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ARIAD Reports First Quarter 2016 Financial Results and Progress on Strategic Review

On May 10, 2016 ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) reported financial results for the first quarter of 2016, including revenue from sales of Iclusig (ponatinib) (Press release, Ariad, MAY 10, 2016, View Source [SID:1234512197]).

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The Company also provided an update on corporate developments and its ongoing strategic review and provided financial guidance following its announced transaction with Incyte Corporation.

"Iclusig demonstrated strong performance in both the U.S. and European markets during the first quarter of 2016 compared to the prior year period, primarily driven by increasing demand and new patient growth," said Paris Panayiotopoulos, president and chief executive officer of ARIAD. "Following our major announcement yesterday with Incyte regarding our agreement to divest our European operations and license the commercial rights to Iclusig in Europe, we are on track to complete our strategic review this quarter aimed at delivering patient and shareholder value. We also look forward to the presentation of pivotal, registration data on brigatinib at ASCO (Free ASCO Whitepaper), along with our planned filing for marketing approval of brigatinib in the U.S. in the third quarter of this year."

2016 First Quarter Financial Results

Revenues

Net product revenues from sales of Iclusig were $33.6 million for the first quarter of 2016, compared to $23.9 million in the first quarter of 2015, representing growth of 41%. Excluding the impact of one-time revenue of $1.2 million recognized in Q1 2015 in connection with our transition to the sell-in method in the U.S., worldwide growth would have been 48%.
U.S. sales of Iclusig were $24.9 million for the first quarter of 2016, compared to $18.7 million in the first quarter of 2015, representing growth of 33%. Excluding the impact of one-time revenue of $1.2 million recognized in Q1 2015 in connection with our transition to the sell-in method, U.S. growth would have been 42%.
European sales of Iclusig were $8.7 million for the first quarter of 2016, compared to $5.2 million in the first quarter of 2015, representing growth of 67%. This difference is primarily due to increased demand and the launch of Iclusig in new countries.
GAAP and Non-GAAP Net Loss

GAAP net loss for the quarter ended March 31, 2016 was $53.8 million, or $0.28 loss per share, compared to GAAP net loss of $52.7 million, or $0.28 loss per share, for the quarter ended March 31, 2015.

Non-GAAP net loss for the quarter ended March 31, 2016 was $44.1 million, or $0.23 loss per share, compared to non-GAAP net loss of $44.2 million, or $0.24 per share for the quarter ended March 31, 2015.

Non-GAAP net loss excludes stock-based compensation and restructuring charges. See "Use of Non-GAAP Financial Measures" below for a description of non-GAAP financial measures and the reconciliation between GAAP and non-GAAP measures at the end of this press release.

Operating Expenses

GAAP R&D expenses were $44.1 million for the first quarter of 2016, an increase of 12% compared to the first quarter of 2015, reflecting an increase in costs for our investigational ALK+ inhibitor, brigatinib, related to the ongoing Phase 2 ALTA trial and NDA-enabling pre-clinical studies, as well as increase in personnel and other costs in support of our R&D activities.
GAAP selling, general and administrative expenses were $36.0 million for the first quarter of 2016, an increase of 7% compared to the first quarter of 2015, reflecting an increase in professional fees and other expenses related to the commercialization of Iclusig.
Restructuring charge expenses were $2.9 million for the first quarter of 2016, associated with employee workforce reductions of approximately 90 positions.
Cash Position

As of March 31, 2016, cash, cash equivalents and marketable securities totaled $168.3 million, compared to $242.3 million at December 31, 2015.
2016 Financial Guidance

Following the anticipated closing of the transaction announced yesterday in which ARIAD has agreed to sell its European operations and license commercial rights to Iclusig in Europe to Incyte, we are revising our product revenue guidance for 2016 and providing expense and year-end cash guidance for 2016, as follows:
Global Iclusig net product and royalty revenues are expected to be in the range of $170 million to $180 million, compared to previous guidance of $190 million to $200 million, reflecting a reduction in European product revenue and the addition of royalty revenue following the Incyte transaction. Of the $170 million to $180 million, approximately $162 million to $170 million consists of expected product revenue, and $8 million to $10 million consists of expected royalty revenue.
Research and development and sales, general and administration expense are expected to be as follows:
$175 million to $180 million for research and development expense
$120 million to $125 million for sales, general and administration expense
This new 2016 expense guidance reflects an expected reduction in expenses of approximately $30 million from the planned divesture of our European business to Incyte.

Cash position at December 31, 2016 is expected to be in the range of $280 million to $290 million, including the $140 million upfront payment from Incyte and $50 million to be received under our royalty financing agreement with PDL.
The foregoing 2016 financial guidance reflects the anticipated completion of the transaction with Incyte, which is expected to close on or about June 1, 2016, subject to customary closing conditions. In addition, the revenue guidance assumes that pricing and reimbursement approval in France (and the corresponding recognition of revenue) will occur prior to the closing of the Incyte transaction.
Recent Progress and Key Objectives

Iclusig Clinical Development

Patient enrollment is ongoing in the OPTIC and OPTIC-2L clinical trials in patients with resistant chronic-phase chronic myeloid leukemia (CP-CML)
Otsuka Pharmaceutical Co., Ltd. (Otsuka) submitted a new drug application (NDA) to the Japanese Pharmaceuticals and Medical Devices Agency (PMDA) seeking approval for Iclusig for the treatment of resistant or intolerant CML and Philadelphia-chromosome positive acute lymphoblastic leukemia (Ph+ALL). This marketing application was submitted in early 2016 and is expected to lead to an initial approval of Iclusig in Japan by the end of this year.
Brigatinib Clinical Development

The ALTA 1L randomized, front-line clinical trial of brigatinib opened to patient enrollment in early April and is now underway. This global, Phase 3 trial is designed to compare brigatinib and crizotinib in patients with ALK+ non-small cell lung cancer (NSCLC), who have not received prior ALK inhibitors.
Clinical data from the Phase 2 ALTA trial of brigatinib has been accepted for oral presentation at this year’s annual meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) in June, 2016. We are on track to file for approval of brigatinib in the U.S. in the third quarter of this year.
Advancing the Pipeline

Preclinical data on AP32788 were presented at last month’s American Association of Clinical Research meeting and a Phase 1/2 proof-of-concept clinical trial is now open to patient enrollment.
AP32788 targets tumors driven by EGFR or HER2 kinases and was designed to achieve selective inhibition of exon 20 mutations in these kinases. ARIAD estimates that there are approximately 6,000 patients in the United States living with EGFR exon 20 or HER2 point mutations.

Upcoming Meetings

American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) 2016 Annual Meeting, Chicago, June 3 to June 7, 2016
Jefferies Healthcare Conference, New York City, June 7-10, 2016
European Hematology Association (EHA) (Free EHA Whitepaper) 20th Congress, Austria, Vienna June 9 to 12, 2016
ARIAD Analyst and Investor Day, New York City, June 17, 2016
Today’s Conference Call at 8:30 a.m. ET

We will hold a live webcast and conference call of our first quarter 2016 financial results this morning at 8:30 a.m. ET. The live webcast can be accessed by visiting the investor relations section of the Company’s website at View Source The call can be accessed by dialing 888-311-8173 (domestic) or 330-863-3376 (international) five minutes prior to the start time and providing the pass code 84030796. A replay of the call will be available on the ARIAD website approximately two hours after completion of the call and will be archived for three weeks.

About Iclusig (ponatinib) tablets

Iclusig is a kinase inhibitor. The primary target for Iclusig is BCR-ABL, an abnormal tyrosine kinase that is expressed in chronic myeloid leukemia (CML) and Philadelphia-chromosome positive acute lymphoblastic leukemia (Ph+ ALL). Iclusig was designed using ARIAD’s computational and structure-based drug-design platform specifically to inhibit the activity of BCR-ABL. Iclusig targets not only native BCR-ABL but also its isoforms that carry mutations that confer resistance to treatment, including the T315I mutation, which has been associated with resistance to other approved TKIs.

Iclusig is approved in the U.S., EU, Australia, Switzerland, Israel and Canada.

In the U.S., Iclusig is a kinase inhibitor indicated for the:

Treatment of adult patients with T315I-positive chronic myeloid leukemia (chronic phase, accelerated phase, or blast phase) or T315I-positive Philadelphia chromosome positive acute lymphoblastic leukemia (Ph+ ALL).
Treatment of adult patients with chronic phase, accelerated phase, or blast phase chronic myeloid leukemia or Ph+ ALL for whom no other tyrosine kinase inhibitor (TKI) therapy is indicated.
IMPORTANT SAFETY INFORMATION, INCLUDING THE BOXED WARNING
WARNING: VASCULAR OCCLUSION, HEART FAILURE, and HEPATOTOXICITY
See full prescribing information for complete boxed warning

Vascular Occlusion: Arterial and venous thrombosis and occlusions have occurred in at least 27% of Iclusig treated patients, including fatal myocardial infarction, stroke, stenosis of large arterial vessels of the brain, severe peripheral vascular disease, and the need for urgent revascularization procedures. Patients with and without cardiovascular risk factors, including patients less than 50 years old, experienced these events. Monitor for evidence of thromboembolism and vascular occlusion. Interrupt or stop Iclusig immediately for vascular occlusion. A benefit risk consideration should guide a decision to restart Iclusig therapy.
Heart Failure, including fatalities, occurred in 8% of Iclusig-treated patients. Monitor cardiac function. Interrupt or stop Iclusig for new or worsening heart failure.
Hepatotoxicity, liver failure and death have occurred in Iclusig-treated patients. Monitor hepatic function. Interrupt Iclusig if hepatotoxicity is suspected.
Please see the full U.S. Prescribing Information for Iclusig, including the Boxed Warning, for additional important safety information.

First Dosing of Pfizer DART Candidate in Phase 1 Study Triggers Milestone Payment to MacroGenics

On May 10, 2016 MacroGenics, Inc. (Nasdaq: MGNX) reported that its collaboration partner, Pfizer Inc. (NYSE: PFE), has advanced a bispecific antibody therapeutic candidate generated by MacroGenics’ Dual-Affinity Re-Targeting, or DART, platform (Press release, MacroGenics, MAY 10, 2016, View Source [SID:1234512178]).

Pfizer recently dosed a first patient in the Phase 1 clinical study of PF-06671008, which targets P-cadherin and CD3. Increased levels of the protein P-cadherin have been reported in various tumors, including breast, ovarian, endometrial, colorectal and pancreatic cancers, and is correlated with poor survival of patients. The commencement of the Phase 1 study triggers a $2 million milestone payment to MacroGenics under the companies’ October 2010 agreement.

PF-06671008 is the first partner-developed DART molecule to enter clinical development and represents the sixth DART molecule in clinical testing. At present, MacroGenics’ clinical pipeline includes multiple DART candidates for the treatment of cancer and one DART candidate for the treatment of autoimmune disorders.

Background on DART Platform

MacroGenics’ DART platform enables the targeting of multiple antigens or cells by using a single molecule with an antibody-like structure. DART molecules can be configured for the potential treatment of cancer, autoimmune disorders and infectious diseases. These DART molecules can be tailored for either short or prolonged pharmacokinetics and have demonstrated good stability and attractive manufacturability. Six DART molecules, including programs being developed by MacroGenics and its collaborators, are currently being evaluated in clinical studies.

10-Q – Quarterly report [Sections 13 or 15(d)]

Scynexis has filed a 10-Q – Quarterly report [Sections 13 or 15(d)] with the U.S. Securities and Exchange Commission (Filing, 10-Q, Scynexis, 2017, MAY 9, 2016, View Source [SID1234521705]).

10-Q – Quarterly report [Sections 13 or 15(d)]

Juno has filed a 10-Q – Quarterly report [Sections 13 or 15(d)] with the U.S. Securities and Exchange Commission (Filing, 10-Q, Juno, MAY 9, 2016, View Source [SID1234512165]).

8-K – Current report

On May 9, 2016 OPKO Health, Inc. (NYSE:OPK), a multinational biopharmaceutical and diagnostics company, reported financial and operating results for the three months ended March 31, 2016 (Filing, Q1, Opko Health, 2016, MAY 9, 2016, View Source [SID:1234512436]).

Business Highlights

Vifor Fresenius Medical Care Renal Pharma and OPKO Health Enter into Agreement for OPKO’s RAYALDEE: VFMCRP, a common company of Galenica and Fresenius Medical Care, and OPKO Health, have entered into a collaboration and license agreement for the development and commercialization of RAYALDEE in Europe, Canada, Mexico, Australia, South Korea and certain other markets for the treatment of secondary hyperparathyroidism (SHPT) in patients with chronic kidney disease (CKD) and vitamin D insufficiency. Under the terms of the agreement, VFMCRP will make an upfront payment to OPKO of $50 million, plus up to an additional $52 million in regulatory and launch milestones, and $180 million in sales-based milestones. In addition, VFMCRP will pay OPKO tiered, double-digit royalties on sales of the product. The parties will also collaborate to develop and commercialize a new dosage form of RAYALDEE for the treatment of SHPT in dialysis patients, and OPKO has granted VFMCRP an option to acquire rights to the US market for dialysis patients. If VFMCRP exercises its option for rights to the US dialysis market for the new dosage form, VFMCRP will pay OPKO up to $550 million in additional milestones, as well as double-digit royalties.

RAYALDEE New PDUFA Date Set for October 22, 2016: OPKO resubmitted the New Drug Application (NDA) for RAYALDEE following receipt of a complete response letter (CRL) from the U.S. Food and Drug Administration on March 29, 2016, in which the FDA indicated the NDA could not be approved due to deficiencies observed during a facility inspection of OPKO’s third party manufacturer. The observations were not specific to RAYALDEE manufacturing, and the CRL did not cite any safety, efficacy or labeling issues with regard to RAYALDEE, nor did it request any additional studies to be conducted prior to FDA approval.

Key Executive Additions — New Leadership at Bio Reference Laboratories and Senior Vice President of Pharmaceutical Sales: Gregory Henderson, M.D., Ph.D. was appointed President, Bio Reference Laboratories; James Demarco was appointed Senior Vice President of Pharmaceutical Sales; Ronald Trust, Ph.D. was named Vice President of Regulatory Affairs – OPKO expects to make key additional commercial hires in 2Q 2016.

4Kscore Recommended in 2016 European Association of Urology Prostate Cancer Guidelines: The European Association of Urology (EAU) Prostate Cancer Guidelines Panel included the 4Kscore in the 2016 EAU Guidelines for Prostate Cancer. The panel concluded that the 4Kscore, as a blood test with greater specificity over the PSA test, is indicated for use prior to a first prostate biopsy or after a negative biopsy to assist patients and physicians in further defining the probability of high grade cancer.

Topline Phase 3 Results for hGH-CTP in Adults Expected 2H 2016; Pediatric Phase 3 Initiation Anticipated in 2H 2016: OPKO expects to report top line results from its Phase 3 trial evaluating the safety and efficacy of once weekly injections of hGH-CTP with a primary endpoint of superiority compared with placebo in decreasing fat mass in adults with growth hormone deficiency (GHD) in the second half of 2016. The trial is a randomized, double-blind, placebo controlled, multicenter, global study in adults with GHD. The study is divided into two treatment periods: a 26 week, double blind, placebo controlled period, followed by a 26 week, open label extension period. A Phase 3 trial in pediatric patients is anticipated to commence in the second half of 2016.

First Patient Dosed in Phase 2a Clinical Trial of Long Acting Factor VIIa for the Treatment of Hemophilia: In February 2016, the first patient was dosed in OPKO’s Phase 2a clinical trial for its long acting Factor VIIa. The study is a dose escalation study to determine safety and explore efficacy endpoints of OPKO’s long-acting version of coagulation Factor VIIa (Factor VIIa-CTP) for the treatment of bleeding episodes in hemophilia A or B patients with inhibitors to Factor VIII or Factor IX. The study is intended to enroll 24 patients in the United States.

First Patient Dosed in Clinical Study for Long Acting Oxyntomodulin for Obesity and Diabetes: In March 2016 the first patient was enrolled in OPKO’s Phase 1 single dose escalation study evaluating the safety and pharmacokinetics of a long acting oxyntomodulin (MOD-6031) in healthy, overweight or obese subjects. The study is intended to enroll 40 subjects. Oxyntomodulin is a peptide hormone that acts as a dual GLP-1/glucagon receptor agonist, with the potential to promote weight loss while improving glycemic control. Oxyntomodulin has been shown to increase energy expenditure, while reducing food intake and body weight, although its clinical utility is limited by its short circulating half life. OPKO’s MOD-6031 has been designed, using a proprietary bifunctional hydrolysable linker, as a long acting version of oxyntomodulin for the treatment of Type 2 Diabetes and obesity, and is intended to reduce the required dosing frequency by prolonging the half life, while improving the hormone’s pharmacokinetic and pharmacodynamic profiles.

"We started 2016 with strong results from our diagnostics business driven by an increase in patient volume at Bio-Reference Laboratories, including our GeneDx business, and continued growth in the utilization of our innovative 4Kscore Test. On the pharmaceutical side, we are looking forward to the launch of RAYALDEE and our collaboration with a leader in the chronic kidney disease field that will allow us to expand the reach of this product to patients outside the US and expand development of the product for patients undergoing dialysis. We are steadily building our commercial team as we work with the FDA to finalize regulatory approval for RAYALDEE. We also made progress advancing our earlier stage development programs including the next program utilizing our CTP technology, with the first patients being administered our long acting Factor VIIa-CTP, and the initiation of a Phase 1 clinical trial for long acting oxyntomodulin," stated Phillip Frost, M.D., Chairman and Chief Executive Officer of OPKO.

Financial Highlights

Consolidated revenues for the three months ended March 31, 2016 increased to $291.0 million from $30.1 million for the three months ended March 31, 2015. The 2016 period include revenue from Bio-Reference Laboratories and EirGen which were acquired in August and May 2015, respectively.

Net loss for the three months ended March 31, 2016 was $12.0 million compared with net loss of $117.1 for the 2015 period. Net loss during the three month periods include significant non-recurring and/or non-cash activities, including:

• $20.5 million of income tax benefit, primarily reflecting a change in the statutory tax rate in Israel during 2016;
• $17.2 million of severance expense related to the resignation of certain Bio-Reference executives during the first quarter of 2016, which is included in selling, general and administrative expense. Of this expense, $8.9 million is a non-cash expense related to the acceleration of stock options;
• The first three months of 2015 include $25.9 million of non-recurring operating expense related to the repayment of a grant to the Office of the Chief Scientist in Israel related to the Pfizer transaction; and,
• Other income and (expense) was ($2.6) million and ($53.9) million in the 2016 and 2015 periods, respectively, primarily related to the change in fair value of derivative instruments. The change in fair value is principally related to an embedded derivative in OPKO’s January 2013 convertible senior notes due in 2033.
Cash, cash equivalents and marketable securities were $175.0 million as of March 31, 2016.