On August 1, 2023 Karyopharm Therapeutics Inc. (Nasdaq: KPTI), a commercial-stage pharmaceutical company pioneering novel cancer therapies, reported that the Company granted an aggregate of 26,350 restricted stock units (RSUs) to 4 newly-hired employees (Press release, Karyopharm, AUG 1, 2023, View Source [SID1234633587]). These RSU awards were granted as of July 31, 2023 (the "Grant Date") pursuant to the Company’s 2022 Inducement Stock Incentive Plan, as amended, as inducements material to the new employees entering into employment with Karyopharm in accordance with Nasdaq Listing Rule 5635(c)(4).

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Each RSU award will vest over three years, with 33 1/3% of the shares underlying the RSU award vesting on each of the three consecutive anniversaries of the Grant Date. The vesting of each RSU award is subject to the employee’s continued service as an employee of, or other service provider to, Karyopharm through the applicable vesting dates. In addition, each RSU award will be immediately exercisable in full if, on or prior to the first anniversary of the consummation of a "change in control event," the employee’s employment is terminated for "good reason" by the employee or terminated without "cause" by Karyopharm (as such terms are defined in the applicable RSU agreement).

On August 1, 2023 Incyte (Nasdaq:INCY) reported second quarter financial results, and provides a status update on the Company’s clinical development portfolio (Press release, Incyte, AUG 1, 2023, View Source [SID1234633586]).

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"We delivered a strong quarter with total net product revenues growing 25% year over year led by double-digit Jakafi (ruxolitinib) growth and continued momentum from Opzelura (ruxolitinib) cream in atopic dermatitis and vitiligo in the United States," said Hervé Hoppenot, Chief Executive Officer, Incyte. "We continue to advance multiple programs in our pipeline, and recently announced positive topline results for two high potential programs, ruxolitinib cream in pediatric atopic dermatitis and axatilimab in chronic graft-versus-host disease."

Key Product Sales Performance

Jakafi:
Net product revenues for the quarter of $682 million:
▪Net product revenues grew 14% compared with the second quarter of 2022, driven by strong underlying patient demand growth across all indications.
▪Channel inventory at the end of the second quarter of 2023 returned to normal levels.
Opzelura:
Net product revenues for the quarter of $80 million:
▪Net product revenues of $80 million grew 384% compared with the second quarter of 2022, driven by growth in patient demand and expansion in payer coverage as the launch in AD and vitiligo continues.
▪Opzelura was approved in Europe for the treatment of nonsegmental vitiligo with facial involvement and is now available in Germany and Austria.
1

Pipeline Updates
MPNs and GVHD – key highlights
LIMBER (Leadership In MPNs and GVHD BEyond Ruxolitinib):
▪AGAVE-201, a global pivotal Phase 2 trial of axatilimab in patients with chronic GVHD met its primary endpoint across all cohorts with an overall response rate (ORR) of 74% at the dose of 0.3 mg/kg administered every two weeks. We plan to share the full dataset at a future medical meeting. A Phase 1/2 combination trial of axatilimab in combination with ruxolitinib is planned to initiate by year-end 2023.
▪Combination trials of ruxolitinib twice daily (BID) with zilurgisertib (ALK2) and INCB57643 (BET) are ongoing and progressing well. At this year’s American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting, updated data for zilurgisertib in both monotherapy and in combination with ruxolitinib BID demonstrated early signals of clinical activity with hepcidin reduction and anemia improvement observed. Also at ASCO (Free ASCO Whitepaper), data for INCB57643 (BET) demonstrated improvements in spleen size and symptom burden at > 8mg monotherapy and 4mg in combination with ruxolitinib.
▪A Phase 1 study evaluating INCA033989 (mCALR) has been initiated. Additionally, a Phase 1 study evaluating ruxolitinib BID in combination with Cellenkos’ CK0804 in MF is continuing to recruit patients.
Indication and status
Ruxolitinib XR (QD)
(JAK1/JAK2) Myelofibrosis, polycythemia vera and GVHD
Ruxolitinib + zilurgisertib
(JAK1/JAK2 + ALK2) Myelofibrosis: Phase 2
Ruxolitinib + INCB57643
(JAK1/JAK2 + BET) Myelofibrosis: Phase 2
Ruxolitinib + CK08041
(JAK1/JAK2 + CB-Tregs)
Myelofibrosis: Phase 1 (LIMBER-TREG108)
Axatilimab (anti-CSF-1R)2
Chronic GVHD: Pivotal Phase 2 (third-line plus therapy) (AGAVE-201)
Ruxolitinib + axatilimab2
(JAK1/JAK2 + anti-CSF-1R)
Chronic GVHD: Phase 1/2 in preparation
INCA033989
(mCALR) Myelofibrosis, essential thrombocythemia: Phase 1 initiated

1 Development collaboration with Cellenkos, Inc.
2 Clinical development of axatilimab in GVHD conducted in collaboration with Syndax Pharmaceuticals.
Other Hematology/Oncology – key highlights
Oral small molecule PD-L1 program: Two studies evaluating INCB99280 in combination with axitinib (VEGF) and in combination with ipilimumab (CTLA-4) have been initiated. A Phase 2 study evaluating INCB99280 in patients with select solid tumors who are checkpoint inhibitor naive was also initiated. Additionally, a Phase 2 study evaluating INCB99280 in metastatic cutaneous squamous cell carcinoma (cSCC) or locally advanced cSCC was initiated.
Collaboration with Replimune Group, Inc. In July, Incyte and Replimune Group, Inc. announced a clinical trial collaboration and supply agreement to investigate the combination of INCB99280 and RP1 in patients with cutaneous squamous cell carcinoma. RP1 is Replimune’s lead oncolytic immunotherapy product candidate and is based on a proprietary new strain of herpes simplex virus engineered for robust tumor selective replication and genetically armed with a fusogenic protein (GALV-GP R-) and GM-CSF, intended to maximize tumor killing potency, the immunogenicity of tumor cell death, and the activation of a systemic anti-tumor immune response.
2

Indication and status
Pemigatinib (Pemazyre)
(FGFR1/2/3)
Myeloid/lymphoid neoplasms (MLN): approved in the U.S. and Japan
Cholangiocarcinoma (CCA): Phase 3 (FIGHT-302)
Glioblastoma: Phase 2 (FIGHT-209)
Tafasitamab (Monjuvi/Minjuvi)1
(CD19)
Relapsed or refractory diffuse large B-cell lymphoma (DLBCL): Phase 3 (B-MIND)
First-line DLBCL: Phase 3 (frontMIND)
Relapsed or refractory follicular lymphoma (FL) and relapsed or refractory marginal zone lymphoma (MZL): Phase 3 (inMIND)
Retifanlimab (Zynyz)2
(PD-1)
Merkel cell carcinoma: approved in the U.S.
Squamous cell anal cancer (SCAC): Phase 3 (POD1UM-303)
Non-small cell lung cancer (NSCLC): Phase 3 (POD1UM-304)
MSI-high endometrial cancer: Phase 2 (POD1UM-101, POD1UM-204)
INCB99280
(Oral PD-L1) Solid tumors (combination): Phase 1
Solid tumors (monotherapy): Phase 2
Cutaneous squamous cell carcinoma (cSCC): Phase 2 initiated
INCB99318
(Oral PD-L1) Solid tumors: Phase 1

1 Development of tafasitamab in collaboration with MorphoSys.
2 Retifanlimab licensed from MacroGenics.
3 Clinical trial collaboration and supply agreement with Mirati Therapeutics.
Inflammation and Autoimmunity (IAI) – key highlights
Dermatology
Opzelura
▪Ruxolitinib cream in pediatric AD: The Phase 3 trial of ruxolitinib cream in pediatric AD (TRuE-AD3) met its primary endpoint. The study demonstrated that significantly more patients treated with ruxolitinib cream 0.75% and 1.5% achieved Investigator’s Global Assessment Treatment Success (IGA-TS) than patients treated with vehicle control. There are an estimated 2-3 million pediatric AD patients (ages 2-11) in the United States.
▪Ruxolitinib cream in other indications: Three Phase 2 studies in lichen planus, lichen sclerosus and mild to moderate hidradenitis suppurativa (HS) have completed enrollment. Two Phase 3 trials evaluating ruxolitinib cream in prurigo nodularis (PN) are ongoing.
Povorcitinib
▪Asthma and chronic spontaneous urticaria: Two Phase 2 trials in asthma and chronic spontaneous urticaria have been initiated.
Auremolimab
•IND cleared: Auremolimab, an anti-IL-15Rβ monoclonal antibody, received IND clearance and is expected to enter the clinic later this year.
3

Indication and status
Ruxolitinib cream (Opzelura)1
(JAK1/JAK2)
AD: Phase 3 pediatric study (TRuE-AD3)
Vitiligo: Phase 3 (TRuE-V1, TRuE-V2); approved in the U.S. and Europe
Lichen planus: Phase 2
Lichen sclerosus: Phase 2
Hidradenitis suppurativa: Phase 2
Prurigo nodularis: Phase 3 initiated (TRuE-PN1, TRuE-PN2)
Ruxolitinib cream + UVB
(JAK1/JAK2 + phototherapy) Vitiligo: Phase 2
Povorcitinib
(JAK1) Hidradenitis suppurativa: Phase 2b; Phase 3 (STOP-HS1, STOP-HS2)
Vitiligo: Phase 2; Phase 3 planned
Prurigo nodularis: Phase 2
Asthma: Phase 2 initiated
Chronic spontaneous urticaria: Phase 2 initiated
Auremolimab
(anti-IL-15Rβ) Vitiligo: Phase 1 in preparation

1 Novartis’ rights to ruxolitinib outside of the United States under our Collaboration and License Agreement with Novartis do not include topical administration.
Discovery and other early development – key highlights
INCA33890 (TGFβR2xPD-1): A Phase 1 study evaluating INCA33890 in patients with select advanced solid tumors has been initiated.
Modality Candidates
Small molecules INCB123667 (CDK2)
Monoclonal antibodies
INCAGN2385 (LAG-3)1, INCAGN2390 (TIM-3)1
Bi-specific antibodies
INCA32459 (LAG-3xPD-1)2, INCA33890 (TGFβR2xPD-1)2

1 Discovery collaboration with Agenus.
2 Development in collaboration with Merus.
Partnered – key highlights
Indication and status
Ruxolitinib1
(JAK1/JAK2)
Acute and chronic GVHD: approved in Europe; J-NDA under review
Baricitinib2
(JAK1/JAK2)
AD: approved in Europe and Japan
Severe AA: approved in the U.S., Europe and Japan
Capmatinib3
(MET)
NSCLC (with MET exon 14 skipping mutations): approved in the U.S., Europe and Japan

1 Ruxolitinib (Jakavi) licensed to Novartis ex-U.S. for use in hematology and oncology excluding topical administration.
2 Baricitinib (Olumiant) licensed to Lilly: approved as Olumiant in multiple territories globally for certain patients with moderate-to-severe rheumatoid arthritis; approved as Olumiant in EU and Japan for certain patients with atopic dermatitis.
3 Capmatinib (Tabrecta) licensed to Novartis.
Organizational Update
Dr. Dashyant Dhanak, who has served as Incyte’s Chief Scientific Officer since 2018, will be leaving the Organization effective August 2, 2023, in order to pursue other interests. Under his leadership, Incyte has filed more than fifteen Investigational New Drug (IND) applications, and has made great advancements in the biotherapeutics and small molecule pipeline.
4

2023 Second Quarter Financial Results
The financial measures presented in this press release for the three and six months ended June 30, 2023 and 2022 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.
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.
As changes in exchange rates are an important factor in understanding period-to-period comparisons, Management believes the presentation of certain revenue results on a constant currency basis in addition to reported results helps improve investors’ ability to understand its operating results and evaluate its performance in comparison to prior periods. Constant currency information compares results between periods as if exchange rates had remained constant period over period. The Company calculates constant currency by calculating current year results using prior year foreign currency exchange rates and generally refers to such amounts calculated on a constant currency basis as excluding the impact of foreign exchange or being on a constant currency basis. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a constant currency basis, as the Company presents them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.
Financial Highlights
Financial Highlights
(unaudited, in thousands, except per share amounts)
Three Months Ended
June 30, Six Months Ended
June 30,
2023 2022 2023 2022
Total GAAP revenues $ 954,610 $ 911,397 $ 1,763,283 $ 1,644,632
Total GAAP operating income 193,780 254,431 218,550 370,971
Total Non-GAAP operating income 262,058 309,624 351,787 481,771
GAAP net income 203,548 161,432 225,251 199,424
Non-GAAP net income 223,029 226,353 307,606 349,220
GAAP basic EPS $ 0.91 $ 0.73 $ 1.01 $ 0.90
Non-GAAP basic EPS $ 1.00 $ 1.02 $ 1.38 $ 1.58
GAAP diluted EPS $ 0.90 $ 0.72 $ 1.00 $ 0.89
Non-GAAP diluted EPS $ 0.99 $ 1.01 $ 1.36 $ 1.56

5

Revenue Details
Revenue Details
(unaudited, in thousands)
Three Months Ended
June 30, %
Change
(as reported)
%
Change
(constant currency)1
Six Months Ended
June 30, %
Change
(as reported)
%
Change
(constant currency)1
2023 2022 2023 2022
Net product revenues:
Jakafi $ 682,384 $ 597,673 14 % 14 % $ 1,262,353 $ 1,142,137 11 % 11 %
Opzelura 80,233 16,560 384 % 384 % 136,785 29,314 367 % 367 %
Iclusig 29,087 26,224 11 % 9 % 56,772 52,293 9 % 11 %
Pemazyre 21,572 18,983 14 % 14 % 44,047 37,015 19 % 21 %
Minjuvi 13,159 4,411 198 % 191 % 19,715 8,913 121 % 122 %
Zynyz 570 — NM NM 570 — NM NM
Total net product revenues 827,005 663,851 25 % 24 % 1,520,242 1,269,672 20 % 20 %
Royalty revenues:
Jakavi 90,448 83,711 8 % 10 % 167,140 154,578 8 % 12 %
Olumiant 32,009 30,254 6 % 10 % 66,164 78,318 (16 %) (10 %)
Tabrecta 4,799 3,581 34 % NA 8,976 7,064 27 % NA
Pemazyre 349 — NM NM 761 — NM NM
Total royalty revenues 127,605 117,546 9 % 243,041 239,960 1 %
Total net product and royalty revenues 954,610 781,397 22 % 1,763,283 1,509,632 17 %
Milestone and contract revenues — 130,000 (100 %) (100 %) — 135,000 (100 %) (100 %)
Total GAAP revenues $ 954,610 $ 911,397 5 % $ 1,763,283 $ 1,644,632 7 %

NM = not meaningful
NA = not available
1.Percentage change in constant currency is calculated using 2022 foreign exchange rates to recalculate 2023 results.
Product and Royalty Revenues Product revenues and product and royalty revenues for the quarter ended June 30, 2023 increased 25% and 22%, respectively, over the prior year comparative period, primarily driven by increases in Jakafi and Opzelura net product revenues. The increase in Jakafi net product revenues was primarily driven by growth in patient demand across all indications and inventory level normalizing at the end of the second quarter of 2023. Total Opzelura net product revenues for the quarter were $80 million, representing a 384% increase year-over-year driven by increased patient demand and expanded coverage. Among other Hematology and Oncology, Minjuvi net product revenues grew 198% driven in part by the recognition of $6 million of previously deferred revenue related to the Early Access Program in France, which ended in June 2023. Jakavi and Olumiant royalties for the quarter were impacted by unfavorable changes in foreign currency exchange rates.
6

Operating Expenses
Operating Expense Summary
(unaudited, in thousands)
Three Months Ended
June 30, %
Change Six Months Ended
June 30, %
Change
2023 2022 2023 2022
GAAP cost of product revenues $ 68,326 $ 50,636 35 % $ 125,148 $ 93,250 34 %
Non-GAAP cost of product revenues1
62,150 44,575 39 % 112,819 81,194 39 %
GAAP research and development 400,750 347,196 15 % 807,391 700,569 15 %
Non-GAAP research and development2
367,921 319,059 15 % 743,541 646,104 15 %
GAAP selling, general and administrative 283,929 253,277 12 % 599,535 462,861 30 %
Non-GAAP selling, general and administrative3
263,030 235,595 12 % 557,047 428,277 30 %
GAAP loss on change in fair value of acquisition-related contingent consideration 8,374 3,313 153 % 14,570 9,695 50 %
Non-GAAP loss on change in fair value of acquisition-related contingent consideration4
— — — % — — — %
GAAP (profit) and loss sharing under collaboration agreements5
(549) 2,544 (122 %) (1,911) 7,286 (126 %)

1 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.
2 Non-GAAP research and development expenses exclude the cost of stock-based compensation.
3 Non-GAAP selling, general and administrative expenses exclude the cost of stock-based compensation.
4 Non-GAAP loss on change in fair value of acquisition-related contingent consideration is null.
5 Growth rate in GAAP (profit) and loss sharing under collaboration agreements represents a decrease in loss position for the three and six months ended June 30, 2023.
Cost of product revenues GAAP and Non-GAAP cost of product revenues for the quarter ended June 30, 2023 increased 35% and 39%, respectively, compared to the same period in 2022 primarily due to growth in net product revenues.
Research and development expenses GAAP and Non-GAAP research and development expense for the quarter ended June 30, 2023 increased 15%, compared to the same period in 2022 primarily due to continued investment in our late stage development assets.
Selling, general and administrative expenses GAAP and Non-GAAP selling, general and administrative expenses for the quarter ended June 30, 2023 increased 12% compared to the same period in 2022, primarily due to expenses related to promotional activities to support the launch of Opzelura for the treatment of vitiligo.
Other Financial Information
Operating income GAAP and Non-GAAP operating income for the three months ended June 30, 2023 decreased 24% and 15%, respectively, compared to the same period in 2022, primarily due to lower milestone and contract revenue for the quarter ended June 30, 2023 compared to the same period in 2022, and increased investment in our late stage development assets and in supporting the launch of Opzelura for the treatment of vitiligo.
Cash, cash equivalents and marketable securities position As of June 30, 2023 and December 31, 2022, cash, cash equivalents and marketable securities totaled $3.4 billion and $3.2 billion, respectively.
7

2023 Financial Guidance
Incyte is tightening its full year 2023 guidance for Jakafi net product revenues as a result of its strong second quarter performance. Incyte’s guidance is summarized below. Guidance does not include revenue from any potential new product launches or the impact of any potential future strategic transactions.
Current Previous
Jakafi net product revenues $2.58 – $2.63 billion $2.55 – $2.63 billion
Other Hematology/Oncology net product revenues(1)
Unchanged $215 – $225 million
GAAP Cost of product revenues Unchanged 7 – 8% of net product revenues
Non-GAAP Cost of product revenues(2)
Unchanged 6 – 7% of net product revenues
GAAP Research and development expenses Unchanged $1,610 – $1,650 million
Non-GAAP Research and development expenses(3)
Unchanged $1,485 – $1,520 million
GAAP Selling, general and administrative expenses Unchanged $1,050 – $1,150 million
Non-GAAP Selling, general and administrative expenses(3)
Unchanged $965 – $1,060 million

1Pemazyre in the U.S., EU and Japan; Zynyz in the U.S.; and Iclusig and Minjuvi in the EU.
2Adjusted 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.
3 Adjusted to exclude the estimated cost of stock-based compensation.
Conference Call and Webcast Information
Incyte will hold a conference call and webcast this morning at 8:00 a.m. ET. 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, 13739925.
If you are unable to participate, a replay of the conference call will be available for 90 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, 13739925.
The conference call will also be webcast live and can be accessed at investor.incyte.com.

On August 1, 2023 ImmunoGen, Inc., (Nasdaq: IMGN), a leader in the expanding field of antibody-drug conjugates (ADCs) for the treatment of cancer, reported that the compensation committee of the Company’s Board of Directors (the "Compensation Committee") approved, effective as of July 31, 2023, grants of non-qualified stock options to purchase an aggregate of 20,600 shares of its common stock and restricted stock units ("RSUs") covering 10,300 shares of its common stock under the Inducement Plan to two new employees (Press release, ImmunoGen, AUG 1, 2023, View Source [SID1234633585]).

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The Inducement Plan is used exclusively for the grant of equity awards to individuals who were not previously employees of ImmunoGen (or following a bona fide period of non-employment), as an inducement material to such individual’s entering into employment with ImmunoGen, pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules.

The options have an exercise price of $17.82 per share, which is equal to the closing price of ImmunoGen’s common stock on the Nasdaq Global Select Market on July 31, 2023. Each option will vest as to 25% of the shares underlying such option on the first anniversary of the grant date and as to an additional 6.25% of the shares underlying the option quarterly thereafter, subject to each employee’s continued employment on each vesting date. Each RSU will vest as to 25% of the shares underlying the RSU award on the first anniversary of the grant date and as to an additional 25% of the shares underlying the RSU award annually thereafter, subject to each employee’s continued employment on each vesting date. Each option and RSU is subject to the terms and conditions of the Inducement Plan and the terms and conditions of a stock option agreement and an RSU agreement covering the respective grants.

On July 1, 2023 Guardant Health, Inc. (NASDAQ: GH), a leading precision oncology company, reported an agreement with Illumina Inc. (NASDAQ: ILMN), a global leader in DNA sequencing and array-based technologies, that resolves their pending litigation and promotes a shared resolution to advance the companies’ long-term, commercial partnership (Press release, Guardant Health, AUG 1, 2023, View Source [SID1234633584]).

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The three-year agreement includes a joint request to dismiss with prejudice the pending litigation between the companies, including any allegations related to the subject intellectual property. The companies have also extended their long-standing commercial relationship by agreeing to collaborate on the sharing of specimen samples to advance cancer research, and by entering into a new long-term purchase and supply commitment.

"Both companies are deeply committed to our collaboration to help patients and conquer cancer," said Chris Freeman, chief commercial officer of Guardant. "This agreement supports getting our transformative technologies to even more patients globally, while strengthening our long-standing and valued partnership with Illumina."

On August 1, 2023 Exelixis, Inc. (Nasdaq: EXEL) reported financial results for the second quarter of 2023 and provided an update on progress toward achieving key corporate objectives, as well as commercial, clinical and pipeline development milestones (Press release, Exelixis, AUG 1, 2023, View Source [SID1234633583]).

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"In the second quarter of 2023, the Exelixis team continued to make steady progress both on our commercial business and our rapidly advancing pipeline," said Michael M. Morrissey, Ph.D., President and Chief Executive Officer, Exelixis. "It was another strong quarter for CABOMETYX, which maintained its status as the leading tyrosine kinase inhibitor for the treatment of renal cell carcinoma, again driven by its use in combination with nivolumab in the first-line setting. Revenues from CABOMETYX and the broader cabozantinib franchise directly support the build-out of our differentiated pipeline, including zanzalintinib, our next-generation tyrosine kinase inhibitor, and XB002, our most advanced antibody-drug conjugate. During and after the quarter, we completed enrollment in multiple expansion cohorts of the phase 1 STELLAR-001 study for zanzalintinib, progressed the ongoing phase 3 pivotal trials and furthered our plans for additional pivotal trials of the compound. We also continued to advance the phase 1 JEWEL-101 study for XB002, selecting the single-agent dose from the dose-escalation stage of the study and initiating the cohort expansion stage, with the goal of moving the program into full development before year end. Our clinical collaborations with Cybrexa and Sairopa also advanced, including Cybrexa’s recent clinical data update from the CBX-12 phase 1 program at the ASCO (Free ASCO Whitepaper) Annual Meeting in June."

Dr. Morrissey continued: "As we move through the second half of this year, we have much to look forward to, including the readout of the phase 3 CONTACT-02 study of cabozantinib and atezolizumab in patients with prostate cancer, the next overall survival analysis from the phase 3 COSMIC-313 study evaluating the triplet regimen of cabozantinib in combination with nivolumab and ipilimumab in renal cell carcinoma, and potential presentations of new data from our pipeline compounds. We also look forward to providing additional details around our discovery and development strategy and activities at an R&D Day planned for Tuesday, December 12th in New York City. As always, I want to thank the Exelixis team for their commitment, hard work and contributions during the second quarter as we advanced our mission to help cancer patients recover stronger and live longer."

Second Quarter 2023 Financial Results

Total revenues for the quarter ended June 30, 2023 were $469.8 million, as compared to $419.4 million for the comparable period in 2022.

Total revenues for the quarter ended June 30, 2023 included net product revenues of $409.6 million, as compared to $347.0 million for the comparable period in 2022. The increase in net product revenues was primarily due to an increase in sales volume and an increase in average net selling price.

Collaboration revenues, composed of license revenues and collaboration services revenues, were $60.2 million for the quarter ended June 30, 2023, as compared to $72.4 million for the comparable period in 2022. The decrease in collaboration revenues was primarily related to decreases in the recognition of milestone-related revenues and development cost reimbursements earned, which were partially offset by higher royalty revenues for the sales of cabozantinib outside of the U.S. generated by Exelixis’ collaboration partners, Ipsen Pharma SAS and Takeda Pharmaceutical Company Limited.

Research and development expenses for the quarter ended June 30, 2023 were $232.6 million, as compared to $199.5 million for the comparable period in 2022. The increase in research and development expenses was primarily related to increases in manufacturing costs to support Exelixis’ development candidates, personnel expenses, clinical trial costs and consulting and outside services, which were partially offset by lower license and other collaboration costs.

Selling, general and administrative expenses for the quarter ended June 30, 2023 were $141.7 million, as compared to $122.8 million for the comparable period in 2022. The increase in selling, general and administrative expenses was primarily related to increases in personnel expenses and legal and advisory fees related to the recent proxy contest.

Provision for income taxes for the quarter ended June 30, 2023 was $19.2 million, as compared to $17.8 million for the comparable period in 2022, primarily due to an increase in pre-tax income.

GAAP net income for the quarter ended June 30, 2023 was $81.2 million, or $0.25 per share, basic and diluted, as compared to GAAP net income of $70.7 million, or $0.22 per share, basic and diluted, for the comparable period in 2022.

Non-GAAP net income for the quarter ended June 30, 2023 was $100.3 million, or $0.31 per share, basic and diluted, as compared to non-GAAP net income of $89.7 million, or $0.28 per share, basic and diluted, for the comparable period in 2022.

Non-GAAP Financial Measures

To supplement Exelixis’ financial results presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), Exelixis presents non-GAAP net income (and the related per share measures), which excludes from GAAP net income (and the related per share measures) stock-based compensation expense, adjusted for the related income tax effect for all periods presented.

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, adjusted for the related income tax effect, because it is a non-cash item 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.

2023 Financial Guidance

Exelixis is maintaining the previously provided financial guidance for fiscal year 2023:

Total revenues

$1.775 billion – $1.875 billion

Net product revenues

$1.575 billion – $1.675 billion

Cost of goods sold

4.0% – 5.0% of net product revenues

Research and development expenses (1)

$1,000 million – $1,050 million

Selling, general and administrative expenses (2)

$475 million – $525 million

Effective tax rate

20% – 22%

____________________

(1)

Includes $45 million of non-cash stock-based compensation expense.

(2)

Includes $55 million of non-cash stock-based compensation expense.

Cabozantinib and Pipeline Highlights

Cabozantinib Franchise Net Product Revenues and Royalties. Net product revenues generated by the cabozantinib franchise in the U.S. were $409.6 million during the second quarter of 2023, with net product revenues of $403.3 million from CABOMETYX (cabozantinib) and $6.4 million from COMETRIQ (cabozantinib). Based upon cabozantinib-related net product revenues generated by Exelixis’ collaboration partners during the quarter ended June 30, 2023, Exelixis earned $37.4 million in royalty revenues.

Cabozantinib and Pipeline Presentations at the 2023 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting. In June, cabozantinib was the subject of 22 presentations at this year’s ASCO (Free ASCO Whitepaper) Annual Meeting, which was held from June 2-6 in Chicago. Notable presentations included three-year quality-of-life follow-up data from CheckMate -9ER and detailed results from the CONTACT-03 phase 3 trial evaluating the combination of cabozantinib and atezolizumab vs. cabozantinib alone in metastatic RCC patients who have progressed following treatment with an immune checkpoint inhibitor therapy. Presentations featuring Exelixis pipeline compounds included updated phase 1 clinical data from the CBX-12 program in collaboration with Cybrexa, as well as an overview of the phase 3 STELLAR-303 study design evaluating zanzalintinib in combination with atezolizumab in patients with previously treated metastatic colorectal cancer.

Corporate Highlights

Settlement of CABOMETYX Patent Litigation with Teva Pharmaceuticals. In July, Exelixis announced that it entered into a Settlement and License Agreement (Agreement) with Teva Pharmaceuticals Development, Inc. and Teva Pharmaceuticals USA, Inc. (collectively "Teva"). This settlement resolves patent litigation brought by Exelixis in response to Teva’s Abbreviated New Drug Application seeking approval to market a generic version of CABOMETYX prior to the expiration of the applicable patents. Pursuant to the terms of the Agreement, Exelixis will grant Teva a license to market its generic version of CABOMETYX in the U.S. beginning on January 1, 2031, if approved by the U.S. Food and Drug Administration and subject to conditions and exceptions common to agreements of this type. Additionally, in accordance with the Agreement, the parties will terminate all ongoing Hatch-Waxman litigation between Exelixis and Teva regarding CABOMETYX patents pending in the U.S. District Court for the District of Delaware.

Share Repurchase Program. As of June 30, Exelixis has repurchased $127.0 million of the company’s common stock, at an average price of $19.22 per share. In March, Exelixis announced that the company’s Board of Directors authorized the repurchase of up to $550 million of the company’s common stock before the end of 2023. Share repurchases under the program may be made from time to time through a variety of methods, which may include open market purchases, in block trades, accelerated share repurchase transactions, exchange transactions, or any combination of such methods. The timing and amount of any share repurchases under the share repurchase program will be based on a variety of factors, including ongoing assessments of the capital needs of the business, alternative investment opportunities, the market price of Exelixis’ common stock and general market conditions.

Exelixis Board of Directors Refreshment Plan. In May, upon the conclusion of its 2023 Annual Meeting of Stockholders, Exelixis announced the election of three new members to its Board of Directors, Mr. Thomas Heyman, Mr. Robert Oliver, Jr. and Mr. David Johnson, following the departure of prior board members Mr. Carl Feldbaum, Dr. Vincent Marchesi and Dr. Lance Willsey. Exelixis thanks Mr. Feldbaum and Drs. Marchesi and Willsey for their commitment and contributions to Exelixis during their tenure, and looks forward to working collaboratively with Messrs. Heyman, Oliver and Johnson to advance the company’s mission to help patients recover stronger and live longer, and generate sustainable, long-term value for shareholders.

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 July 1, 2022 are indicated as being as of and for the periods ended June 30, 2022.

Conference Call and Webcast

Exelixis management will discuss the company’s financial results for the second quarter of 2023 and provide a general business update during a conference call beginning at 5:00 p.m. ET / 2:00 p.m. PT today, Tuesday, August 1, 2023.

To access the conference call, please register using this link. Upon registration, a dial-in number and unique PIN will be provided to join the call. To access the live webcast link, log onto www.exelixis.com and proceed to the Event Calendar page under the Investors & News 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. A webcast replay of the conference call will also be archived on www.exelixis.com for one year.