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Valeant Pharmaceuticals Reports First Quarter 2016 Financial Results

On June 7, 2016 Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) ("Valeant" or the "Company") reported first quarter 2016 financial results and updated 2016 guidance (Press release, Valeant, JUN 7, 2016, http://ir.valeant.com/news-releases/2016/06-07-2016-110324216 [SID:1234513132]).

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"The first quarter’s results reflect, in part, the impact of significant disruption this organization has faced over the past nine months," said Joseph Papa, chairman and chief executive officer. "This has been a difficult period for Valeant and its stakeholders, and while there are some challenges to work through in certain business operations in 2016, such as our U.S. dermatology unit, the majority of our businesses are performing according to expectations.

"While we recognize that we did not meet the timeline for filing our first quarter results, with our filing expected this week, we will be current in our financial reporting," continued Papa. "We have made progress toward stabilizing the organization over the past few months, and we expect to file our financial results in a timely manner going forward. Valeant has a portfolio of world class brands, a strong new product pipeline and dedicated leaders who are committed to doing what is right and what is necessary to turn this company around by re-engaging our workforce, rebuilding our relationships with prescribers, patients and payors, and regaining the trust of our debtholders and shareholders."

Total Revenues
Total revenues increased $202 million, or 9%, to $2.37 billion in the first quarter of 2016, primarily due to the effect of acquisitions completed in 2015 and their subsequent growth under Valeant’s ownership. This increase was primarily offset by a negative foreign currency impact of $52 million and a negative impact from divestitures and discontinuations of $22 million. On an organic basis, total revenues declined $289 million in the first quarter of 2016 from the remainder of the existing business.

In the Developed Markets segment, revenues increased $186 million primarily from the acquisitions of Salix Pharmaceuticals, Ltd. (Salix) and certain assets of Dendreon Corporation and their subsequent growth under Valeant’s ownership of $513 million, primarily offset by declining volumes in the neurology portfolio and lower volumes in dermatology of $208 million.

In the Emerging Markets segment, revenues increased $15 million, primarily from the acquisition of Amoun Pharmaceutical Company S.A.E. of $59 million, partially offset by a negative foreign currency exchange impact.

Operating Expenses
Cost of goods sold, excluding amortization, as a percentage of product sales, increased to 27% for the first quarter of 2016 as compared to 24% for the first quarter of 2015 (restated) primarily due to an unfavorable foreign currency exchange impact in the first quarter of 2016, lower high-margin dermatology revenues due to changing market dynamics and the addition of lower margin products acquired in 2015, partially offset by increased margins in the neurology and other portfolio, as well as the addition of the Salix portfolio acquired in 2015.

Selling, general and administrative expenses ("SG&A") increased $239 million, or 42%, to $813 million in the first quarter of 2016. As a percentage of revenue, SG&A was 34% in the first quarter of 2016, as compared to 26% in the first quarter of 2015 (restated). SG&A in the first quarter of 2016 was impacted primarily by higher expenses related to acquisitions completed in 2015, as well as expenses related to share-based compensation costs and contractually required termination benefits for the Company’s former Chief Executive Officer, higher expenses to support the U.S. operations, and increased professional fees.

Investment in research and development increased $47 million, or 85%, to $103 million in the first quarter of 2016, primarily due to the development programs related to the Company’s dermatology product portfolio, including IDP-118, as well as brodalumab, an IL-17 receptor monoclonal antibody for patients with moderate-to-severe plaque psoriasis and psoriatic arthritis, and programs acquired in the Salix acquisition.

Net Income (Loss)
Net loss was $373.7 million, or a loss of $1.08 per diluted share for the first quarter of 2016 as compared to net income of $97.7 million, or $0.28 per diluted share in the first quarter of 2015 (restated). Adjusted net income (non-GAAP) was $442.6 million, or $1.27 per diluted share for the first quarter of 2016 as compared to adjusted net income (non-GAAP) of $704.2 million, or $2.05 per diluted share in the first quarter of 2015 (restated).

Cash Flow
GAAP cash flow from operations was $558 million in the first quarter of 2016 as compared to $491 million in the prior year, an increase of 14%.

2016 Guidance
The Company is updating its full year 2016 guidance. Total revenue is expected to be in the range of $9.9 – $10.1 billion. Adjusted EPS (non-GAAP) is expected to be in the range of $6.60 – $7.00. Adjusted EBITDA (non-GAAP) is expected to be in the range of $4.80 – $4.95 billion.

Sorrento and 3SBio Announce CAR-T Joint Venture in China

On June 7, 2016 Sorrento Therapeutics, Inc. (NASDAQ: SRNE) ("Sorrento"), an antibody-centric, clinical-stage biopharmaceutical company developing new treatments for cancer and other unmet medical needs, reported its subsidiary TNK Therapeutics, Inc. ("TNK") has entered into a joint venture agreement ("JVA") with Shenyang Sunshine Pharmaceutical Company Ltd ("3SBio") to develop and commercialize proprietary immunotherapies, including those developed from, including or using TNK’s chimeric antigen receptor T cell ("CAR-T") technology targeting carcinoembryonic antigen ("CEA") positive cancers (Press release, Sorrento Therapeutics, JUN 7, 2016, View Source [SID:1234513131]). 3SBio is a leading China-based biotechnology company focused on discovering, developing, manufacturing, and commercializing biopharmaceutical products.

Under the terms of the JVA, 3SBio will make total contributions of $10 million to the joint venture and TNK will grant the joint venture an exclusive license to the CEA CAR-T technology and two additional CARs for cellular therapy for the Greater China market, including Mainland China, Hong Kong and Macau. 3SBio will initially own 51% of the joint venture while TNK will initially hold the remaining 49%.

"We are pleased that 3SBio, a leading biotechnology company in China, has recognized the value of our CAR-T technologies and we look forward to working with them to advance the development of our novel anti-cancer cellular therapies," said Dr. Henry Ji, President and CEO of Sorrento.

"3SBio is committed to introducing innovative biologic medicines for unmet medical needs in China and we look forward to collaborating with Sorrento to advance our CAR-T program into clinical trials in China. CAR-T technology is an important and promising approach to treating cancers, particularly for patients in advanced or metastatic stages of the disease. Our first candidate is aimed at CEA-positive cancers, which include colorectal, lung, liver and breast cancers," commented Dr. Jing Lou, Chairman and CEO of 3SBio.

TAPIMMUNE ANNOUNCES FINALIZATION OF LICENSE AGREEMENT WITH MAYO CLINIC TO COMMERCIALIZE A HER2neu VACCINE

On June 7, 2016 TapImmune, Inc. (OTCQB: TPIV), a clinical stage cancer immunotherapy company, reported that the Company has exercised its option agreement with Mayo Clinic and signed a worldwide license agreement to a proprietary HER2neu vaccine technology (Press release, TapImmune, JUN 7, 2016, View Source [SID:1234513125]). The license gives TapImmune the right to develop and commercialize the technology in any cancer indication in which the Her2neu antigen is overexpressed. This technology, developed in the laboratory of Keith Knutson, Ph.D. at Mayo Clinic, has completed Phase 1 clinical trials in HER2neu breast cancer patients.

TapImmune recently announced positive Phase 1 clinical data for the technology in HER2neu breast cancer. The trial demonstrated that the experimental therapy was safe, well-tolerated, and provided a robust immune response across a broad patient population. Therefore, TapImmune plans to initiate a Phase 2 clinical trial at the start of 2017. Under the license agreement the Investigational New Drug (IND) application filed with the U.S. Food and Drug Administration covering the clinical trial will be transferred to TapImmune.

Dr. Glynn Wilson TapImmune’s CEO stated "This agreement confirms our intent to further develop and commercialize TPIV 100 and TPIV 110, our novel HER2neu vaccine technology. The HER2neu antigen is a well-established therapeutic target. Our immediate plans are to complete development of a Phase 2 vaccine formulation and to establish clinical protocols for Phase 2 studies. We are excited by the recent Phase 1 data and our future clinical programs will be aimed at developing this leading vaccine candidate as a stand-alone therapy or in combination with other immunotherapies."

Mayo Clinic and Dr. Knutson have a financial interest in the technology described in this press release. Revenue Mayo receives is used to support its not-for-profit mission in patient care, education and research.

Galera Therapeutics Announces Presentation at ASCO of Positive Results from Study of GC4419 for the Reduction of Severe Oral Mucositis

On June 6, 2016 Galera Therapeutics, Inc., a clinical-stage biotechnology company developing new treatments for cancer patients, reported the presentation of data from a Phase 1b/2a clinical trial of GC4419, an investigational drug candidate for the reduction of chemoradiotherapy-induced oral mucositis (OM), at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting in Chicago, IL (Press release, Galera Therapeutics, JUN 7, 2016, View Source [SID:1234513124]). Study results suggest that GC4419 may reduce the incidence, severity and duration of severe OM in patients receiving chemoradiation therapy for the treatment of head and neck cancer, particularly when GC4419 is administered for the duration of chemoradiation therapy.

The Phase 1b/2a trial assessed the safety and pharmacokinetics of GC4419, administered intravenously prior to each dose of intensity modulated radiotherapy (IMRT) and cisplatin therapy, in 43 patients evaluable for OM. Study endpoints also included assessments of the incidence, time to onset, duration, and severity of OM and initial tumor outcomes for several dosing schedules of GC4419. The study demonstrated that, compared to historic controls, GC4419 appeared to delay onset, shorten the duration and decrease the incidence of severe OM (defined as WHO Grades 3 and 4 OM). The data also showed that the effect of GC4419 was greater if the treatment was administered for the entire duration of IMRT, with larger reductions in all grades of OM experienced by patients receiving full therapy (6-7 weeks) compared to patients receiving partial therapy (3 weeks). For example, investigators reported that the cumulative overall incidence of Grade 4 OM was 25 percent in patients in the 3 week cohort, while patients receiving full therapy had 0 percent. The median duration of severe OM was 2.5 days in patients receiving full therapy, far shorter than the 3-4 week duration in matched historical controls. Patients who received partial therapy still experienced less than 25 percent of the duration of severe OM than reported for matched historical controls.

GC4419 had a safety profile consistent with the IMRT and cisplatin regimen. The most common adverse events were attributable to chemotherapy or head and neck cancer. The plasma half-life of GC4419 was approximately 1.5 hours, with minimal accumulation after repeated dosing. Only 4.3 percent of patients required breaks in IMRT of 5 consecutive fractions or more, as opposed to 15% in published reports of other studies of OM in comparable patients. Patients followed for up to 12 months after completion of IMRT have showed no evidence of tumor protection from GC4419 treatment, with follow-up ongoing.

"We are pleased to share the promising results of the Phase 1b/2a trial, which offer early insight into the potential safety profile and clinical benefit of GC4419 in reducing severe oral mucositis in patients with head and neck cancer," said J. Mel Sorensen, MD, President and CEO of Galera. "These findings support the continued clinical development of GC4419, as well as our pipeline of breakthrough drugs targeting oxygen metabolic pathways. Enrollment in a randomized Phase 2 trial of GC4419 is currently underway. In addition, we are conducting IND-enabling work on orally active dismutase mimetics."

About Oral Mucositis (OM)
OM is a common debilitating side effect of radiation treatment in head and neck cancer (HNC) patients. Severe OM, defined as Grade 3 or 4 OM on the World Health Organization Oral Mucositis Scale, occurs in 60 to 80 percent of HNC patients who receive radiation therapy. Importantly, severe OM may result in interruptions in radiation treatment, which can compromise the otherwise good prognosis for tumor control in many of these patients. In addition, patients suffer significant pain, may develop serious infections, and may be unable to eat solid food or even drink liquids. Further, the costs of managing these side effects are substantial, particularly when hospitalization and/or surgical placement of PEG tubes to maintain nutrition and hydration is required. There is currently no drug approved to prevent or treat severe OM in head and neck cancer patients.

About GC4419
GC4419 is a superoxide dismutase mimetic, a small molecule drug that selectively targets the superoxide pathway by supplementing the activity of the superoxide dismutase enzyme family to accelerate the conversion of superoxide to hydrogen peroxide. This mechanism is thought to block the large burst of superoxide induced by radiotherapy, the initiating step in the development of OM, and has been shown to be protective of normal tissue but not tumor. In preliminary clinical studies, GC4419 markedly delayed the onset, shortened the duration and decreased the incidence of severe OM when administered intravenously prior to each dose of intensity modulated radiotherapy (IMRT) and cisplatin. GC4419 has now entered randomized Phase 2 development for the reduction of severe OM associated with chemoradiotherapy in head and neck cancer.

Blue Earth Diagnostics and Siemens’ PETNET Solutions Announce Commercial Availability of Axumin™ (Fluciclovine F 18) Injection for PET Imaging of Recurrent Prostate Cancer

On June 7, 2016 Blue Earth Diagnostics Ltd., a molecular imaging diagnostics company, and Siemens’ PETNET Solutions, Inc., a wholly-owned subsidiary of Siemens Medical Solutions USA, Inc., reported the commercial availability of Axumin (fluciclovine F 18) injection in the United States (Press release, Blue Earth Diagnostics, JUN 7, 2016, View Source [SID:1234513123]). Axumin is a novel molecular imaging agent indicated for use in positron emission tomography (PET) imaging to identify suspected sites of prostate cancer recurrence in men who have elevated blood levels of prostate specific antigen (PSA) following prior treatment. Axumin was approved by the U.S. Food and Drug Administration (FDA) on May 27, 2016, and is the first FDA-approved F-18 PET imaging agent indicated for use in patients with suspected recurrent prostate cancer.

"Blue Earth Diagnostics is extremely pleased to be working with Siemens’ PETNET Solutions, the leading supplier of PET radiopharmaceuticals in the United States; we both share a passion for PET molecular imaging, and for providing imaging tools to improve patient management."
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Axumin will be commercially available this month through Blue Earth Diagnostics’ manufacturer and exclusive distributor in the United States, Siemens’ PETNET Solutions. Initial commercial production of Axumin will be underway at certain Siemens’ PETNET Solutions radiopharmacies, with increasingly broader availability planned in the coming months.

"We are tremendously pleased with FDA’s recent approval of Axumin for suspected biochemically recurrent prostate cancer, and hope that this will make a real difference to patients and their physicians," said Jonathan Allis, D. Phil., CEO of Blue Earth Diagnostics Ltd. "Blue Earth Diagnostics is extremely pleased to be working with Siemens’ PETNET Solutions, the leading supplier of PET radiopharmaceuticals in the United States; we both share a passion for PET molecular imaging, and for providing imaging tools to improve patient management."

"This is a significant milestone for the PET industry, as this is the first proprietary F-18 labeled agent for an oncology indication approved by the FDA. And, being F-18 labeled enables efficient distribution and wide patient access," said Barry Scott, head of Siemens’ PETNET Solutions. "Through our broad network of radiopharmacies we are able to increase access to PET tracers, like Axumin, helping healthcare providers to address society’s most challenging diseases. We are proud to work with Blue Earth Diagnostics as the U.S. commercial supplier making Axumin available to imaging centers and their patients."

Blue Earth Diagnostics and Siemens’ PETNET Solutions welcome visitors to the upcoming SNMMI meeting to visit their exhibit booths. Blue Earth Diagnostics is at Booth 337; Siemens’ PETNET Solutions is at Booth 431.

About AxuminTM (fluciclovine F 18)

Axumin (fluciclovine F 18) injection is a novel product indicated for use in positron emission tomography (PET) imaging to identify suspected sites of prostate cancer recurrence in men. Recurrence of prostate cancer is suspected by an increase in prostate specific antigen (PSA) levels following initial therapy. PET imaging with Axumin may identify the location and extent of such recurrence. Axumin was developed to enable visualization of the increased amino acid transport that occurs in many cancers, including prostate cancer. It consists of a synthetic amino acid that is preferentially taken up by prostate cancer cells compared with surrounding normal tissues, and is labeled with the radioisotope F18 for PET imaging. Axumin was approved by the U.S. Food and Drug Administration on May 27, 2016 following Priority Review, and is the first product commercialized by Blue Earth Diagnostics, which licensed the product from GE Healthcare. The molecule is being investigated by Blue Earth Diagnostics for other potential cancer indications, such as glioma.

Indication and Important Safety Information About Axumin

INDICATION

Axumin (fluciclovine F 18) injection is indicated for positron emission tomography (PET) imaging in men with suspected prostate cancer recurrence based on elevated blood prostate specific antigen (PSA) levels following prior treatment.

IMPORTANT SAFETY INFORMATION

Image interpretation errors can occur with Axumin PET imaging. A negative image does not rule out recurrent prostate cancer and a positive image does not confirm its presence. The performance of Axumin seems to be affected by PSA levels. Axumin uptake may occur with other cancers and benign prostatic hypertrophy in primary prostate cancer. Clinical correlation, which may include histopathological evaluation, is recommended.
Hypersensitivity reactions, including anaphylaxis, may occur in patients who receive Axumin. Emergency resuscitation equipment and personnel should be immediately available.
Axumin use contributes to a patient’s overall long-term cumulative radiation exposure, which is associated with an increased risk of cancer. Safe handling practices should be used to minimize radiation exposure to the patient and health care providers.
Adverse reactions were reported in ≤ 1% of subjects during clinical studies with Axumin. The most common adverse reactions were injection site pain, injection site erythema and dysgeusia.
To report suspected adverse reactions to Axumin, call 1-855-AXUMIN1 (1-855-298-6461) or contact FDA at 1-800-FDA-1088 or www.fda.gov/medwatch.

Full Axumin prescribing information is available at www.axumin.com.

About Prostate Cancer/Recurrent Prostate Cancer

Prostate cancer is the second leading cause of cancer death in men. While most primary prostate cancer can be successfully treated, the disease recurs in up to one-third of patients. In some patients recurrent disease is detectable only by a rise in prostate specific antigen (PSA) levels, yet the location of the recurrence cannot consistently be located by conventional imaging, severely limiting treatment guidance for these patients.