On July 30, 2019 Incyte Corporation (Nasdaq:INCY) reported 2019 second quarter financial results and provides a status update on the Company’s development portfolio (Press release, Incyte, JUL 30, 2019, View Source [SID1234537892]).

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!

"Revenue growth continues to be strong, and we are pleased that Jakafi is also now available as an approved therapeutic option for patients with steroid-refractory acute GVHD," stated Hervé Hoppenot, Chief Executive Officer, Incyte. "In addition, we made good progress across our development portfolio during the quarter, including presenting data from the Phase 2 trial of ruxolitinib cream in patients with vitiligo at the World Congress of Dermatology (WCD) which drove our decision to advance the program into pivotal development. We remain on track to file a New Drug Application (NDA) seeking approval of pemigatinib in cholangiocarcinoma in the second half, and we look forward to announcing the results of multiple pivotal trials of ruxolitinib and itacitinib in GVHD by year-end. In summary, we continue to execute on our key strategic goals of further diversifying our revenue base and driving sustainable long-term growth."

Portfolio Update

Oncology – key highlights

The U.S. Food and Drug Administration (FDA) approved Jakafi for the treatment of steroid-refractory acute GVHD in May. Additionally, the results from the randomized Phase 3 trials of ruxolitinib versus best available therapy in steroid-refractory acute (REACH2) and steroid-refractory chronic (REACH3) GVHD, respectively, are currently expected to be available by the end of 2019.

GRAVITAS-301, the Phase 3 trial of itacitinib as a treatment for patients with newly-diagnosed acute GVHD, is also expected to readout before the end of 2019. GRAVITAS-309, a Phase 3 trial of itacitinib as a treatment for patients with newly-diagnosed chronic GVHD, was initiated in January of this year.

The Phase 1/2 trial evaluating the combination of itacitinib and osimertinib as a second-line treatment for patients with EGFR mutation-positive non-small cell lung cancer (NSCLC) has been completed; there are currently no plans for additional clinical evaluations of this combination.

Incyte is planning to submit an NDA seeking approval for pemigatinib as a second-line treatment for patients with FGFR2 translocated cholangiocarcinoma in the second half of 2019. The Phase 3 trial of pemigatinib for the first-line treatment of patients with FGFR2 translocated cholangiocarcinoma was initiated in June. Enrollment in the continuous dosing cohort of the Phase 2 trial of pemigatinib in patients with bladder cancer is expected to complete by the end of 2019, and a Phase 2 study of pemigatinib in patients with driver-activations of FGFR, that is agnostic to the tumor type, is expected to open in the coming months.

Indication and status

Ruxolitinib

Steroid-refractory acute GVHD: Phase 3 (REACH2)

(JAK1/JAK2)

Steroid-refractory chronic GVHD: Phase 3 (REACH3)

Essential thrombocythemia: Phase 2 (RESET)

Refractory myelofibrosis: Phase 2 with PI3Kδ, PIM or JAK1 inhibition

Itacitinib

Treatment-naïve acute GVHD: Phase 3 (GRAVITAS-301)

(JAK1)

Treatment-naïve chronic GVHD: Phase 3 (GRAVITAS-309)

Pemigatinib

Cholangiocarcinoma: Phase 2 (FIGHT-202), Phase 3 (FIGHT-302)

(FGFR1/2/3)

Bladder cancer: Phase 2 (FIGHT-201)

8p11 MPN: Phase 2 (FIGHT-203)

Tumor agnostic: Phase 2 (FIGHT-207) in preparation

Parsaclisib

Follicular lymphoma: Phase 2 (CITADEL-203)

(PI3Kδ)

Marginal zone lymphoma: Phase 2 (CITADEL-204)

Mantle cell lymphoma: Phase 2 (CITADEL-205)

INCMGA0012

MSI-high endometrial cancer: Phase 2 (POD1UM-101)

(PD-1)1

Merkel cell carcinoma: Phase 2 (POD1UM-201)

Anal cancer: Phase 2 (POD1UM-202)

Notes:
1) INCMGA0012 licensed from MacroGenics

Inflammation and autoimmunity (IAI) – key highlights

Data from the randomized Phase 2 trial of ruxolitinib cream in patients with vitiligo were presented at WCD. The study met its primary endpoint, demonstrating that significantly more patients treated with ruxolitinib cream for 24 weeks achieved a ≥50 percent improvement from baseline in the facial vitiligo area severity index (F-VASI50) score compared to patients treated with a vehicle control (non-medicated cream). Phase 3 development of ruxolitinib cream in patients with vitiligo is expected to begin by the end of 2019.

Indication and status

Ruxolitinib cream

Atopic dermatitis: Phase 3 (TRuE-AD)

(JAK1/JAK2)

Vitiligo: Phase 3 in preparation (TRuE-V)

INCB54707

Hidradenitis suppurativa: Phase 2

(JAK1)

Itacitinib
(JAK1)

Ulcerative colitis: Phase 2

Parsaclisib

Autoimmune hemolytic anemia: Phase 2

(PI3Kδ)

Sjögren’s syndrome: Phase 2

Discovery and early development – key highlights

Incyte’s portfolio of earlier-stage clinical candidates is detailed below.

Modality

Candidates

Small molecules

INCB01158 (ARG)1, INCB81776 (AXL/MER), INCB62079 (FGFR4), epacadostat (IDO1),
INCB59872 (LSD1), INCB53914 (PIM), INCB86550 (PD-L1)

Monoclonal antibodies2

INCAGN1876 (GITR), INCAGN2385 (LAG-3), INCAGN1949 (OX40),
INCAGN2390 (TIM-3)

Bispecific antibodies

MCLA-145 (PD-L1xCD137)3

Notes:
1) INCB01158 development in collaboration with Calithera
2) Discovery collaboration with Agenus
3) MCLA-145 development in collaboration with Merus

Partnered – key highlights

Phase 3 data from BREEZE-AD1 and BREEZE-AD2, two Phase 3 trials of baricitinib in patients with moderate-to-severe atopic dermatitis, were presented at WCD. Lilly expects topline results from additional ongoing Phase 3 trials in this indication to be available later in 2019.

Data from the GEOMETRY mono-1 Phase 2 clinical trial illustrate the promise of the investigational MET inhibitor capmatinib as a potential first- and second/third-line treatment option for patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) that harbor the MET exon-14 skipping mutation. These data were presented at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting in June. In addition, Novartis announced in June that the FDA granted Breakthrough Therapy designation for capmatinib as a treatment for patients with metastatic NSCLC harboring MET exon-14 skipping mutation with disease progression on or after platinum-based chemotherapy.

Novartis continues to expect to submit an NDA seeking approval of capmatinib in the second half of 2019.

Indication and status

Baricitinib (JAK1/JAK2)1

Atopic dermatitis: Phase 3 (BREEZE-AD)

Systemic lupus erythematosus: Phase 3

Severe alopecia areata: Phase 3

Capmatinib (MET)2

NSCLC (with MET exon 14 skipping mutations): NDA expected in H2 2019 (by Novartis)

Notes:
1) Worldwide rights to baricitinib licensed to Lilly: approved as Olumiant in multiple territories globally for certain patients with moderate to severe rheumatoid arthritis
2) Worldwide rights to capmatinib licensed to Novartis

2019 Second-Quarter Financial Results

The financial measures presented in this press release for the three and six months ended June 30, 2019 and 2018 have been prepared by the Company in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), unless otherwise identified as a Non-GAAP financial measure. Management believes that Non-GAAP information is useful for investors, when considered in conjunction with Incyte’s GAAP disclosures. Management uses such information internally and externally for establishing budgets, operating goals and financial planning purposes. These metrics are also used to manage the Company’s business and monitor performance. The Company adjusts, where appropriate, for expenses in order to reflect the Company’s core operations. The Company believes these adjustments are useful to investors by providing an enhanced understanding of the financial performance of the Company’s core operations. The metrics have been adopted to align the Company with disclosures provided by industry peers.

Beginning in the first quarter of 2019, after reviewing our Reconciliation of GAAP Net Income to Selected Non-GAAP Adjusted Information with the U.S. Securities & Exchange Commission, we no longer adjust for upfront consideration and milestones that are part of collaboration agreements with new or existing partners. This revised methodology is reflected in this press release for the three and six months ended June 30, 2019 and 2018.

Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used in conjunction with and to supplement Incyte’s operating results as reported under GAAP. Non-GAAP measures may be defined and calculated differently by other companies in our industry.

The Company’s 2019 financial guidance related to research and development and selling, general and administrative expenses does not include estimates associated with any potential future strategic transactions.

Revenues For the quarter ended June 30, 2019, net product revenues of Jakafi were $410 million as compared to $346 million for the same period in 2018, representing 18 percent growth. For the six months ended June 30, 2019, net product revenues of Jakafi were $785 million as compared to $659 million for the same period in 2018, representing 19 percent growth. For the quarter ended June 30, 2019, net product revenues of Iclusig (ponatinib) were $24 million as compared to $20 million for the same period in 2018. For the six months ended June 30, 2019, net product revenues of Iclusig were $45 million as compared to $41 million for the same period in 2018.

For the quarter and six months ended June 30, 2019, product royalties from sales of Jakavi (ruxolitinib), which has been out-licensed to Novartis outside of the United States, were $57 million and $102 million, respectively, as compared to $47 million and $88 million, respectively, for the same periods in 2018. For the quarter and six months ended June 30, 2019, product royalties from sales of Olumiant (baricitinib), which has been out-licensed to Lilly globally, were $19 million and $35 million, respectively, as compared to $9 million and $15 million, respectively, for the same periods in 2018.

For the quarter and six months ended June 30, 2019, milestone and contract revenues earned from our collaborative partners were $20 million and $60 million, respectively, as compared to $100 million for the same periods in 2018.

For the quarter and six months ended June 30, 2019, total revenues were $530 million and $1 billion, respectively, as compared to $522 million and $904 million, respectively, for the same periods in 2018.

Cost of product revenues GAAP cost of product revenues for the quarter and six months ended June 30, 2019 was $29 million and $52 million, respectively, as compared to $25 million and $43 million, respectively, for the same periods in 2018. Non-GAAP cost of product revenues for the quarter and six months ended June 30, 2019 was $24 million and $41 million, respectively, as compared to $19 million and $32 million, respectively, for the same periods in 2018. Non-GAAP cost of product revenues excludes the amortization of licensed intellectual property for Iclusig relating to the acquisition of the European business of ARIAD Pharmaceuticals, Inc. and the cost of stock-based compensation.

Research and development expenses GAAP research and development expenses for the quarter and six months ended June 30, 2019 were $289 million and $560 million, respectively, as compared to $298 million and $601 million, respectively, for the same periods in 2018. The decrease in GAAP research and development expenses over the prior year quarter and prior year six month period was driven primarily by our decision to no longer co-fund the development of baricitinib with Lilly.

Non-GAAP research and development expenses for the quarter and six months ended June 30, 2019 were $262 million and $505 million, respectively, including upfront and milestone expenses related to collaborative agreements of $25 million. Non-GAAP research and development expenses for the quarter and six months ended June 30, 2018 were $273 million and $552 million, respectively, including upfront and milestone expenses related to collaborative agreements of $20 million and $32 million, respectively. Non-GAAP research and development expenses exclude the cost of stock-based compensation.

Selling, general and administrative expenses GAAP selling, general and administrative expenses for the quarter and six months ended June 30, 2019 were $106 million and $230 million, respectively, as compared to $108 million and $230 million, respectively, for the same periods in 2018.

Non-GAAP selling, general and administrative expenses for the quarter and six months ended June 30, 2019 were $93 million and $204 million, respectively, as compared to $96 million and $206 million, respectively, for the same periods in 2018. Non-GAAP selling, general and administrative expenses exclude the cost of stock-based compensation.

Change in fair value of acquisition-related contingent consideration GAAP change in fair value of acquisition-related contingent consideration for the quarter and six months ended June 30, 2019 was $7 million and $13 million, respectively, as compared to $7 million and $14 million, respectively, for the same periods in 2018.

Unrealized gain (loss) on long term investments GAAP unrealized loss on long-term investments for the quarter ended June 30, 2019 was $5 million and the GAAP unrealized gain for the six months ended June 30, 2019 was $16 million. GAAP unrealized loss on long-term investments for the quarter and six months ended June 30, 2018 was $35 million and $12 million, respectively. The unrealized gain (loss) on long-term investments represents the fair market value adjustments of the Company’s investments in Agenus, Calithera, Merus and Syros.

Net income GAAP net income for the quarter ended June 30, 2019 was $105 million, or $0.49 per basic and $0.48 per diluted share, as compared to net income of $52 million, or $0.25 per basic and $0.24 per diluted share for the same period in 2018. GAAP net income for the six months ended June 30, 2019 was $208 million, or $0.97 per basic and $0.96 per diluted share, as compared to net income of $11 million, or $0.05 per basic and diluted share for the same period in 2018.

Non-GAAP net income for the quarter ended June 30, 2019 was $162 million, or $0.76 per basic and $0.75 per diluted share, as compared to Non-GAAP net income of $136 million, or $0.64 per basic and $0.63 per diluted share for the same period in 2018. Non-GAAP net income for the six months ended June 30, 2019 was $297 million, or $1.39 per basic and $1.37 per diluted share, as compared to Non-GAAP net income of $121 million, or $0.57 per basic and $0.56 per diluted share for the same period in 2018.

Cash, cash equivalents and marketable securities position As of June 30, 2019 and December 31, 2018, cash, cash equivalents and marketable securities totaled $1.7 billion and $1.4 billion, respectively.

2019 Financial Guidance

The Company has updated its full year 2019 financial guidance, as detailed below.

Unchanged

(1) Adjusted to exclude the amortization of licensed intellectual property for Iclusig relating to the acquisition of the European business of ARIAD Pharmaceuticals, Inc. and the estimated cost of stock-based compensation.
(2) Adjusted to exclude the estimated cost of stock-based compensation.
(3) Adjusted to exclude the change in fair value of estimated future royalties relating to sales of Iclusig in the licensed territory relating to the acquisition of the European business of ARIAD Pharmaceuticals, Inc.

Future Non-GAAP financial measures may also exclude impairment of goodwill or other assets, changes in the fair value of equity investments in our collaboration partners, non-cash interest expense related to the amortization of the initial discount on our 2020 Senior Notes and the impact on our tax provision of discrete changes in our valuation allowance position on deferred tax assets.

Conference Call and Webcast Information

Incyte will hold a conference call and webcast this morning at 8:00 a.m. EDT. To access the conference call, please dial 877-407-3042 for domestic callers or 201-389-0864 for international callers. When prompted, provide the conference identification number, 13692111.

If you are unable to participate, a replay of the conference call will be available for 30 days. The replay dial-in number for the United States is 877-660-6853 and the dial-in number for international callers is 201-612-7415. To access the replay you will need the conference identification number, 13692111.

The conference call will also be webcast live and can be accessed at www.incyte.com in the Investors section under "Events and Presentations".

On July 30, 2019 Hutchison China MediTech Limited ("Chi-Med") (AIM/Nasdaq: HCM) reported its unaudited financial results for the six months ended June 30, 2019 and provides updates on key clinical programs (Press release, Hutchison China MediTech, JUL 30, 2019, View Source [SID1234537891]). Major highlights include:

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!

Positive surufatinib China Phase III study in non-pancreatic neuroendocrine tumors ("NET")—Interim analysis of SANET-ep study confirmed to have met primary endpoint and the Independent Data Monitoring Committee ("IDMC") recommended the study be un-blinded, a year ahead of schedule. New Drug Application ("NDA") is now being prepared for submission during 2019;

Early progress on Elunate (fruquintinib capsules) with China in-market sales in colorectal cancer ("CRC") of $11.4 million1 (RMB77.1 million) during H1 2019; Discussions in progress for potential inclusion in the China National Reimbursement Drug List ("NRDL") at the next update in Q4 2019;

Potential for first savolitinib NDA targeted for H1 2020—for MET2 Exon 14 deletion non-small cell lung cancer ("NSCLC") in China. Oral presentations of savolitinib data made at scientific conferences in H1 2019 in lung cancer (monotherapy and combination with Tagrisso) and kidney cancer (combination with Imfinzi).
Video webcast presentation at 9:00 a.m. BST and additional conference call at 9:00 a.m. EDT.

"Chi-Med’s business is progressing well on all fronts." said Simon To, Chairman, Chi-Med. "All major clinical readouts in the first half were encouraging, with the stand-out results being surufatinib’s positive Phase III outcome in non-pancreatic NET and savolitinib’s preliminary data in MET Exon 14 deletion NSCLC along with the completion of enrollment of its registration study. We believe these accomplishments have the potential to support Chi-Med’s next two NDA submissions, surufatinib later this year and savolitinib early next year."

"Highly encouraging preliminary data was also reported for the savolitinib / Tagrisso combination in NSCLC, which led to the initiation of a global registration intent trial by AstraZeneca AB (publ) ("AstraZeneca"), the SAVANNAH study, early this year. Also, recently released preliminary data for the savolitinib / Imfinzi combination in kidney cancer is promising."

"Our first approved oncology drug, Elunate, is making progress, with first six-month revenue well ahead, at the same stage, of the five small molecule VEGFR3 inhibitors previously launched by multinational companies in China. In our view, with time and inclusion in the China NRDL, Elunate’s well documented efficacy and safety profile will make it a formidable competitor."

[1] In-market sales figures for Elunate are based on information provided by Eli Lilly and Company ("Lilly");

[2] mesenchymal epithelial transition receptor ("MET");

[3] Vascular endothelial growth factor receptor ("VEGFR");

"Business is as usual for our Commercial Platform, which generated 9% net income growth on a CER4 basis versus same period last year. This income helps significantly to fund our clinical development programs as well as our discovery engine which produced yet another exciting oncology asset, our ninth, with the IND5 submission of our novel IDH 1/2 inhibitor6 HMPL-306."

"Our organization is expanding rapidly, with our New Jersey-based international clinical and regulatory team scaling up to manage global registration studies on surufatinib and fruquintinib and early development on our B-cell malignancy assets. Our in-house oncology commercial team in China is also growing fast, managing medical affairs and getting ready for the potential launch of surufatinib late next year."

"Looking ahead at the next two years, we expect to accelerate our transformation into a fully integrated and globally-facing biopharmaceutical company with capability to discover, develop and launch multiple novel drug innovations aimed at addressing a broad range of unmet medical needs and benefiting a large number of patients."

FINANCIAL HIGHLIGHTS

The items below are selected financial data for the six months ended June 30, 2019. All monetary figures are expressed in U.S. dollars unless otherwise stated. For more details, please refer to "Financial Review", "Operations Review" and "Interim Unaudited Condensed Consolidated Financial Statements" below.

OVERALL GROUP: sufficient resources to reach multiple value inflection points on our pipeline

Group revenue $102.2 million (H1-18: $102.2m).

Net loss attributable to Chi-Med of $45.4 million (H1-18: net loss of $32.7m).

Adjusted Group net cash flows (non-GAAP) was -$63.7 million in H1 2019 including the repayment of a total of $26.9 million in bank loans, leaving the Group with no outstanding bank borrowings. Cash from our Commercial Platform, as well as payments received from our multinational partners, continued to offset a material part of our research and development ("R&D") expenses.

Cash resources of $383.6 million at Group level as of June 30, 2019 (December 31, 2018: $420.3m), including cash, cash equivalents and short-term investments of $237.3 million (December 31, 2018: $301.0m) and unutilized bank facilities of $146.3 million (December 31, 2018: $119.3m).
INNOVATION PLATFORM: increased investment in R&D driven by expansion of our organization, operations and progress on our clinical development pipeline

Consolidated revenue was $12.0 million (H1-18: $13.6m) mainly due to payments from AstraZeneca and Lilly. During H1 2019, following the launch of Elunate in late 2018, we recorded $5.5 million (H1-18: $1.1m) in manufacturing and service fee revenues as well as royalty income from Lilly.

[4] Constant Exchange Rate ("CER"). Certain financial information in this announcement is presented on a constant exchange rate basis, or at CER. These financial measures are not prepared in accordance with U.S. generally accepted accounting principles (GAAP) because they remove the effects of currency movements from our reported results. Please refer to "Use of Non-GAAP Financial Measures and Reconciliation" below for further information relevant to the interpretation of these financial measures and reconciliations of these financial measures to the most comparable GAAP measures;

R&D expenses on an as adjusted (non-GAAP) basis increased to $74.5 million (H1-18: $66.7m), primarily driven by the progress in the development of our eight clinical drug candidates, five of which are either in or about to start development outside China; the ramp-up of our small molecule manufacturing operations in Suzhou; expansion of U.S. and international clinical and regulatory operations; and establishment of our oncology commercial infrastructure in China.

Net loss from our Innovation Platform attributable to Chi-Med of $63.8 million (H1-18: net loss of $52.9m).
COMMERCIAL PLATFORM: solid net income growth on a CER basis due to continued progress in our Prescription Drugs business

Total consolidated sales grew 2% (7% at CER) to $90.2 million (H1-18: $88.6m) mainly due to progress on our Prescription Drugs subsidiary Hutchison Sinopharm7 being partially offset by rationalization of certain low contribution products in the Consumer Health business.

Total sales of non-consolidated joint ventures increased 2% (8% at CER) to $276.9 million (H1-18: $271.7m) driven by solid performance on our leading prescription cardiovascular drug, She Xiang Bao Xin ("SXBX") pill, which grew 9% (15% at CER) to $141.0 million (H1-18: $129.8m).

Total consolidated net income from our Commercial Platform attributable to Chi-Med increased 3% (9% at CER) to $27.7 million (H1-18: $26.9m).
—

U.K. Analysts Meeting and Webcast Scheduled Today at 9:00 a.m. BST (4:00 p.m. HKT)—at Citigate Dewe Rogerson, 8th Floor, Holborn Gate, 26 Southampton Buildings, London WC2A 1AN, UK. Investors may participate in the call at +44 20 3003 2666 (800 900 476 toll free in Hong Kong), or access a live video webcast of the call via Chi-Med’s website at www.chi-med.com/investors/event-information/.

U.S. Conference Call Scheduled Today at 9:00 a.m. EDT—to participate in the call from the U.S., please dial 1 866 966 5335.

Additional dial-in numbers are also available at Chi-Med’s website. For both calls please use conference ID "Chi-Med."

OPERATING HIGHLIGHTS

The points below summarize some of Chi-Med’s operating highlights so far this year. For more details, please refer to "Operations Review" below.

SURUFATINIB (HMPL-012 or sulfatinib)—angio-immuno kinase inhibitor of VEGFR 1/2/3, fibroblast growth factor receptor ("FGFR") 1, and colony stimulating factor-1 receptor ("CSF-1R"):

Positive China Phase III in non-pancreatic NET: An interim analysis in June 2019 confirmed that the Phase III non-pancreatic NET (SANET-ep) study met its primary endpoint of progression-free survival ("PFS"). As a result, the IDMC recommended the study be un-blinded, a year ahead of schedule, and preparations are now underway for an NDA submission in late 2019 for this indication in China;

Initiated China Phase II/III in biliary tract cancer ("BTC"): Based on preliminary Phase Ib/IIa data, we initiated a Phase IIb/III registration study in BTC in China in March 2019; and

[7] Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Company Limited ("Hutchison Sinopharm").

Initiated PD-1 combination development: Received China IND clearance during early 2019 and initiated a Phase I safety run-in study in China of surufatinib plus Tuoyi, an approved PD-1 monoclonal antibody from Shanghai Junshi Biosciences Co. Ltd. ("Junshi").
FRUQUINTINIB—highly selective tyrosine kinase inhibitor ("TKI") of VEGFR 1/2/3—potential best-in-class in terms of both efficacy and safety:

Early progress on Elunate (fruquintinib capsules) in third-line CRC in China:

$11.4 million (RMB77.1 million) in sales during H1 2019: In-market sales of Elunate to third-parties, as provided by Lilly, in the first full six-month period since its November 25, 2018 launch;

Progress in reimbursement discussion: Elunate was included in the Shanghai provincial reimbursement drug list ("RDL") in June 2019. Discussions now in-progress for potential inclusion in the China NRDL at the next update in early Q4 2019.

Cleared Phase III interim analysis in second-line gastric cancer: In April 2019, we conducted an interim analysis of the FRUTIGA study in China for futility. The analysis evaluated PFS and overall survival ("OS") trends after six months of therapy for the first 100 patients in the study. The IDMC recommended to continue the study without changes; and

Initiated PD-1 combination development: Received China IND clearance in early 2019 and initiated a Phase I study of fruquintinib plus Tyvyt, an approved PD-1 monoclonal antibody from Innovent Biologics (Suzhou) Co. Ltd. ("Innovent"). Phase I development of fruquintinib plus genolimzumab, a PD-1 monoclonal antibody under development by Genor Biopharma Co. Ltd. ("Genor") is also now underway.
SAVOLITINIB—potential first-in-class selective MET inhibitor in late-stage clinical development:

Reached enrollment goal in Phase II registration study—MET Exon 14 deletion NSCLC: Encouraging interim data, for 31 evaluable patients, for the China Phase II registration study in MET Exon 14 deletion NSCLC were presented during the 2019 American Association for Cancer Research (AACR) (Free AACR Whitepaper) ("AACR") Annual Meeting. We have now reached our enrollment goal for this Phase II registration study, and subject to clinical outcome, with potential to be our first NDA submission for savolitinib in early 2020;

AstraZeneca collaboration, leading global position in EGFR-TKI resistant NSCLC:

56% objective response rate ("ORR") and 7.1 months’ median duration of response—in patients with acquired resistance to Iressa or Tarceva driven by MET amplification: Preliminary TATTON Phase Ib/IIa data for the savolitinib/Tagrisso combination regimen were presented at the 2019 AACR (Free AACR Whitepaper) Annual Meeting for a total of 43 evaluable patients who were T790M- and had not previously received a third-generation EGFR inhibitor;

31% ORR and 9.7 months’ median duration of response—in patients with acquired resistance to Tagrisso driven by MET amplification: Preliminary TATTON Phase Ib/IIa data for the savolitinib/Tagrisso combination regimen were also presented at the 2019 AACR (Free AACR Whitepaper) Annual Meeting for a total of 39 evaluable patients who had reported disease progression after receiving a third-generation EGFR inhibitor. The SAVANNAH Phase IIb registration intent study, which is being conducted in North and South America, Europe and Asia in this target patient population, dosed its first patient in early 2019;

Emerging signal for savolitinib/Imfinzi (PD-L1) combination in renal cell carcinoma ("RCC"): Interim results for the papillary RCC ("PRCC") cohort of the CALYPSO Phase II study were presented at the 2019 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Genitourinary Symposium ("ASCO GU") reporting a 27% ORR for all 41 patients and a 32% ORR for the 28 previously untreated patients. The combination was tolerable and associated with durable responses in PRCC.
Further progress in early/proof-of-concept clinical trials and discovery, including:

HMPL-523—potential first-in-class selective Syk inhibitor: A Phase Ib dose expansion study in both China and Australia accelerated enrollment in H1 2019 in multiple sub-types of non-Hodgkin’s lymphoma ("NHL"). We intend to use Phase Ib data to guide registration strategy in China during late 2019; and multiple U.S. / Europe sites are also now open for a Phase I/Ib study with patient screening underway.

HMPL-689—potential best-in-class selective PI3Kd inhibitor: A recommended dose for Phase II study has been selected based on the China Phase I study; U.S. / Europe IND applications cleared; and

IND submission in China for HMPL-306: A novel selective small molecule TKI of isocitrate dehydrogenase ("IDH") 1/2, discovered in-house with IND submitted H1 2019.
Major organizational expansion, including:

Expansion of international clinical and regulatory operations: accelerated expansion of New Jersey team to support development of multiple un-partnered compounds outside of Asia; and

Establishment of China oncology commercial organization: currently numbering about 60 commercial staff, primarily focused on medical affairs and preparation for potential surufatinib launch in late 2020.
POTENTIAL UPCOMING KEY EVENTS

China—H2 2019 Global—H2 2019
Savolitinib—Registration study completion—MET Exon 14 deletion NSCLC (occurred July); HMPL-523 (Syk)—Phase I—Initiate U.S. / E.U. Phase I/Ib in indolent NHL;

Surufatinib—Phase III data (SANET-ep)—presentation at scientific conference;

HMPL-689 (PI3Kd)—Phase I—Initiate U.S. / E.U. Phase I/Ib in indolent NHL;

Surufatinib—NDA submission—in non-pancreatic NET;

Savolitinib—Phase II data (VIKTORY)—gastric cancer data (patient tumor molecular profiling).

Fruquintinib—Phase III data (FALUCA)—submit for presentation in NSCLC at conference;

Fruquintinib—Reimbursement—possible Elunate inclusion in China NRDL in Q4 2019.

Fruquintinib—Phase III interim analysis (FRUTIGA)—2nd interim in gastric cancer; Phase II/III start—initiate U.S. / E.U. study in pancreatic NET;

Surufatinib—Phase III interim analysis (SANET-p)—planned final interim analysis;

Fruquintinib—Phase II/III start—initiate U.S. / E.U. Phase II/III study in metastatic CRC;

Savolitinib—NDA submission—in MET Exon 14 deletion NSCLC;

Savolitinib—Phase II data (CALYPSO)—Imfinzi (PD-L1) combo in RCC;

Surufatinib—Phase Ib/II data—submit for presentation of BTC at conference;

Savolitinib—Phase II registration study (SAVANNAH) interim analysis—in NSCLC;

HMPL-523—Phase II study start—potential registration study indolent NHL.

FINANCIAL GUIDANCE

We are providing the following updated Financial Guidance for the year ending December 31, 2019. Our updated guidance takes into account the weakening of the RMB, which was down 6% against the U.S. dollar during H1 2019 (using the average exchange rate for the period) relative to the same period last year due to global macroeconomic factors. We expect this trend to continue through the balance of 2019, and this depreciation of the RMB has the effect of reducing our R&D expenses in China in U.S. dollar terms.

In addition, we have both expanded and extended existing studies of surufatinib and fruquintinib in the U.S. ahead of upcoming regulatory authority end of Phase II meetings. This will move certain start-up costs of our global Phase II/III registration studies on surufatinib and fruquintinib into 2020.

Use of Non-GAAP Financial Measures—References in this announcement to adjusted R&D expenses, adjusted Group net cash flows and adjusted Group net cash flows excluding financing activities and financial measures reported at CER are based on non-GAAP financial measures. Please see the "Use of Non-GAAP Financial Measures and Reconciliation" below for further information relevant to the interpretation of these financial measures and reconciliations of these financial measures to the most comparable GAAP measures.

On July 30, 2019 Gilead Sciences, Inc. (Nasdaq: GILD) reported its results of operations for the second quarter ended June 30, 2019 (Press release, Gilead Sciences, JUL 30, 2019, View Source [SID1234537890]). The financial results that follow represent a year-over-year comparison of the second quarter of 2019 to the second quarter of 2018. Total revenues were $5.7 billion in 2019 compared to $5.6 billion in 2018. Net income was $1.9 billion or $1.47 per diluted share in 2019 compared to $1.8 billion or $1.39 per diluted share in 2018. Non-GAAP net income was $2.3 billion or $1.82 per diluted share in 2019 compared to $2.5 billion or $1.91 per diluted share in 2018.

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!

"I am very pleased with Gilead’s performance and our ability to continue to reach patients around the world with our medicines. I am also very excited about the progress we are making to strengthen our pipeline, including the recently announced Galapagos collaboration, to bring forward our next generation of products," said Daniel O’Day, Chairman and Chief Executive Officer, Gilead Sciences. "We saw strong revenue growth quarter-over-quarter, primarily driven by our HIV medicines and the rapid adoption of Biktarvy. Based on this momentum and our confidence in the outlook for the coming months, we are raising our full-year product sales guidance for 2019."

Product Sales
Total product sales for the second quarter of 2019 were $5.6 billion compared to $5.5 billion for the same period in 2018. For the second quarter of 2019, product sales in the United States, Europe and other locations were $4.1 billion, $1.0 billion and $512 million, respectively. For the second quarter of 2018, product sales in the United States, Europe and other locations were $4.1 billion, $1.0 billion and $466 million, respectively. Product sales in Europe for the second quarter of 2019 benefited from approximately $160 million of adjustments for statutory rebates related primarily to HCV and HIV sales made in prior years.

HIV product sales were $4.0 billion for the second quarter of 2019 compared to $3.7 billion for the same period in 2018. The increase was primarily driven by higher sales volume as a result of the continued uptake of Biktarvy (bictegravir 50 mg/emtricitabine 200 mg/tenofovir alafenamide 25 mg).

Chronic hepatitis C virus (HCV) product sales were $842 million for the second quarter of 2019 compared to $1.0 billion for the same period in 2018. The decline was primarily due to competitive dynamics, including a decline in U.S. Medicare prices, and lower patient starts.

Yescarta (axicabtagene ciloleucel) generated $120 million in sales during the second quarter of 2019 compared to $68 million for the same period in 2018. The increase was driven by an increase in the number of therapies provided to patients.

Other product sales, which include products from chronic hepatitis B virus (HBV), cardiovascular, oncology and other categories inclusive of Vemlidy (tenofovir alafenamide 25 mg), Viread (tenofovir disoproxil fumarate 300 mg), Letairis (ambrisentan 5 mg and 10 mg), Ranexa (ranolazine 500 mg and 1000 mg), Zydelig (idelalisib 150 mg), AmBisome (amphotericin B liposome for injection 50 mg/vial) and Cayston (aztreonam for inhalation solution 75 mg/vial), were $604 million for the second quarter of 2019 compared to $807 million for the same period in 2018. The decrease was primarily due to the expected declines in Ranexa and Letairis sales after generic entries in 2019.

During the second quarter of 2019, compared to the same period in 2018:

R&D expenses decreased slightly, primarily due to the 2018 impacts of Gilead’s purchase of a U.S. Food and Drug Administration (FDA) Priority Review Voucher and stock-based compensation expense following the acquisition of Kite Pharma, Inc., largely offset by higher investments in 2019 to support Gilead’s cell therapy programs.

Non-GAAP R&D expenses decreased slightly, primarily due to the 2018 impact of Gilead’s purchase of an FDA Priority Review Voucher, largely offset by higher investments in 2019 to support Gilead’s cell therapy programs.

SG&A expenses increased primarily due to higher promotional expenses in the United States and expenses associated with the expansion of Gilead’s business in Japan and China, partially offset by lower stock-based compensation expense. Stock-based compensation expense was higher for the second quarter of 2018 following the acquisition of Kite Pharma, Inc.

Non-GAAP SG&A expenses increased primarily due to higher promotional expenses in the United States and expenses associated with the expansion of Gilead’s business in Japan and China.

Effective Tax Rate
The effective tax rate and non-GAAP effective tax rate in the second quarter of 2019 were 22.2% and 21.5%, respectively, compared to 12.8% and 13.4% for the same period in 2018, respectively. The increases were primarily due to the 2018 impact of a favorable settlement of a tax examination.
Cash, Cash Equivalents and Marketable Debt Securities
As of June 30, 2019, Gilead had $30.2 billion of cash, cash equivalents and marketable debt securities, compared to $31.5 billion as of December 31, 2018. During the second quarter of 2019, Gilead generated $2.2 billion in operating cash flow, repaid $500 million of debt, paid cash dividends of $800 million and utilized $588 million on stock repurchases.

Revised Full Year 2019 Guidance
Gilead revised its full year 2019 guidance, initially provided on February 4, 2019. The updated guidance for product sales reflects favorable demand trends observed in the first half of 2019 across Gilead’s product portfolio, the adjustments for statutory rebates related to Europe sales made in prior years, a greater impact from generic versions of Letairis in the second half of 2019 and the full year impact from generic products containing tenofovir disoproxil fumarate in certain European countries. The guidance for diluted EPS impact of acquisition-related, up-front collaboration and licensing, stock-based compensation and other expense was updated as a result of the collaboration agreement with Galapagos NV (Galapagos).

Corporate Highlights, Including the Announcement of:

A global research and development collaboration with Galapagos under which Gilead will make a $3.95 billion up-front payment and an equity investment of approximately $1.1 billion. Through this agreement, Gilead will gain access to a proven drug discovery platform and an innovative portfolio of compounds, including six molecules currently in clinical trials, and more than 20 preclinical programs.

Collaboration and/or licensing agreements with Novartis AG (Novartis), Carna Biosciences Inc. (Carna), Nurix Therapeutics, Inc. (Nurix), Humanigen, Inc. (Humanigen), Goldfinch Bio, Inc. (Goldfinch), Insitro, Inc. (Insitro), and Novo Nordisk A/S (Novo Nordisk).

Senior leadership changes, including the appointment of Christi L. Shaw as Chief Executive Officer of Kite, a Gilead Company; the appointment of Johanna Mercier as Chief Commercial Officer; the departures of John G. McHutchison, A.O., M.D., Chief Scientific Officer and Head of Research and Development, Gregg H. Alton, Chief Patient Officer, and Katie L. Watson, Executive Vice President, Human Resources; and the planned retirement of Robin L. Washington from her role as Executive Vice President and Chief Financial Officer effective March 1, 2020.

Louisiana’s launch of an innovative payment model for HCV treatment with Gilead’s separate subsidiary, Asegua Therapeutics LLC, aiming to eliminate the disease.

The donation of TruvadaforPrEP (emtricitabine 200 mg and tenofovir disoproxil fumarate 300 mg) to the U.S. Centers for Disease Control and Prevention (CDC) in support of national efforts to help prevent HIV and end the epidemic. Gilead will provide to CDC up to 2.4 million bottles of Truvada (emtricitabine 200 mg and tenofovir disoproxil fumarate 300 mg) annually for uninsured Americans at risk for HIV. The donation, which extends until 2030, will transition to Descovy (emtricitabine 200 mg and tenofovir alafenamide 25 mg), if it is approved for use as prevention.

Plans for a new facility in Frederick County, Maryland, to significantly expand Kite’s ability to manufacture Yescarta, Kite’s first commercially available CAR T cancer therapy, and a variety of investigational cell therapies.
Product and Pipeline Updates, Including the Announcement of:
HIV and Liver Diseases Programs

The presentation of data at the 10th International AIDS Society Conference on HIV Science, which included:

Results from a sub-analysis of the DISCOVER trial evaluating an investigational use of Descovy for HIV pre-exposure prophylaxis (PrEP), which demonstrated that Descovy reached intracellular drug concentration levels above the estimated protective threshold significantly more quickly than Truvada and that these drug concentration levels persist longer than Truvada.
◦
Results from two studies of investigational toll-like receptor (TLR7) agonists as part of an HIV cure research program. The Phase 1 and preclinical study results demonstrate that TLR7 agonists have a potential role to play in scalable strategies for achieving sustained viral remission in humans.

Results from two Phase 3 trials demonstrating the effectiveness of Biktarvy for the treatment of HIV in women and in virologically suppressed patients with known resistance.

Results from a Phase 1b study of GS-6207, an investigational, novel, selective capsid inhibitor, in people living with HIV. The Phase 1b data demonstrated the first proof of concept that HIV capsid inhibition can lead to significant declines in viral load in vivo and that resistance to GS-6207 in vitro did not lead to resistance to other classes of drugs used in the treatment of HIV.

Data from STELLAR-3, a Phase 3 study evaluating the safety and efficacy of selonsertib, an investigational, once daily, oral inhibitor of apoptosis signal-regulating kinase 1 (ASK1), for patients with bridging fibrosis (F3) due to nonalcoholic steatohepatitis (NASH), did not meet the pre-specified week 48 primary endpoint of a ≥ 1-stage histologic improvement in fibrosis without worsening of NASH.

The presentation of data at the International Liver Congress 2019, which included:

Safety and efficacy data on Vemlidy in patients with HBV previously treated with tenofovir disoproxil fumarate and data on Epclusa (sofosbuvir 400mg/velpatasvir 100mg) and Harvoni (ledipasvir 90mg/sofosbuvir 400mg) in difficult-to-cure HCV patient populations.

Results from Gilead’s clinical research program in NASH, including a combination study of the investigational, selective, non-steroidal farnesoid X receptor agonist cilofexor (GS-9674) and the acetyl-CoA carboxylase inhibitor firsocostat (GS-0976). The data support Gilead’s efforts to develop combination therapies to target different aspects of NASH, evaluate the utility of noninvasive tests for the identification of patients living with the disease and advance overall understanding of the complexities and burden of NASH.

The launch of five new global grant programs to continue to support investigator-sponsored research in HCV and HBV, HCV and HIV co-infection, NASH and primary sclerosing cholangitis.

The submission of a supplemental new drug application to FDA for Descovy for PrEP to reduce the risk of sexually acquired HIV-1 infection among individuals who are HIV-negative and at risk for HIV. A priority review voucher was submitted with the filing, leading to an anticipated review time of six months.

Inflammation Program

The intent to submit a new drug application to FDA for filgotinib this year, an investigational, oral, selective JAK1 inhibitor, as a treatment for rheumatoid arthritis (RA).

The presentation of data at the Annual European Congress of Rheumatology 2019, which included data on filgotinib. Among the abstracts presented were 24-week, interim results from the ongoing FINCH 1 and FINCH 3 Phase 3 studies evaluating filgotinib in adults with RA.
Cell Therapy Program

The presentation of data at the 2019 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting, which included:

Results from a safety management analysis of early use of steroids from the ZUMA-1 trial of Yescarta in adult patients with diffuse large B-cell lymphoma (DLBCL).

Results from a sub-population analysis from the ZUMA-1 trial of Yescarta in adult patients with DLBCL.

Results from the completed Phase 1 of the ZUMA-3 study evaluating KTE-X19, an investigational CD19 CAR T cell therapy. ZUMA-3 is a single-arm Phase 1/2 study in adult patients with relapsed or refractory acute lymphoblastic leukemia.
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 measures may be defined and calculated differently by other companies in the same industry. A reconciliation between GAAP and non-GAAP financial information is provided in the tables on pages 9 through 11.
Conference Call
The live webcast of the call can be accessed at Gilead’s Investors page at View Source Please connect to the website at least 15 minutes prior to the start of the call to allow adequate time for any software download that may be required to listen to the webcast. Alternatively, please call 877-359-9508 (U.S.) or 224-357-2393 (international) and dial the conference ID 8696029 to access the call. Telephone replay will be available approximately two hours after the call through 8:00 p.m. Eastern Time, August 1, 2019. To access the replay, please call 855-859-2056 (U.S.) or 404-537-3406 (international) and dial the conference ID 8696029. The webcast will be archived on www.gilead.com for one year.

On July 30, 2019 Fresenius reported that Group sales growth guidance for 2019 raised (Press release, Fresenius, JUL 30, 2019, View Source [SID1234537889])

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!

Based on the Group’s good H1/19 results and good prospects for the remainder of the year, Fresenius raises its 2019 Group sales growth guidance. Fresenius now projects sales growth1 of 4% to 7% in constant currency. Previously, Fresenius expected sales growth1 of 3% to 6% in constant currency. The company confirms its earnings guidance. Net income2,3 growth is expected to be ~0% in constant currency. The guidance for 2019 includes the related sales and dilutive earnings contributions of the NxStage acquisition.

Fresenius expects net debt/EBITDA4 at year-end to be around the upper-end of the original self-imposed target corridor of 2.5x to 3.0x. This includes the NxStage acquisition which is increasing the net debt/EBITDA ratio in 2019 by ~30 basis points and excludes IFRS 16 effects.

Due to the adoption of the IFRS 16 accounting standard ("IFRS 16 effect"), Fresenius’ self-imposed target corridor has shifted to 3.0x to 3.5x net debt/EBITDA on a reported basis.

1 On a comparable basis: FY/18 base: €33,009 million; FY/18 adjusted for divestitures of Care Coordination activities at FMC (H1/18); FY/19: adjusted for IFRS 16 effect
2 Net income attributable to shareholders of Fresenius SE & Co. KGaA
3 On a comparable basis: FY/18 base: €1,872 million; FY/18 before special items and adjusted for divestitures of Care Coordination activities at FMC (H1/18); FY/19: before special items (transaction-related expenses, revaluations of biosimilars contingent liabilities, gain related to divestitures of Care Coordination activities at FMC, expenses associated with the cost optimization program at FMC), adjusted for IFRS 16 effect
4 Both net debt and EBITDA calculated at expected annual average exchange rates; excluding further potential acquisitions

For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.

6% sales growth1 in constant currency
Group sales were €8,761 million including an IFRS 16 effect of -€18 million. Group sales1 on a comparable basis increased by 8% (6% in constant currency) to €8,779 million (Q2/18: €8,124 million). Organic sales growth was 5%. Acquisitions/divestitures contributed net 1% to growth. In H1/19, Group sales were €17,256 million including an IFRS 16 effect of -€40 million. Group sales1 on a comparable basis increased by 8% (6% in constant currency) to €17,296 million (H1/18: €15,994 million). Organic sales growth was 5%. Acquisitions/divestitures contributed net 1% to growth. Positive currency translation effects of 2% were mainly driven by the U.S. dollar strengthening against the euro.

Net income2,3 growth in constant currency
Group EBITDA before special items was €1,703 million including an IFRS 16 effect of €242 million. Group EBITDA2 on a comparable basis decreased by 2% (-5% in constant currency) to €1,461 million (Q2/18: €1,495 million). In H1/19, Group EBITDA before special items was €3,404 million including an IFRS 16 effect of €462 million. Group EBITDA2 on a comparable basis increased by 2% (-1% in constant currency) to €2,942 million (H1/18: €2,889 million).

Group EBIT before special items was €1,118 million including an IFRS 16 effect of €37 million. Group EBIT2 on a comparable basis decreased by 5% (-7% in constant currency) to €1,081 million (Q2/18: €1,135 million). The EBIT margin2 on a comparable basis was 12.3% (Q2/18: 14.0%). A significant contributor was the reduction in patient attribution and a decreasing savings rate for ESCOs, based on recent reports for prior plan years ("ESCO effect"). Reported Group EBIT4 was €1,118 million. In H1/19, Group EBIT before special items was €2,248 million including an IFRS 16 effect of €56 million. Group EBIT2 on a comparable basis remained at previous year’s level (-3% in constant currency) at €2,192 million (H1/18: €2,185 million). The EBIT margin2 on a comparable basis was 12.7% (H1/18: 13.7%). Reported Group EBIT4 was €2,233 million.

Group net interest before special items was -€180 million including an IFRS 16 effect of -€58 million. On a comparable basis, net interest2 improved to -€122 million (Q2/18: -€140 million) mainly due to successful refinancing activities and lower interest rates. Reported Group net interest4 was -€179 million. In H1/19, Group net interest before special items was -€361 million including an IFRS 16 effect of -€106 million. On a comparable basis, net interest1 improved to -€255 million (H1/18: -€279 million). Reported Group net interest3 was -€363 million.

1 On a comparable basis: Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities at FMC;
Q2/19 and H1/19 adjusted for IFRS 16 effect
2 On a comparable basis: Q2/19 and H1/19 before special items and adjusted for IFRS 16 effect;
Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities at FMC
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA
4 After special items and including IFRS 16 effect

For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.

The Group tax rate before special items and adopting IFRS 16 was 22.8%. Group tax rate1 on a comparable basis was 22.8% (Q2/18: 23.3%). In H1/19, the Group tax rate before special items and adopting IFRS 16 was 23.1%. In H1/19, Group tax rate1 on a comparable basis was 23.1% (H1/18: 22.1%).

Noncontrolling interest before special items was €253 million including an IFRS 16 effect of €7 million. Noncontrolling interest1 on a comparable basis was €260 million (Q2/18:
€290 million). In H1/19, Noncontrolling interest before special items was €524 million including an IFRS 16 effect of €20 million. Noncontrolling interest1 on a comparable basis was €544 million (H1/18: €560 million), of which 93% was attributable to the Noncontrolling interest in Fresenius Medical Care.

Group net income2 before special items was €471 million including an IFRS 16 effect of -€9 million. Group net income1,2 on a comparable basis increased by 1% (0% in constant currency) to €480 million (Q2/18: €473 million). Reported Group net income2,3 was €471 million. Earnings per share2 before special items were €0.85 including an IFRS 16 effect of -€0.01. Earnings per share1,2 on a comparable basis increased by 1% (0% in constant currency) to €0.86 (Q2/18: €0.85). Reported Earnings per share2,3 were €0.85.

In H1/19, Group net income2 before special items was €928 million including an IFRS 16 effect of -€17 million. Group net income1,2 on a comparable basis increased by 2% (0% in constant currency) to €945 million (H1/18: €924 million). Reported Group net income2,3 was €924 million. In H1/19, Earnings per share2 before special items were €1.67 including an IFRS 16 effect of -€0.03. Earnings per share1,2 on a comparable basis increased by 2% (0% in constant currency) to €1.70 (H1/18: €1.66). Reported Earnings per share2,3 were €1.66.

Continued investment in growth
2019 is an investment year for the Fresenius Group. Fresenius is making good progress in all of its investment initiatives to secure long-term sustainable growth. Spending on property, plant and equipment was €565 million (Q2/18: €451 million). This corresponds to 6% of sales. In H1/19, spending on property, plant and equipment was €1,006 million (H1/18: €831 million), primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. This corresponds to 6% of sales.

Total acquisition spending was €234 million (Q2/18: €194 million) including the acquisition of Clínica Medellín in Colombia by Fresenius Helios, among others. In H1/19, total acquisition spending was €2,157 million (H1/18: €386 million), mainly for the acquisition of NxStage by Fresenius Medical Care.

1 On a comparable basis: Q2/19 and H1/19 before special items and adjusted for IFRS 16 effect;
Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities at FMC
2 Net income attributable to shareholders of Fresenius SE & Co. KGaA
3 After special items and including IFRS 16 effect

Cash flow development
Group operating cash flow was €1,205 million including an IFRS 16 effect of €182 million. On a comparable basis, Group operating cash flow was €1,023 million (Q2/18: €1,020 million) with a margin of 11.7% (Q2/18: 12.2%). Free cash flow before acquisitions and dividends adjusted for IFRS 16 was €467 million (Q2/18: €580 million). Free cash flow after acquisitions and dividends adjusted for IFRS 16 was -€437 million (Q2/18: €1,331 million). The IFRS 16 effect amounts to €182 million respectively. Correspondingly, cash flow from financing activities decreased by €182 million.

In H1/19, Group operating cash flow was €1,494 million including an IFRS 16 effect of €353 million. On a comparable basis, Group operating cash flow was €1,141 million (H1/18: €1,256 million) with a margin of 6.6% (H1/18: 7.6%). Free cash flow before acquisitions and dividends adjusted for IFRS 16 was €128 million (H1/18: €425 million) mainly due to increasing investments. Free cash flow after acquisitions and dividends adjusted for IFRS 16 was -€2,719 million (H1/18: €942 million). The IFRS 16 effect amounts to €353 million respectively. Correspondingly, cash flow from financing activities decreased by €353 million.

Solid balance sheet structure
The Group’s total assets were €64,929 million including an IFRS 16 effect of €5,587 million. Adjusted for IFRS 16, Group total assets1 increased by 5% (4% in constant currency) to €59,342 million (Dec. 31, 2018: €56,703 million). Current assets1 remained flat (remained flat in constant currency) to €14,851 million (Dec. 31, 2018: €14,790 million). Non-current assets1 increased by 6% (6% in constant currency) to €44,491 million (Dec. 31, 2018: € 41,913 million).

Total shareholders’ equity was €25,382 million including an IFRS 16 effect of -€186 million. Adjusted for IFRS 16, total shareholders’ equity increased by 2% (2% in constant currency) to €25,568 million (Dec. 31, 2018: €25,008 million). The equity ratio was 39.1%. Adjusted for IFRS 16, the equity ratio was 43.1% (Dec. 31, 2018: 44.1%).

Group debt was €26,879 million including an IFRS 16 effect of €5,773 million. Adjusted for IFRS 16, Group debt increased by 11% to €21,106 million (11% in constant currency) (Dec. 31, 2018: € 18,984 million). Group net debt was €25,416 million including an IFRS 16 effect of €5,773 million. Adjusted for IFRS 16, Group net debt increased by 21% (21% in constant currency) to € 19,643 million (Dec. 31, 2018: € 16,275 million) mainly due to the acquisition of NxStage by Fresenius Medical Care.

As of June 30, 2019, the net debt/EBITDA ratio increased to 3.21×1,2,3,4 (December 31, 2018: 2.71×2,4). Including the IFRS 16 effect, the reported net debt/EBITDA ratio increased to 3.64×2,3,4.

1 Adjusted for IFRS 16 effect
2 At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures
3 Including acquisition of NxStage
4 Before special items

For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32.

Business Segments

Fresenius Medical Care (Figures according to Fresenius Medical Care press release)
Fresenius Medical Care is the world’s largest provider of products and services for individuals with renal diseases. As of June 30, 2019, Fresenius Medical Care was treating 339,550 patients in 3,996 dialysis clinics. Along with its core business, the company provides related medical services in the field of Care Coordination.

5% sales1,2 growth in constant currency
Underlying dialysis business development as expected; negative impact from ESCO adjustments for prior plan years
FY/19 outlook confirmed

Adjusted for the Q2/18 contribution from the divested Care Coordination activities, the IFRS 16 effect and the contribution from NxStage, sales of Fresenius Medical Care increased by 8% (5% at constant currency) to €4,284 million (Q2/18: €3,956 million). Organic sales growth was 4%. Positive currency translation effects of 3% were mainly related to the U.S. dollar strengthening against the euro. In H1/19, sales adjusted for the H1/18 contribution from the divested Care Coordination activities, the IFRS 16 effect and the contribution from NxStage increased by 9% (5% at constant currency) to €8,409 million (H1/18: €7,680 million). Organic sales growth was 5%.

EBIT4 decreased by 12% (-17% in constant currency) to €491 million (Q2/19: €558 million) The EBIT margin4 decreased to 11.5% (Q2/18: 14.1%). A significant contributor was the reduction in patient attribution and a decreasing savings rate for ESCOs, based on recent reports for prior plan years ("ESCO effect").

1 On an adjusted basis: before special items (transaction-related expenses, gain related to divestitures of Care Coordination activities, expenses associated with the cost optimization program), adjusted for IFRS 16 effect, excluding effects from NxStage transaction
2 Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities
3 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
4 Q2/18 and H1/18 before special items and after adjustments; Q2/19 and H1/19 before special items (transaction-related expenses, gain related to divestitures of Care Coordination activities, expenses associated with the cost optimization program), adjusted for IFRS 16 effect, excluding effects from NxStage transaction

For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32.

In H1/19, EBIT6 decreased by 2% (-7% in constant currency) to €1,042 million (H1/18: €1,064 million). The EBIT margin4 decreased to 12.4% (H1/18: 13.9%).

Net income1,2 decreased by 9% (-14% in constant currency) to €279 million (Q2/18: €308 million). A significant contributor was the ESCO effect. In H1/19, net income1,2 decreased by 1% (-6% in constant currency) to €597 million (H1/18: €604 million).

Operating cash flow was €700 million3 (Q2/18: €656 million) with a margin of 16.0% (Q2/18: 15.6%). In H1/19, operating cash flow was €635 million (H1/18: €611 million) with a margin of 7.6% (H1/18: 7.5%).

For FY/19, Fresenius Medical Care expects adjusted sales to grow by 3% to 7%5,6 in constant currency. Adjusted net income1 is expected to develop in the range of -2% to +2%5,7 in constant currency.

For further information on the IFRS 16 reconciliation of Fresenius Medical Care, please see page 18 in the PDF document.
For further information, please see Fresenius Medical Care’s press release at www.freseniusmedicalcare.com.

1 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
2 Q2/18 and H1/18 before special items and after adjustments; Q2/19 and H1/19 before special items (transaction-related expenses, gain related to divestitures of care coordination activities, expenses associated with the cost optimization program), adjusted for IFRS 16 effect, excluding effects from NxStage transaction
3 €852 million including an IFRS 16 effect of €152 million
4 €928 million including an IFRS 16 effect of €293 million
5 FY/18 before special items, Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities;
FY/19 before special items (transaction-related expenses, gain related to divestitures of care coordination activities, expenses associated with the cost optimization program), adjusted for IFRS 16 effects, excluding effects from NxStage transaction
6 FY/18 base: €16,026 million
7 FY/18 base: €1,341 million

For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 in the PDF document.

Fresenius Kabi
Fresenius Kabi offers intravenously administered generic drugs, clinical nutrition and infusion therapies for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medical devices and transfusion technology products. In the biosimilars business, Fresenius Kabi develops products with a focus on oncology and autoimmune diseases.

4% organic sales growth and 4% EBIT1 growth in constant currency
Excellent growth in Emerging Markets
FY/19 outlook confirmed

Sales of Fresenius Kabi increased by 5% (5% in constant currency) to €1,691 million (Q2/18: €1,604 million). Organic sales growth was 4%. In H1/19, sales increased by 6% (4% in constant currency) to €3,392 million (H1/18: €3,207 million). Organic sales growth was 4%. Positive currency translation effects of 2% were mainly related to the U.S. dollar strengthening against the euro.

Sales in North America increased by 4% (organic growth: -1%) to €573 million (Q2/18: €549 million). In H1/19, sales in North America increased by 5% (organic growth:
-1%) to €1,196 million (H1/18: €1,140 million). The anticipated easing of shortage situations, intensified competition in individual molecules, and a prescribing trend towards non-opioids pain management were the main headwinds.

Sales in Europe grew by 2% (organic growth: 1%) to €572 million (Q2/18: €563 million). In H1/19, sales in Europe increased by 2% (organic growth: 2%) to €1,145 million (H1/18: €1,120 million).

Sales in Asia-Pacific increased by 15% (organic growth: 15%) to €374 million (Q2/18: €326 million). In H1/19, sales in Asia-Pacific increased by 14% (organic growth: 13%) to €715 million (H1/18: €627 million).

Sales in Latin America/Africa increased by 4% (organic growth: 13%) to €172 million (Q2/18: €166 million). In H1/19, sales in Latin America/Africa increased by 5% (organic growth: 15%) to €336 million (H1/18: €320 million).

EBIT1 increased by 7% (4% in constant currency) to €308 million (Q2/18: €289 million) with an EBIT margin1 of 18.2% (Q2/18: 18.0%). In H1/19, EBIT1 increased by 10% (6% in constant currency) to €611 million (H1/18: €557 million) with an EBIT margin1 of 18.0% (H1/18: 17.4%).

Net income1,2 increased by 14% (12% in constant currency) to €211 million (Q2/18: €185 million). In H1/19, net income1,2 increased by 17% (12% in constant currency) to €414 million (H1/18: €355 million).

Operating cash flow3 was €201 million (Q2/18: €228 million). The cash flow margin was 11.9% (Q2/18: 14.2%). In H1/19, operating cash flow3 was €333 million (H1/18: €454 million). The cash flow margin was 9.8% (H1/18: 14.2%).

Fresenius Kabi confirms its outlook for FY/19 and expects organic sales growth4 of 3% to 6% and EBIT growth5 in constant currency of 3% to 6%.

For further information on the IFRS 16 reconciliation of Fresenius Kabi, please see page 18 of the PDF document.

1 On a comparable basis: before special items and adjusted for IFRS 16 effect
2 Net income attributable to shareholders of Fresenius SE & Co. KGaA
3 Adjusted for IFRS 16 effect (operating cash flow after special items)
4 On a comparable basis: FY/18 base: €6,544 million; FY/19 before special items (acquisition-related expenses, revaluations of biosimilars contingent liabilities) and adjusted for IFRS 16 effect
5 On a comparable basis: FY/18 base: €1,139 million; FY/18 before special items; FY/19 before special items (acquisition-related expenses, revaluations of biosimilars contingent liabilities) and adjusted for IFRS 16 effect.

For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.

Fresenius Helios
Fresenius Helios is Europe’s leading private hospital operator. The company comprises Helios Germany and Helios Spain (Quirónsalud). Helios Germany operates 86 hospitals, ~125 outpatient centers and treats approximately 5.3 million patients annually. Quirónsalud operates 50 hospitals, 62 outpatient centers and around 300 occupational risk prevention centers, and treats approximately 13.3 million patients annually.

Strong organic sales growth of 5%
Helios Germany further stabilized; Helios Spain with solid growth despite Easter effect
FY/19 outlook confirmed

Sales of Fresenius Helios remained at previous year’s level (increased by 6%1 organic growth: 5%) to €2,349 million (Q2/18: €2,343 million). In H1/19, sales also remained at previous year’s level (increased by 5%1; organic growth: 4%) to €4,660 million (H1/18: €4,674 million).

Sales of Helios Germany decreased by 3% (increased by 5%1; organic growth: 5%) to €1,506 million (Q2/18: €1,547 million). Organic sales growth was positively influenced by pricing effects and a strong case mix. In H1/19, sales of Helios Germany decreased by 4% (increased by 3%1; organic growth: 3%) to €2,991 million (H1/18: €3,121 million).

Sales of Helios Spain increased by 6% (organic growth: 4%) to €842 million (Q2/18: €796 million) despite the negative effect related to the Easter holidays. In H1/19, sales of Helios Spain increased by 7% (organic growth: 6%) to €1,668 million (H1/18: €1,553 million).

1 Adjusted for the post-acute care business transferred to Fresenius Vamed as of July 1, 2018
2 Adjusted for IFRS 16 effect
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA

For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.

EBIT1 of Fresenius Helios decreased by 6% (-4% ) to €274 million (Q2/18: €293 million) with an EBIT margin of 11.7% (Q2/18: 12.5%). In H1/19, EBIT1 of Fresenius Helios decreased by 5% (-4%2) to €540 million (H1/18: €571 million) with an EBIT margin of 11.6% (H1/18: 12.2%).

EBIT1 of Helios Germany decreased by 8% (-4%2) to €154 million (Q2/18: €168 million) with an EBIT margin of 10.2% (Q2/18: 10.9%). In H1/19, EBIT1 of Helios Germany decreased by 12% (-10%2) to €303 million (H1/18: €345 million) with an EBIT margin of 10.1% (H1/18: 11.1%). Whilst EBIT and margin have further stabilized, investments for preparatory structural measures continue to weigh on Helios Germany’s financial performance.

Despite the negative Easter effect, EBIT1 of Helios Spain increased by 1% to €125 million (Q2/18: €124 million) with an EBIT margin of 14.8% (Q2/18: 15.6%). In H1/19, EBIT1 of Helios Spain increased by 7% to €244 million (H1/18: €227 million).

Net income1,3 decreased by 7% to €183 million (Q2/18: €197 million). In H1/19, net income1,3 also decreased by 7% to €359 million (H1/18: €388 million).

Operating cash flow1 was €197 million (Q2/18: €162 million) with a margin of 8.4% (Q2/18: 6.9%). In H1/19, operating cash flow1 was €288 million (H1/18: €259 million) with a margin of 6.2% (H1/18: 5.5%). The increase is mainly attributable to the decrease in days sales outstanding (DSO) at Helios Spain.

Fresenius Helios confirms its outlook for FY/19 and expects organic sales growth of 2% to 5% and an EBIT1 growth of -5% to -2%.

For further information on the IFRS 16 reconciliation of Fresenius Helios, please see page 18.

1 Adjusted for IFRS 16 effect
2 Adjusted for the post-acute care business transferred to Fresenius Vamed as of July 1, 2018
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA

For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.

Fresenius Vamed
Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide and is a leading post-acute care provider in Central Europe. The portfolio ranges along the entire value chain: from project development, planning, and turnkey construction, via maintenance and technical management to total operational management.

Very strong organic sales growth of 27%
Intensified collaboration with Fresenius Helios contributes to sales growth
FY/19 outlook confirmed

Sales of Fresenius Vamed increased by 76% (31%1) to €467 million (Q2/18: €266 million). Organic sales growth was 27%, acquisitions contributed 3%1 to growth. Positive currency translation effects increased sales by 1%. Sales in the service business grew by 106% (35%1) to €344 million (Q2/18: €167 million), supported by an intensified collaboration with Fresenius Helios. Sales of the project business increased by 24% to €123 million (Q2/18: €99 million). In H1/19, sales increased by 76% (32%1) to €907 million (H1/18: €515 million). Organic sales growth was 29%, acquisitions contributed 3%1 to growth. Both the service and the project business showed strong growth momentum.

EBIT2 increased by 67% to €20 million (Q2/18: €12 million) with an EBIT margin of 4.3% (Q2/18: 4.5%). EBIT2 additionally adjusted for the acquisition of Helios’ German post-acute care business was €8 million (-33% YoY) with an EBIT margin of 2.3% – the decrease was mainly driven by phasing effects in the project business. In H1/19, EBIT2 increased by 72% to €31 million (H1/18: €18 million) with an EBIT margin of 3.4% (H1/18: 3.5%). EBIT2 additionally adjusted for the acquisition of Helios’ German post-acute care business was €15 million (-17% YoY) with an EBIT margin of 2.2%.

Net income2,3 increased by 86% to €13 million (Q2/18: €7 million). In H1/19, net income2,3 increased by 73% to €19 million (H1/18: €11 million).

Order intake decreased by -41% to €115 million (Q2/18: €195 million) but increased by 9% to €498 million in H1/19 (H1/18: €455 million). As of June 30, 2019, order backlog was at €2,690 million (Dec 31, 2018: €2,420 million).

Operating cash flow2 decreased to -€42 million (Q2/18: -€14 million) with a margin of -9.0% (Q2/18: -5.3%). In H1/19, Operating cash flow2 decreased to -€65 million (H1/18:
-€56 million) with a margin of -7.2% (H1/18: -10.9%).

Fresenius Vamed confirms its outlook for FY/19 and expects organic sales growth of ~10% and EBIT growth2 of 15% to 20%.

For further information on the IFRS 16 reconciliation of Fresenius Vamed, please see page 18 of the PDF document.

1 Adjusted for German post-acute care business acquired from Fresenius Helios as of July 1, 2018
2 Adjusted for IFRS 16 effect
3 Net income attributable to shareholders of VAMED AG

For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.

Conference Call
As part of the publication of the results for the second quarter / first half of 2019, a conference call will be held on July 30, 2019 at 1:30 p.m. CEDT (7:30 a.m. EDT). All investors are cordially invited to follow the conference call in a live broadcast over the Internet at www.fresenius.com/investors. Following the call, a replay will be available on our website.

For additional information on the performance indicators used please refer to our website www.fresenius.com/alternative-performance-measures.

On JUly 30, 2019 Fate Therapeutics, Inc. (NASDAQ: FATE), a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders, reported that the Company will host a conference call and live audio webcast on Tuesday, August 6, 2019 at 5:00 p.m. ET to report its second quarter 2019 financial results and provide a corporate update (Press release, Fate Therapeutics, JUL 30, 2019, https://ir.fatetherapeutics.com/news-releases/news-release-details/fate-therapeutics-webcast-conference-call-reporting-second-4 [SID1234537888]).

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!

In order to participate in the conference call, please dial 877-303-6235 (domestic) or 631-291-4837 (international) and refer to conference ID 3898842. The live webcast can be accessed under "Events & Presentations" in the Investors and Media section of the Company’s website at www.fatetherapeutics.com. The archived webcast will be available on the Company’s website beginning approximately two hours after the event.