On February 25, 2016 Baxalta Incorporated (NYSE: BXLT), a global biopharmaceutical leader dedicated to delivering transformative therapies to patients with orphan diseases and underserved conditions, and Precision BioSciences, the genome editing company, reported a global collaboration to develop a broad series of allogeneic chimeric antigen receptor (CAR) T cell therapies directed towards areas of major unmet need in multiple cancers (Press release, Baxalta, FEB 25, 2016, View Source [SID:1234509194]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

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

                  Schedule Your 30 min Free Demo!

CAR T is widely recognized as a breakthrough technology with the potential to become a curative option for certain malignancies. Most CAR T cell therapy technologies isolate cells from cancer patients’ blood and re-engineer them to specifically target receptors on tumor cells. The reprogrammed cells are multiplied in a laboratory and then returned to the patient to target the tumor. This approach has had initial success in clinical trials for certain tumor types, but persistent scaling challenges remain based on the highly personalized nature of the therapy. Precision BioSciences’ proprietary ARCUS genome editing technology enables the production of CAR T cells derived from healthy donors rather than relying on the patient. This approach aims to overcome the manufacturing-related limitations with existing CAR T therapies and enable a broader range of malignancies to be targeted.

"Collaborating with Precision BioSciences enables Baxalta to accelerate innovation in immuno-oncology with a next-generation, donor-derived CAR T strategy using a proprietary combination of genome editing expertise and technology," said David Meek, executive vice president and president, Oncology, Baxalta. "Combining Precision BioSciences’ ARCUS technology with Baxalta’s global infrastructure, expertise and growing immuno-oncology portfolio is a synergistic approach that we believe has the potential to make disruptive approaches available to people with a range of underserved cancers."

"Baxalta is an ideal partner in CAR T for Precision and our ARCUS genome editing platform because of their global reach, collaborative business model, and long-term commitment to succeeding in immuno-oncology," said Matthew Kane, CEO of Precision BioSciences. "We look forward to working closely with the team at Baxalta to develop novel CAR T therapeutics that could transform the treatment of cancer."

Under the terms of the agreement, Baxalta and Precision BioSciences will develop CAR T therapies for up to six unique targets, with the first program expected to enter clinical studies in late 2017. Precision BioSciences will be responsible for performing early-stage research activities up to Phase 2, following which Baxalta has the exclusive right to opt in for late-stage development and commercialization. Precision BioSciences will receive an upfront payment of $105 million from Baxalta, with additional option fees, developmental, clinical, regulatory, and sales milestones, potentially totaling up to $1.6 billion, in addition to royalties on worldwide sales. Precision also has the right to participate in the development and commercialization of any licensed products resulting from the collaboration through a 50/50 co-development and co-promotion option in the United States. Additional terms and initial targets were not disclosed.

The agreement follows another recently established Baxalta collaboration to advance novel therapeutics against checkpoint targets, advancing the company’s strategic commitment to investing in immuno-oncology and building an innovative portfolio of cancer immunotherapies.

On February 25, 2016 AstraZeneca and Acerta Pharma BV, a company in which AstraZeneca has a majority equity investment, reported that the European Medicines Agency (EMA) Committee for Orphan Medicinal Products (COMP) adopted three positive opinions recommending acalabrutinib (ACP-196) for designation as an orphan medicinal product (Press release, AstraZeneca, FEB 25, 2016, View Source [SID:1234509186]). The three positive opinions are for the treatment of chronic lymphocytic leukaemia (CLL) / small lymphocytic lymphoma (SLL), mantle cell lymphoma (MCL) and lymphoplasmacytic lymphoma (Waldenström’s macroglobulinaemia, MG).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

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

                  Schedule Your 30 min Free Demo!

Sean Bohen, Executive Vice-President of Global Medicines Development and Chief Medical Officer at AstraZeneca, said: "Today’s three positive opinions recommending acalabrutinib for designation as an orphan medicinal product are important milestones. They reinforce the strategic rationale for our investment in Acerta, demonstrating clear progress in developing a potential best-in-class medicine that could transform treatment for patients across a range of blood cancers. The positive opinions underscore the continued need for the development of new therapies in these serious and life-threatening conditions and support our commitment to bring new medicines to patients as quickly as possible."

CLL is a slow-growing blood and bone marrow cancer that accounts for approximately one in four cases of leukaemia.i,ii Most CLL patients experience disease progression despite initial response to therapy and may require additional treatment. iii SLL is a clinically similar disease localized to the lymph nodes.iv

MCL is an aggressive non-Hodgkin’s lymphoma (NHL) typically associated with very poor outcomes.v MCL represents around 5% of all NHLs.vi The name comes from the fact that the tumour cells originate in the mantle zone of the lymph node. vi

WM is a rare, slow-growing cancer predominantly affecting older individuals, with a mean age of 60 at diagnosis.vii, viii and median survival from five to nearly eleven years. vii, viii

The COMP adopts an opinion on Orphan Drug Designation, after which the opinion is submitted to the European Commission (EC) for endorsement. Orphan Drug Designation is a status assigned to a medicine intended for use in rare diseases.ix To be granted orphan status by the EC, a medicine must be intended for the treatment, prevention or diagnosis of a disease that is life threatening and has a prevalence of up to five in 10,000 in the European Union. Additionally, the intended medicine must aim to provide significant benefit to those affected by the condition. Orphan status provides companies with development and market exclusivity incentives for designated compounds and medicines.

In addition to ongoing Phase II/III trials in CLL, MCL and WM, acalabrutinib is currently being tested in Phase I/II trials in monotherapy as well as in combination with immunotherapy or chemotherapies in a range of other blood cancers and solid tumours.

NOTES TO EDITORS

i Chronic Lymphocytic Leukemia. Leukemia & Lymphoma Society Website. View Source Accessed February 19, 2016.

ii What are the key statistics for chronic lymphocytic leukemia? American Cancer Society Website. View Source . Accessed February 19, 2015.

iii Veliz M, Pinilla-Ibarz J. Treatment of relapsed or refractory chronic lymphocytic leukemia. Cancer Control. 2012; 19(1):37-53.

iv Chronic lymphocytic leukemia/Small lymphocytic lymphoma, National Cancer Institute Website. View Source Accessed February 19, 2016.

v Campo E and Rule S. Mantle cell lymphoma: evolving management strategies. Blood. 2015 Jan 1;125(1):48-55.

vi Mantle Cell Lymphoma, Lymphoma.org Website. View Source Accessed February 19, 2016.

vi Lymphoplasmacytic lymphoma. National Cancer Institute. Surveillance, Epidemiology, and End Results program. View Source Accessed February 19, 2016.

vii Dimopoulos MA, Kastritis E, Ghobrial IM. Waldenström’s macroglobulinemia: a clinical perspective in the era of novel therapeutics. Ann Oncol. 2016 Feb;27(2):233-40.

viii Oza and Rajkumar. Waldenstrom macroglobulinemia: prognosis and management. Blood Cancer Journal (2015) 5, e394; doi:10.1038/bcj.2015.28

ix European Medicines Agency web site. "Orphan Designation." View Source Accessed February 17, 2016.

About Acalabrutinib

Acalabrutinib is a highly selective, irreversible, second generation BTK inhibitor, with approximately 1,000 patients treated to date in clinical studies across the entire development programme. More than 600 patients have been treated with acalabrutinib monotherapy. Phase I/II data showing a favourable safety profile and efficacy in relapsed/refractory chronic lymphocytic leukaemia patients was presented at the American Society of Haematology Annual Meeting & Exposition in December 2015, with simultaneous publication in the New England Journal of Medicine.

Potentially registrational studies in haematological malignancies are ongoing. In addition, a head-to-head study versus ibrutinib in high risk chronic lymphocytic leukaemia patients is currently ongoing.

Acalabrutinib is also currently being tested in multiple Phase I/II studies in solid tumours, as monotherapy or in combination with immune checkpoint inhibitors or other standard of care regimens.

On February 25, 2016 United Therapeutics Corporation (NASDAQ: UTHR) reported its financial results for the fourth quarter and year ended December 31, 2015 (Press release, United Therapeutics, FEB 25, 2016, View Source [SID:1234509185]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

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

                  Schedule Your 30 min Free Demo!

"We are pleased with our 2015 top-line financial results as fourth-quarter revenues were $405 million, a 17% increase, and total annual revenues approached $1.5 billion, a 14% increase, as compared to the same periods in the prior year," said Roger Jeffs, Ph.D., United Therapeutics’ President and Co-Chief Executive Officer. "These strong 2015 top-line financial results generated annual net income of $652 million, a 92% increase, and annual non-GAAP earnings(1) of $632 million, a 26% increase, as compared to the prior year, and further strengthens our ability to advance a strategic product pipeline of more innovative therapeutic options and drug delivery technologies for patients with PAH."

Key financial highlights include (in thousands, except per share data):


Three Months Ended
December 31,

Year Ended
December 31,

2015

2014

2015

2014

Revenues
$
404,875

$
346,363

$
1,465,761

$
1,288,519
Net income
$
104,644

$
115,935

$
651,639

$
340,074
Non-GAAP earnings(1)
$
183,034

$
151,797

$
631,655

$
501,392
Net income, per diluted share
$
2.10

$
2.17

$
12.72

$
6.28
Non-GAAP earnings, per diluted share(1)
$
3.68

$
2.83

$
12.33

$
9.26

(1) See definition of non-GAAP earnings, a non-GAAP financial measure, and a reconciliation of net income to non-GAAP earnings below.
Revenues

The table below summarizes the components of total revenues (dollars in thousands):


Three Months Ended
December 31,

Percentage

Year Ended
December 31,

Percentage


2015

2014

Change

2015

2014

Change

Net product sales:

Remodulin

$
140,482

$
136,591

3
%
$
572,795

$
553,728

3
%
Tyvaso

119,130

115,070

4
%
470,069

463,067

2
%
Adcirca

91,581

73,545

25
%
278,829

221,471

26
%
Orenitram

37,289

20,175

85
%
118,434

41,267

187
%
Unituxin

15,714

—

NM
(1)
20,443

—

NM
(1)
Other
679

982

(31)
%
5,191

8,986

(42)
%
Total revenues

$
404,875

$
346,363

17
%
$
1,465,761

$
1,288,519

14
%

(1) Calculation is not meaningful.

Revenues for the quarter ended December 31, 2015 increased by $58.5 million compared to the same period in 2014. The growth in revenues primarily resulted from: (1) an $18.0 million increase in Adcirca net product sales; (2) a $17.1 million increase in Orenitram net product sales; and (3) a $15.7 million increase in Unituxin net product sales.

Revenues for the year ended December 31, 2015 increased by $177.2 million compared to the same period in 2014. The growth in revenues primarily resulted from: (1) a $77.2 million increase in Orenitram net product sales; (2) a $57.4 million increase in Adcirca net product sales; and (3) a $20.4 million increase in Unituxin net product sales.

Expenses

Research and development expense. The table below summarizes research and development expense by major project and non-project components (dollars in thousands):


Three Months Ended
December 31,

Percentage

Year Ended
December 31,

Percentage


2015

2014

Change

2015

2014

Change

Project and non-project:

Cardiopulmonary

$
38,297

$
46,857

(18)
%
$
130,097

$
131,843

(1)
%
Share-based compensation expense

30,336

15,729

93
%
87,713

72,714

21
%
Other

7,315

8,896

(18)
%
27,288

37,992

(28)
%
Total research and development expense

$
75,948

$
71,482

6
%
$
245,098

$
242,549

1
%
Cardiopulmonary. The decrease in cardiopulmonary project expenses of $8.6 million for the quarter ended December 31, 2015, as compared to the same period in 2014, resulted from a decrease of $12.9 million in expenses related to our esuberaprost development partially offset by: (1) a $1.4 million increase in expenses related to our development of a cell-based product for the treatment of PAH under a license agreement with Pluristem Ltd., which we terminated in the fourth quarter of 2015; and (2) a $1.3 million increase in expenses related to the development of our semi-disposable pump with DEKA Research & Development Corp.

Share-based compensation. The increases of $14.6 million and $15.0 million, respectively, during the quarter and year ended December 31, 2015, as compared to the same periods in 2014, corresponded to the appreciation of our stock price during those periods. During the quarter ended December 31, 2015, the price of our common stock appreciated 19 percent, compared to the one percent appreciation in our stock price during the same period in 2014. During the year ended December 31, 2015, the price of our common stock appreciated 21 percent, compared to the 15 percent appreciation in our stock price during the same period in 2014.

Other. The decrease in other research and development expenses of $10.7 million for the year ended December 31, 2015, as compared to the same period in 2014, was primarily attributable to a $6.4 million decrease in expenditures for our development of Unituxin, which was approved by the United States Food and Drug Administration (FDA) in March of 2015, and a $3.9 million decrease in research and development expenditures not allocated to specific projects.

Selling, general and administrative expense. The table below summarizes selling, general and administrative expense by major categories (dollars in thousands):


Three Months Ended
December 31,

Percentage

Year Ended
December 31,

Percentage


2015

2014

Change

2015

2014

Change

Category:

General and administrative

$
42,801

$
41,493

3
%
$
174,570

$
186,312

(6)
%
Sales and marketing

24,698

21,312

16
%
94,297

82,000

15
%
Share-based compensation expense

81,062

17,729

357
%
183,745

112,975

63
%
Total selling, general and administrative expense

$
148,561

$
80,534

84
%
$
452,612

$
381,287

19
%
General and administrative. The decrease in general and administrative expenses of $11.7 million for the year ended December 31, 2015, as compared to the same period in 2014, was attributable to: (1) a $12.7 million decrease due to timing of the payment of grants to non-affiliated, non-profit organizations that provide financial assistance to patients with PAH; and (2) a $9.4 million decrease in legal expenses resulting from the April 2015 closure of the investigation by the Office of Inspector General of the Department of Health and Human Services related to our marketing practices; partially offset by (3) a $10.0 million increase in salaries and other compensation-related expenses driven by the general expansion of our business.

Sales and marketing. The increase in sales and marketing expenses of $12.3 million for the year ended December 31, 2015, as compared to the same period in 2014, was driven by: (1) an $8.6 million increase in marketing activities for all of our commercial products, primarily for our most recently approved PAH product, Orenitram, and our first oncology product, Unituxin; and (2) a $3.7 million increase in salaries and other compensation-related expenses driven by the expansion of our personnel in connection with the growth of our commercial product portfolio.

Share-based compensation. The increases of $63.3 million and $70.8 million, respectively, during the quarter and year ended December 31, 2015, as compared to the same periods in 2014, corresponded to the appreciation of our stock price during those periods. During the quarter ended December 31, 2015, the price of our common stock appreciated 19 percent, compared to the one percent appreciation in our stock price during the same period in 2014. During the year ended December 31, 2015, the price of our common stock appreciated 21 percent, compared to the 15 percent appreciation in our stock price during the same period in 2014.

Cost of product sales. The table below summarizes cost of product sales by major categories (dollars in thousands):


Three Months Ended
December 31,

Percentage

Year Ended
December 31,

Percentage


2015

2014

Change

2015

2014

Change

Category:

Cost of product sales

$
19,339

$
16,904

14
%
$
60,240

$
121,518

(50)
%
Share-based compensation expense (benefit)

5,970

(1,134)

626
%
8,796

4,365

102
%
Total cost of product sales

$
25,309

$
15,770

60
%
$
69,036

$
125,883

(45)
%
Cost of product sales. The decrease in cost of product sales of $61.3 million for the year ended December 31, 2015, as compared to the same period in 2014, resulted primarily from the expiration of our royalty obligation to GlaxoSmithKline plc in October 2014. During the twelve months ended December 31, 2014, we incurred $72.5 million in royalty expense related to this obligation. This decrease was partially offset by an increase in the cost of product sales of $5.6 million and $3.0 million of Orenitram and Adcirca, respectively, due to increased sales of these products in 2015, and $3.2 million from Unituxin which was commercially launched during the third quarter of 2015.

Share-based compensation. The increases of $7.1 million and $4.4 million, respectively, during the quarter and year ended December 31, 2015, as compared to the same periods in 2014, corresponded to the appreciation of our stock price during those periods. During the quarter ended December 31, 2015, the price of our common stock appreciated 19 percent compared to the one percent appreciation in our stock price during the same period in 2014. During the year ended December 31, 2015, the price of our common stock appreciated 21 percent compared to the 15 percent appreciation in our stock price during the same period in 2014.

Gain on Sale of Intangible Asset

In September 2015, we sold the Rare Pediatric Priority Review Voucher (PPRV) that we received from the FDA in connection with the approval of Unituxin for $350.0 million in cash. The proceeds from the sale of the PPRV were recognized as a gain on the sale of an intangible asset, as the PPRV did not have a carrying value on our consolidated balance sheet at the time of sale.

Income Taxes

The provision for income taxes was $51.4 million for the quarter ended December 31, 2015, as compared to $58.8 million for the quarter ended December 31, 2014. The decrease in the provision for income taxes corresponded to the decrease in income before income taxes.

The provision for income taxes was $392.8 million for the year ended December 31, 2015, as compared to $185.1 million for the same period in 2014. The increase in the provision for income taxes corresponded to the increase in income before income taxes. For the years ended December 31, 2015 and December 31, 2014, the effective tax rates were approximately 38 percent and 35 percent, respectively. The increase in the effective rate is primarily due to the decrease of general business tax credits in the current year.

Non-GAAP Earnings

Non-GAAP earnings is defined as net income, adjusted for the following charges, which are presented net of our annual effective income tax rate, as applicable: (1) interest expense; (2) license fees; (3) depreciation and amortization; (4) impairment charges; and (5) share-based compensation expense (stock option, share tracking award and employee stock purchase plan). For 2015, we also adjusted non-GAAP earnings to eliminate the gain (net of our annual effective income tax rate) resulting from the sale of the PPRV in September 2015.

A reconciliation of net income to non-GAAP earnings is presented below (in thousands, except per share data):


Three Months Ended
December 31,

Year Ended
December 31,

2015

2014

2015

2014
Net income, as reported
$
104,644

$
115,935

$
651,639

$
340,074
Adjust for the following charges(1):

Interest expense

340

2,268

2,949

11,312
License fees

—

7,067

—

7,067
Depreciation and amortization

4,958

5,743

20,502

20,734
Share-based compensation expense

73,092

20,784

174,531

122,205
Gain on sale of intangible asset

—

—

(217,966)

—
Non-GAAP earnings
$
183,034

$
151,797

$
631,655

$
501,392
Non-GAAP earnings per share:

Basic

$
4.01

$
3.20

$
13.73

$
10.41
Diluted

$
3.68

$
2.83

$
12.33

$
9.26
Weighted average number of common shares outstanding:


Basic

45,687

47,431

46,000

48,176
Diluted

49,746

53,548

51,221

54,155

(1) Non-GAAP earnings adjustments are presented net of the impact of our actual effective income tax rates of approximately 38 percent and 35 percent for the quarters and years ended December 31, 2015 and 2014, respectively. We changed the presentation of our non-GAAP earnings in the first quarter of 2015 for all periods presented to reflect the impact of our estimated effective income tax rates on each component. The sum of each of the quarters in 2015 and 2014, respectively, will not add to the full year non-GAAP earnings amount as we apply the estimated effective income tax rate to each quarter.

On February 25, 2016 Heat Biologics, Inc. ("Heat") (Nasdaq:HTBX), an immuno-oncology company developing novel therapies that activate a patient’s immune system against cancer, reported that the company will no longer enroll new patients in its Phase 2 monotherapy trial arm evaluating HS-410 alone for the treatment of non-muscle invasive bladder cancer (NMIBC) (Press release, Heat Biologics, FEB 25, 2016, View Source [SID:1234509177]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

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

                  Schedule Your 30 min Free Demo!

Heat added the monotherapy trial arm in response to the intermittent global shortage of standard of care Bacillus Calmette-Guérin (BCG) in early 2015. The shortage has since then been resolved and as such, Heat will no longer enroll new patients in this trial arm based on discussions with the U.S. Food and Drug Administration (FDA). The decision does not relate to concerns regarding the safety profile of HS-410. The 16 patients currently enrolled, out of the anticipated 25 patients, can continue receiving HS-410 monotherapy per the study protocol. Heat anticipates reporting topline 6-month data from these 16 patients in the fourth quarter of 2016, contemporaneous with reporting data from the company’s BCG combination cohorts.

This decision does not impact the three additional randomized Phase 2 trial arms evaluating HS-410 in combination with BCG for the treatment of NMIBC. As previously announced, Heat completed enrollment of the 75 patients for these three combination trial arms in October 2015 and continues to expect to report one-year topline efficacy, immune-response and safety data in the fourth quarter of 2016.

About HS-410 (vesigenurtacel-L)

HS-410 is an investigational product candidate for NMIBC based on Heat’s proprietary ImPACT immunotherapy platform, designed to generate CD8+ "killer" T cells that attack cancer cells. HS-410 is currently being evaluated in a Phase 2, placebo-controlled NMIBC trial at multiple centers and has been granted U.S. FDA Fast Track Designation for the treatment of NMIBC.