On July 31, 2019 United Therapeutics Corporation (Nasdaq: UTHR) reported its financial results for the quarter ended June 30, 2019 (Press release, United Therapeutics, JUL 31, 2019, View Source [SID1234537934]).

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"Our prostacyclin product franchise, consisting of Remodulin, Tyvaso, and Orenitram, is being used by a larger number of pulmonary arterial hypertension (PAH) patients than ever before," said Martine Rothblatt, Ph.D., Chairman and Chief Executive Officer of United Therapeutics. "This momentum underscores our belief that our product franchise is well positioned to treat a large and growing number of PAH patients in need of a true prostacyclin analogue therapy. It also reinforces our commitment to advancing our innovative pipeline of next generation drug delivery systems and late stage clinical programs in cardiopulmonary diseases and oncology, as well as regenerative medicine and organ manufacturing programs to ultimately achieve our mission of finding a cure for PAH and other end-stage organ diseases."

Remodulin net product sales decreased by $3.7 million for the three months ended June 30, 2019, as compared to the same period in 2018. $10.3 million of the decrease was due to price reductions, primarily to our international distributors, partially offset by a net increase in total quantities shipped of $9.4 million. The net increase in shipments was due to higher quantities sold to our international distributors, partially offset by lower quantities sold to domestic distributors. Changes in quarterly Remodulin sales do not precisely reflect underlying patient demand or changes in patient census as, during the three months ended June 30, 2019, there was an increase in the number of U.S. patients being treated with Remodulin, as compared to the same period in 2018.

Tyvaso net product sales for the three months ended June 30, 2019 increased by $3.7 million as compared to the same period in 2018. This increase was primarily due to a price increase implemented in January 2019 and an increase in the number of patients being treated with Tyvaso, partially offset by higher gross-to-net revenue reductions.

Orenitram net product sales for the three months ended June 30, 2019 increased by $4.5 million as compared to the same period in 2018. This increase was primarily due to an increase in the number of patients being treated with Orenitram and a price increase implemented in January 2019.

Unituxin net product sales for the three months ended June 30, 2019 increased by $5.3 million as compared to the same period in 2018. This increase was due to an increase in the number of vials sold and a price increase implemented in April 2019.

Adcirca net product sales for the three months ended June 30, 2019 decreased by $80.7 million as compared to the same period in 2018. This decrease was primarily due to a decrease in bottles sold following the onset of generic competition for Adcirca beginning in August 2018.

Cost of product sales, excluding share-based compensation. The decrease in cost of product sales of $32.2 million for the three months ended June 30, 2019, as compared to the same period in 2018, was primarily attributable to a $34.4 million decrease in royalty expense for Adcirca because fewer bottles were sold due to the launch of generic versions of Adcirca beginning in August 2018.

Research and development expense, excluding share-based compensation. The increase in research and development expense of $16.7 million for the three months ended June 30, 2019, as compared to the same period in 2018, was driven by continued investment in our product pipeline. Research and development expense for the treatment of cardiopulmonary diseases increased by $19.0 million for the three months ended June 30, 2019, as compared to the same period in 2018, due to: (1) $11.7 million of expenditures associated with the phase III ADVANCE studies of ralinepag during the three months ended June 30, 2019; (2) increased spending of $2.2 million on the development of drug delivery devices; and (3) an $8.8 million in-process research and development impairment charge related to the termination of a license agreement during the three months ended June 30, 2019. The increase in total research and development expense was partially offset by a $5.4 million decrease in expense for cancer-related projects driven by the decrease in spending on the DISTINCT study, which is now fully-enrolled.

The increase in share-based compensation benefit of $57.7 million for the three months ended June 30, 2019, as compared to the same period in 2018, was primarily due to a $62.1 million increase in STAP benefit driven by a 33 percent decrease in our stock price for the three months ended June 30, 2019, as compared to a 1 percent increase in our stock price for the same period in 2018; partially offset by: (1) a $2.6 million increase in stock option expense due to additional awards granted and outstanding in 2019; and (2) a $1.8 million increase in restricted stock unit expense due to additional awards granted and outstanding in 2019.

Other Income (Expense), Net

The increase in other income (expense), net of $33.7 million for the three months ended June 30, 2019, as compared to the same period in 2018, was primarily due to the recognition of a net unrealized gain in investments in equity securities with readily determinable fair values. During the three months ended June 30, 2019, we recognized $29.5 million of net unrealized gains on these securities.

Income Tax Expense

The income tax expense was $45.3 million for the three months ended June 30, 2019, as compared to $45.0 million for the same period in 2018. The income tax expense is based on an estimated effective tax rate (ETR) for the entire year. The estimated annual ETR is subject to adjustment in subsequent quarterly periods if components used to calculate the estimated annual ETR are updated or revised. Our actual ETR as of June 30, 2019 and June 30, 2018 was 28 percent and 21 percent, respectively. We recognized a loss before income taxes, and a corresponding income tax benefit, for the six months ended June 30, 2019, as a result of the one-time $800.0 million payment to Arena Pharmaceuticals, Inc. in January 2019. As a result of this loss, our anticipated tax credits and foreign sales deduction, partially offset by non-deductible compensation expense, increased our tax benefit and resulting ETR for the six months ended June 30, 2019, compared to the same period in 2018.

Non-GAAP Earnings

Non-GAAP earnings is defined as net income, adjusted for: (1) share-based compensation (benefit) expense (including expenses relating to stock options, restricted stock units, share tracking awards and our employee stock purchase plan); (2) unrealized (gains) losses on equity securities; (3) impairment charges; and (4) tax expense (benefit) on non-GAAP earnings adjustments.

On July 29, 2019, we granted a total of 817 restricted stock units under our 2019 Inducement Stock Incentive Plan to two newly hired employees. These restricted stock units vest in three equal installments on July 31, 2020, July 31, 2021 and July 31, 2022, assuming continued employment on such dates, and are subject to the standard terms and conditions we filed with the SEC as Exhibit 10.2 to our Current Report on Form 8-K on March 1, 2019. We are providing this information in accordance with Nasdaq Listing Rule 5635(c)(4).

Conference Call

We will host a half-hour teleconference on Wednesday, July 31, 2019, at 9:00 a.m. Eastern Time. The teleconference is accessible by dialing 1-877-351-5881, with international callers dialing 1-970-315-0533. A rebroadcast of the teleconference will be available for one week by dialing 1-855-859-2056, with international callers dialing 1-404-537-3406, and using access code: 3066089.

This teleconference will also be webcast and can be accessed via our website at View Source

On July 31, 2019 CymaBay Therapeutics, Inc. (NASDAQ: CBAY), a clinical-stage biopharmaceutical company focused on developing therapies for liver and other chronic diseases with high unmet need, reported that it will host a conference call and live audio webcast on Wednesday, August 7, 2019 at 4:30 p.m. Eastern Time to discuss financial results for the second quarter and six months ended June 30, 2019 and to provide a business update (Press release, CymaBay Therapeutics, JUL 31, 2019, View Source [SID1234537933]).

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Conference Call Details
To access the live conference call, please dial 877-407-0784 from the U.S. and Canada, or 201-689-8560 internationally, Conference ID# 13692706. To access the live and subsequently archived webcast of the conference call, go to the Investors section of the company’s website at View Source

On July 31, 2019 Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) reported consolidated financial results for the second quarter ended June 30, 2019 and increased its full-year 2019 total product revenue guidance (Press release, Vertex Pharmaceuticals, JUL 31, 2019, View Source [SID1234537932]).

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"We have made tremendous progress across our business in 2019 thus far. In CF, we submitted a New Drug Application to the FDA for our VX-445 triple combination regimen, which we believe has the potential to treat up to 90% of all CF patients in the future. We continue to focus on ensuring all eligible patients have access to our CF medicines as early as possible," said Jeffrey Leiden, M.D., Ph.D., Chairman, President and Chief Executive Officer of Vertex. "Additionally, we have rapidly grown our pipeline beyond CF, advancing seven new potential medicines across five disease areas, including beta thalassemia, sickle cell disease, alpha-1 antitrypsin deficiency, APOL1-mediated kidney diseases and pain. And through our expanded collaboration with CRISPR Therapeutics and acquisition of Exonics Therapeutics, we have now established a leading gene editing platform for the treatment of Duchenne Muscular Dystrophy and Myotonic Dystrophy Type 1."

Total product revenues increased 25% compared to the second quarter of 2018, primarily driven by the uptake of SYMDEKO in the U.S. and SYMKEVI in Germany.
GAAP net income increased compared to the second quarter of 2018, driven by the strong growth in total product revenues, and was partially offset by increases in operating expenses, including a $50 million upfront payment as part of Vertex’s recent collaboration with Kymera Therapeutics, and income taxes.
Non-GAAP net income increased compared to the second quarter of 2018, driven by the strong growth in total product revenues, and was partially offset by increased income taxes.
Cash, cash equivalents and marketable securities as of June 30, 2019 were $4.0 billion, an increase of approximately $800 million compared to $3.2 billion as of December 31, 2018.

Combined GAAP R&D and SG&A expenses increased compared to the second quarter of 2018 primarily due to the $50 million upfront payment to Kymera Therapeutics.
Combined Non-GAAP R&D and SG&A expenses were similar to the second quarter of 2018.
GAAP and Non-GAAP income taxes increased significantly compared to the second quarter of 2018 due to Vertex’s release of its valuation allowance on the majority of its deferred tax assets in the fourth quarter of 2018. GAAP and non-GAAP income taxes in the second quarter of 2019 include a provision for income taxes on Vertex’s pre-tax income using an estimated effective tax rate approximating statutory rates. This provision for income taxes includes a significant non-cash charge due to Vertex’s ability to offset its pre-tax income against previously benefited net operating losses. Refer to "Supplemental Income Tax Information" for discussion of the cash versus non-cash components of Vertex’s provision for income taxes.

Share Repurchase Program
In order to reduce the impact of dilution from employee equity programs, the Board of Directors has authorized a share repurchase program of up to $500 million of common stock through December 31, 2020.
The repurchase is expected to be executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans.

Business Highlights
CF CLINICAL DEVELOPMENT

On July 22, 2019, the company announced that it submitted a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) for the triple combination of VX-445 (elexacaftor), tezacaftor and ivacaftor. A Marketing Authorization Application (MAA) submission to the European Medicines Agency (EMA) is planned for the fourth quarter of 2019.

Enrollment is ongoing in a Phase 3 study evaluating the triple combination of elexacaftor, tezacaftor and ivacaftor in children ages 6 to 11 years.

A Phase 2 dose-ranging study is ongoing to evaluate the once-daily potentiator VX-561 to support potential Phase 3 development of VX-561 in a once-daily triple combination regimen.

A Phase 2 study is ongoing to evaluate the next-generation corrector, VX-121, in combination with VX-561 and tezacaftor as a potential once-daily triple combination regimen. VX-121 was granted Fast Track Designation by the FDA in the second quarter of 2019.

Vertex continues to make significant progress toward gaining approval for its CF medicines for use earlier in the course of disease progression. Recent highlights include:

Approval for SYMDEKO in the U.S. for children ages 6 to 11 years; MAA submission in the EU planned for the second half of 2019

Approval for ORKAMBI in Australia for children ages 2 to 5 years

Approval for KALYDECO in Australia for children ages 12 to <24 months

CLINICAL DEVELOPMENT
Alpha-1 Antitrypsin (AAT) Program:

Vertex has completed its evaluation of single and multiple doses of VX-814, the company’s first investigational molecule for the treatment of alpha-1 antitrypsin (AAT) deficiency, in healthy volunteers. Based on the safety, tolerability and pharmacokinetic data from this study, the company plans to advance VX-814 into a Phase 2 dose-ranging study in patients with two Z mutations.

The company expects to have clinical data from its AAT program in people who have two Z mutations in 2020.

Vertex has also advanced a second investigational small molecule corrector, VX-864, into Phase 1 clinical development. Both VX-814 and VX-864 have received Fast Track Designation by the FDA.

Sickle Cell Disease and Beta Thalassemia:

Vertex and its partner CRISPR Therapeutics have dosed the first patient in the Phase 1/2 clinical study of severe sickle cell disease using the novel gene-editing therapy CTX001. The first patient with beta thalassemia was dosed in the first quarter of this year.

APOL1-Mediated Kidney Diseases:

Vertex has initiated a Phase 1 study evaluating VX-147, the company’s first investigational oral small molecule medicine for the treatment of APOL1-mediated focal segmental glomerulosclerosis (FSGS) and other serious kidney diseases. VX-147 is designed to inhibit APOL1 function, which is a causal genetic factor in FSGS and other proteinuric kidney diseases. Vertex is also advancing multiple other APOL1 inhibitors through preclinical development.

INVESTMENTS IN EXTERNAL INNOVATION

On June 6, 2019, Vertex announced that it is expanding its collaboration with CRISPR Therapeutics and acquiring Exonics Therapeutics with the goal of developing novel therapies for Duchenne Muscular Dystrophy (DMD) and Myotonic Dystrophy Type 1 (DM1). Vertex completed the CRISPR and Exonics transactions in July 2019.

On May 15, 2019, Vertex and Kymera Therapeutics entered into a four-year strategic research and development collaboration to develop small molecule protein degraders against multiple targets. The collaboration will leverage Kymera’s expertise in targeted protein degradation and its proprietary Pegasus drug discovery platform and Vertex’s scientific, clinical, and regulatory capabilities to accelerate the development of first-in-class medicines for people with serious diseases.

On July 31, 2019 Exelixis, Inc. (Nasdaq: EXEL) reported financial results for the second quarter of 2019 and provided an update on progress toward fulfilling its key corporate objectives, as well as discovery, development and commercial milestones (Press release, Exelixis, JUL 31, 2019, View Source [SID1234537931]).

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"The second quarter of 2019 was highlighted by the strong and sustained momentum of our business," said Michael M. Morrissey, Ph.D., President and Chief Executive Officer of Exelixis. "We achieved notable revenue growth for the CABOMETYX franchise, supporting our strategy of reinvestment in long-term growth opportunities through our internal discovery and targeted in-licensing activities, including today’s announcement of our partnership agreement with Aurigene."

Dr. Morrissey continued: "Our clinical development efforts continue to accelerate with the initiation of COSMIC-313, a new phase 3 pivotal trial of the cabozantinib triplet combination with nivolumab and ipilimumab in renal cell carcinoma, as well as the recent expansion of COSMIC-021, our phase 1b trial of cabozantinib and atezolizumab across multiple tumor types. Through the rest of our 25th anniversary year, we’re working to advance our business with a focus on sustainable long-term growth through commercial execution, thoughtful research and development investments, and financial discipline."

Second Quarter 2019 Financial Results

Total revenues for the quarter ended June 30, 2019 were $240.3 million, compared to $186.1 million for the comparable period in 2018.

Total revenues included net product revenues of $193.7 million for the quarter ended June 30, 2019, compared to $145.8 million for the comparable period in 2018. The increase in net product revenues reflected the continued growth of CABOMETYX (cabozantinib) in the U.S. for the treatment of patients with advanced renal cell carcinoma (RCC), as well as the U.S. launch of CABOMETYX for the treatment of patients with hepatocellular carcinoma who have been previously treated with sorafenib, following its approval by the U.S. Food and Drug Administration in January 2019.

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Exelixis Second Quarter 2019 Financial Results
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July 31, 2019

Total revenues for the quarter ended June 30, 2019 also include collaboration revenues of $46.6 million, compared to $40.3 million for the comparable period in 2018. The increase in collaboration revenues was primarily the result of the recognition of a $20.0 million milestone from Daiichi Sankyo Company, Limited (Daiichi Sankyo) for the launch of MINNEBRO (esaxerenone) tablets as a treatment for patients with hypertension in Japan, increases in royalty revenues on net sales of cabozantinib by Ipsen Pharma SAS (Ipsen) outside of the U.S. and Japan, and development cost reimbursements by Ipsen and Takeda Pharmaceutical Company Ltd. (Takeda), offset by a $25.0 million milestone from Ipsen recognized in the comparable period in 2018 for the achievement of $100.0 million of net sales cumulatively over four consecutive fiscal quarters.

Research and development expenses for the quarter ended June 30, 2019 were $81.9 million, compared to $42.5 million for the comparable period in 2018. The increase in research and development expenses was primarily related to increases in clinical trial costs, license and other collaboration costs, personnel expenses and stock-based compensation. The increase in clinical trial costs was primarily due to costs associated with the expanding clinical trial program for cabozantinib that includes four phase 3 pivotal studies (CheckMate 9ER, COSMIC-311, COSMIC-312 and COSMIC-313), as well as a multi-cohort phase 1b study (COSMIC-021). The increase in license and other collaboration costs was primarily a result of the collaboration and license agreement Exelixis entered into with Iconic Therapeutics, Inc. (Iconic) in May 2019. The increase in personnel expenses was primarily due to increases in headcount to support Exelixis’ expanded discovery and development efforts. The increase in stock-based compensation was primarily due to increases in headcount, as well as the expense recognition attributable to research and development for restricted stock units that were granted in September 2018 that will vest upon the achievement of specific performance targets (the PSUs).

Selling, general and administrative expenses for the quarter ended June 30, 2019 were $58.8 million, compared to $51.9 million for the comparable period in 2018. The increase in selling, general and administrative expenses was primarily related to increases in stock-based compensation and personnel expenses. The increase in stock-based compensation was primarily due to increases in general and administrative headcount to support the company’s commercial and research and development organizations as well as the expense recognition attributable to selling, general and administrative for the PSUs. The increase in personnel expenses was primarily due to increases in headcount.

Provision for income taxes for the quarter ended June 30, 2019 was $20.7 million and Exelixis’ effective tax rate was 20.8%, compared to $0.9 million and 1.0%, respectively, for the comparable period in 2018. The provision for income taxes relating to Exelixis’ pre-tax income for the three months ended June 30, 2018 was largely offset by a valuation allowance against its net operating loss carryforwards and other deferred tax assets. At December 31, 2018, Exelixis released substantially all of the remaining valuation allowance against Exelixis’ deferred tax assets, after Exelixis determined that it was more likely than not that these deferred tax assets would be realized.

GAAP net income for the quarter ended June 30, 2019 was $79.0 million, or $0.26 per share, basic and $0.25 per share, diluted, compared to GAAP net income of $87.5 million, or $0.29 per share, basic and $0.28 per share, diluted, for the comparable period in 2018. The decrease in net income was primarily related to the increases in research and development expenses, selling, general and administrative expenses and the provision for income taxes; those changes were partially offset by the increases in both net product revenues and collaboration revenues recognized from Exelixis’ collaboration agreements.

Non-GAAP net income for the quarter ended June 30, 2019 was $90.7 million, or $0.30 per share, basic and $0.29 per share, diluted, compared to non-GAAP net income of $96.6 million, or $0.32 per share, basic and $0.31 per share, diluted, for the comparable period in 2018. Non-GAAP net income excludes stock-based compensation and adjusts for the related income tax effect.

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Exelixis Second Quarter 2019 Financial Results
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July 31, 2019

Cash and investments totaled $1,161.0 million at June 30, 2019, compared to $851.6 million at December 31, 2018.

Non-GAAP Financial Measures

To supplement Exelixis’ financial results presented in accordance with GAAP, Exelixis presents non-GAAP net income (and the related per share measures), which exclude from GAAP net income (and the related per share measures) stock-based compensation expense and adjust for the related income tax effect of this non-GAAP adjustment.

Exelixis believes that the presentation of these non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors. In particular, Exelixis believes that these non-GAAP financial measures, when considered together with its financial information prepared in accordance with GAAP, can enhance investors’ and analysts’ ability to meaningfully compare Exelixis’ results from period to period, and to identify operating trends in Exelixis’ business. Exelixis has excluded stock-based compensation expense because it is a non-cash expense that may vary significantly from period to period as a result of changes not directly or immediately related to the operational performance for the periods presented. Exelixis also regularly uses these non-GAAP financial measures internally to understand, manage and evaluate its business and to make operating decisions.

These non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Exelixis encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP financial information and the reconciliation between these presentations, to more fully understand Exelixis’ business. Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.

2019 Financial Guidance

Exelixis is providing the following updated financial guidance for the full year 2019. Cost of goods sold is expected to be between 4% and 5% of net product revenues. Research and development expenses are now expected to be between $330 million and $350 million given the impact of the recent business development activities and include non-cash expenses related to stock-based compensation of $25 million. Selling, general and administrative expenses are expected to be between $220 million and $240 million and include non-cash expenses related to stock-based compensation of $40 million. Guidance for the effective tax rate in 2019 is between 21% and 23%.

Cabozantinib Highlights

Strong Growth in Cabozantinib Franchise Net Revenues and Royalties. Net product revenues generated by the cabozantinib franchise were $193.7 million during the second quarter of 2019, an increase of 32.8% year-over-year. During the second quarter of 2019, CABOMETYX generated $189.0 million in net product revenues and COMETRIQ (cabozantinib) capsules for the treatment of patients with progressive, metastatic medullary thyroid cancer generated $4.7 million in net product revenues. Based upon Exelixis’ partner Ipsen’s cabozantinib-related revenues in the second quarter of 2019 of approximately $67 million, Exelixis earned $14.9 million in royalty revenues at the 22% royalty rate. The commercial rollout of CABOMETYX continues globally, where it is now approved and commercially available in 45 and 33 countries, respectively.

Takeda Submits Marketing Application to the Japanese Ministry of Health, Labour and Welfare (MHLW) for CABOMETYX as a Treatment for RCC. In April, Takeda, Exelixis’ partner in cabozantinib’s development and

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July 31, 2019

commercialization in Japan, announced that it applied to the Japanese MHLW for approval to manufacture and sell CABOMETYX as a treatment for unresectable and metastatic RCC in Japan. In May, Exelixis and Takeda amended the agreement originally executed in 2017. Per the terms of the amended agreement, as a result of this regulatory filing, Exelixis received a milestone payment in the second quarter of 2019 of $16.0 million, $9.4 million of which was recognized as revenue on the Company’s income statement in the first quarter of 2019. Exelixis is eligible for additional development, regulatory and first-sales milestone payments, as well as royalties on sales of cabozantinib in Japan.

Completion of Enrollment in CheckMate 9ER. In May, CheckMate 9ER, the phase 3 pivotal study evaluating the combination of cabozantinib and nivolumab versus sunitinib in patients with previously untreated advanced or metastatic RCC, completed enrollment. The trial randomized approximately 650 patients globally. CheckMate 9ER is sponsored by Bristol-Myers Squibb Company (BMS) and co-funded by Exelixis and Exelixis’ partners, Ipsen and Takeda. Results from the trial are expected in early 2020.

Initiation of COSMIC-313, a Phase 3 Pivotal Trial Evaluating the Triplet Combination of Cabozantinib, Nivolumab and Ipilimumab Versus the Combination of Nivolumab and Ipilimumab in Patients with Previously Untreated Advanced Intermediate- or Poor-Risk RCC. In May, Exelixis announced the initiation of COSMIC-313, a multicenter, randomized, double-blinded, controlled phase 3 pivotal trial that is designed to enroll 676 patients at 150 sites globally. The primary endpoint of the trial is progression-free survival, and the secondary endpoints are overall survival and objective response rate. COSMIC-313 is being conducted in collaboration with BMS, which is providing nivolumab and ipilimumab for use in this trial.

Expansion to Clinical Research Protocol for Phase 1b COSMIC-021 Trial. In July, Exelixis announced an amendment to the protocol for COSMIC-021, the phase 1b trial of cabozantinib in combination with TECENTRIQ (atezolizumab), an anti-PDL1 antibody discovered and developed by Genentech, Inc. (a member of the Roche Group), in patients with locally advanced or metastatic solid tumors. Based on preliminary encouraging activity and safety data, the original cohorts for immune checkpoint inhibitor-refractory non-small cell lung cancer and metastatic castration-resistant prostate cancer (CRPC) are being expanded to 80 patients each. In addition, four new cohorts – two expansion and two exploratory – in metastatic CRPC settings are being added to the trial. There are currently a total of 20 expansion cohorts and four exploratory cohorts in the trial, which now has a targeted enrollment of up to 1,732 patients. The primary goal of COSMIC-021 remains to determine the objective response rate in each cohort.

Corporate Highlights

Daiichi Sankyo Launches MINNEBRO Tablets for the Treatment of Hypertension in Japan. In May, Exelixis announced that its partner Daiichi Sankyo launched MINNEBRO tablets as a treatment for patients with hypertension in Japan. MINNEBRO is a compound identified during the prior research collaboration between Exelixis and Daiichi Sankyo, which the companies entered into in March 2006, and has been subsequently developed by Daiichi Sankyo. Per the collaboration agreement, Exelixis recognized and received a $20.0 million milestone payment from Daiichi Sankyo in June 2019 for the first commercial sale of MINNEBRO in Japan. Exelixis is eligible for additional commercialization milestone payments, as well as low double-digit royalties on sales of MINNEBRO.

Exelixis and Iconic Enter into Exclusive Option and License Agreement for Novel Antibody-Drug Conjugate (ADC) Program. In May, Exelixis announced an exclusive option and license agreement with Iconic, a private biopharmaceutical company focused on cancer and retinal disease, to advance an innovative next-generation ADC program for cancer. Under the terms of the agreement, Exelixis will gain an exclusive option to license ICON-2, Iconic’s lead oncology ADC program targeting Tissue Factor in solid tumors, in exchange for an upfront

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option payment of $7.5 million and a commitment for preclinical development funding. During the second quarter of 2019, Exelixis accrued $5.1 million for the preclinical development funding commitment.

Presence at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) 2019 Annual Meeting. In June, data from clinical trials of cabozantinib were featured in nine presentations at the ASCO (Free ASCO Whitepaper) Annual Meeting in Chicago. Cobimetinib was the subject of two additional presentations.

Exelixis and Aurigene Discovery Technologies Limited (Aurigene) Enter into Exclusive Option and License Agreement to Discover and Develop Novel Therapies for Cancer. In July, Exelixis announced an exclusive option and license agreement with Aurigene, a biotechnology company based in India focused on oncology and inflammatory disorders, to in-license up to six oncology programs from Aurigene. Under the terms of the agreement, Exelixis will make an upfront payment of $10.0 million for exclusive options to license three preexisting programs. In addition, Exelixis and Aurigene will initiate three Aurigene-led drug discovery programs on mutually agreed upon targets for additional upfront payments of $2.5 million per program. Exelixis will also contribute research funding to Aurigene for discovery and preclinical development work on all six programs. If Exelixis exercises an option, it would assume responsibility for all further development, commercialization and global manufacturing of that program, and Aurigene would become eligible for potential development, regulatory and commercialization milestone payments, as well as royalties on potential sales. Under the terms of the agreement, Aurigene retains limited development and commercial rights for India and Russia.

Basis of Presentation

Exelixis has adopted a 52- or 53-week fiscal year that generally ends on the Friday closest to December 31st. For convenience, references in this press release as of and for the fiscal periods ended June 28, 2019, December 28, 2018 and June 29, 2018 are indicated as being as of and for the periods ended June 30, 2019, December 31, 2018 and June 30, 2018, respectively.

Conference Call and Webcast

Exelixis management will discuss the company’s financial results for the second quarter of 2019 and provide a general business update during a conference call beginning at 5:00 p.m. EDT / 2:00 p.m. PDT today, Wednesday, July 31, 2019.

To access the webcast link, log onto www.exelixis.com and proceed to the News & Events / Event Calendar page under the Investors & Media heading. Please connect to the company’s website at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to listen to the webcast. Alternatively, please call 855-793-2457 (domestic) or 631-485-4921 (international) and provide the conference call passcode 6687332 to join by phone.

A telephone replay will be available until 8:00 p.m. EDT on August 2, 2019. Access numbers for the telephone replay are: 855-859-2056 (domestic) and 404-537-3406 (international); the passcode is 6687332. A webcast replay will also be archived on www.exelixis.com for one year.

On July 31, 2019 Agilent Technologies Inc. (NYSE: A) reported that the U.S. Food and Drug Administration (FDA) has approved the company’s PD-L1 IHC 22C3 pharmDx assay for expanded use (Press release, Agilent, JUL 31, 2019, https://www.agilent.com/about/newsroom/presrel/2019/31jul-ca19019.html [SID1234537930]).

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The assay is now approved as an aid in identifying patients with ESCC for treatment with KEYTRUDA (pembrolizumab), an anti-PD-1 therapy manufactured by Merck (known as MSD outside the United States and Canada). KEYTRUDA is approved for patients with recurrent locally advanced or metastatic ESCC whose tumors express PD-L1 [Combined Positive Score (CPS) ≥ 10] as determined by an FDA-approved test, with disease progression on or after one prior line of systemic therapy.

PD-L1 IHC 22C3 pharmDx is the only companion diagnostic FDA-approved to aid in identifying ESCC patients for second-line treatment with KEYTRUDA. This is the sixth cancer type for which PD-L1 IHC 22C3 pharmDx has gained FDA approval in the United States.

"PD-L1 has been established as an essential biomarker for PD-1/PD-L1 checkpoint inhibitors," said Sam Raha, president of Agilent’s Diagnostics and Genomics Group. "As a growing number of patients are becoming eligible for treatment with these inhibitors, pathologists’ confidence in their PD-L1 test is critical. With the approval of expanded use of our PD-L1 IHC 22C3 pharmDx assay, Agilent is able to aid in the identification of patients with ESCC for treatment with KEYTRUDA, while providing pathologists the quality, reliability, and accuracy they need to ensure diagnostic confidence."

In the United States, esophageal cancer is expected to cause approximately 16,000 deaths in 2019.3 ESCC accounts for approximately 30% of all esophageal cancers diagnosed in the United States4 and has a 5-year survival rate of 12%.5

Agilent developed PD-L1 IHC 22C3 pharmDx in collaboration with Merck.

KEYTRUDA is a humanized monoclonal antibody that increases the ability of the body’s immune system to help detect and fight tumor cells. KEYTRUDA blocks the interaction between PD-1 and its ligands, PD-L1 and PD-L2, thereby activating T lymphocytes, which may affect both tumor cells and healthy cells. KEYTRUDA and other targeted immunotherapies are revolutionizing cancer treatment, with their therapeutic value being demonstrated across a growing list of cancer types.

Agilent is a worldwide leader in partnering with pharmaceutical companies to develop immunohistochemical-based diagnostics for cancer therapy. Agilent developed PD-L1 IHC 22C3 pharmDx in partnership with Merck. PD-L1 IHC 22C3 pharmDx also helps physicians identify non-small cell lung cancer (NSCLC), cervical cancer, gastric or GEJ adenocarcinoma, urothelial carcinoma and head and neck squamous cell carcinoma (HNSCC) patients for treatment with KEYTRUDA. PD-L1 expression in NSCLC tissues is interpreted using Tumor Proportion Score (TPS). PD-L1 expression in HNSCC, urothelial carcinoma, cervical cancer, gastric or GEJ adenocarcinoma, and ESCC tissues is interpreted using Combined Positive Score (CPS).