, 2018 and provided an update on recent corporate activities (Press release, Halozyme, NOV 6, 2018, View Source [SID1234530776]).

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"The expanded agreement we have signed with Roche, covering up to three new targets, speaks to the compelling and ongoing value proposition of our ENHANZE technology," said Dr. Helen Torley, president and chief executive officer. "The overall progress we made recently with the initiation of two Phase 1 trials combining ENHANZE with Alexion’s ALXN1210 and Bristol-Myers Squibb’s BMS-986179, an investigational anti-CD-73 antibody, reinforces our confidence in the potential for $1 billion in royalty revenue in 2027 and for up to $1 billion in cumulative lifetime milestone payments associated with our partners’ programs."

"Turning to our second potential growth engine, PEGPH20, we continue to make good progress with our pivotal HALO-301 pancreas cancer study and in our exploration of the pan tumor potential of PEGPH20. We are pleased to have moved into the randomization phase of our study in patients with cholangiocarcinoma and gall bladder cancer in August. Interest is high, with enrollment progressing very well in the randomization phase to date."

Third Quarter 2018 and Recent Highlights Include:

Halozyme licensed its ENHANZE drug-delivery technology to Roche for exclusive development of a new undisclosed clinical stage therapeutic target, with an option for Roche to select two additional targets within four years. Halozyme will receive an initial payment of $25 million, which will be recognized as revenue in the fourth quarter, with the potential to earn additional payments of up to $160 million to $165 million per target, subject to the achievement of specified development, regulatory and sales-based milestones. Halozyme will also receive mid-single digit royalties on sales of commercialized products.
Bristol-Myers Squibb has dosed the first subject in a Phase 1 clinical trial evaluating the safety, pharmacokinetics and pharmacodynamics of BMS-986179. This investigational anti-CD-73 antibody is being tested in combination with Halozyme’s proprietary ENHANZE drug delivery technology.
Alexion continuing to progress ALXN1210 with ENHANZE, which advanced into Phase 1 clinical testing in the third quarter of 2018.
Health Canada approves a subcutaneous (SC) formulation of trastuzumab (Herceptin SC) for the treatment of patients with HER2-positive breast cancer. Additionally, the U.S. Food and Drug Administration accepted a Biologics License Application from Genentech for a subcutaneous (SC) formulation of trastuzumab (Herceptin SC) in July 2018.
Data presentations from two clinical trials for PEGPH20 (pegvorhyaluronidase alfa) in patients with advanced pancreas and metastatic breast cancer at ESMO (Free ESMO Whitepaper) 2018. These data reinforce the potential for PEGPH20 in combination with chemotherapy and its ability to degrade tumor hyaluronan, which could allow for greater penetration of chemotherapy and improved access of the immune system to the tumor.
Janssen continuing in multiple ongoing trials of a subcutaneous formulation of DARZALEX (daratumumab) in support of plans for commercialization. Halozyme’s ENHANZE technology has the potential to enable a 15-ml injection to be delivered in five minutes or less. Ongoing trials in patients with multiple myeloma, amyloidosis and smoldering myeloma include four Phase 3 studies. Two additional Phase 3 trials, which are listed on clinicaltrials.gov, are planned and expected to begin shortly.
Progress continues in the HALO-301 trial in screening and enrolling patients. The company projects that an interim analysis of the first primary endpoint of progression free survival will be conducted upon achievement of the target number of events in the December 2018 to February 2019 time frame. The trial is investigating PEGPH20 in combination with ABRAXANE (nab-paclitaxel) and gemcitabine in first-line metastatic pancreas cancer patients with high levels of tumor hyaluronan (HA-High).
Strengthened management team and board of directors, with the appointment of Benjamin Hickey as Chief Commercial Officer and Bernadette Connaughton to the board of directors.
Third Quarter 2018 Financial Highlights

Revenue for the third quarter was $25.6 million compared to $63.7 million for the third quarter of 2017. The year-over-year decrease was driven by a one-time $30 million upfront license fee from Roche received in the prior year and an expected decrease in bulk rHuPH20 sales to partners and research and development reimbursements. The decrease was offset by a 9 percent growth in royalties on a reported basis from partner sales. Revenue for the third quarter included $18.7 million in royalties and $3.7 million in HYLENEX recombinant (hyaluronidase human injection) product sales.
Research and development expenses for the third quarter were $35.5 million, compared to $34 million for the third quarter of 2017.
Selling, general and administrative expenses for the third quarter were $14.9 million, compared to $13.3 million for the third quarter of 2017.
Net loss for the third quarter was $27.9 million, or $0.19 per share, compared to net income in the third quarter of 2017 of $2.7 million, or $0.02 per share.
Cash, cash equivalents and marketable securities were $364.4 million at September 30, 2018, compared to $469.2 million at December 31, 2017.
Financial Outlook for 2018

For the full year 2018, the company is updating its prior guidance ranges for net revenue, operating expenses, operating cash burn and year-end cash, and is now expecting:

Net revenue of $150 million to $160 million, an increase from the prior range of $125 million to $135 million, driven by the $25 million upfront payment from the recent Roche ENHANZE license agreement expected in the fourth quarter;
Operating expenses to $220 million to $230 million, a reduction from the prior range of $230 million to $240 million;
Operating cash burn of $50 million to $60 million compared to the prior range of $75 million to $85 million; and
Year-end cash balance of $340 million to $350 million, an increase from the prior range of $310 million to $320 million, driven by the $25 million upfront payment from the recent Roche ENHANZE agreement, and the reduction in operating expenses, partially offset by changes in our working capital.
Webcast and Conference Call

Halozyme will webcast its Quarterly Update Conference Call for the third quarter of 2018 today, Tuesday, November 6 at 4:30 p.m. ET/1:30 p.m. PT. Dr. Torley will lead the call, which will be webcast live through the "Investors" section of Halozyme’s corporate website and a replay will be available following the close of the call. To access the webcast and additional documents related to the call, please visit halozyme.com approximately fifteen minutes prior to the call to register, download and install any necessary audio software. The call may also be accessed by dialing (877) 410-5657 (domestic callers) or (334) 323-7224 (international callers) using passcode 387156. A telephone replay will be available after the call by dialing (877) 919-4059 (domestic callers) or (334) 323-0140 (international callers) using replay ID number 55575898.

On November 6, 2018 Loxo Oncology, Inc. (Nasdaq:LOXO), a biopharmaceutical company developing highly selective medicines for patients with genomically defined cancers, reported that company management will participate in fireside chats at the following upcoming investor conferences (Press release, Loxo Oncology, NOV 6, 2018, View Source [SID1234530773]):

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Stifel Healthcare Conference in New York City on November 13, 2018 at 8:45 a.m. ET
Piper Jaffray Healthcare Conference in New York City on November 28, 2018 at 10:30 a.m. ET
Live webcasts of the fireside chats will be available at View Source

On November 6, 2018 Emergent BioSolutions Inc. (NYSE: EBS) reported that a member of the company’s senior management team will participate in the following investor conferences during the fourth quarter and early portion of the first quarter of 2019 (Press release, Emergent BioSolutions, NOV 6, 2018, View Source;p=RssLanding&cat=news&id=2375511 [SID1234530772]):

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Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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JP Morgan – 2018 CEO Conference Call Series
Virtual/Conference Call (information to be provided by JP Morgan)
November 13, 2018

Three Part Advisors – 2018 Southwest IDEAS Investor Conference
Dallas, TX
November 14-15, 2018

Piper Jaffray – 30th Annual Healthcare Conference
New York, NY
November 27-29, 2018

Mizuho – Global Mizuho Investor Conference
New York, NY
December 3, 2018

BMO Capital Markets – 2018 Prescriptions for Success Healthcare Conference
New York, NY
December 12, 2018

JP Morgan – 37th Annual Healthcare Conference
San Francisco, CA
January 7-10, 2019
Presentation dates and times will be updated on the Emergent website www.emergentbiosolutions.com under "Investors" as the information becomes available.
For these conferences, the company will be webcasting its presentation, which may include a discussion of the company’s recent business developments as well as its most recently reported financial results and guidance. The webcasts will be available both live and by replay, accessible from the Emergent website.

On November 6, 2018 Eli Lilly and Company (NYSE: LLY) reported financial results for the third quarter of 2018 (Press release, Eli Lilly, NOV 6, 2018, View Source [SID1234530771]).

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Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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Certain financial information for 2018 and 2017 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) and include all revenue and expenses recognized during the periods. Non-GAAP measures exclude the items described in the reconciliation tables later in the release. The company’s 2018 financial guidance is also 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. This press release does not constitute an offer of any securities for sale.

"Lilly delivered strong financial results in the third quarter. Revenue growth driven by greater use of our newest medicines, coupled with prudent expense management, led to strong EPS growth," said David A. Ricks, Lilly’s chairman and CEO. "Our strategy is to focus on discovering and developing breakthrough medicines that can help doctors and patients who need new treatment options for serious diseases. We are pleased with our progress this quarter, achieving key development and regulatory milestones in pain and diabetes, while driving continued adoption of our new medicines around the world. Consistent with our revised guidance, we expect to finish 2018 by further delivering strong performance."

Key Events Over the Last Three Months

Regulatory

The U.S. Food and Drug Administration (FDA) approved, and the company launched in the U.S., Emgality for the preventive treatment of migraine in adults. In addition, the European Medicines Agency’sCommittee for Medicinal Products for Human Use (CHMP) issued a positive opinion for Emgality for the prophylaxis of migraine in adults who have at least four migraine days per month.
Verzenios was approved in Europe for the treatment of women with hormone receptor (HR) positive, human epidermal growth factor receptor 2 (HER2) negative locally advanced or metastatic breast cancer in combination with an aromatase inhibitor or fulvestrant as initial endocrine-based therapy, or in women who have received prior endocrine therapy. Verzenio was also approved in Japan, where it is indicated for HR+, HER2- unresectable or recurrent breast cancer.
Clinical

The company announced that Trulicity met the primary efficacy objective in the REWIND clinical trial, and significantly reduced major adverse cardiovascular events (MACE), a composite endpoint of cardiovascular (CV) death, non-fatal myocardial infarction (heart attack) or non-fatal stroke.
The company announced that results from a Phase 2b clinical trial of its dual GIP and GLP-1 receptor agonist (GIP/GLP-1 RA, LY3298176) showed strong and clinically meaningful blood sugar reduction and weight loss in people with type 2 diabetes. Phase 3 studies for type 2 diabetes are expected to begin no later than early 2019 and to be completed in late 2021.
The company and Boehringer Ingelheim announced that empagliflozin met the primary efficacy endpoint, defined as a change from baseline in A1C versus placebo after 26 weeks of treatment, for all doses investigated in a Phase III study in adults with type 1 diabetes.
The company announced that readouts from two Phase 3 clinical trials demonstrated that Ultra Rapid Lispro (URLi) met the primary efficacy endpoint of non-inferior A1C reduction from baseline compared to Humalog and also demonstrated significantly improved post-meal glucose control in people with type 1 and type 2 diabetes. Based on these results, the company is planning to submit URLi to regulatory authorities in 2019.
The company and its wholly-owned subsidiary, Avid Radiopharmaceuticals, Inc., announced that a Phase 3 study of flortaucipir F 18, a Positron Emission Tomography (PET) imaging agent, met its two primary endpoints, defined as predicting brain tau pathology and predicting Alzheimer’s disease diagnosis.
Business Development/Other Developments

Elanco Animal Health Incorporated became a publicly traded company via an initial public offering (IPO). As of the closing of the IPO, Lilly owns approximately 80.2 percent of Elanco, and is actively working to divest its remaining position through a tax-efficient transaction within one year of the IPO. Elanco raised over $4 billion in capital from the IPO and associated debt offering.
The company announced a license agreement with Chugai Pharmaceutical Co., Ltd for OWL833, Chugai’s oral non-peptidic GLP-1 receptor agonist. OWL833 is being studied for the treatment of type 2 diabetes. Under the terms of the agreement, Lilly will receive worldwide development and commercialization rights to OWL833. Chugai will receive an upfront payment of $50 million and is eligible for milestone payments based on achievement of certain predetermined milestones. If the molecule is successfully commercialized, Chugai would also be eligible for royalty payments.
The company announced a global licensing and research collaboration with Dicerna Pharmaceuticals focused on the discovery, development and commercialization of potential new medicines in the areas of cardio-metabolic disease, neurodegeneration and pain, utilizing Dicerna’s RNA interference (RNAi) technology platform.
The company acquired a Priority Review Voucher (PRV) from SIGA Technologies for $80 million. The company intends to utilize this voucher to fast track a product application for an existing R&D project, although the specific project has not yet been determined. As a result of this transaction, the company will record an acquired in-process research and development charge of $80 million (pretax), or $0.06 EPS (after tax), in the fourth quarter of 2018.
The company announced a multi-year collaboration with NextCure, Inc. focused on the discovery and development of immuno-oncology cancer therapies. NextCure will apply its discovery platform to identify novel, functional immune-related targets and Lilly will develop antibodies to these targets.
Third-Quarter Reported Results

In the third quarter of 2018, worldwide revenue was $6.062 billion, an increase of 7 percent compared with the third quarter of 2017. The increase in revenue was driven by a 12 percent increase due to volume, partially offset by a 4 percent decrease due to lower realized prices and a 1 percent decrease due to the unfavorable impact of foreign exchange rates.

Revenue in the U.S. increased 11 percent, to $3.447 billion, driven primarily by increased volume for new pharmaceutical products, including Trulicity, Basaglar, Taltz, and Verzenio. The increase in revenue was partially offset by lower realized prices, primarily driven by Basaglar, Humalog and Taltz, as well as decreased volume for products that have lost exclusivity, including Cialis, Stratteraand Effient.

Revenue outside the U.S. increased 2 percent, to $2.615 billion, driven by increased volume of 8 percent, which was primarily for new pharmaceutical products, including Trulicity, Olumiant and Taltz. The increase in revenue was partially offset by lower realized prices for several pharmaceutical products, decreased volume for Cialis due to loss of exclusivity, as well as the unfavorable impact of foreign exchange rates.

Gross margin increased 11 percent, to $4.500 billion, in the third quarter of 2018 compared with the third quarter of 2017. Gross margin as a percent of revenue was 74.2 percent, an increase of 2.2 percentage points compared with the third quarter of 2017. The increase in gross margin percent was primarily due to manufacturing efficiencies and, to a lesser extent, the effect of foreign exchange rates on international inventories sold and the favorable impact of product mix, partially offset by the negative impact of price on revenue.

Operating expenses in the third quarter of 2018, defined as the sum of research and development and marketing, selling, and administrative expenses, increased 1 percent to $2.960 billion. Research and development expenses remained flat at $1.343 billion, or 22.2 percent of revenue, as additional late-stage development expenditures were offset by lower development milestone payments compared to the third quarter of 2017. Marketing, selling, and administrative expenses increased 2 percent, to $1.617 billion, primarily due to increased expenses related to new pharmaceutical product launches, partially offset by reduced expenses on late life-cycle products. Both research and development expenses and marketing, selling, and administrative expenses benefited from previously-announced actions taken to reduce the company’s cost structure.

In the third quarter of 2018, the company recognized acquired in-process research and development charges of $30.0 million related to a collaboration with Anima Biotech for the discovery and development of translation inhibitors for several target proteins. In the third quarter of 2017, the company recognized acquired in-process research and development charges of $205.0 million associated with strategic collaborations with Nektar Therapeutics to co-develop NKTR-358 and with KeyBioscience focused on the development of Dual Amylin Calcitonin Receptor Agonists (DACRAs).

In the third quarter of 2018, the company recognized asset impairment, restructuring, and other special charges of $83.3 million. The charges are primarily associated with asset impairment and restructuring charges related to the sale of the Posilac (rbST) brand and the October 2, 2018 sale of the Augusta, Georgia manufacturing site. The charges also include expenses associated with the initial public offering and separation of the Elanco animal health business. In the third quarter of 2017, the company recognized asset impairment, restructuring and other special charges of $406.5 million. These charges were partially associated with asset impairments related to lower projected revenue for Posilac. The charges were also associated with severance costs incurred as a result of actions taken to reduce the company’s cost structure.

Operating income in the third quarter of 2018 was $1.426 billion, compared to $541.7 million in the third quarter of 2017. The increase to operating income was driven by higher gross margin, lower asset impairment, restructuring, and other special charges, and, to a lesser extent, lower acquired in-process research and development charges.

Other income (expense) was expense of $15.4 million in the third quarter of 2018, compared with income of $49.9 million in the third quarter of 2017. The reduction in other income (expense) was driven by foreign exchange losses (primarily related to Argentina), higher net interest expense and mark-to-market adjustments on investment securities.

The effective tax rate was 18.5 percent in the third quarter of 2018, compared with 6.1 percent in the third quarter of 2017. The higher effective tax rate for the third quarter of 2018 is primarily due to a higher income tax benefit in the third quarter of 2017 for acquired in-process research and development charges, asset impairment, restructuring, and other special charges.

In the third quarter of 2018, net income and earnings per share were $1.149 billion and $1.12, respectively, compared with net income of $555.6 million and earnings per share of $0.53 in the third quarter of 2017. The increases in net income and earnings per share were primarily driven by higher operating income, partially offset by higher tax expense.

Third-Quarter Non-GAAP Measures

On a non-GAAP basis, third-quarter 2018 gross margin increased 10 percent, to $4.651 billion. Gross margin as a percent of revenue was 76.7 percent, an increase of 1.9 percentage points compared with the third quarter of 2017. The increase in gross margin percent was primarily due to manufacturing efficiencies and, to a lesser extent, the effect of foreign exchange rates on international inventories sold and the favorable impact of product mix, partially offset by the negative impact of price on revenue.

Reflecting the company’s previously-announced actions to reduce its cost structure, operating expenses were 48.8 percent of revenue in the third quarter of 2018, a reduction of 2.7 percentage points compared with the third quarter of 2017.

Operating income increased $377.5 million, or 29 percent, to $1.692 billion in the third quarter of 2018, primarily due to higher revenue.

The effective tax rate was 15.1 percent in the third quarter of 2018, compared with 18.9 percent in the third quarter of 2017. The lower effective tax rate for the third quarter of 2018 was primarily due to U.S. tax reform enacted in December 2017.

In the third quarter of 2018, net income increased 29 percent, to $1.424 billion, and earnings per share increased 32 percent, to $1.39, compared with $1.107 billion and $1.05, respectively, in the third quarter of 2017. The increases in net income and earnings per share were primarily driven by higher operating income.

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.

Third Quarter

2018

2017

% Change

Earnings per share (reported)

$

1.12

$

0.53

NM

Amortization of intangible assets

.12

.10

Asset impairment, restructuring and other special charges

.07

.29

Income taxes(a)

.05

—

Acquired in-process research and development

.02

.13

Earnings per share (non-GAAP)

$

1.39

$

1.05

32%

Numbers may not add due to rounding.

(a) Relates to adjustments to the 2017 Toll Tax for U.S. tax reform proposed regulations and tax expenses associated with the separation of the Elanco animal health business.

Year-to-Date Results

For the first nine months of 2018, worldwide revenue increased 8 percent, to $18.117 billion, compared with $16.711 billion in the same period in 2017. Reported net income and earnings per share were $2.107 billion and $2.03, respectively, for the first nine months of 2018.

Year-to-Date Non-GAAP Measures

For the first nine months of 2018, net income and earnings per share, on a non-GAAP basis, were $4.377 billion and $4.22, respectively.

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.

Year-to-Date

2018

2017

% Change

Earnings per share (reported)

$

2.03

$

1.37

48%

Acquired in-process research and development

1.57

.94

Amortization of intangible assets

.36

.33

Asset impairment, restructuring and other special charges

.20

.48

Income taxes(a)

.05

—

Other, net

.01

.02

Earnings per share (non-GAAP)

$

4.22

$

3.14

34%

Numbers may not add due to rounding.

(a) Relates to adjustments to the 2017 Toll Tax for U.S. tax reform proposed regulations and tax expenses associated with the separation of the Elanco animal health business.

Selected Revenue Highlights

(Dollars in millions)

Third Quarter

Year-to-Date

Established Pharma
Products

2018

2017

% Change

2018

2017

% Change

Humalog

$

664.6

$

696.2

(5)%

$

2,226.1

$

2,083.0

7%

Alimta

520.5

514.5

1%

1,576.0

1,537.3

3%

Cialis

467.1

564.9

(17)%

1,501.2

1,725.7

(13)%

Forteo

390.8

441.7

(12)%

1,138.5

1,235.8

(8)%

Humulin

322.1

300.5

7%

994.0

972.8

2%

Cymbalta

172.0

(a) Trajenta includes Jentadueto

(b) Jardiance includes Glyxambi and Synjardy

NM – not meaningful

Numbers may not add due to rounding

Selected Established Pharma Products

Humalog

For the third quarter of 2018, worldwide Humalog revenue decreased 5 percent compared with the third quarter of 2017, to $664.6 million. Revenue in the U.S. decreased 12 percent, to $365.6 million, driven by lower realized prices primarily due to changes in segment mix and the impact of patient affordability programs, partially offset by increased volume. Revenue outside the U.S. increased 6 percent, to $299.0 million, driven by increased volume, partially offset by lower realized prices and the unfavorable impact of foreign exchange rates.

Alimta

For the third quarter of 2018, Alimta generated worldwide revenue of $520.5 million, which increased 1 percent compared with the third quarter of 2017. U.S. revenue increased 11 percent, to$288.5 million, driven by increased demand and, to a lesser extent, higher realized prices. Revenue outside the U.S. decreased 9 percent to $232.0 million, driven primarily by decreased volume due to competitive pressure and loss of exclusivity in several countries.

Cialis

For the third quarter of 2018, worldwide Cialis revenue decreased 17 percent to $467.1 million. U.S. revenue was $295.9 million in the third quarter, a 7 percent decrease compared with the third quarter of 2017, driven by decreased demand due to the entry of generic sildenafil, partially offset by higher realized prices. Cialis lost exclusivity, and generic tadalafil entered the U.S. market, in late September 2018. Revenue outside the U.S. decreased 30 percent to $171.2 million, primarily driven by the loss of exclusivity in Europe.

Forteo

For the third quarter of 2018, worldwide revenue for Forteo was $390.8 million, a 12 percent decrease compared with the third quarter of 2017. U.S. revenue decreased 22 percent, to $182.5 million, primarily due to decreased demand and, to a lesser extent, lower realized prices. Revenue outside the U.S. remained flat at $208.3 million, driven by increased volume, offset by lower realized prices and the unfavorable impact of foreign exchange rates.

Humulin

For the third quarter of 2018, worldwide Humulin revenue increased 7 percent compared with the third quarter of 2017, to $322.1 million. U.S. revenue increased 7 percent, to $216.9 million, driven by increased volume. Revenue outside the U.S. increased 8 percent, to $105.1 million, primarily due to buying patterns in China, partially offset by the unfavorable impact of foreign exchange rates.

Select Products Launched Since 2014

Trulicity

Third-quarter 2018 worldwide Trulicity revenue was $816.2 million, an increase of 55 percent compared with the third quarter of 2017. U.S. revenue increased 56 percent, to $645.9 million, driven by higher demand. Revenue outside the U.S. was $170.3 million, an increase of 48 percent, primarily driven by increased volume.

Taltz

For the third quarter of 2018, worldwide Taltz revenue was $263.9 million, an increase of 74 percent compared with the third quarter of 2017. U.S. revenue was $210.6 million, an increase of 60 percent, driven by higher demand, partially offset by lower realized prices. Revenue outside the U.S. was $53.3 million, an increase of $33.3 million, driven by increased volume from new launches.

Cyramza

For the third quarter of 2018, worldwide Cyramza revenue was $198.4 million, an increase of 1 percent compared with the third quarter of 2017. U.S. revenue was $67.0 million, a decrease of 4 percent, driven by lower realized prices. Revenue outside the U.S. was $131.4 million, an increase of 4 percent, driven by increased volume, partially offset by lower realized prices.

Basaglar

For the third quarter of 2018, Basaglar generated worldwide revenue of $201.2 million, an increase of 38 percent compared with the third quarter of 2017. U.S. revenue was $157.3 million, an increase of 37 percent, driven by increased demand, partially offset by lower realized prices due to increased volume in Medicare Part D and, to a lesser extent, changes to estimates for rebates and discounts. Revenue outside the U.S. was $43.9 million, an increase of 44 percent, primarily driven by increased demand. Basaglar is part of the company’s alliance with Boehringer Ingelheim, and Lilly reports total sales as revenue, with payments made to Boehringer Ingelheim for its portion of the gross margin reported as cost of sales.

Jardiance

The company’s worldwide Jardiance revenue during the third quarter of 2018 was $166.9 million, an increase of 31 percent compared with the third quarter of 2017. U.S. revenue increased 24 percent, to $104.2 million, driven by increased demand. Revenue outside the U.S. was $62.7 million, an increase of 45 percent, primarily driven by increased volume. Jardiance is part of the company’s alliance with Boehringer Ingelheim, and Lilly reports as revenue a portion of Jardiance’s gross margin.

Lartruvo

For the third quarter of 2018, Lartruvo generated worldwide revenue of $76.9 million, an increase of 41 percent compared with third quarter of 2017. U.S. revenue increased 12 percent, to $47.4 million, driven by increased demand. Revenue outside the U.S. was $29.5 million, an increase of $17.5 million, driven by increased volume from new launches.

Verzenio

For the third quarter of 2018, Verzenio, a treatment for women with HR+, HER2- advanced breast cancer, generated U.S. revenue of $84.5 million, an increase of $26.7 million compared with the second quarter of 2018.

Olumiant

For the third quarter of 2018, Olumiant generated worldwide revenue of $55.6 million. U.S. revenue was $0.8 million. Revenue outside the U.S. was $54.8 million, an increase of $11.9 million compared with the second quarter of 2018, reflecting uptake of new launches in Europe.

Animal Health

In the third quarter of 2018, worldwide animal health revenue totaled $772.7 million, an increase of 4 percent compared with the third quarter of 2017, driven by higher prices and higher volume, partially offset by the negative impact of foreign exchange rates. In terms of animal health product categories, higher sales of companion animal disease prevention, ruminants and swine, and companion animal therapeutics products were partially offset by lower sales of products that are being exited. For specific animal health product performance, refer to today’s Elanco Animal Health Incorporated press release.

2018 Financial Guidance

The company has revised certain elements of its 2018 financial guidance on a reported basis and on a non-GAAP basis. On a reported basis, earnings per share for 2018 are now expected to be in the range of $3.04 to $3.09. On a non-GAAP basis, earnings per share are now expected to be in the range of $5.55 to $5.60.

(a) Relates to adjustments to the 2017 Toll Tax for U.S. tax reform proposed regulations and tax expenses associated with the separation of the Elanco animal health business.

The company now anticipates 2018 revenue between $24.3 billion and $24.5 billion. The increase in the low end of the revenue range from prior guidance is due to strong performance across the pharmaceutical portfolio, particularly in diabetes. Revenue growth is still expected to be driven by new products including Trulicity, Taltz, Basaglar, Jardiance, Verzenio, Cyramza, Olumiant and Lartruvo.

Marketing, selling and administrative expenses are now expected to be in the range of $6.3 billion to $6.5 billion.

The 2018 effective tax rate is still expected to be approximately 22.5 percent on a reported basis and is now expected to be approximately 16 percent on a non-GAAP basis, reflecting recently issued guidance on elements of U.S. tax reform. The 2018 effective tax rate benefits from a lower corporate income tax rate, partially offset by the changes to certain business exclusions, deductions, credits and international tax provisions. The 2018 effective tax rate is subject to change based upon changes in the company’s interpretations of the tax laws, along with subsequent regulations, interpretations, guidance, and accounting policy elections that the company continues to evaluate.

Webcast of Conference Call

As previously announced, investors and the general public can access a live webcast of the third-quarter 2018 financial results conference call through a link on Lilly’s website at www.lilly.com. The conference call will be held today from 9 a.m. to 10:30 a.m. Eastern time (ET) 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. To learn more about Lilly, please visit us at www.lilly.com and View Source F-LLY