On April 29, 2021 Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) reported consolidated financial results for the first quarter ended March 31, 2021 and reiterated full-year 2021 guidance for product revenues (Press release, Vertex Pharmaceuticals, APR 29, 2021, View Source [SID1234578780]).

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"In CF, our goal is that all eligible patients have access to and can benefit from CFTR modulators. In the first quarter, we continued to make significant progress towards this goal, and in so doing again delivered strong revenue and earnings growth," said Reshma Kewalramani, M.D., Chief Executive Officer and President of Vertex. "Beyond CF, we have also seen continued significant progress across our broad pipeline, including advancement of VX-548 to Phase 2 in acute pain, initiation of the Phase 1/2 clinical trial with VX-880 in type 1 diabetes and completion of enrollment and dosing in our Phase 2 proof-of-concept study with the AAT corrector, VX-864. The recent amendment of our agreement with CRISPR Therapeutics for the CTX001 program further enhances our leadership position in cell and genetic therapies and we look forward to completing enrollment of our ongoing trials for CTX001 in sickle cell disease and beta thalassemia this year and bringing this first-in-class treatment to patients with these devastating diseases as soon as possible."

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First-Quarter 2021 Financial Highlights

Three Months Ended March 31,

%

2021

2020

Change

(in millions, except per share amounts)
Product revenues, net
$
1,723

$
1,515

14%
TRIKAFTA/KAFTRIO
$
1,193

$
895

SYMDEKO/SYMKEVI
$
125

$
173

ORKAMBI
$
219

$
234

KALYDECO
$
186

$
213

GAAP Operating income
$
888

$
720

23%
Non-GAAP Operating income
$
1,003

$
877

14%

GAAP Net income
$
653

$
603

8%
Non-GAAP Net income
$
781

$
674

16%

GAAP Net income per share – diluted
$
2.49

$
2.29

9%
Non-GAAP Net income per share – diluted
$
2.98

$
2.56

16%

Product revenues increased 14% compared to the first quarter of 2020, primarily driven by the uptake of KAFTRIO in Europe and continued performance of TRIKAFTA in the U.S. Net product revenues in the first quarter of 2021 increased 6% to $1.25 billion in the U.S. and increased 43% to $470 million outside the U.S., compared to the prior year.
GAAP and non-GAAP net income increased compared to the first quarter of 2020, largely driven by strong growth in total product revenues.
Cash, cash equivalents and marketable securities as of March 31, 2021 were $6.9 billion, an increase of $265 million compared to $6.7 billion as of December 31, 2020 primarily driven by strong revenue and profitability offset by the repurchase of our common stock authorized under our stock repurchase plan.
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First-Quarter 2021 Expenses

Three Months Ended March 31,

2021

2020

(in millions)
Combined GAAP R&D and SG&A expenses
$
648

$
631

Combined Non-GAAP R&D and SG&A expenses
$
530

$
477

GAAP R&D expenses
$
456

$
449

Non-GAAP R&D expenses
$
379

$
337

GAAP SG&A expenses
$
192

$
182

Non-GAAP SG&A expenses
$
151

$
140

GAAP income taxes (1)
$
168

$
55

Non-GAAP income taxes
$
207

$
184

GAAP effective tax rate

20%

8%

Non-GAAP effective tax rate (1)

21%

21%

Combined GAAP and Non-GAAP R&D and SG&A expenses increased compared to the first quarter of 2020, primarily due to the expansion of Vertex’s pipeline in CF and other disease areas and incremental investment to support the global launches of Vertex’s medicines.
GAAP income taxes and the GAAP effective tax rate increased compared to the first quarter of 2020 due a non-recurring discrete tax benefit recognized in the first quarter of 2020 and Vertex’s increased operating income.
Non-GAAP income taxes increased compared to the first quarter of 2020 primarily due to Vertex’s increased operating income.

Full-Year 2021 Financial Guidance
Vertex today reiterated its full-year 2021 financial guidance, except for its expectations for combined GAAP R&D and SG&A expenses, which increased by $900 million as a result of Vertex’s amended collaboration with CRISPR announced in April. Vertex’s guidance is summarized below:

Current FY 2021

Previous FY 2021

Product revenues
Unchanged

$6.7 to 6.9 billion

Combined GAAP R&D and SG&A expenses (2)
$3.8 to 3.95 billion

$2.9 to 3.05 billion
Combined Non-GAAP R&D and SG&A expenses (2)
Unchanged

$2.25 to 2.3 billion
Non-GAAP effective tax rate
Unchanged

21% to 22%

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Key Business Highlights

Cystic Fibrosis (CF)
Vertex anticipates that achieving new approvals and entering into additional reimbursement agreements for our current CFTR modulators will increase the number of CF patients treated with our medicines and continue to grow our CF business in the years ahead.

Key progress in 2021 includes:
•New approval received for TRIKAFTA (elexacaftor/tezacaftor/ivacaftor and ivacaftor) in Australia for people with CF ages 12 years and older who have at least one F508del mutation.
•Post-marketing application filed with the European Medicines Agency (EMA) for the expanded indication of KAFTRIO (elexacaftor/tezacaftor/ivacaftor and ivacaftor) to include children with CF ages 6 through 11 years.
•TRIKAFTA/KAFTRIO is now approved and reimbursed or accessible in 12 countries outside the U.S., including Denmark, Germany, Ireland, Israel, Switzerland and the countries within the UK.

R&D pipeline
Vertex continues to progress a broad pipeline of potentially transformative small molecule, cell and genetic therapies aimed at serious diseases. Recent and anticipated progress for key pipeline programs is noted below:

Beta Thalassemia and Sickle Cell Disease
•In April, Vertex and CRISPR Therapeutics amended their collaboration for the CTX001 programs in beta thalassemia and sickle cell disease. Under the terms of the revised agreement, Vertex will lead worldwide development, manufacturing and commercialization of CTX001. The revised agreement provides Vertex with 60% and CRISPR Therapeutics with 40% of program economics. At closing, CRISPR Therapeutics will receive a $900 million upfront payment with the potential for an additional $200 million milestone payment upon CTX001 regulatory approval.
•The CTX001 program employs a non-viral ex vivo CRISPR gene-editing therapy for the treatment of transfusion-dependent beta thalassemia (TDT) and sickle cell disease (SCD). This approach aims to edit a person’s hematopoietic stem cells to produce fetal hemoglobin in red blood cells, which has the potential to reduce or eliminate symptoms associated with the diseases.
•Enrollment and dosing are ongoing in the clinical studies for CTX001 and more than 30 patients have now been dosed to date. Completion of enrollment in both studies is expected in 2021.
4

•In April, the European Medicines Agency (EMA) granted Priority Medicines Designation (PRIME) to CTX001 for TDT. The program has previously been granted Regenerative Medicine Advanced Therapy (RMAT), Fast Track, Orphan Drug and Rare Pediatric Disease designations from the U.S. Food and Drug Administration (FDA) for both TDT and SCD. CTX001 has also been granted PRIME designation for SCD and Orphan Drug Designation from EMA for both TDT and SCD.

Alpha-1 Antitrypsin (AAT) Deficiency
•Vertex is evaluating multiple compounds with the potential to correct the misfolding of Z-AAT protein in the liver, in order to increase the systemic levels of functional AAT. Misfolded Z-AAT protein is the root cause of AAT deficiency and the Vertex small molecule corrector program targets both the liver and lung manifestations of the disease.
•Patients enrolled in the Phase 2 proof-of-concept study for the Z-AAT corrector, VX-864, have completed the 28-day dosing period. The study includes a 28-day safety follow-up period which is ongoing, and results are expected in the second quarter of 2021.

APOL1-mediated Kidney Diseases
•Vertex is evaluating the potential of inhibitors of APOL1 function in people with APOL1-mediated kidney diseases, including focal segmental glomerulosclerosis (FSGS).
•Enrollment is ongoing in a Phase 2 proof-of-concept study designed to evaluate the reduction in proteinuria in people with APOL1-mediated FSGS after treatment with VX-147. Results from this study are expected in the second half of 2021.

Type 1 Diabetes (T1D)
•Vertex is evaluating a cell therapy designed to replace insulin-producing islet cells in people with T1D. Vertex is pursuing two programs for the transplant of these fully-differentiated functional islets into patients: 1) transplantation of islet cells alone, using immunosuppression to protect the implanted cells and 2) implantation of the islet cells inside a novel immunoprotective device.
•In March, the U.S. FDA granted Fast Track Designation and Vertex initiated a Phase 1/2 clinical trial for VX-880, the islet cells alone program, in people with T1D.

Pain
•Vertex is evaluating selective small molecule inhibitors of NaV1.8, a genetically validated, novel target for the treatment of pain, with the goal of preventing pain signals traveling from the sensory
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nerves to the central nervous system. Vertex has previously demonstrated clinical proof-of-concept with a small molecule investigational treatment targeting NaV1.8, VX-150, in multiple pain indications including acute pain, neuropathic pain and musculoskeletal pain.
•VX-548, a selective NaV1.8 inhibitor, demonstrated favorable safety, tolerability and pharmacokinetic profiles in Phase 1 studies. In these studies, the molecule exhibited a favorable profile at doses considerably lower than those required with our previous NaV1.8 inhibitors.
•VX-548 is expected to advance into Phase 2 proof-of-concept studies for acute pain in the second half of 2021.

Investments in External Innovation
•In April, we entered into a research collaboration with Obsidian Therapeutics, Inc., or Obsidian, aimed at the discovery of novel therapies that regulate gene-editing for the treatment of serious diseases. This collaboration enables us to leverage Obsidian’s cytoDRiVE platform technology to discover gene-editing medicines whose therapeutic activity can be precisely controlled using small molecules.
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Non-GAAP Financial Measures
In this press release, Vertex’s financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. In particular, non-GAAP financial results and guidance exclude from Vertex’s pre-tax income (i) stock-based compensation expense, (ii) revenues and expenses related to collaborative milestones and upfront payments, (iii) gains or losses related to the fair value of the company’s strategic investments, (iv) increases or decreases in the fair value of contingent consideration, (v) acquisition-related costs and (vi) other adjustments. The company’s non-GAAP financial results also exclude from its provision for income taxes the estimated tax impact related to its non-GAAP adjustments to pre-tax income described above and certain discrete items. These results should not be viewed as a substitute for the company’s GAAP results and are provided as a complement to results provided in accordance with GAAP. Management believes these non-GAAP financial measures help indicate underlying trends in the company’s business, are important in comparing current results with prior period results and provide additional information regarding the company’s financial position that the company believes is helpful to an understanding of its ongoing business. Management also uses these non-GAAP financial measures to establish budgets and operational goals that are communicated internally and externally, to manage the company’s business and to evaluate its performance. The company adjusts, where appropriate, for both revenues and expenses in order to reflect the company’s operations. The company’s calculation of non-GAAP financial measures likely differs from the calculations used by other companies. A reconciliation of the GAAP financial results to non-GAAP financial results is included in the attached financial information.
The company provides guidance regarding combined R&D and SG&A expenses and effective tax rate on a non-GAAP basis. The guidance regarding combined GAAP R&D and SG&A expenses does not include estimates associated with any potential future business development activities. The company does not provide guidance regarding its GAAP effective tax rate because it is unable to forecast with reasonable certainty the impact of excess tax benefits related to stock-based compensation and the possibility of certain discrete items, which could be material.
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Vertex Pharmaceuticals Incorporated
First-Quarter Results
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

Three Months Ended March 31,

2021

2020
Revenues:

Product revenues, net
$
1,723,305

$
1,515,107

Other revenues
1,000

—

Total revenues
1,724,305

1,515,107

Costs and expenses:

Cost of sales
192,329

162,497

Research and development expenses
455,973

448,528

Sales, general and administrative expenses
192,077

182,258

Change in fair value of contingent consideration
(3,900)

1,600

Total costs and expenses
836,479

794,883

Income from operations
887,826

720,224

Interest income
1,465

12,576

Interest expense
(15,678)

(14,136)

Other expense, net (3)
(52,653)

(61,130)

Income before provision for income taxes
820,960

657,534

Provision for income taxes
167,822

54,781

Net income
$
653,138

$
602,753

Net income per common share:

Basic
$
2.52

$
2.32

Diluted
$
2.49

$
2.29

Shares used in per share calculations:

Basic
259,369

259,815

Diluted
261,916

263,515

8

Reconciliation of GAAP to Non-GAAP Net Income
First-Quarter Results
(in thousands, except per share amounts)
(unaudited)

Three Months Ended March 31,

2021

2020
GAAP net income
$
653,138

$
602,753

Stock-based compensation expense
115,174

115,706

Decrease in fair value of strategic investments (3)
52,295

44,870

(Decrease) increase in fair value of contingent consideration (4)
(3,900)

1,600

Collaborative revenues and expenses (5)
650

36,250

Acquisition-related costs (6)
2,820

2,883

Total non-GAAP adjustments to pre-tax income
167,039

201,309

Tax adjustments (1)
(38,961)

(129,608)

Non-GAAP net income
$
781,216

$
674,454

Net income per diluted common share:

GAAP
$
2.49

$
2.29

Non-GAAP
$
2.98

$
2.56

Shares used in diluted per share calculations:

GAAP and Non-GAAP
261,916

263,515

Three Months Ended March 31,

2021

2020
GAAP operating income
$
887,826

$
720,224

Stock-based compensation expense
115,174

115,706

(Decrease) increase in fair value of contingent consideration (4)
(3,900)

1,600

Collaborative revenues and expenses (5)
650

36,250

Acquisition-related costs (6)
2,820

2,883

Non-GAAP operating income
$
1,002,570

$
876,663

9

Reconciliation of GAAP to Non-GAAP Revenues and Expenses
First-Quarter Results
(in thousands)
(unaudited)

Three Months Ended March 31,

2021

2020
GAAP total revenues
$
1,724,305

$
1,515,107

Collaborative revenues
(1,000)

—

Non-GAAP total revenues
$
1,723,305

$
1,515,107

Three Months Ended March 31,

2021

2020
GAAP cost of sales
$
192,329

$
162,497

Stock-based compensation expense
(1,431)

(1,361)

Non-GAAP cost of sales
$
190,898

$
161,136

GAAP research and development expenses
$
455,973

$
448,528

Stock-based compensation expense
(72,802)

(72,687)

Collaborative expenses (5)
(1,650)

(36,250)

Acquisition-related costs (6)
(2,820)

(2,678)

Non-GAAP research and development expenses
$
378,701

$
336,913

GAAP sales, general and administrative expenses
$
192,077

$
182,258

Stock-based compensation expense
(40,941)

(41,658)

Acquisition-related costs (6)
—

(205)

Non-GAAP sales, general and administrative expenses
$
151,136

$
140,395

Combined non-GAAP R&D and SG&A expenses
$
529,837

$
477,308

Three Months Ended March 31,

2021

2020
GAAP other expense, net
$
(52,653)

$
(61,130)

Decrease in fair value of strategic investments (3)
52,295

44,870

Non-GAAP other expense, net
$
(358)

$
(16,260)

GAAP provision for income taxes
$
167,822

$
54,781

Tax adjustments (1)
38,961

129,608

Non-GAAP provision for income taxes (7)
$
206,783

$
184,389

GAAP effective tax rate
20
%

8
%
Non-GAAP effective tax rate (7)
21
%

21
%
10

Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

March 31, 2021

December 31, 2020
Assets

Cash, cash equivalents and marketable securities
$
6,923,968

$
6,658,897

Accounts receivable, net
977,551

885,352

Inventories
298,863

280,777

Property and equipment, net
986,123

958,534

Goodwill and intangible assets
1,402,158

1,402,158

Deferred tax assets
815,890

882,779

Other assets
710,506

683,311

Total assets
$
12,115,059

$
11,751,808

Liabilities and Shareholders’ Equity

Accounts payable and accrued expenses
$
1,659,876

$
1,560,110

Finance lease liabilities
572,856

581,476

Contingent consideration
185,700

189,600

Other liabilities
716,373

733,807

Shareholders’ equity
8,980,254

8,686,815

Total liabilities and shareholders’ equity
$
12,115,059

$
11,751,808

Common shares outstanding
258,829

259,890

11

Notes and Explanations

1: In the three months ended March 31, 2021 and 2020, "Tax adjustments" primarily related to the estimated income taxes related to non-GAAP adjustments to pre-tax income including (i) stock-based compensation (including an adjustment for excess tax benefits related to stock-based compensation), (ii) decreases in the fair value of the company’s strategic investments and (iii) collaborative milestone payments. In the three months ended March 31, 2020, "Tax adjustments" also included a non-recurring discrete benefit to the company’s provision for income taxes of $50.4 million, relating to the write-off of a long-term intercompany receivable, that the company excluded from its Non-GAAP measures.
2: The company’s increased combined GAAP R&D and SG&A expenses guidance reflects the expected effect upon closing of the company’s contemplated transaction with CRISPR, which was announced in April 2021. The difference between the company’s full-year 2021 combined GAAP R&D and SG&A expenses and combined non-GAAP R&D and SG&A expenses guidance relates primarily to $1.12 billion to $1.17 billion of R&D expenses related to existing and contemplated collaboration agreements and $430 million to $455 million of stock-based compensation expense. The guidance regarding combined GAAP R&D and SG&A expenses does not include estimates associated with any potential future business development activities other than the company’s contemplated transaction with CRISPR.
3: "Other expense, net" includes net losses related to changes in the fair value of the company’s strategic investments and from sales of certain investments.
4: During the three months ended March 31, 2021 and 2020, the change in the fair value of contingent consideration relates to potential payments to Exonics Therapeutics’ former equity holders.
5: "Collaborative revenues and expenses" in the three months ended March 31, 2021 and 2020 primarily related to collaborative milestone payments.
6: "Acquisition-related costs" in the three months ended March 31, 2021 and 2020 related to costs associated with the company’s acquisition of Exonics Therapeutics in 2019.
7: The company released its valuation allowance on the majority of its net operating losses and other deferred tax assets as of December 31, 2018. As of December 31, 2020, the company had utilized substantially all of its remaining federal net operating losses. As a result, a larger portion of the company’s tax provision will represent a cash tax payable beginning in 2021, subject to continued utilization of certain tax credits.

On April 29, 2021 BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) (BioMarin or the Company) reported its financial results for the first quarter ended March 31, 2021 (Press release, BioMarin, APR 29, 2021, View Source [SID1234578779]).

"We mark the start of 2021 with strong financial results, and a number of exciting regulatory decisions ahead this year." said Jean-Jacques Bienaimé, Chairman and Chief Executive Officer of BioMarin. "The potential approval in Europe this summer of vosoritide, the first potential therapeutic option for children with achondroplasia, will set the stage for our next significant phase of growth, especially considering the EMEA region is 3 times larger than the U.S. market. To date, the interactions with the review team at the European Medicines Agency have been very positive. Next, we plan to re-submit the application for valoctocogene roxaparvovec gene therapy, to treat hemophilia A, to the EMA in the second quarter, to be followed by potential approval of vosoritide in the United States later this year."

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Mr. Bienaimé continued, "We are well positioned to deliver strong results for the full-year 2021, and reaffirm our financial guidance provided early this year. This takes into consideration the uneven ordering patterns in our dynamic and global commercial business, as well as continued uncertainty outside of the United States from COVID-19, and further underscores the essential nature of our products to the people who rely on them. Taken together, our financial strength, including positive cash flows from operations of $113.5 million in the first quarter, combined with near-term opportunities from potential new products and a robust early-stage pipeline, we believe that 2021 will be pivotal to BioMarin’s evolution."

Financial Highlights:
•Net Product Revenues for the first quarter of 2021 decreased to $467.8 million, compared to $489.0 million for the same period in 2020. The decrease in Net Product Revenues was primarily attributed to the following:
•Lower Kuvan product revenues primarily due to known generic competition in the U.S.; partially offset by
•Higher Vimizim product revenues primarily due to timing of orders from Europe, Middle East and North Africa; and
•Higher Palynziq product revenues primarily driven by a combination of revenue from more U.S. patients achieving maintenance dosing and new patients initiating therapy.

•GAAP Net Income decreased $64.0 million to $17.4 million for the first quarter of 2021 compared to $81.4 million for the same period in 2020. The decrease was primarily due to the absence of the gain on sale the Firdapse commercial assets totaling $59.5 million in the first quarter of 2020 and a decrease in gross profits due to the lower Kuvan product revenues due to generic competition in the U.S. This decrease was partially offset by lower selling, general and administrative (SG&A) expenses primarily due to a decrease in foreign currency exchange losses in the first quarter of 2021.

•Non-GAAP Net Income for the first quarter of 2021 decreased to $104.4 million compared to Non-GAAP Income of $116.5 million for the same period in 2020. The decline in Non-GAAP Income for the quarter, compared to the same period in 2020, was primarily attributed to lower gross profits, partially offset by lower SG&A expenses primarily due to a decrease in foreign currency exchange losses in the first quarter of 2021.
Commercial Portfolio (Naglazyme, VIMIZIM, Brineura, Palynziq, Kuvan and Aldurazyme)
•Naglazyme, VIMIZIM and Brineura maintained robust patient compliance in the quarter and continue to grow based on strong underlying demand.
◦Patients on commercial Naglazyme and Vimizim therapy both increased approximately 10% year-over-year.
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◦Patients on commercial Brineura therapy increased by more than 30% year-over-year.
•Order timing for both Naglazyme and VIMIZIM are expected to be more concentrated in the first half of 2021 as compared to the second half of 2021.
•Palynziq top-line results in 2021 are expected to increase approximately 35% based on the mid-point of full-year 2021 guidance as compared to full-year 2020 results.
•Palynziq growth in European, Middle East and African regions (EMEA) has been impacted by ongoing challenges due to COVID-19 with Palynziq revenue from EMEA expected to increase when PKU clinics have more freedom to operate and start additional patients.
◦The number of U.S. Patients on commercial Palynziq therapy increased more than 20% year-over-year and is expected to continue to grow as U.S. PKU clinics re-open over the coming quarters.
•Loss of Kuvan U.S. market share, due to the introduction of generics following BioMarin’s loss of U.S. market exclusivity, is consistent with expectations.
•Aldurazyme contributions were driven by the timing of product released and transfer of control to Genzyme, who is responsible for marketing Aldurazyme worldwide.
Late-stage Regulatory Portfolio (Vosoritide and valoctocogene roxaparvovec)
•In Europe, with respect to vosoritide for the treatment of achondroplasia, BioMarin is in the final stages of the review procedure ahead of the anticipated June 2021 Committee for Medicinal Products for Human Use (CHMP) opinion. Assuming a positive CHMP opinion, the European Commission could potentially grant marketing authorization for vosoritide in the third quarter of 2021.
•In Europe, with respect to valoctocogene roxaparvovec for the treatment of severe hemophilia A, based on positive pre-submission feedback in the current quarter, BioMarin reaffirms its plan to submit the Marketing Authorization Application with one-year results from the Phase 3 GENEr8-1 study to the European Medicines Agency (EMA) in June 2021.
•In the U.S., BioMarin provided the U.S. Food and Drug Administration (FDA) with the two-year results from the Phase 3 extension study with vosoritide to supplement the New Drug Application (NDA) already under review. As anticipated, the FDA designated this submission as a major amendment to the application, thus extending the Prescription Drug User Fee Act (PDUFA) target action date by three months to November 20, 2021 to provide time for a full review of the submission.
◦Also in the first quarter of 2021, the FDA pre-approval inspection of BioMarin’s Novato facility for the manufacture of vosoritide drug substance was completed, representing another important milestone as vosoritide advances through the review process.
•During the current quarter, the FDA reiterated their recommendation that BioMarin submit two-year follow-up safety and efficacy data on all study participants from the GENEr8-1 study to support their benefit/risk assessment of valoctocogene roxaparvovec. BioMarin is targeting a Biologics License Application (BLA) submission in the second quarter of 2022 assuming favorable results, followed by an expected 6-month review procedure by the FDA.
◦The FDA granted Regenerative Medicine Advanced Therapy (RMAT) designation to valoctocogene roxaparvovec. The RMAT designation is complementary to Breakthrough Therapy Designation, which BioMarin received in 2017.
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Earlier-stage Development Portfolio (BMN 307, BMN 255, BMN 331, DiNA-001, Allen Institute Collaboration)
◦BMN 307: Dose escalation in PHEarless, the Phase 1/2 study of BMN 307 continues based on encouraging Phe lowering and safety profile observed in study participants who were treated with the lowest dose.
◦BMN 255 for a subset of chronic renal disease: On January 11, 2021 BioMarin announced that it had filed an IND in 2020 for BMN 255, a small molecule for a subset of chronic renal disease. BMN 255 was driven by genetic discoveries for both mechanism and for identifying individuals for treatment.

◦BMN 331 gene therapy product candidate for Hereditary Angioedema (HAE): IND-enabling studies are ongoing with BMN 331 for the treatment of HAE, BioMarin’s third gene therapy candidate. BioMarin plans to leverage its broad expertise in developing gene therapies for severe hemophilia A and PKU to improve efficiencies in the development process of BMN 331. BioMarin is on track to file an IND for BMN 331 mid-year 2021.

◦BMN 351 for Duchenne Muscular Dystrophy (DMD): IND-enabling studies are underway with BMN 351, an antisense oligonucleotide therapy that has demonstrated dystrophin expression levels of 30-50% of wild-type levels in the quadriceps in a DMD mouse model treated at 18.7 mg/kg/week for 13 weeks (measured 2 weeks following last administration). If results from the ongoing pre-clinical studies are supportive, BioMarin anticipates filing an IND for BMN 351 in the first half of 2022.

◦DiNA-001 for MYBPC3 hypertrophic cardiomyopathy (HCM): Pre-clinical studies are underway with DiNA-001 following a collaboration announced in 2020 with DiNAQOR, a gene therapy platform company, to develop novel gene therapies to treat rare genetic cardiomyopathies. DiNAQOR received an undisclosed upfront payment and is eligible to receive development, regulatory and commercial milestones on product sales in addition to tiered royalties on worldwide sales.

◦On April 28, 2021, BioMarin and the Allen Institute announced a collaboration to create new gene therapies aimed at rare genetic diseases of the central nervous system (CNS). The goal is to combine the Allen Institute’s leadership in large-scale genomic science in the CNS therapeutic area with BioMarin’s expertise in developing transformational gene therapies.
2021 Full-Year Financial Guidance (in millions, except %)

Item

2021 Guidance * (reaffirmed)
Total Revenues

$1,750

to

$1,850
Vimizim Net Product Revenues

$570

to

$610
Kuvan Net Product Revenues

$250

to

$290
Naglazyme Net Product Revenues

$365

to

$395
Palynziq Net Product Revenues

$210

to

$250
Brineura Net Product Revenues

$120

to

$140

Cost of Sales (% of Total Revenues)

23
%

to

25%
Research and Development Expense

$645

to

$695
Selling, General and Administrative Expense

$725

to

$775

GAAP Net Loss

($130)

to

($80)
Non-GAAP Income (1)

$170

to

$220

On April 29, 2021 Gilead Sciences, Inc. (Nasdaq: GILD) reported its results of operations for the first quarter 2021 (Press release, Gilead Sciences, APR 29, 2021, View Source [SID1234578778]).

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"We have made strong progress in this first quarter, with our new partnership with Merck in long-acting HIV therapies, two newly approved indications in the U.S. for Trodelvy in metastatic triple-negative breast cancer and metastatic urothelial cancer, and the addition of Hepcludex to our portfolio," said Daniel O’Day, Chairman and Chief Executive Officer, Gilead Sciences. "2021 is a pivotal year for Gilead, with key milestones across our virology and oncology portfolios. We’re looking forward to advancing our pipeline of promising therapies in the coming months."

First Quarter 2021 Financial Results

•Total first quarter 2021 revenue of $6.4 billion increased 16% compared to the same period in 2020, primarily due to Veklury (remdesivir) sales, Cell Therapy growth with Yescarta (axicabtagene ciloleucel) and the U.S. launch of Tecartus (brexucabtagene autoleucel) in the third quarter 2020, the first full quarter recognition of Trodelvy (sacituzumab govitecan-hziy 180 mg) sales, and Hepatitis B virus ("HBV") growth with Vemlidy (tenofovir alafenamide 25 mg).

•Diluted Earnings Per Share ("EPS") increased 12% to $1.37 for the first quarter 2021 compared to the same period in 2020, primarily driven by revenue growth, partially offset by fair value loss adjustments related to Gilead’s equity investment in Galapagos NV ("Galapagos") and lower interest income.
•Non-GAAP diluted EPS increased 24% to $2.08 for the first quarter 2021 compared to the same period in 2020, primarily due to higher operating income and lower effective tax rate, offset by lower interest income.
•As of March 31, 2021, Gilead had $6.2 billion of cash, cash equivalents and marketable debt securities compared to $7.9 billion as of December 31, 2020.
•During the first quarter 2021, Gilead generated $2.6 billion in operating cash flow.
•During the first quarter 2021, Gilead repaid $1.3 billion of debt, utilized $1.3 billion on acquisitions, net of cash acquired (including in-process research and development ("IPR&D")), paid cash dividends of $917 million and utilized $309 million on repurchases of common stock.

Product Sales Performance

Total first quarter 2021 product sales increased 16% to $6.3 billion compared to the same period in 2020. Total product sales excluding Veklury decreased 11% to $4.9 billion for the first quarter 2021 compared to the same period in 2020, with contributions from new product launches such as Tecartus and Trodelvy offset, as expected, by loss of exclusivity of Truvada (emtricitabine 200 mg ("FTC") and tenofovir disoproxil fumarate 300 mg ("TDF")) and Atripla (efavirenz 600 mg/FTC/TDF) in the United States and COVID-19 pandemic-related impacts in both HIV and hepatitis C virus ("HCV").
HIV product sales decreased 12% to $3.7 billion for the first quarter 2021 compared to the same period in 2020, reflecting the expected loss of exclusivity of Truvada and Atripla in the United States, in addition to channel inventory dynamics including COVID-19 pandemic-related stocking in the first quarter 2020.

April 29, 2021

2

•Biktarvy (bictegravir 50 mg/FTC/tenofovir alafenamide 25 mg ("TAF")) sales increased 8% year-over-year in the first quarter 2021, reflecting robust market share gains across core markets and partially offset by channel inventory dynamics.
•Descovy (FTC/TAF) sales decreased 22% year-over-year in the first quarter 2021, driven by lower average net selling price and channel inventory dynamics including COVID-19 pandemic-related stocking in the first quarter 2020, in addition to the ongoing COVID-19 pandemic-related effects on the pre-exposure prophylaxis ("PrEP") market.
•Truvada and Atripla sales decreased 67% year-over-year to $135 million and $31 million, respectively, in the first quarter 2021, following loss of exclusivity in the United States in October 2020.
HCV product sales decreased 30% to $510 million for the first quarter 2021 compared to the same period in 2020. Sales volumes were impacted by lower patient starts in the United States and Europe associated with the COVID-19 pandemic.
HBV and hepatitis delta virus ("HDV") product sales increased 18% to $220 million for the first quarter 2021 compared to the same period in 2020. Vemlidy sales increased 33% in the first quarter 2021 compared to the same period in 2020. Hepcludex (bulevirtide) contributed $6 million in sales subsequent to Gilead’s acquisition of MYR GmbH ("MYR"), representing a partial quarter of sales.
Cell Therapy product sales increased 36% to $191 million for the first quarter 2021 compared to the same period in 2020.
•Yescarta sales increased to $160 million in the first quarter 2021, reflecting increased uptake and geographic expansion in Europe.
•Tecartus sales were $31 million for the first quarter 2021 as launch activities continue to ramp up in the United States.
Trodelvy sales for the first quarter 2021 were $72 million, representing the first full quarter of sales for Gilead.
Veklury sales were $1.5 billion for the first quarter 2021. Sales of Veklury are generally affected by COVID-19 related rates of infections, hospitalizations and vaccinations.
Other product sales decreased 13% to $241 million for the first quarter 2021 compared to the same period in 2020.
•Letairis (ambrisentan 5 mg and 10 mg) and Ranexa (ranolazine 500 mg and 1000 mg) sales decreased in the first quarter 2021, as expected, as generic competition continues to gain share following loss of exclusivity in 2019.
First Quarter 2021 Product Gross Margin, Operating Expenses and Tax
•Product gross margin was 78.5% for the first quarter 2021 compared to 82.3% in the same period in 2020. Non-GAAP product gross margin was 86.5% for the first quarter 2021 compared to 87.1% in the same period in 2020, reflecting a less favorable product mix and an inventory charge, partially offset by favorable royalty adjustments.
•Research and Development ("R&D") expenses for the first quarter 2021 were $1,055 million compared to $1,004 million in the same period in 2020. Non-GAAP R&D expenses for the first quarter 2021 were $1,049 million compared to $1,004 million in the same period in 2020. The higher R&D expenses included ramp-up of magrolimab and Trodelvy clinical activities, partially offset by study completions and discontinuations.
•Sales, General and Administrative ("SG&A") expenses for the first quarter 2021 were $1,055 million compared to $1,076 million in the same period in 2020. Non-GAAP SG&A expenses for the first quarter 2021 were $1,033 million compared to $1,076 million in the same period in 2020. The lower SG&A expenses reflect lower promotional spend in HIV and HCV and timing of grants, partially offset by increased commercialization investments for Veklury, Trodelvy, Cell Therapy, and HBV and HIV in China.

April 29, 2021

3

•The GAAP effective tax rate ("ETR") and non-GAAP ETR for the first quarter 2021 were 23.9% and 18.4%, respectively, compared to 23.2% and 19.7% for the same period in 2020, respectively.
Key Updates Since Our Last Quarterly Release
Viral Diseases
• Gilead announced a collaboration with Merck Sharp & Dohme Corp ("Merck"), a subsidiary of Merck & Co., Inc., to develop and commercialize long-acting, investigational treatment combinations of Gilead’s lenacapavir and Merck’s islatravir in HIV. The first clinical studies of the oral combination are expected to begin in the second half of 2021.
• At the Conference on Retroviruses and Opportunistic Infections ("CROI"), Gilead presented additional results from lenacapavir’s Phase 2/3 CAPELLA trial. The interim efficacy results showed lenacapavir maintained high rates of virologic suppression through 26 weeks among heavily treatment-experienced people with multi-drug resistant HIV; 73% of participants who reached Week 26 since the first dose of subcutaneous lenacapavir with an optimized background regimen achieved undetectable viral load.
• At CROI, Gilead presented data from an open label-extension of two Phase 3 studies of Biktarvy, demonstrating sustained safety and efficacy with greater than 98% of treatment-naïve participants achieving and maintaining undetectable viral load through four years of follow-up.
Oncology
• The New England Journal of Medicine published primary results from the randomized confirmatory Phase 3 ASCENT study of Trodelvy in metastatic triple-negative breast cancer ("mTNBC"). The publication demonstrated that Trodelvy significantly extended both progression-free survival and overall survival for patients compared to standard single-agent chemotherapy.
•U.S. Food and Drug Administration ("FDA") granted accelerated approval of Trodelvy for adult patients with locally advanced or metastatic urothelial cancer who have previously received a platinum-containing chemotherapy and either a programmed death receptor-1 or programmed death-ligand 1 inhibitor.
• FDA granted full approval of Trodelvy for adult patients with unresectable locally advanced or mTNBC who have received two or more prior systemic therapies, at least one of them for metastatic disease.
• European Medicines Agency ("EMA") validated the Marketing Authorization Application and granted accelerated review for Trodelvy for the treatment of mTNBC.
• FDA approved Yescarta for relapsed or refractory follicular lymphoma after two or more lines of systemic therapy. Yescarta is the first CAR T therapy approved for indolent follicular lymphoma.
• Gilead and Kite announced new analysis from the ZUMA-1 trial of Yescarta in a cohort of adult patients with relapsed or refractory large B-cell lymphoma. Findings suggest use of corticosteroids prior to Yescarta infusion has potential to impact the benefit/risk profile.
Inflammatory Diseases
• Gilead and Novo Nordisk A/S ("Novo Nordisk") expanded their clinical collaboration in non-alcoholic steatohepatitis ("NASH") with plans to launch a new Phase 2b for a triple combination regimen in NASH patients with cirrhosis.
• Gilead and Galapagos discontinued ISABELA Phase 3 trials in idiopathic pulmonary fibrosis.
Corporate
• In response to the rapid increase in COVID-19 in India, Gilead announced that it would provide voluntary licensees with technical assistance to expand local production capacity, support for the addition of new manufacturing facilities and a donation of active pharmaceutical ingredient. Gilead will also donate at least 450,000 vials of Veklury to the government of India.
•Gilead welcomed Flavius Martin, MD, as Executive Vice President, Research, following the retirement of William A. Lee, PhD. Dr. Martin brings decades of experience in early drug discovery research.

April 29, 2021

4

• Gilead completed the acquisition of MYR for up to approximately €1.3 billion (or $1.6 billion) in aggregate consideration. The acquisition provides Gilead with Hepcludex, which is conditionally approved by EMA for the treatment of chronic HDV in adults with compensated liver disease.
• Kite appointed Frank Neumann, MD, PhD, as Worldwide Head of Clinical Development. Dr. Neumann has a record of proven leadership in cell therapy and oncology clinical development.
Guidance and Outlook

The COVID-19 pandemic is expected to continue to impact our business and broader market dynamics, such as HCV treatment initiations and HIV new starts and switches. We now expect a more gradual recovery in the COVID-19 related dynamics starting in the second quarter 2021, and the rate and degree of recovery may vary by geography. Sales of Veklury will continue to be subject to significant volatility and uncertainty. As a result, Gilead believes providing full year 2021 revenue guidance excluding Veklury is useful for investors, when considered in conjunction with its GAAP financial information.

Except for GAAP earnings per diluted share, there is no change to the guidance shared on February 4, 2021, including: full year product sales excluding Veklury between $21.7 billion and $22.1 billion; full year Veklury sales between $2 billion and $3 billion; total product sales for 2021 between $23.7 billion and $25.1 billion; and non-GAAP earnings per share for 2021 between $6.75 and $7.45. GAAP earnings per diluted share for 2021 is now expected to be between $4.75 and $5.45, updated primarily for actual changes in fair value of equity investments in the first quarter 2021. A reconciliation between GAAP and non-GAAP financial information for the 2021 guidance is provided in the table on page 12.

Non-GAAP Financial Information

The information presented in this document has been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), unless otherwise noted as non-GAAP. Management believes non-GAAP information is useful for investors, when considered in conjunction with Gilead’s GAAP financial information, because management uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Gilead’s operating results as reported under GAAP. Non-GAAP financial information excludes acquisition-related expenses including amortization of acquired intangible assets and inventory step-up charges in cost of goods sold, acquired IPR&D expenses, and other items that are considered unusual or not representative of underlying trends of Gilead’s business, fair value adjustments of equity securities and discrete and related tax charges or benefits associated with changes in tax related laws and guidelines. Acquired IPR&D expenses reflect IPR&D impairments as well as the initial costs of externally developed IPR&D projects, acquired directly in a transaction other than a business combination, that do not have an alternative future use, including upfront payments related to various collaborations and the initial costs of rights to IPR&D projects. Although Gilead consistently excludes the amortization of acquired intangible assets from the non-GAAP financial information, management believes that it is important for investors to understand that such intangible assets were recorded as part of acquisitions and contribute to ongoing revenue generation. Non-GAAP measures may be defined and calculated differently by other companies in the same industry. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the tables on pages 10 – 11.

Conference Call

At 4:30 p.m. Eastern Time today, Gilead will host a conference call to discuss Gilead’s results. The live webcast can be accessed through the Gilead website at View Source Alternatively, individuals can access the call by dialing 877-359-9508 (U.S.) or 224-357-2393 (international) with conference ID 5069935. A replay of the conference call will be posted on the Gilead website after the event and will be available for one year.

On April 29, 2021 Novo Seeds, the early stage investment and company creation team of Novo Holdings, reported an investment in Adcendo, a Danish biotech company which is developing antibody-drug conjugates (ADCs) for the treatment of cancers (Press release, Novo, APR 29, 2021, View Source [SID1234578812]). The EUR 51 million (US$ 62 million) Series A financing was led by Novo Seeds and Ysios Capital, along with RA Capital Management, HealthCap and Gilde Healthcare.

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The new financing, which is the largest Series A financing for a Danish biotech company, will be used to establish a pipeline of ADCs directed at novel cancer targets and to bring the lead program targeting the novel cancer target uPARAP/Endo180 to proof of concept in patients.

The company has been supported by Novo Seeds since 2017 and was incubated in 2018 at the BioInnovation Institute (BII), an international life sciences incubator in Copenhagen. Novo Seeds supported the company amongst others through leveraging its network in industry and academia to recruit world-renowned experts to the company’s Scientific Advisory Board. As part of the financing, Jeroen Bakker, Principal at Novo Seeds, will join the Board.

Commenting on the financing, Henrik Stage, Chief Executive Officer of Adcendo, said: "We are very pleased to welcome world-leading life sciences investor Novo Seeds to our board as a result of today’s financing and in recognition of its involvement in the company since inception. In the last few years, the ADC modality has delivered promising approvals of new drugs as well as significant commercial transactions. We are excited that we have secured this major financing from top tier investors and are looking forward to delivering on our vision of bringing new innovative treatments to cancer patients."

Jeroen Bakker, Principal at Novo Seeds, commented: "One of our ambitions at Novo Seeds is to leverage and nurture the untapped innovation in the Nordic region. We are proud to have been involved with Adcendo since its early days and are very impressed with the progress achieved to date. We are very pleased to now co-lead this investment with such an exceptional syndicate, building on the founders’ early-stage research at The Finsen Laboratory to develop Adcendo into a world leading ADC player, and we look forward to continuing playing a prominent role in shaping the Nordic biotech ecosystem."

uPARAP is a unique novel cancer target overexpressed on the cell surface of several cancers. Being a collagen scavenger receptor that possesses constitutively active and highly efficient internalization and recycling properties, it has been demonstrated to play a role in tumor invasion. The expression and biological mechanisms of uPARAP makes it ideal for an ADC approach as it may be used as a cancer-associated "drug internalization pump" to bring conjugated drugs directly into the cancer cells.

The uPARAP collagen scavenger receptor has been found to be overexpressed by cancer cells in several indications with high unmet needs including soft tissue sarcoma, glioblastoma multiforme, triple-negative breast cancers, leukemia and osteosarcoma, as well as by stromal cells in several high prevalence cancers with substantial stromal tissue content, such as prostate, breast and pancreatic cancer.

In addition to the uPARAP program, Adcendo will build a pipeline of additional novel cancer targets ideally suited to ADC approaches.

On April 29, 2021 Lantern Pharma (NASDAQ: LTRN), a clinical stage biopharmaceutical company using its proprietary RADR artificial intelligence ("A.I.") platform to improve drug discovery and development and identify patients who will benefit from its portfolio of targeted oncology therapeutics, reported that RADR has exceeded 4.6 billion datapoints (Press release, Lantern Pharma, APR 29, 2021, View Source;utm_medium=rss&utm_campaign=radr-surpasses-4-6-billion-datapoints-accelerating-progress [SID1234578775]). This 16-fold increase in datapoints over the past 12 months was also accompanied by other significant improvements in the functionality, feature-set and automation of the drug development platform as well as a significant increase in the number of drugs, drug classes and cancers covered by RADR.

"We are extremely pleased to share the fact that we have increased the number of biologically relevant and curated datapoints that power our RADR platform by 16-fold since last May and nearly 4-fold since the beginning of the year. The pace of data acquisition, curation, and tagging achieved during this last campaign is well ahead of schedule and allows us to increasingly focus on building a more complete and more powerful library of algorithms and machine learning models aimed at rapidly answering questions that are fundamental to oncology drug development," stated Panna Sharma, President and CEO of Lantern Pharma. "Our mission to build the world’s largest, most robust and most accurate A.I. driven platform for precision oncology drug discovery and development is advancing rapidly. The robustness of the datasets powering RADR is anticipated to continue to improve machine-learning results, accelerate automation of other features and aid oncology drug development for Lantern and our partners with the ultimate focus of benefitting cancer patients."

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Lantern is committed to growing and enhancing RADR, which it believes is among the largest drug development platforms powered exclusively for oncology drug development and rescue. The growing datapoints, and accompanying functionality in the A.I. platform, allow scientists, biologists, and engineers to collaborate on issues of drug activity, drug response, patient stratification, and cancer biomarkers at a pace which has been unachievable, until now. The developmental focus on increasing the number of datapoints, and improving the performance, power and biological relevance of the algorithms, is expected to yield additional targeted indications for Lantern’s current pipeline of drug candidates. We expect that the platform will also help in revealing additional compounds and therapies that can be in-licensed and subsequently developed in a more efficient, and potentially more targeted manner. Lantern has used RADR to uncover indications in multiple cancer sub-types, including CNS (central nervous system) cancers, drug-resistant lung cancers, lung cancer sub-types among never-smokers and SMARCB1 mutated cancers (e.g. Atypical Teratoid Rhabdoid Tumors).

Lantern has filed two additional patent applications directed to the RADR platform that further strengthen the Company’s leading position in using A.I. for cancer drug development and drug rescue. The Company’s patent applications are directed to using machine learning to predict and discover gene signatures associated with pharmaceutical agents, as well as using automated and machine learning methods on genomic and biomarker data for rescuing, repurposing and repositioning of pharmaceutical agents. Lantern expects to continue developing novel A.I. and machine learning functionality, methods and technologies that it will file patents on both as core technologies and directed in the use of its pipeline of drug candidates.

"As A.I. continues to transform drug development, platforms that can provide a machine-learning, A.I. driven edge are becoming an essential tool for companies to make informed, rapid decisions in cancer indication selection, trial design, validation of mechanisms and potential creation of combination therapy regimens," continued Sharma. "Now, with every major cancer and drug class being covered in our A.I. platform, Lantern can focus not only on accelerating our portfolio, but also on developing collaborations that continue to enhance and validate our platform while delivering insights for our biopharma partners. These RADR powered insights are expected to accelerate development timelines, derisk key decisions and uncover new opportunities that may have gone undeveloped — ultimately leading to oncology therapies that can increase the personalization of treatment."

"Biopharma companies are looking to launch programs in validated indications more rapidly as they focus on maximizing the potential of each drug candidate," said Mr. Sharma. "We believe that RADR can help design and launch these programs, that continue to grow in complexity, at a fraction of the cost and timeline of traditional oncology drug development. Creating novel genomic and mechanistic insights while also providing specific guidance on designing biomarker driven preclinical studies and clinical trials is an essential component of personalizing cancer treatment. RADR is a powerful platform that can offer a significant competitive advantage for oncology drug development."