On May 3, 2022 Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) reported results for the quarter ended March 31, 2022 (Press release, Teva, MAY 3, 2022, View Source [SID1234613369]).

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!

Mr. Kåre Schultz, Teva’s President and CEO, said, 2022 is off to a solid start with the successful launch of a first generic version of Revlimid in the United States, and gains in market share for AJOVY both in the United States and in Europe, where it has solidified its leadership position as the second leading brand. AUSTEDO continues to grow as more patients with tardive dyskinesia are being diagnosed and are receiving treatment. We are also pleased to continue resolving opioid-related litigations with recent settlements in Florida and Rhode Island including the provision of lifesaving opioid treatments and recovery medicines for those who need them."

Mr. Schultz continued: "While easing of COVID-19 related restrictions has led to positive momentum in our European business, we are seeing fluctuations of foreign exchange rates, and have therefore lowered our 2022 revenue outlook, while reaffirming our earnings and cash flow guidance."

First Quarter 2022 Consolidated Results

Revenues in the first quarter of 2022 were $3,661 million, a decrease of 8%, or 5% in local currency terms, compared to the first quarter of 2021. This decrease was mainly due to lower revenues in our North America segment primarily related to generic products and COPAXONE, partially offset by higher revenues from Anda and generic products in our Europe segment.

Exchange rate movements during the first quarter of 2022, including hedging effects, negatively impacted our revenues by $133 million and our GAAP and non-GAAP operating income by $56 million and $59 million, respectively.

GAAP gross profit was $1,740 million in the first quarter of 2022, a decrease of 7% compared to the first quarter of 2021. GAAP gross profit margin was 47.5% in the first quarter of 2022, compared to 47.2% in the first quarter of 2021. The increase in gross profit margin was mainly driven by our network consolidation activities, as well as a change in product portfolio mix in our International Markets segment, partially offset by the unfavorable mix of generic products in our North America segment and lower revenues from COPAXONE. Non-GAAP gross profit was $1,986 million in the first quarter of 2022, a decrease of 7% compared to the first quarter of 2021. Non-GAAP gross profit margin was 54.2% in the first quarter of 2022, compared to 53.8% in the first quarter of 2021.

GAAP Research and Development (R&D) expenses in the first quarter of 2022 were $225 million, a decrease of 11% compared to the first quarter of 2021. Non-GAAP R&D expenses were $221 million, or 6.0% of quarterly revenues, in the first quarter of 2022, compared to $244 million, or 6.1%, in the first quarter of 2021. In the first quarter of 2022, our R&D expenses related primarily to specialty product candidates in neuroscience (such as migraine, movement disorders/ neurodegeneration and neuropsychiatry, including post-approval commitments), immunology (such as respiratory medicines) and selected other areas, as well as generic products including biosimilars. Our lower R&D expenses in the first quarter of 2022, compared to the first quarter of 2021, were mainly due to a decrease in neuroscience (in the pain and migraine and headache therapeutic areas), as well as various generics projects.

GAAP Selling and Marketing (S&M) expenses in the first quarter of 2022 were $584 million, flat compared to the first quarter of 2021. Non-GAAP S&M expenses were $552 million, or 15.1% of quarterly revenues, in the first quarter of 2022, compared to $549 million, or 13.8%, in the first quarter of 2021.

GAAP General and Administrative (G&A) expenses in the first quarter of 2022 were $296 million, an increase of 2% compared to the first quarter of 2021. Non-GAAP G&A expenses were $252 million, or 6.9% of quarterly revenues, in the first quarter of 2022, compared to $278 million, or 7%, in the first quarter of 2021.

GAAP other income and Non-GAAP other income in the first quarter of 2022 was $52 million, compared to $5 million in the first quarter of 2021. Other income in the first quarter of 2022 was mainly the result of settlement proceeds in our International Markets segment.

GAAP operating loss in the first quarter of 2022 was $713 million, compared to operating income of $434 million in the first quarter of 2021. GAAP operating loss in the first quarter of 2022 was mainly affected by legal settlements and loss contingencies, primarily related to an update of the estimated settlement provision recorded in connection with the remaining opioid cases. Non-GAAP operating income in the first quarter of 2022 was $1,013 million, a decrease of 6%, compared to $1,077 million in the first quarter of 2021. This decrease in non-GAAP operating income was mainly due to lower profit in our North America segment, partially offset by higher profit in our Europe and International Markets segments. Non-GAAP operating margin was 27.7% in the first quarter of 2022, compared to 27.1% in the first quarter of 2021.

EBITDA (defined as operating income (loss), excluding amortization and depreciation expenses) was negative $390 million in the first quarter of 2022, compared to EBITDA of $809 million in the first quarter of 2021. Adjusted EBITDA (defined as non-GAAP operating income excluding depreciation expenses) was $1,135 million in the first quarter of 2022, a decrease of 6% compared to $1,206 million in the first quarter of 2021.

GAAP financial expenses, net were $258 million in the first quarter of 2022, compared to $290 million in the first quarter of 2021. Financial expenses in the first quarter of 2022, were mainly comprised of interest expenses of $238 million. Financial expenses in the first quarter of 2021 were mainly comprised of interest expenses of $239 million and loss on revaluations of marketable securities of $64 million. Non-GAAP financial expenses, net were $247 million in the first quarter of 2022, compared to $227 million in the first quarter of 2021.

In the first quarter of 2022, we recognized a GAAP tax expense of $2 million, on pre-tax loss of $971 million. In the first quarter of 2021, we recognized a tax expense of $62 million, on pre-tax income of $144 million. Our tax rate for the first quarter of 2022 was mainly affected by legal settlement charges and interest expense disallowances. Non-GAAP income taxes in the first quarter of 2022 were $142 million, or 18.5%, on pre-tax non-GAAP income of $766 million. Non-GAAP income taxes in the first quarter of 2021 were $146 million, or 17%, on pre-tax non-GAAP income of $851 million. Our non-GAAP tax rate in the first quarter of 2022 was mainly affected by the mix of products we sold and interest expense disallowances.

We expect our annual non-GAAP tax rate for 2022 to be 18%-19%, unchanged from our outlook provided in February 2022.

GAAP net loss attributable to Teva and GAAP diluted loss per share were $955 million and $0.86, respectively, in the first quarter of 2022, compared to net income of $77 million and diluted earnings per share of $0.07 in the first quarter of 2021. Non-GAAP net income attributable to Teva and non-GAAP diluted earnings per share in the first quarter of 2022 were $609 million and $0.55, respectively, compared to $699 million and $0.63 in the first quarter of 2021.

The weighted average diluted shares outstanding used for the fully diluted share calculation for the three months ended March 31, 2022 and 2021 was 1,107 million shares. The weighted average diluted shares outstanding used for the fully diluted share calculation on a non-GAAP basis for the three months ended March 31, 2022 and 2021 was 1,112 million and 1,107 million shares, respectively.

As of March 31, 2022 and 2021, the fully diluted share count for purposes of calculating our market capitalization was approximately 1,145 million and 1,130 million, respectively.

Non-GAAP information: Net non-GAAP adjustments in the first quarter of 2022 were $1,564 million. Non-GAAP net income and non-GAAP EPS for the first quarter of 2022 were adjusted to exclude the following items:

Legal settlements and loss contingencies of $1,124 million;
Amortization of purchased intangible assets of $200 million, of which $178 million is included in cost of sales and the remaining $22 million in S&M expenses;
Impairment of long-lived assets of $165 million, comprised mainly of impairment of intangible assets of product rights assets in connection with the Actavis Generics acquisition;
Restructuring expenses of $57 million;
Contingent consideration expense of $33 million, mainly related to an increase in future royalties;
Equity compensation expenses of $24 million;
Finance expenses of $11 million;
Other items of $91 million; and
Income tax of $140 million.
Teva believes that excluding such items facilitates investors’ understanding of its business.

Commencing in the first quarter of 2022, we no longer exclude IPR&D acquired in development arrangements from our non-GAAP financial measures. In our comparable non-GAAP financial measures for the first quarter of 2021, we excluded $5 million IPR&D acquired in development arrangements. We are not recasting the non-GAAP presentation for the first quarter of 2021 since the adjustment is not significant. We are making this change to our presentation of non-GAAP financial measures to improve comparability of our non-GAAP presentation to those of other companies in the pharmaceutical industry that are making a similar change to their presentations beginning in the first quarter of 2022.

For further information, see the tables below for a reconciliation of the U.S. GAAP results to the adjusted non-GAAP figures and the information under "Non-GAAP Financial Measures." Investors should consider non-GAAP financial measures in addition to, and not as replacement for, or superior to, measures of financial performance prepared in accordance with GAAP.

Cash flow used in operating activities during the first quarter of 2022 was $49 million, compared to $405 million in the first quarter of 2021. The lower cash flow used in operating activities in the first quarter of 2022 was mainly due to changes in working capital items resulting from a decrease in accounts receivables net of SR&A in connection with the decrease in revenues.

Free cash flow (defined as cash flow used in operating activities, cash used for capital investments, beneficial interest collected in exchange for securitized accounts receivables, proceeds from divestitures of businesses and other assets and cash used for acquisition of businesses, net of cash acquired) was $117 million in the first quarter of 2022, compared to $59 million in the first quarter of 2021. The increase in the first quarter of 2022 resulted mainly from lower cash flow used in operating activities, partially offset by lower sales of assets.

As of March 31, 2022, our debt was $22,917 million, compared to $23,043 million as of December 31, 2021. This decrease was mainly due to exchange rate fluctuations. Our debt as of March 31, 2022 was effectively denominated in the following currencies: 61% in U.S. dollars, 36% in euros and 3% in Swiss francs. The portion of total debt classified as short-term as of March 31, 2022 was 9%, compared to 6% as of December 31, 2022. Our financial leverage was 69% as of March 31, 2022, compared to 67% as of December 31, 2021. Our average debt maturity was approximately 6.2 years as of March 31, 2022, compared to 6.4 years as of December 31, 2021.

In April 2022, we entered into an unsecured syndicated sustainability-linked revolving credit facility ("RCF") of $1.8 billion with a maturity date of April 2026, with two one-year extension options, which replaces Teva’s existing revolving credit facility. The RCF is linked to two sustainability performance targets. The RCF margin may increase or decrease depending on the Company’s sustainability performance.

Segment Results for the First Quarter of 2022

North America Segment

Our North America segment includes the United States and Canada.

The following table presents revenues, expenses and profit for our North America segment for the three months ended March 31, 2022 and 2021:

* Segment profit does not include amortization and certain other items.

§ Represents an amount less than 0.5%.

Revenues from our North America segment in the first quarter of 2022 were $1,737 million, a decrease of $251 million, or 13%, compared to the first quarter of 2021, mainly due to a decrease in revenues from generic products and COPAXONE, partially offset by higher revenues from ANDA.

Revenues in the United States, our largest market, were $1,638 million in the first quarter of 2022, a decrease of $216 million or 12% compared to the first quarter of 2021.

Revenues by Major Products and Activities

The following table presents revenues for our North America segment by major products and activities for the three months ended March 31, 2022 and 2021:

Generic products revenues in our North America segment (including biosimilars) in the first quarter of 2022 were $899 million, a decrease of 15% compared to the first quarter of 2021, mainly due to increased competition on key products and lower volumes, partially offset by higher revenues from lenalidomide capsules (the generic version of Revlimid) and Truxima.

In the first quarter of 2022, our total prescriptions were approximately 302 million (based on trailing twelve months), representing 8.2% of total U.S. generic prescriptions according to IQVIA data.

On March 7, 2022 we announced the launch of the first generic version of Revlimid (lenalidomide capsules), in 5mg, 10mg, 15mg, and 25mg strengths, in the United States. These lenalidomide capsules are a prescription medicine used in adults for the treatment of (i) multiple myeloma in combination with the medicine dexamethasone, (ii) certain myelodysplastic syndromes, and (iii) mantle cell lymphoma following specific prior treatment.

AJOVY revenues in our North America segment in the first quarter of 2022 increased by 16% to $36 million, compared to the first quarter of 2021, mainly due to growth in volume.

AUSTEDO revenues in our North America segment in the first quarter of 2022 increased by 6%, to $154 million, compared to $146 million in the first quarter of 2021, mainly due to growth in volume.

BENDEKA and TREANDA combined revenues in our North America segment in the first quarter of 2022 decreased by 10% to $82 million, compared to the first quarter of 2021, mainly due to the availability of alternative therapies and continued competition from Belrapzo (a ready-to-dilute bendamustine hydrochloride product from Eagle).

COPAXONE revenues in our North America segment in the first quarter of 2022 decreased by 48% to $86 million, compared to the first quarter of 2021, mainly due to generic competition in the United States and a decrease in glatiramer acetate market share due to availability of alternative therapies.

Anda revenues in our North America segment in the first quarter of 2022 increased by 18% to $342 million, compared to $289 million in the first quarter of 2021, mainly due to higher demand for COVID-related products.

North America Gross Profit

Gross profit from our North America segment in the first quarter of 2022 was $890 million, a decrease of 17%, compared to $1,074 million in the first quarter of 2021. This decrease was mainly due to lower gross profit from generic products and lower gross profit from COPAXONE.

Gross profit margin for our North America segment in the first quarter of 2022 decreased to 51.2%, compared to 54.0% in the first quarter of 2021. This decrease was mainly due to a change in the mix of generic products and COPAXONE.

North America Profit

Profit from our North America segment consists of gross profit less R&D expenses, S&M expenses, G&A expenses and any other income related to this segment. Segment profit does not include amortization and certain other items.

Profit from our North America segment in the first quarter of 2022 was $402 million, a decrease of 30% compared to $577 million in the first quarter of 2021, mainly due to lower revenues, as discussed above.

Europe Segment

Our Europe segment includes the European Union, the United Kingdom and certain other European countries.

The following table presents revenues, expenses and profit for our Europe segment for the three months ended March 31, 2022 and 2021:

* Segment profit does not include amortization and certain other items.

§ Represents an amount less than $0.5 million or 0.5%, as applicable.

Revenues from our Europe segment in the first quarter of 2022 were $1,156 million, a decrease of 5%, or $58 million, compared to the first quarter of 2021. In local currency terms, revenues increased by 3%. In the first quarter of 2021, our lower revenues were impacted by the implications of the COVID-19 pandemic. In the first quarter of 2022, our higher revenues were attributed to higher demand for generic and OTC products resulting mainly from the removal of restrictions related to doctor and hospital visits by patients that were previously implemented in response to the COVID-19 pandemic, as well as higher sales of cough and cold products. In the first quarter of 2022, revenues were negatively impacted by exchange rate fluctuations of $67 million, net of hedging effects.

Revenues by Major Products and Activities

The following table presents revenues for our Europe segment by major products and activities for the three months ended March 31, 2022 and 2021:

Generic products revenues in our Europe segment in the first quarter of 2022, including OTC products, increased by 1% to $876 million, compared to the first quarter of 2021. In local currency terms, revenues increased by 8%, mainly due to higher demand for generic and OTC products, resulting mainly from the removal of restrictions related to doctor and hospital visits by patients that were previously implemented in response to the COVID-19 pandemic, as well as higher sale of cough and cold products.

AJOVY revenues in our Europe segment in the first quarter of 2022 increased to $30 million, compared to $16 million in the first quarter of 2021, mainly due to growth in European countries in which AJOVY had previously been launched, as well as launches and reimbursements in additional European countries.

COPAXONE revenues in our Europe segment in the first quarter of 2022 decreased by 29% to $72 million, compared to the first quarter of 2021. In local currency terms, revenues decreased by 24%, due to price reductions and a decline in volume resulting from competing glatiramer acetate products.

Respiratory products revenues in our Europe segment in the first quarter of 2022 decreased by 24% to $71 million compared to the first quarter of 2021. In local currency terms, revenues decreased by 19%, mainly due to price reductions.

Europe Gross Profit

Gross profit from our Europe segment in the first quarter of 2022 was $694 million, an increase of 1% compared to $688 million in the first quarter of 2021.

Gross profit margin for our Europe segment in the first quarter of 2022 increased to 60.0%, compared to 56.6% in the first quarter of 2021. This increase was mainly due to lower cost of goods sold, mainly driven by our network consolidation activities, as well as a decrease in write-offs.

Europe Profit

Profit from our Europe segment consists of gross profit less R&D expenses, S&M expenses, G&A expenses and any other income related to this segment. Segment profit does not include amortization and certain other items.

Profit from our Europe segment in the first quarter of 2022 was $381 million, an increase of 13%, compared to $338 million in the first quarter of 2021. This increase was mainly due to higher gross profit and reduced expenses, as discussed above.

International Markets Segment

Our International Markets segment includes all countries in which we operate other than those in our North America and Europe segments. The key markets in this segment are Japan, Russia and Israel.

On February 1, 2021, we completed the sale of the majority of the generic and operational assets of our business venture in Japan.

In February 2022, Russia launched an invasion of Ukraine. As of the date of this press release, sustained conflict and disruption in the region is ongoing. Russia and Ukraine markets are included in our International Markets segment results. We have no manufacturing or R&D facilities in these markets. During the first quarter of 2022, the impact of this conflict on our International Markets segment results of operations and financial condition was immaterial.

The following table presents revenues, expenses and profit for our International Markets segment for the three months ended March 31, 2022 and 2021:

* Segment profit does not include amortization and certain other items.

§ Represents an amount less than 0.5%.

Revenues from our International Markets segment in the first quarter of 2022 were $492 million, flat compared to the first quarter of 2021. In local currency terms, revenues increased by 8% compared to the first quarter of 2021, mainly due to higher revenues in certain markets, partially offset by lower revenues in Japan resulting from the divestment mentioned above, as well as regulatory price reductions and generic competition to off-patented products. Revenues continued to be affected by the ongoing impact of the COVID-19 pandemic on markets and on customer stocking and purchasing patterns.

Revenues by Major Products and Activities

The following table presents revenues for our International Markets segment by major products and activities for the three months ended March 31, 2022 and 2021:

Generic products revenues in our International Markets segment in the first quarter of 2022, which include OTC products, decreased by 1% in U.S. dollar. In local currency terms, revenues increased by 9% to $388 million, compared to the first quarter of 2021. This increase was mainly due to higher revenues in certain markets, partially offset by lower sales in Japan resulting from the divestment mentioned above, as well as regulatory price reductions and generic competition to off-patented products in Japan.

AJOVY was launched in certain markets in our International Markets segment, including Japan in August 2021. We are moving forward with plans to launch AJOVY in other markets. AJOVY revenues in our International Markets segment in the first quarter of 2022 were $6 million, compared to $1 million in the first quarter of 2021.

COPAXONE revenues in our International Markets segment in the first quarter of 2022 were $10 million, compared to $12 million in the first quarter of 2021.

AUSTEDO was launched in early 2021 in China for the treatment of chorea associated with Huntington’s disease and for the treatment of tardive dyskinesia and was also launched in Israel during 2021. In October 2021, we received marketing approval for both indications in Brazil. We continue with additional submissions in various other markets.

International Markets Gross Profit

Gross profit from our International Markets segment in the first quarter of 2022 was $286 million, an increase of 10% compared to $260 million in the first quarter of 2021.

Gross profit margin for our International Markets segment in the first quarter of 2022 increased to 58.1%, compared to 53.0% in the first quarter of 2021. This increase was mainly due to a change in product portfolio mix, price increases largely as a result of rising costs due to inflationary pressure and a positive impact from hedging activity, partially offset by regulatory price reductions and generic competition to off-patented products in Japan.

International Markets Profit

Profit from our International Markets segment consists of gross profit less R&D expenses, S&M expenses, G&A expenses and any other income related to this segment. Segment profit does not include amortization and certain other items.

Profit from our International Markets segment in the first quarter of 2022 was $179 million, an increase of 47%, compared to $122 million in the first quarter of 2021. This increase was mainly due to higher gross profit as well as other income.

Other Activities

We have other sources of revenues, primarily the sale of active pharmaceutical ingredients ("APIs") to third parties, certain contract manufacturing services and an out-licensing platform offering a portfolio of products to other pharmaceutical companies through our affiliate Medis. Our other activities are not included in our North America, Europe or International Markets segments described above.

Our revenues from other activities in the first quarter of 2022 were $275 million, a decrease of 5% compared to the first quarter of 2021. In local currency terms, revenues were flat.

API sales to third parties in the first quarter of 2022 were $181 million, an increase of 2% in both U.S. dollars and local currency terms, compared to the first quarter of 2021.

Teva will host a conference call and live webcast including a slide presentation on Tuesday, May 3, 2022, at 8:00 a.m. ET to discuss its first quarter 2022 results and overall business environment. A question & answer session will follow.

A live webcast of the call will be available on Teva’s website at: ir.tevapharm.com. Please log in at least 10 minutes prior to the conference call in order to download the applicable audio software.

Following the conclusion of the call, a replay of the webcast will be available within 24 hours on the Company’s website or by calling the following numbers: United States 1-866-331-1332; International +44 (0) 3333 009785; passcode: 8636304.

On May 3, 2022 Phio Pharmaceuticals Corp. (Nasdaq: PHIO), a clinical stage biotechnology company developing the next generation of therapeutics based on its proprietary self-delivering RNAi (INTASYL) therapeutic platform, reported that it will present a trial-in-progress poster at the 2022 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting, which is being held June 3-7, 2022 in Chicago, IL (Press release, Phio Pharmaceuticals, MAY 3, 2022, View Source [SID1234613368]). ASCO (Free ASCO Whitepaper) is the largest cancer meeting in the world, bringing together thousands of cancer experts from academia, industry, patient advocacy and policy.

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!

On May 3, 2022 HOOKIPA Pharma Inc. (NASDAQ: HOOK, ‘HOOKIPA’), a company developing a new class of immunotherapeutics based on its proprietary arenavirus platform, reported that HOOKIPA’s management team will participate in and present at the following upcoming investor conferences (Press release, Hookipa Pharma, MAY 3, 2022, View Source [SID1234613365]):

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!

BofA Securities 2022 Healthcare Conference, May 10-13, Las Vegas
Fireside Chat: May 10, 8:40am PT
2022 RBC Capital Markets Global Healthcare Conference, May 17-18, New York
Fireside Chat: May 17, 4:05pm ET
H.C. Wainwright Global Investment Conference, May 23-26, Miami Beach
Fireside Chat: May 24, 2:00pm ET
Webcasts will be available within the Investors & Media section of HOOKIPA’s website at View Source Archived replays will be accessible for 30 days following each event.

On May 3, 2022 Evotec SE (Frankfurt Stock Exchange: EVT, MDAX/TecDAX, ISIN: DE0005664809; NASDAQ: EVO) reported that the Company has made a strategic equity investment in Tubulis GmbH by participating in the company’s Series B financing round (Press release, Evotec, MAY 3, 2022, View Source [SID1234613363]). Based in Munich, Germany, Tubulis specialises in the development of antibody drug conjugates ("ADCs") by leveraging a set of proprietary technology platforms to develop these highly targeted therapeutics against solid tumours.

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!

By linking a small molecule drug ("payload") with an antibody, ADCs use the targeting capabilities of monoclonal antibodies to selectively deliver cancer-destroying substances to the affected cells. Tubulis’ approach to ADCs is based on a variety of proprietary technologies regarding both linkers and payloads. The companies’ technologies utilise novel chemical groups to go beyond traditional payload classes and increase antibody conjugation options, thus enabling the development of ADCs with higher drug-to-antibody ratios.

Evotec joins a consortium of new and renowned investors to fund Tubulis’ € 60 m Series B financing round led by Andera Partners. Tubulis intends to use the new capital to further progress the company’s proprietary pipeline as well as to continue innovating novel payload classes and identifying new targets for solid tumours to transform the ADC space. In conjunction with the financing round, Dr Thomas Hanke, EVP, Head of Academic Partnerships at Evotec, will join Tubulis’ Supervisory Board.

Dr Werner Lanthaler, Chief Executive Officer of Evotec, commented: "We are excited to participate in Tubulis’ Series B financing round alongside European venture capital investors such as Andera Partners and Fund+. This investment further adds momentum as well as diversification to Evotec’s EVOequity strategy."

Dr Thomas Hanke, EVP Academic Partnerships at Evotec and new member of Tubulis’ Supervisory Board, commented: "With their unique, differentiated and proprietary platform of both linker and payload technologies, Tubulis is ideally positioned to fully exploit the potential that antibody drug conjugates hold within the field of targeted therapies also for solid tumours. This investment underpins Evotec’s strategic approach of leveraging partnerships to deliver effective medicines– regardless of therapeutic modality."

On May 3, 2022 Biogen Inc. (Nasdaq: BIIB) reported first quarter 2022 financial results (Press release, Biogen, MAY 3, 2022, View Source [SID1234613362]).

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 disappointed by the recent Medicare coverage decision for ADUHELM," said Michel Vounatsos, Biogen’s Chief Executive Officer. "We executed on our core business objectives in the first quarter, and we will now look forward and execute on a set of near-term operational priorities, which we believe will drive renewed growth and value creation over time. We have a strong balance sheet, enabling us to advance a broad pipeline that includes lecanemab in Alzheimer’s disease and zuranolone in depression, while also pursuing new internal and external growth opportunities."

First Quarter 2022 Operating Results
•First quarter total revenue of $2,532 million decreased 6% versus the prior year at actual currency and 5% at constant currency*. Multiple sclerosis (MS) revenue, including royalties on sales of OCREVUS, of $1,647 million decreased 3% versus the prior year at actual currency and 2% at constant currency. SPINRAZA revenue of $473 million decreased 9% versus the prior year at actual currency and 6% at constant currency. Biosimilars revenue of $194 million decreased 5% versus the prior year at actual currency and 1% at constant currency. RITUXAN/GAZYVA revenue of $147 million decreased 18% versus the prior year.

•First quarter GAAP net income and diluted earnings per share (EPS) attributable to Biogen Inc. were $304 million and $2.06, respectively. First quarter Non-GAAP net income and diluted EPS attributable to Biogen Inc. were $535 million and $3.62, respectively. First quarter GAAP and Non-GAAP EPS attributable to Biogen Inc. were negatively impacted by approximately $0.76 due to ADUHELM inventory write-offs. A reconciliation of GAAP to Non-GAAP financial measures can be found in Table 4 at the end of this news release.

•First quarter GAAP and Non-GAAP cost of sales was $754 million as compared to $478 million in the first quarter of 2021. First quarter 2022 GAAP and Non-GAAP cost of sales includes approximately $275 million of charges resulting from ADUHELM inventory write-offs as well as approximately
1

$45 million of idle capacity charges. Eisai Co., Ltd.’s (Eisai’s) share of these charges (approximately $160 million) is reflected in collaboration profit sharing.

•First quarter GAAP and Non-GAAP R&D expense was $552 million as compared to $514 million in the first quarter of 2021.

•First quarter GAAP and Non-GAAP SG&A expense was $635 million as compared to $595 million in the first quarter of 2021. Beginning in the second quarter of 2021, upon FDA approval, the reimbursement from Eisai for its share of U.S. ADUHELM SG&A expense is reflected in collaboration profit sharing rather than SG&A. First quarter 2022 GAAP and Non-GAAP SG&A expense includes approximately $80 million related to ADUHELM commercialization. Eisai’s reimbursement of U.S. ADUHELM SG&A expense of approximately $23 million is reflected in collaboration profit sharing.

•First quarter GAAP and Non-GAAP amortization and impairment of acquired intangible assets was $67 million and $8 million, respectively.

•First quarter GAAP and Non-GAAP collaboration profit sharing reduced Biogen’s net operating expense by $117 million, which includes reimbursement of $182 million from Eisai related to the commercialization of ADUHELM in the U.S., partially offset by $64 million of net profit sharing expense related to Biogen’s collaboration with Samsung Bioepis.

•First quarter GAAP restructuring expense includes $38 million in charges primarily associated with the Company’s global commercial infrastructure supporting ADUHELM.

•First quarter GAAP other expense was $263 million, primarily driven by net unrealized losses on strategic equity investments of $191 million. First quarter Non-GAAP other expense was $73 million, primarily driven by interest expense.

•First quarter effective GAAP and Non-GAAP tax rates were 36.2% and 15.5%, respectively. The first quarter 2022 effective GAAP tax rate was impacted by a deferred tax expense of approximately $85 million related to a valuation allowance on Neurimmune SubOne AG’s (Neurimmune) tax basis in ADUHELM, with an equal and offsetting amount assigned to noncontrolling interest, resulting in zero net impact to net income attributable to Biogen Inc.

•First quarter GAAP loss attributable to noncontrolling interest was approximately $85 million, which includes the offset to a deferred tax expense related to Neurimmune’s tax basis in ADUHELM of approximately $85 million. First quarter Non-GAAP income attributable to noncontrolling interest was $0.1 million.

* Percentage changes in revenue growth at constant currency are presented excluding the impact of changes in foreign currency exchange rates and hedging gains or losses. The current period’s foreign currency revenue values are converted into U.S. dollars using the average exchange rates from the prior period.
Financial Position
•First quarter 2022 cash from operations was $162 million. Capital expenditures were $58 million, and free cash flow, defined as cash flow from operations less capital expenditures, was $104 million.

•As of March 31, 2022, Biogen had cash, cash equivalents, and marketable securities totaling $4,753 million and $7,275 million in total debt, resulting in net debt of $2,522 million.

•No shares were repurchased in the first quarter of 2022. As of March 31, 2022, there was $2,800 million remaining under the share repurchase program authorized in October 2020.

•For the first quarter of 2022 the Company’s weighted average diluted shares were 148 million.

Alzheimer’s Disease Update
In April 2022 the Centers for Medicare & Medicaid Services (CMS) announced the final national coverage determination (NCD) for FDA approved monoclonal antibodies directed against amyloid for the treatment of Alzheimer’s disease, including ADHUELM. Due to the restrictions on coverage in the final NCD, Biogen will substantially eliminate its commercial infrastructure supporting ADUHELM, retaining minimal resources to manage patient access programs, including a continued free drug program for patients currently on treatment in the U.S. Biogen expects to continue funding certain regulatory and R&D activities for ADUHELM, including the continuation of the EMBARK re-dosing study and the initiation of the Phase 4 post-marketing requirement study, ENVISION. Additional actions regarding ADUHELM may be informed by upcoming data readouts expected for this class of antibodies, as well as further engagement with the FDA and CMS.

The Phase 3 readout for lecanemab is expected in the fall of 2022, and Biogen is committed to working closely with Eisai on the potential launch of lecanemab.

Near-term Operational Priorities
Biogen is executing on five near-term operational priorities intended to drive renewed revenue growth and value creation over time:

1.Increasing focus on R&D prioritization with the goal of maximizing the probability of success. This may include choosing to accelerate, terminate, divest, or partner certain programs, and will also include a continued evaluation of new internal and external opportunities within Biogen’s therapeutic areas of focus and adjacencies. This prioritization process will be informed in part by key data readouts expected in 2022:

◦In Alzheimer’s disease, Biogen and Eisai plan to complete the rolling submission for lecanemab under the accelerated approval pathway in the U.S. in the second quarter of 2022. In addition, the readout of the Phase 3 Clarity AD confirmatory study for lecanemab is expected in the fall of 2022. Based on the results of the Clarity AD study, Biogen and Eisai plan to submit for full FDA approval by the first quarter of 2023. Lecanemab has the opportunity to become the first anti-amyloid antibody to obtain full approval for Alzheimer’s disease in the U.S.

◦In neuropsychiatry, Biogen is working with Sage Therapeutics, Inc. (Sage) to advance zuranolone as a new potential treatment option for patients suffering from major depressive disorder (MDD) and post-partum depression (PPD). Biogen and Sage have initiated the rolling submission of a New Drug Application (NDA) to the U.S. FDA for MDD, which is expected to be complete in the second half of 2022. The readout of the Phase 3 SKYLARK study in PPD is expected in mid-2022, with an associated NDA filing anticipated in early 2023.

◦Also in neuropsychiatry, Biogen expects the Phase 2 readout for BIIB104 in cognitive impairment associated with schizophrenia in mid-2022.

2.Implementing additional cost-reduction and productivity measures to further align Biogen’s costs with its revenue base, while continuing to fund promising pipeline and commercial opportunities.

◦The substantial elimination of Biogen’s global commercial infrastructure supporting ADUHELM as well as other cost reductions are expected to yield approximately $500 million in annualized savings in addition to the previously communicated initiatives already targeting approximately $500 million in annualized savings.

◦This brings total expected annualized savings to approximately $1 billion, a portion of which will be reinvested in strategic initiatives over the coming years.

3.Executing on international growth opportunities with a focus on key emerging markets, such as China and certain markets in both Latin America and the Middle East. This includes the continued launch of SPINRAZA and may also include pursuing local business development opportunities.

4.Driving the potential return to growth in the biosimilars business. While Biogen’s current commercial portfolio of anti-TNF products is likely past the peak of its lifecycle, the Company currently has four more programs in development and is preparing to launch BYOOVIZ, referencing Lucentis, in the U.S. in the coming months.

5.Continuing to focus the deployment of cash on hand and future cash flow towards initiatives designed to create incremental revenue growth opportunities, while continuing to return cash to shareholders through share repurchases.

Biogen believes that successfully executing on these priorities can return the Company to growth over time.

This guidance assumes continued declines in RITUXAN revenue due to biosimilar competition, as well as continued erosion of TECFIDERA revenue in the U.S. due to generic entry. Further, this guidance assumes the potential entry of TECFIDERA generics in the E.U. during the second quarter of 2022. Biogen expects the decreased revenue from these high margin products as well as the ADUHELM inventory write-offs to reduce its gross margin percentage compared to 2021.

Non-GAAP R&D expense is expected to be between $2.2 billion and $2.3 billion, unchanged from prior guidance.

Non-GAAP SG&A expense is expected to be between $2.3 billion and $2.4 billion, a decrease from prior guidance of $2.5 billion to $2.6 billion.

These R&D and SG&A expense estimates reflect the initial implementation of the cost-reduction measures described above, which for 2022 are expected to primarily impact results in the third and fourth quarters.

The Non-GAAP tax rate for 2022 is expected to be between 15.5% and 16.5%.

This guidance assumes a currency headwind of approximately $120 million, net of hedging activities, to full year 2022 revenue and approximately $0.35 to full year 2022 Non-GAAP diluted EPS, due primarily to the strengthening of the U.S. dollar from January 1, 2022 through April 29, 2022. This guidance also assumes that foreign exchange rates as of April 29, 2022, will remain in effect for the remainder of the year, net of hedging activities, and does not contemplate any further strengthening or weakening of the dollar throughout the year.

Biogen expects to utilize a portion of the remaining share repurchase authorization of $2,800 million through the end of 2022. This financial guidance does not include any impact from potential acquisitions or large business development transactions or pending and future litigation, as all are hard to predict, or any impact of potential tax or healthcare reform. Biogen may incur charges, realize gains or losses, or experience other events or circumstances in 2022 that could cause any of these assumptions to change and/or actual results to vary from this financial guidance.

Biogen does not provide guidance for GAAP reported financial measures (other than revenue) or a reconciliation of forward-looking Non-GAAP financial measures to the most directly comparable GAAP reported financial measures because the Company is unable to predict with reasonable certainty the financial impact of items such as the transaction, integration, and certain other costs related to acquisitions or large business development transactions; unusual gains and losses; potential future asset impairments; gains and losses from our equity security investments; and the ultimate outcome of pending significant litigation without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period. For the same reasons, the Company is unable to address the significance of the unavailable information, which could be material to future results.

CEO Transition
Biogen announced today that it has begun a search for a new Chief Executive Officer. Michel Vounatsos will continue to serve as Chief Executive Officer and on the Company’s Board of Directors until his successor is appointed. Mr. Vounatsos has served as the Company’s Chief Executive Officer since his appointment in January 2017.

Under Mr. Vounatsos’ leadership, the Company has transformed itself from a company focused primarily on Multiple Sclerosis (MS) into a pioneer in neuroscience with a robust and diversified pipeline that includes over 30 clinical programs across a broad set of disease areas and modalities, 10 of which are in Phase 3 or filed. Mr. Vounatsos led the Company in completing over 30 business development agreements in the past five years, spanning a range of disease areas including MS, depression, stroke, and ALS.

Mr. Vounatsos was instrumental in establishing multiple franchises that address the significant unmet need of patients living with devastating diseases and was the architect of a significant international expansion of the Company. Among his many achievements, Mr. Vounatsos led the successful launches of SPINRAZA, Biogen’s groundbreaking treatment for spinal muscular atrophy, and VUMERITY, a novel treatment for relapsing forms of MS, as well as the establishment of a successful biosimilars business and the FDA approval of ADUHELM, the first new treatment for Alzheimer’s disease in nearly 20 years. During his tenure, the Company also demonstrated financial resilience in light of many external challenges and took bold actions to address climate change.

Stelios Papadopoulos, Chairman of the Biogen Board of Directors, said: "We appreciate Michel’s significant contributions to Biogen. He has transformed the Company into a global leader in neuroscience. He always puts patients first, driven by a steadfast commitment to innovation and scientific advances that can make a difference in the lives of people confronting devastating diseases. We are pleased that Michel will continue to lead the Company until a successor is appointed and help to ensure a seamless transition
5

to a new chief executive. This is the right time to transition to a new leader who will build Biogen’s next chapter on the strong foundation existing today."

Mr. Vounatsos said: "It has been an honor to lead this outstanding Company during such a challenging period and to work closely with so many dedicated and talented colleagues. I am very proud of Biogen’s unparalleled capabilities in neuroscience, a complex field with tremendous unmet medical need, and of the novel medicines and benefits we have brought to patients. I want to thank the Board of Directors and my colleagues for their support during this period. I will be leaving at a time of promise for Biogen, with noteworthy potential for value creation, and I look forward working with my successor through a smooth transition."

Recent Events
•In the first quarter of 2022 Eisai and Biogen announced that Eisai initiated a submission to the Pharmaceuticals and Medical Devices Agency (PMDA) of application data under the prior assessment consultation system in Japan for the investigational anti-amyloid beta protofibril antibody lecanemab (BAN2401). The lecanemab Clarity AD Phase 3 clinical study for mild cognitive impairment due to Alzheimer’s disease (AD) and mild AD is ongoing. The PMDA’s process, known as "prior assessment consultation", is conducted at the development stage before the NDA submission, which is based on available quality, non-clinical and clinical data. By identifying and resolving any potential issues prior to submission, the aim is to shorten application review time. Based on discussions with the Ministry of Health, Labour and Welfare and PMDA, Eisai applied to PMDA for permission to utilize the "prior assessment consultation" process for lecanemab with the aim of shortening the review period. The agency approved Eisai’s request and Eisai has submitted the non-clinical lecanemab data to PMDA. The additional data of the application package will be submitted hereafter. Eisai plans to obtain the primary endpoint data from Clarity AD study in the fall of 2022, and based on the results of the study, aims to file for the manufacturing and marketing approval in Japan during Eisai’s fiscal year 2022.

•In the first quarter of 2022 Eisai and Biogen presented the latest findings on lecanemab, an investigational anti-amyloid-beta protofibril antibody being developed for the treatment of early AD, at the International Conference on Alzheimer’s and Parkinson’s Diseases. Four key symposium presentations explored how lecanemab’s clinical efficacy data, overall amyloid-related imaging abnormality rates, biomarker relationships to clinical outcomes, potential dosing regimens, and administration have the potential to benefit people living with early AD.

•In April 2022 Sage and Biogen initiated a rolling submission of an NDA to the FDA for zuranolone in the treatment of MDD. Zuranolone is an investigational two-week, once-daily oral drug being developed for MDD and postpartum depression. The companies have submitted the nonclinical module of the NDA to the FDA and plan to submit the remaining components for the MDD filing in the second half of 2022.

•In April 2022 Biogen completed the sale of the company’s equity stake in the Samsung Bioepis joint venture to Samsung Biologics for a total consideration of up to $2.3 billion, of which approximately $1 billion in cash was received at closing. Together Biogen and Samsung Bioepis will continue with their exclusive agreements, including the commercialization of their current biosimilars portfolio including BENEPALI, FLIXABI, IMRALDI in Europe and the potential upcoming launches of BYOOVIZ and the potential filings for SB15 in major markets worldwide.

•In the first quarter of 2022 Sage and Biogen announced the CORAL Study in people with major depressive disorder achieved the primary endpoint and key secondary endpoint. Study results showed that zuranolone 50 mg co-initiated with a standard of care (SOC) antidepressant (ADT) resulted in a rapid and statistically significant reduction in depressive symptoms both at Day 3 and over the 2-week
6

treatment period, vs. placebo co-initiated with SOC ADT. Zuranolone was generally well-tolerated, and no new safety signals attributable to zuranolone were identified. The CORAL Study results support the potential of zuranolone, when co-initiated with standard of care, to accelerate the benefit of depression treatment compared to treatment with ADTs alone.

•In the first quarter of 2022 Biogen and Sage initiated the KINETIC 2 Study of BIIB124 (SAGE-324) in essential tremor. The KINETIC 2 study is a Phase 2b dose-finding study that incorporates learnings from the prior Phase 2 with the primary goal of identifying a dose that balances tolerability with sustained tremor reduction.

•In the first quarter of 2022 Biogen and Xbrane Biopharma AB announced that they have entered into a commercialization and license agreement to develop, manufacture, and commercialize Xcimzane, a preclinical monoclonal antibody that is a proposed biosimilar referencing CIMZIA (certolizumab pegol). CIMZIA’s primary indication is for rheumatoid arthritis in adults as well as axial spondylarthrosis, psoriasis and Crohn’s disease and is a registered trademark of UCB. Under the terms of the agreement, Biogen will gain exclusive global regulatory, manufacturing, and commercial rights to Xcimzane and will be the Marketing Authorization Holder.

•In April 2022 Biogen announced new data from its industry-leading portfolio of MS therapies being presented at the American Academy of Neurology 2022 Annual Meeting. The presentations include new real-world, long-term data on TYSABRI (natalizumab), as well as persistence and adherence learnings with VUMERITY (diroximel fumarate). Additional presentations highlight the use of digital tools to potentially predict MS disease progression. These data build on ongoing work to advance the understanding and treatment of serious neurological and neurodegenerative diseases, and highlight Biogen’s commitment to science that strives to address the diverse needs of people living with MS.

•In the first quarter of 2022 Biogen presented new data and updates from its SPINRAZA and spinal muscular atrophy (SMA) research programs at the Muscular Dystrophy Association Clinical & Scientific Conference.
◦The ASCEND study, evaluating the potential benefit of investigational higher dose nusinersen in children, teens and adults previously treated with Evrysdi, is currently enrolling, with the first patient treated in Q1 2022.
◦Additionally, baseline characteristics indicate all nine infants and toddlers enrolled in RESPOND had suboptimal clinical status in ≥2 areas after receiving Zolgensma; there were no new safety findings with subsequent SPINRAZA treatment.
◦Finally, new NURTURE results continue to show the potential long-term benefit of early treatment before SMA symptom onset, with 92 percent of participants now able to walk alone, most in age-appropriate timelines.

Conference Call and Webcast
The Company’s earnings conference call for the first quarter will be broadcast via the internet at 8:00 a.m. ET on May 3, 2022, and will be accessible through the Investors section of Biogen’s website, www.biogen.com. Supplemental information in the form of a slide presentation is also accessible at the same location on the internet and will be subsequently available on the website for at least one month.