On October 29, 2015 Baxalta Incorporated (NYSE:BXLT) reported strong third quarter financial results, exceeding its previously-issued sales and earnings guidance (Press release, Baxalta, OCT 29, 2015, View Source [SID:1234507835]). The company also raised its outlook for the second half of 2015 and provided preliminary 2016 guidance.
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 already delivering on our promise to patients and shareholders in the short time that we have been an independent, standalone company," said Ludwig Hantson, chief executive officer and president. "Baxalta’s strong financial performance, increasing depth and breadth across the portfolio and meaningful pipeline achievements all validate our company’s compelling growth prospects, vision and commitment to driving shareholder value."
Results for the Third Quarter 2015
In the third quarter, Baxalta generated net income on a GAAP (Generally Accepted Accounting Principles) basis of $309 million and earnings of $0.45 per diluted share. These results include net after-tax special items totaling $76 million, or $0.11 per diluted share, primarily for intangible asset amortization, expenses associated with the company’s separation, certain business development and collaboration-related items, and a gain from the sale of the company’s vaccines business which is classified as a discontinued operation.
On an adjusted pro forma basis, excluding special items, Baxalta reported third quarter net income of $385 million and earnings of $0.56 per diluted share, which exceeded the company’s previously-issued guidance of $0.48 to $0.50 per diluted share. These financial results reflect positive sales momentum from across the portfolio, including meaningful sales contributions, value from new product launches, and strong operational performance.
Positive Sales Momentum Across Market-Leading Portfolio
In the third quarter, Baxalta’s worldwide revenues on a GAAP basis of $1.6 billion advanced 7 percent from the prior-year period. Excluding the impact of foreign currency, sales advanced 16 percent.
On a pro forma basis, worldwide revenues grew 4 percent. Excluding the impact of foreign currency, sales advanced 13 percent, exceeding the company’s previously-issued guidance of growth in the 8 to 10 percent range. Within the United States, sales of $841 million rose 14 percent, and international sales of $754 million declined 5 percent. Excluding foreign currency, international sales increased 12 percent.
Baxalta’s leading hematology and immunology businesses generated double-digit sales growth (excluding the impact of foreign currency) in the quarter. Hematology revenues of $935 million increased 10 percent (excluding the impact of foreign currency) as the company continues to focus on enhancing access and elevating standards of care worldwide. Key drivers of growth include heightened demand for ADVATE [Antihemophilic Factor (Recombinant)], a treatment for hemophilia A, and FEIBA [Anti-Inhibitor Coagulant Complex], an inhibitor treatment. A benefit from newly launched products, such as RIXUBIS [Coagulation Factor IX (Recombinant)] for the treatment of hemophilia B, and OBIZUR [Antihemophilic Factor (Recombinant), Porcine Sequence], for the treatment of acquired hemophilia A, also contributed to performance.
Immunology sales of $626 million advanced 13 percent (excluding the impact of foreign currency) on a pro forma basis. The company continues to capitalize on its broad and differentiated portfolio of immunoglobulin therapies, including HYQVIA [Immune Globulin Infusion 10% (Human) with Recombinant Human Hyaluronidase], and is driving strong sales of specialty biotherapeutics. Baxalta’s new oncology business, which leverages the company’s heritage and expertise in orphan diseases, recorded sales of $34 million in the quarter. This reflects the recent acquisition of ONCASPAR (pegaspargase), a marketed biologic treatment for acute lymphocytic leukemia (ALL).
Nine-Month Sales Results
For the nine-month period, Baxalta reported worldwide revenues on a GAAP basis of $4.4 billion, which increased 3 percent from the prior-year period. Excluding the impact of foreign currency, sales advanced 11 percent.
On a pro forma basis, worldwide revenues for the nine-month period grew 2 percent, and excluding the impact of foreign currency, sales advanced 10 percent. Within the United States, sales of $2.4 billion rose 9 percent, and international sales of $2.1 billion declined 5 percent. Excluding the impact of foreign currency, international sales increased 10 percent.
Advancing Pipeline with Key Milestone Achievements
Baxalta is building a solid track record with an array of meaningful milestone achievements toward its objective of launching 20 new products by 2020.
"We continue to make progress toward our goal of achieving 20 new product launches by 2020 with a rich pipeline of promising late-stage assets, novel mechanisms of action and disruptive technologies," added Hantson. "Successful commercial launches of these products are projected to result in approximately $2.8 billion in risk-adjusted revenues by 2020, and approximately $7 billion on a risk-adjusted basis by 2025, creating enhanced value for patients, customers and shareholders."
Recent highlights include:
Approval in Canada of OBIZUR [Antihemophilic Factor (Recombinant), Porcine Sequence] for the treatment of bleeding episodes in patients with acquired hemophilia A, a very rare and life-threatening acute bleeding disorder. OBIZUR is the first recombinant porcine sequence FVIII treatment specifically designed to enable physicians to monitor treatment response by measuring FVIII activity levels in addition to clinical assessments. The company has also received a positive opinion on OBIZUR from the European Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA), and expects marketing authorization from the European Commission later this year.
Publication of pivotal phase III data for BAX 111 (to be marketed in the U.S. as VONVENDI) in Blood, the journal of the American Society of Hematology (ASH) (Free ASH Whitepaper). The data showed 100 percent of patients treated with this highly purified recombinant von Willebrand factor (rVWF) candidate achieved success in the management of bleeding episodes.1 VONVENDI is currently under review by the FDA and, if approved, would become the first recombinant replacement treatment for managing bleeding episodes for von Willebrand patients.2
FDA submission for approval of an investigational 20% concentration subcutaneous immune globulin (IGSC) treatment for primary immunodeficiencies. As Baxalta expands its immunoglobulin portfolio to address patient needs, the higher potency IG treatment is intended to offer faster infusions with less volume. The product is also under regulatory review in Europe.
Initiation of a pivotal phase III clinical trial in collaboration with Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) in patients with chronic plaque psoriasis for M923, a biosimilar version of HUMIRA (adalimumab). The trial will compare the safety, efficacy and immunogenicity of M923 with HUMIRA, and the companies are targeting first regulatory submission in 2017 and first commercial launch in 2018.
Announcement of plans to submit a new drug application (NDA) to the FDA with partner CTI BioPharma Corp. (NASDAQ: CTIC) for pacritinib, an investigational oral kinase inhibitor with specificity for JAK2 and FLT3 for the treatment of patients with myelofibrosis, in the fourth quarter of 2015. The companies plan to request priority review for the treatment of patients with intermediate and high-risk myelofibrosis with low platelet counts of less than 50,000 per microliter (<50,000/uL) for whom there are no approved treatments.
Completion of the ONCASPAR leukemia portfolio acquisition from Sigma-Tau Finanziaria S.p.A. The acquisition includes ONCASPAR, a marketed biologic treatment for acute lymphocytic leukemia (ALL), the investigational biologic calaspargase pegol, and an established oncology infrastructure with clinical and sales resources.
Financial Outlook for Fourth Quarter and Second Half 2015
For the fourth quarter of 2015, Baxalta expects pro forma sales growth, excluding the impact of foreign currency, of 3 to 5 percent. Including the impact of foreign currency, the company expects pro forma sales to decline 1 to 3 percent. Baxalta also expects fourth quarter 2015 adjusted earnings, before special items, of $0.55 to $0.57 per diluted share.
This guidance translates into an improved outlook for the second half of 2015, which now includes adjusted earnings, before special items, of $1.11 to $1.13 per diluted share. This is an increase from the previously communicated earnings guidance range of $1.02 to $1.04 per diluted share. Also for the second half of 2015, Baxalta now expects pro forma sales growth, excluding the impact of foreign currency, of approximately 8 to 9 percent, compared to its prior guidance of growth in the 5 to 6 percent range. Including the impact of foreign currency, pro forma sales growth is expected to be flat to up 1 percent.
For the full-year 2015, Baxalta projects pro forma sales growth, excluding the impact of foreign currency, of approximately 8 percent, compared to its prior guidance of growth in the 6 to 7 percent range. Including the impact of foreign currency, the company now expects pro forma sales in 2015 to be comparable to 2014.
Preliminary Full-Year 2016 Guidance
Baxalta is also providing preliminary guidance for full-year 2016, which includes pro forma sales growth, excluding the impact of foreign currency, of 8 to 9 percent. Including the impact of foreign currency, the company expects pro forma sales growth of approximately 7 to 8 percent. Based on strong sales momentum and operating performance, Baxalta expects adjusted earnings, before special items, of $2.15 to $2.25 per diluted share for full-year 2016.
"Baxalta has a competitive and compelling financial profile with an outlook that balances accelerating growth with attractive returns," said Robert J. Hombach, chief financial officer and chief operations officer. "We firmly believe that our focus on orphan diseases and underserved conditions combined with numerous new product opportunities uniquely positions us to drive enhanced and sustainable value for our shareholders."
Reconciliation of GAAP and Non-GAAP Results
The company’s guidance for earnings in the fourth quarter of 2015 excludes approximately $0.02 per diluted share of projected intangible asset amortization expense. The company’s adjusted earnings guidance for the second half excludes $0.13 per diluted share of special items comprising $0.11 per diluted share of special items recorded during the third quarter and $0.02 of projected intangible asset amortization expense for the fourth quarter. Reconciling for the inclusion of these items results in expected GAAP earnings of $0.53 to $0.55 per diluted share for the fourth quarter of 2015, and earnings of $0.98 to $1.00 per diluted share for the second half of 2015.
The company’s guidance for full-year 2016 excludes approximately $0.08 per diluted share of projected intangible asset amortization expense. Reconciling for the inclusion of this item results in expected GAAP earnings of $2.07 to $2.17 per diluted share.