On February 6, 2024 Exelixis, Inc. (Nasdaq: EXEL) reported financial results for the fourth quarter and fiscal year of 2023, provided an update on progress toward achieving key corporate objectives, and outlined its commercial, clinical and pipeline development milestones (Press release, Exelixis, FEB 6, 2024, View Source [SID1234639870]).

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"Exelixis entered 2024 with significant momentum on the research, development, commercial and financial fronts," said Michael M. Morrissey, Ph.D., President and Chief Executive Officer, Exelixis. "This year, we plan to advance our regulatory strategies for cabozantinib label expansions in neuroendocrine tumors and metastatic castration-resistant prostate cancer, both indications with high unmet medical need and the potential to drive revenue growth for the franchise for years to come. Positive data from the CABINET and CONTACT-02 studies give us confidence that cabozantinib has the potential to become an important option for clinicians treating patients with these forms of cancer. As we pursue these additional growth opportunities, we remain steadfast in our defense of cabozantinib’s intellectual property and anticipate a ruling on the second bench trial for our ongoing litigation with MSN Pharmaceuticals this spring."

Dr. Morrissey continued: "Our deep, differentiated and maturing pipeline is essential to our efforts to position Exelixis as a global biotech leader in oncology. Drawing on the cabozantinib experience and the integrated research, development and commercial capabilities highlighted at our recent R&D Day, we are working to build multiple franchises across the Exelixis portfolio. As we concentrate our R&D resources on our product development activities, we remain focused on accelerating zanzalintinib, XB002 and XL309 through clinical development, and filing Investigational New Drug applications for up to three development candidates in 2024. We believe the associated restructuring of our business, announced in January, will enable us to rapidly execute on our goals, maintain positive cash flow and deliver an innovative pipeline of biotherapeutics and small molecules for patients with cancer."

Fourth Quarter and Fiscal Year 2023 Financial Results

Total revenues for the quarter and year ended December 31, 2023 were $479.7 million and $1,830.2 million, respectively, as compared to $423.9 million and $1,611.1 million for the comparable periods in 2022.

Total revenues for the quarter and year ended December 31, 2023 included net product revenues of $429.3 million and $1,628.9 million, respectively, as compared to $377.4 million and $1,401.2 million for the comparable periods in 2022. The increases in net product revenues were 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 $50.3 million for the quarter ended December 31, 2023, as compared to $46.5 million for the comparable period in 2022. The increase was primarily due to 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. Collaboration revenues were $201.3 million for the year ended December 31, 2023, as compared to $209.8 million for the comparable period in 2022. The decrease was primarily related to decreases in the recognition of milestone-related revenues and development cost reimbursements earned, partially offset by higher royalty revenues for the sales of cabozantinib outside of the U.S. generated by Exelixis’ collaboration partners.

Research and development expenses for the quarter ended December 31, 2023 were $244.7 million, as compared to $336.8 million for the comparable period in 2022. The decrease in research and development expenses for the quarter was primarily related to a decrease in license and other collaboration costs, partially offset by increases in clinical trial costs, manufacturing costs to support Exelixis’ development candidates and personnel expenses. Research and development expenses for the year ended December 31, 2023 were $1,044.1 million, as compared to $891.8 million for the comparable period in 2022. The increase in research and development expenses for the year was primarily related to increases in manufacturing costs to support Exelixis’ development candidates, personnel expenses and clinical trial costs, partially offset by lower license and other collaboration costs and lower stock-based compensation expense.

Selling, general and administrative expenses for the quarter and year ended December 31, 2023 were $131.4 million and $542.7 million, respectively, as compared to $119.3 million and $459.9 million for the comparable periods in 2022. The increases in selling, general and administrative expenses were primarily related to increases in personnel expenses, technology costs, facility expenses and legal and advisory fees.

Provision for (benefit from) income taxes for the quarter and year ended December 31, 2023 was $17.5 million and $49.8 million, respectively, as compared to $(1.3) million and $52.1 million for the comparable periods in 2022, primarily due to an increase in pre-tax income.

GAAP net income (loss) for the quarter ended December 31, 2023 was $85.5 million, or $0.28 per share, basic and $0.27 per share, diluted, as compared to GAAP net loss of $(30.2) million, or $(0.09) per share, basic and diluted, for the comparable period in 2022. GAAP net income for the year ended December 31, 2023 was $207.8 million, or $0.65 per share, basic and diluted, as compared to GAAP net income of $182.3 million, or $0.57 per share, basic and $0.56 per share, diluted, for the comparable period in 2022.

Non-GAAP net income (loss) for the quarter ended December 31, 2023 was $104.2 million, or $0.34 per share, basic and $0.33 per share, diluted, as compared to non-GAAP net loss of $(10.2) million, or $(0.03) per share, basic and diluted, for the comparable period in 2022. Non-GAAP net income for the year ended December 31, 2023 was $289.4 million, or $0.91 per share, basic and $0.90 per share, diluted, as compared to non-GAAP net income of $265.4 million, or $0.83 per share, basic and $0.82 per share, diluted, for the comparable period 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.

2024 Financial Guidance

Exelixis is maintaining the previously provided financial guidance for fiscal year 2024(1):

Total revenues

$1.825 billion – $1.925 billion

Net product revenues (2)

$1.650 billion – $1.750 billion

Cost of goods sold

4% – 5% of net product revenues

Research and development expenses (3)

$925 million – $975 million

Selling, general and administrative expenses (4)

$425 million – $475 million

Effective tax rate

20% – 22%

____________________
(1)

2024 financial guidance excludes expenses related to the restructuring plan announced in January 2024.

(2)

Exelixis’ 2024 net product revenues guidance range includes the impact of a U.S. wholesale acquisition cost increase of 2.2% for both CABOMETYX and COMETRIQ effective on January 1, 2024.

(3)

Includes $40 million of non-cash stock-based compensation expense.

(4)

Includes $60 million of non-cash stock-based compensation expense.

Cabozantinib Highlights

Cabozantinib Franchise Net Product Revenues and Royalties. Net product revenues generated by the cabozantinib franchise in the U.S. were $429.3 million during the fourth quarter of 2023, with net product revenues of $427.7 million from CABOMETYX (cabozantinib) and $1.6 million from COMETRIQ (cabozantinib). For the year ended December 31, 2023, net product revenues generated by the cabozantinib franchise in the U.S. were $1,628.9 million, with net product revenues of $1,614.9 million from CABOMETYX and $13.9 million from COMETRIQ. In 2023, global cabozantinib franchise net product revenues generated by Exelixis and its partners exceeded $2.2 billion. Based upon cabozantinib-related net product revenues generated by Exelixis’ collaboration partners during the quarter and year ended December 31, 2023, Exelixis earned $40.7 million and $148.5 million, respectively, in royalty revenues.

Detailed Results from Phase 3 CABINET Pivotal Trial Evaluating Cabozantinib in Advanced Pancreatic and Extra-Pancreatic Neuroendocrine Tumors (NET) Presented at the 2023 European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Congress. In October 2023, detailed results were presented from the phase 3 CABINET pivotal trial at the 2023 ESMO (Free ESMO Whitepaper) Congress. The CABINET trial evaluated cabozantinib versus placebo in two different cohorts of patients, those with pancreatic NET and those with extra-pancreatic NET. A statistically significant and clinically meaningful improvement in progression-free survival (PFS) was observed in those patients treated with cabozantinib in both cohorts. Adverse events were consistent with the known safety profile of cabozantinib. CABINET is sponsored by the National Cancer Institute and is led by The Alliance for Clinical Trials in Oncology (The Alliance). Previously, in August, Exelixis announced The Alliance’s independent Data and Safety Monitoring Board unanimously recommended to stop the trial early, unblind all patients and allow those on placebo to cross over to cabozantinib due to a dramatic improvement in efficacy. Exelixis is discussing these results with the U.S. Food and Drug Administration (FDA) to support a potential regulatory submission in 2024 and will provide an update when appropriate.

Detailed Results from Phase 3 CONTACT-02 Pivotal Trial Evaluating Cabozantinib in Combination with Atezolizumab in Metastatic Castration-Resistant Prostate Cancer (mCRPC) Presented at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) 2024 Genitourinary Cancers Symposium (ASCO GU). In January 2024, positive results from the primary PFS analysis in the global phase 3 CONTACT-02 pivotal trial were presented during an oral abstract session at ASCO (Free ASCO Whitepaper) GU. The results demonstrated a statistically significant improvement in PFS, as assessed by a blinded independent radiology committee (BIRC), for cabozantinib in combination with atezolizumab in the first 400 randomized patients in the intent-to-treat (PFS ITT) population and per protocol. A PFS benefit was observed across all subgroups of high-risk populations who have a poor prognosis and a high unmet need for additional treatment options, notably in patients with liver metastases or those who had received prior docetaxel chemotherapy. A statistically significant improvement in PFS was also observed by BIRC both in the ITT population (n=507) and according to Prostate Cancer Clinical Trials Working Group 3 (PCWG3) criteria. An interim analysis for overall survival (OS), conducted at the time of the primary PFS analysis, demonstrated a trend favoring the combination of cabozantinib and atezolizumab. The study continues toward the next analysis of OS, which is anticipated in 2024. CONTACT-02 is evaluating cabozantinib in combination with atezolizumab compared with a second novel hormonal therapy (NHT) in patients with mCRPC and measurable extra-pelvic soft-tissue disease who have progressed on one prior NHT. The safety profile of the combination regimen was consistent with the known profiles of each single agent, and no new safety findings were identified. Exelixis will continue its discussions with the FDA on a potential regulatory path forward for the combination of cabozantinib and atezolizumab in mCRPC.

Four-Year Follow-up Results from Phase 3 CheckMate -9ER Trial Evaluating CABOMETYX in Combination with Nivolumab (OPDIVO) in Previously Untreated Renal Cell Carcinoma (RCC) Presented at ASCO (Free ASCO Whitepaper) GU. In January 2024, four-year follow-up results from the CheckMate -9ER trial were featured in an oral presentation at ASCO (Free ASCO Whitepaper) GU. Results continued to show superior PFS and objective response rates (ORR) in patients treated with the combination of CABOMETYX and nivolumab over sunitinib, the comparator studied in the trial, regardless of risk classification. Superior OS was also observed in patients treated with the combination. The presentation included data showing health-related quality-of-life benefits with the combination as compared to sunitinib. No new safety concerns were identified in the follow-up analysis.

Pipeline Highlights

Presentation of Encouraging Results from Expansion Cohort of Phase 1b/2 STELLAR-001 Trial Evaluating Zanzalintinib in Patients with Advanced Kidney Cancer at the International Kidney Cancer Symposium (IKCS) 2023. In November 2023, Exelixis presented initial results from an expansion cohort of STELLAR-001 evaluating single-agent zanzalintinib in patients with previously treated clear cell renal cell carcinoma (ccRCC) at IKCS 2023. STELLAR-001 is a phase 1b/2 trial evaluating zanzalintinib alone and in combination with atezolizumab in patients with locally advanced or metastatic solid tumors. In the ccRCC cohort of 32 patients, the findings demonstrated strong response rates and anti-tumor activity across the entire cohort, including in patients who had previously been treated with cabozantinib.

Exelixis and Arcus Biosciences, Inc. Enter Clinical Trial Collaboration to Evaluate Zanzalintinib in Combination with AB521 in Patients with Advanced RCC. In December 2023, Exelixis and Arcus Biosciences announced that the companies entered into a clinical trial collaboration for STELLAR-009, a phase 1b/2 trial evaluating zanzalintinib in combination with AB521, an inhibitor of the transcription factor HIF-2⍺, in patients with advanced solid tumors, including ccRCC. The trial is divided into dose-escalation and expansion phases, and patient enrollment into dose-escalation cohorts is ongoing. Exelixis is sponsoring STELLAR-009, and Arcus is co-funding the study and providing AB521 for use in the trial.

Initiation of STELLAR-305 Phase 2/3 Pivotal Trial Evaluating Zanzalintinib in Combination with Pembrolizumab in Patients with Previously Untreated Recurrent or Metastatic Head and Neck Cancer. In December 2023, Exelixis announced the initiation of STELLAR-305, a global, multicenter, randomized, double-blinded phase 2/3 trial evaluating zanzalintinib in combination with pembrolizumab versus pembrolizumab alone in patients with previously untreated PD-L1-positive recurrent or metastatic squamous cell carcinoma of the head and neck (SCCHN). The primary endpoints of the study are BIRC-assessed PFS and OS. Secondary endpoints include investigator-assessed PFS and ORR and duration of response as assessed by both BIRC and the investigator.

Exelixis Provides Strategic Review of Biotherapeutics and Small Molecule Pipeline at its 2023 R&D Day: Science & Strategy. In December 2023, Exelixis held its 2023 R&D Day: Science & Strategy event in New York City. During the event, Exelixis speakers reviewed the strategy and progress of the company’s growing research and development pipeline, highlighted recent clinical updates, provided a comprehensive overview of its preclinical biotherapeutics and small molecule development candidates and elaborated on the company’s continued efforts to serve more patients with cancer and generate sustainable, long-term value for shareholders. The webcast replay of the event can be accessed via EXELRDDay.com and is also available at www.exelixis.com on the Event Calendar page under the Investors & News heading.

Corporate Highlights

Appointments of Two New Board Members with Extensive Drug Development and Corporate Governance Expertise. In January 2024, Exelixis announced the appointments of Mary C. Beckerle, Ph.D., and Gail Eckhardt, M.D., to the Exelixis Board of Directors, effective January 5, 2024. Dr. Beckerle is Chief Executive Officer of the Huntsman Cancer Institute and Distinguished Professor of Biological and Oncological Sciences at the University of Utah. Since 2006, she has had responsibility for the vision, strategic direction, and management of the University’s oncology programs, including research, care, education, and community outreach. She is also a noted cell biologist and cancer researcher. Dr. Eckhardt is Associate Dean of Experimental Therapeutics at Baylor College of Medicine and Associate Director of Translational Research at the College’s Dan L. Duncan Comprehensive Cancer Center. A recognized leader in translational medicine relative to oncology, she has focused her career on the preclinical and early clinical development of molecularly targeted therapies and combination regimens to treat colorectal and other gastrointestinal cancers.

Share Repurchase Program. In January 2024, the Exelixis Board of Directors authorized the repurchase of up to an additional $450 million of the company’s common stock before the end of 2024. As of December 31, 2023, Exelixis completed the repurchase of 26.2 million shares of the company’s common stock for a total of $550 million, fulfilling its commitments under the prior share repurchase program announced in March 2023. Share repurchases under the 2024 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.

Announcement of Key Priorities and Anticipated Milestones for 2024. In January 2024, Exelixis announced its key priorities and anticipated milestones for 2024, including: implementation of a corporate restructuring to prioritize the advancement of the company’s deep pipeline of clinical and near-clinical programs; potential U.S. regulatory filings for cabozantinib in advanced NET and mCRPC indications; the anticipated outcome of the cabozantinib Abbreviated New Drug Application litigation with MSN Pharmaceuticals in the first half of 2024; expansion of zanzalintinib’s pivotal development program with priorities defined by emerging phase 1b/2 data and potential clinical co-funding opportunities; advancing JEWEL-101, the phase 1 study of XB002, a next-generation tissue factor-targeting antibody-drug conjugate (ADC), alone and in combination with immunotherapy in a variety of solid tumor settings with the goal of prioritizing sensitive tumor types for full development; accelerating the phase 1 development of XL309, a potentially best-in-class small molecule inhibitor of USP1, as a potential therapy for tumors that have become refractory to PARP inhibitor (PARPi) therapy, including forms of ovarian, breast and prostate cancers, and pursuing potential PARPi combinations; potentially filing three Investigational New Drug Applications for XB010 (5T4-MMAE ADC), XB628 (PD-L1-NKG2A bispecific antibody), and XL495 (small molecule PKMYT1 inhibitor) if preclinical data continue to be supportive; and advancing two new programs to development candidate status, including a small molecule PLK4 inhibitor and an additional ADC. Exelixis presented the details of its key priorities and anticipated milestones at the 42nd Annual J.P. Morgan Healthcare Conference.

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 December 29, 2023 and December 30, 2022 are indicated as being as of and for the periods ended December 31, 2023 and 2022, respectively.

Conference Call and Webcast

Exelixis management will discuss the company’s financial results for the fourth quarter and fiscal year 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, February 6, 2024.

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. A webcast replay of the conference call will also be archived on www.exelixis.com for one year.

On February 6, 2024 Eli Lilly and Company (NYSE: LLY) reported its financial results for the fourth quarter of 2023 (Press release, Eli Lilly, FEB 6, 2024, View Source [SID1234639869]).

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"2023 was a year of tremendous achievement for Lilly, which delivered life-changing medicines to more patients than ever before resulting in strong revenue growth," said David A. Ricks, Lilly’s chair and CEO. "We advanced our pipeline of new medicines for serious diseases and created new partnerships and innovative ways of collaborating to add to that pipeline. Lilly invested in the quality, reliability and resilience of our supply chain with new advanced manufacturing plants and lines in the U.S. and in Europe. Entering 2024, we remain focused on the opportunity in front of us, to help solve some of the most challenging healthcare problems in the world and make life better for millions of patients."

Lilly has had numerous updates recently on key regulatory, clinical, business development and other events, including:

U.S. Food and Drug Administration (FDA) approval of Zepbound (tirzepatide) for the treatment of adult patients with obesity or overweight with weight-related comorbidities;
FDA approval of Jaypirca for the treatment of adult patients with chronic lymphocytic leukemia or small lymphocytic lymphoma (CLL/SLL) who have received at least two prior lines of therapy, including a BTK inhibitor and a BCL-2 inhibitor, under the Accelerated Approval Program;
Positive results from SYNERGY-NASH, a Phase 2 study of tirzepatide in adults with nonalcoholic steatohepatitis (NASH), also known as metabolic dysfunction-associated steatohepatitis (MASH), which met its primary endpoint where up to 74% of participants achieved an absence of MASH with no worsening of fibrosis at 52 weeks, compared to nearly 13% of participants on placebo;
Negative Phase 3 CYCLONE-2 results, in which Verzenio added to abiraterone did not meet the primary endpoint of improved radiographic progression-free survival (rPFS) in men with metastatic castration-resistant prostate cancer (mCRPC); the overall safety and tolerability profile was consistent with the known profiles of the medicines;
Approval of Ebglyss (lebrikizumab) for adult and adolescent patients with moderate-to-severe atopic dermatitis in the European Union and Japan (Almirall S.A. has licensed the rights from Lilly to develop and commercialize Ebglyss in Europe);
Announcement of LillyDirect, the company’s end-to-end digital healthcare experience;
Announcement of further expansion of the company’s injectable manufacturing capacity with a planned investment of $2.5 billion to build a site in Germany;
Completion of the acquisitions of POINT Biopharma Global Inc. and Mablink Biosciences SAS;
The sixth consecutive 15% annual increase in Lilly’s quarterly dividend, more than doubling the dividend since 2018; and
Announcement of Johna Norton, Lilly executive vice president of Global Quality, retirement after 34 years of service with the company, effective July 31, 2024.
For information on important public announcements, visit the news section of Lilly’s website.

Financial Results

$ in millions, except

per share data

Fourth Quarter

2023

2022

% Change

Revenue

$ 9,353.4

$ 7,301.8

28 %

Net income – Reported

2,189.6

1,937.7

13 %

Earnings per share – Reported

2.42

2.14

13 %

Net income – Non-GAAP

2,249.4

1,893.1

19 %

Earnings per share – Non-GAAP

2.49

2.09

19 %

A discussion of the non-GAAP financial measures is included below under "Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)."

Fourth-Quarter Reported Results
In Q4 2023, worldwide revenue was $9.35 billion, an increase of 28% compared with Q4 2022, driven by increases of 16% due to higher realized prices, 11% in volume and 1% from the favorable impact of foreign exchange rates. Higher realized prices were driven by Mounjaro in the U.S., partially offset by lower realized prices for Humalog and Trulicity. In the U.S., Mounjaro saw net price positively impacted by savings card dynamics compared with Q4 2022, as well as a favorable one-time change in estimates for rebates and discounts. The volume increase was primarily driven by growth from Mounjaro, Verzenio, Zepbound, Jardiance and Taltz, partially offset by declines in Alimta and Trulicity. New Products revenue grew by $2.19 billion to $2.49 billion in Q4 2023. Growth Products revenue increased 9% to $5.27 billion in Q4 2023.

Revenue in the U.S. increased 39% to $6.46 billion, driven by a 27% increase in realized prices and a 12% increase in volume. The higher realized prices in the U.S. were driven by Mounjaro, partially offset by lower realized prices for Humalog and Trulicity. When excluding Mounjaro, realized prices in the U.S. declined by high-single digits for the quarter. The increase in U.S. volume was driven by Mounjaro, Zepbound, Verzenio, Jardiance and Taltz, partially offset by a decrease in Trulicity.

Revenue outside the U.S. increased 10% to $2.90 billion, driven by a 10% increase in volume and a 3% increase from the favorable impact of foreign exchange rates, partially offset by a 3% decrease due to lower realized prices. The increase in volume outside the U.S. was driven by Verzenio, Mounjaro, Jardiance, Tyvyt and Taltz. Revenue also benefited from $65 million associated with milestones for the EU approval and launch of Ebglyss. These drivers were partially offset by approximately $130 million of one-time revenue in 2022 associated with the sale of the company’s rights to Alimta in Korea and Taiwan.

Gross margin increased 31% to $7.57 billion in Q4 2023. Gross margin as a percent of revenue was 80.9%, an increase of 2.1 percentage points. The increase in gross margin percent was primarily driven by higher realized prices, partially offset by increased manufacturing expenses related to labor costs and investments in capacity expansion.

In Q4 2023, research and development expenses increased 28% to $2.56 billion, or 27% of revenue, primarily driven by development expenses for late-stage assets and additional investments in early-stage research, as well as higher incentive compensation costs.

Marketing, selling and administrative expenses increased 17% to $1.92 billion in Q4 2023, primarily driven by costs associated with launches of new products and indications, as well as higher incentive compensation costs.

In Q4 2023, the company recognized acquired in-process research and development (IPR&D) charges of $622.6 million compared with $240.1 million in Q4 2022. The Q4 2023 charges primarily related to the acquisition of Mablink Biosciences SAS and the business development transaction with Beam Therapeutics Inc.

Other income (expense) was $121.0 million of income in Q4 2023, compared with $260.0 million of income in Q4 2022. The decrease in income was driven by lower net gains on investments in equity securities in Q4 2023 compared with Q4 2022 and, to a lesser extent, higher net interest expenses.

The effective tax rate was 12.7% in Q4 2023 compared with 7.6% in Q4 2022. The higher effective tax rate for Q4 2023 was primarily driven by a lower net discrete tax benefit compared with Q4 2022 and the new Puerto Rico tax regime.

In Q4 2023, net income and earnings per share (EPS) were $2.19 billion and $2.42, respectively, compared with net income of $1.94 billion and EPS of $2.14 in Q4 2022. EPS in Q4 2023 included $0.62 of acquired IPR&D charges compared with $0.23 in Q4 2022.

Fourth-Quarter Non-GAAP Measures
On a non-GAAP basis, Q4 2023 gross margin increased 31% to $7.69 billion. Gross margin as a percent of revenue was 82.3%, an increase of 1.8 percentage points. The increase in gross margin percent was primarily driven by higher realized prices, partially offset by increased manufacturing expenses related to labor costs and investments in capacity expansion.

The effective tax rate on a non-GAAP basis was 13.1% in Q4 2023 compared with 7.3% in Q4 2022. The higher effective tax rate for Q4 2023 was primarily driven by a lower net discrete tax benefit compared with Q4 2022 and the new Puerto Rico tax regime.

On a non-GAAP basis, Q4 2023 net income and EPS were $2.25 billion and $2.49, respectively, compared with net income of $1.89 billion and EPS of $2.09 in Q4 2022. Non-GAAP EPS in Q4 2023 included $0.62 of acquired IPR&D charges compared with $0.23 in Q4 2022.

For further detail on non-GAAP measures, see the reconciliation below as well as the "Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)" table later in this press release.

Fourth Quarter

2023

2022

% Change

Earnings per share (reported)

$ 2.42

$ 2.14

13 %

Amortization of intangible assets

.11

.11

Asset impairment, restructuring and other
special charges

.06

.03

Net gains on investments in equity securities

(.11)

(.19)

Earnings per share (non-GAAP)

$ 2.49

$ 2.09

19 %

Numbers may not add due to rounding.

Acquired IPR&D

.62

.23

NM

Selected Revenue Highlights

(Dollars in millions)

Fourth Quarter

Year-to-Date

Selected Products

2023

2022

% Change

2023

2022

% Change

Trulicity

$ 1,669.3

$ 1,936.2

(14) %

$ 7,132.6

$ 7,439.7

(4) %

Mounjaro

2,205.6

279.2

NM

5,163.1

482.5

NM

Verzenio

1,145.4

808.0

42 %

3,863.4

2,483.5

56 %

Taltz

784.6

707.8

11 %

2,759.6

2,482.0

11 %

Jardiance(a)

798.1

612.3

30 %

2,744.7

2,066.0

33 %

Humalog(b)

366.6

548.3

(33) %

1,663.3

2,060.6

(19) %

Cyramza

253.6

277.8

(9) %

974.7

971.4

0 %

Olumiant(c)

243.5

205.8

18 %

922.6

830.5

11 %

Emgality

186.1

175.6

6 %

678.3

650.9

4 %

Tyvyt

113.6

57.5

98 %

393.4

293.3

34 %

Retevmo

73.4

64.6

14 %

253.6

191.9

32 %

Alimta

44.9

236.6

(81) %

217.5

927.7

(77) %

Zepbound

175.8

—

NM

175.8

—

NM

COVID-19
antibodies(d)

—

38.0

(100) %

—

2,023.5

(100) %

Total Revenue

9,353.4

7,301.8

28 %

34,124.1

28,541.4

20 %

(a) Jardiance includes Glyxambi, Synjardy and Trijardy XR

(b) Humalog includes Insulin Lispro

(c) Olumiant includes sales of baricitinib that were made pursuant to Emergency Use Authorization (EUA) or similar
regulatory authorizations

(d) COVID-19 antibodies include sales for bamlanivimab administered alone, for bamlanivimab and etesevimab
administered together, and for bebtelovimab, and were made pursuant to EUAs or similar regulatory authorizations

NM – not meaningful

Trulicity
For Q4 2023, worldwide Trulicity revenue decreased 14% compared with Q4 2022 to $1.67 billion. U.S. revenue decreased 18% to $1.26 billion, driven by decreased volume and lower realized prices. Lilly has experienced and continues to expect intermittent delays fulfilling orders of Trulicity. These delays have impacted and are expected to continue to impact volume. Revenue outside the U.S. increased 1% to $413.6 million, driven by increased volume and the favorable impact of foreign exchange rates, largely offset by lower realized prices. Volumes in international markets continue to be affected by actions Lilly has taken to manage demand amid tight supply, including measures to minimize impact to existing patients.

Mounjaro
For Q4 2023, worldwide Mounjaro revenue was $2.21 billion compared with $279.2 million in Q4 2022. U.S. revenue was $2.11 billion compared with $256.7 million in Q4 2022 reflecting higher realized prices due to decreased utilization of savings card programs as access continued to expand, as well as increased demand. U.S. revenue in Q4 2023 represented a sequential increase of $828.1 million, or 65%, compared with U.S. revenue of $1.28 billion in Q3 2023. Q4 2023 U.S. Mounjaro revenue also benefited from a favorable one-time change in estimates for rebates and discounts. Adjusting for this one-time change, sequential net sales would have grown by approximately 30% in Q4. Lilly has experienced and continues to expect intermittent delays fulfilling orders of certain Mounjaro doses given significant demand, which is expected to affect volume. Revenue outside the U.S. was $100.5 million compared with $22.5 million in Q4 2022.

Verzenio
For Q4 2023, worldwide Verzenio revenue increased 42% compared with Q4 2022 to $1.15 billion. U.S. revenue was $774.8 million, an increase of 40%, driven by increased demand and higher realized prices. Revenue outside the U.S. was $370.6 million, an increase of 45%, driven by increased demand and, to a lesser extent, the favorable impact of foreign exchange rates, partially offset by lower realized prices.

Taltz
For Q4 2023, worldwide Taltz revenue increased 11% compared with Q4 2022 to $784.6 million. U.S. revenue increased 5% to $537.8 million, driven by increased demand, partially offset by lower realized prices. Revenue outside the U.S. increased 26% to $246.8 million, driven by increased volume.

Jardiance
For Q4 2023, the company’s worldwide Jardiance revenue increased 30% compared with Q4 2022 to $798.1 million. U.S. revenue was $468.9 million, an increase of 29%, driven by increased demand. Revenue outside the U.S. was $329.1 million, an increase of 32%, driven by increased volume and, to a lesser extent, the favorable impact of foreign exchange rates.

Jardiance is part of the company’s alliance with Boehringer Ingelheim. Lilly reports as revenue royalties received on net sales of Jardiance.

Humalog
For Q4 2023, worldwide Humalog revenue decreased 33% compared with Q4 2022 to $366.6 million. U.S. revenue was $167.6 million, a decrease of 50%, driven by lower realized prices primarily due to a one-time impact related to the implementation of list price decreases, partially offset by increased demand. Revenue outside the U.S. was $199.0 million, a decrease of 6%, driven by decreased volume, partially offset by the favorable impact of foreign exchange rates.

Olumiant
For Q4 2023, worldwide Olumiant revenue increased 18% compared with Q4 2022 to $243.5 million. U.S. revenue increased 53% to $66.7 million, driven by increased demand, partially offset by lower realized prices. Revenue outside the U.S. was $176.8 million, an increase of 9%, driven by increased volume.

Emgality
For Q4 2023, worldwide Emgality revenue increased 6% compared with Q4 2022 to $186.1 million. U.S. revenue decreased 3% to $128.3 million, driven by lower realized prices, largely offset by increased demand. Revenue outside the U.S. increased 33% to $57.8 million, driven by increased volume and higher realized prices.

Zepbound
For Q4 2023, worldwide Zepbound revenue was $175.8 million. Zepbound launched in the U.S. for the treatment of adult patients with obesity or overweight with weight-related comorbidities in November 2023.

2024 Financial Guidance
The company anticipates 2024 revenue to be in the range of $40.4 billion to $41.6 billion. The growth in revenue compared to 2023 is expected to be largely driven by New Products, partially offset by an expected continuation of the decline in Trulicity sales. The company continues to execute on its manufacturing expansion agenda, however, given strong demand and the time required to bring manufacturing capacity fully online, the company expects that demand for incretins is likely to outpace supply in 2024.

The company’s guidance now includes a new ratio calculated by subtracting research and development expenses and marketing, selling and administrative expenses from gross margin, and expressed as a percentage of revenue. The company anticipates this ratio to be 30% to 32% on a reported basis and 31% to 33% on a non-GAAP basis. Marketing, selling and administrative expenses are expected to continue growing in 2024, though at a pace slower than revenue growth with growth driven by marketing investments in recently launched and upcoming launch products. Research and development expenses are expected to increase at a higher rate than marketing, selling and administrative expenses in 2024, driven by investments in ongoing and new late-phase opportunities.

Consistent with 2023, the company is not including any potential or pending acquired IPR&D charges in its initial 2024 guidance and expects to update EPS guidance each quarter as acquired IPR&D charges are incurred.

Other income (expense) is expected to be expense in the range of $400 million to $500 million, primarily driven by higher interest expense.

The 2024 effective tax rate is expected to be approximately 14%. This rate does not assume deferral or repeal of the provision in the 2017 Tax Act requiring capitalization and amortization of research and development for tax purposes.

EPS for 2024 is expected to be in the range of $11.80 to $12.30 on a reported basis and $12.20 to $12.70 on a non-GAAP basis. The company’s 2024 financial guidance reflects adjustments shown in the reconciliation table below.

2024

Guidance

Earnings per share (reported)

$11.80 to $12.30

Amortization of intangible assets

.40

Earnings per share (non-GAAP)

$12.20 to $12.70

Numbers may not add due to rounding

The following table summarizes the company’s 2024 financial guidance:

2024 Guidance(1)

Revenue

$40.4 to $41.6 billion

(Gross Margin – OPEX(2)) / Revenue:

(reported)

30% to 32%

(non-GAAP)

31% to 33%

Other Income/(Expense)

($500) to ($400) million

Tax Rate

Approx. 14%

Earnings per Share (reported)

$11.80 to $12.30

Earnings per Share (non-GAAP)

$12.20 to $12.70

(1) Non-GAAP guidance reflects adjustments presented in the earnings per share reconciliation
table above.

(2) OPEX is defined as the sum of research and development expenses and marketing, selling
and administrative expenses.

Webcast of Conference Call
As previously announced, investors and the general public can access a live webcast of the Q4 2023 financial results conference call through a link on Lilly’s website at investor.lilly.com/webcasts-and-presentations. The conference call will begin at 10 a.m. Eastern time today and will be available for replay via the website.

On February 6, 2024 Deciphera Pharmaceuticals, Inc. (NASDAQ: DCPH), a biopharmaceutical company focused on discovering, developing, and commercializing important new medicines to improve the lives of people with cancer, reported financial results for the fourth quarter and year ended December 31, 2023 and provided a corporate update (Press release, Deciphera Pharmaceuticals, FEB 6, 2024, View Source [SID1234639868]).

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"We are proud of the significant progress we made across our company throughout 2023, particularly in our late-stage programs as we continue on our path to becoming a self-sustaining, fully integrated biotechnology company. I am excited to announce another record quarter of QINLOCK revenue, demonstrating the proven commercial capabilities that position us well as we continue to evolve into a company with multiple approved medicines," said Steve Hoerter, President and Chief Executive Officer of Deciphera Pharmaceuticals. "Looking ahead, we plan to build upon this momentum in 2024 as we work to file regulatory submissions for vimseltinib, which has the potential to be a much-needed treatment option for patients with tenosynovial giant cell tumor, continue enrollment of our INSIGHT Phase 3 study of QINLOCK, and progress our early-stage pipeline of potential first- or best-in-class candidates."

Fourth Quarter 2023 and Upcoming Milestones

QINLOCK (ripretinib)

Recorded $46.7 million in QINLOCK net product revenue in the fourth quarter of 2023, including $35.3 million in U.S. net product revenue and $11.4 million in international net product revenue, an increase of 42% from net product revenue of $32.9 million in the fourth quarter of 2022.

Published results in Nature Medicine from an exploratory circulating tumor DNA (ctDNA) analysis of the INTRIGUE Phase 3 study demonstrating the substantial clinical benefit of QINLOCK in second line gastrointestinal stromal tumor (GIST) patients with mutations in KIT exon 11 and 17/18.

Presented final OS results from the INTRIGUE Phase 3 clinical study in second-line GIST patients at the 2024 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Gastrointestinal Cancers (ASCO GI) Symposium showing that the median OS was similar with QINLOCK (35.5 months) versus sunitinib (31.5 months) (HR 0.86; 95% CI, 0.65 to 1.13; nominal p= 0.275). Treatment with QINLOCK continued to show a favorable safety profile compared to treatment with sunitinib, with fewer patients experiencing Grade 3/4 drug-related treatment emergent adverse events with QINLOCK (27.4%) compared with sunitinib (57.9%). The results also showed that patient outcomes in the third line setting were comparable for patients that were treated with either QINLOCK or sunitinib in the second line. The presentation is available on the Company’s website at www.deciphera.com/presentations-publications.
Entered into a supply and distribution agreement with GENESIS Pharma, a leading regional biopharma company, in Central and Eastern Europe under which GENESIS Pharma will be the exclusive distributor of QINLOCK in 14 countries in the European Union with a combined population of 118 million including Czech Republic, Greece, Hungary, Romania, and Poland.

Continue to enroll the INSIGHT Phase 3 study comparing QINLOCK versus sunitinib in second-line GIST patients with mutations in KIT exon 11 and 17/18.
Vimseltinib

Expects to submit a New Drug Application (NDA) with the U.S. Food and Drug Administration (FDA) in the second quarter of 2024 and a Marketing Authorisation Application (MAA) with the European Medicines Agency (EMA) in the third quarter of 2024.
Expects to present additional results from Part 1 of the MOTION pivotal Phase 3 study of vimseltinib at a medical meeting in the second quarter of 2024.
Expects to present updated results from the Phase 1/2 study of vimseltinib in TGCT in the second half of 2024.
Expects to initiate a Phase 2 proof-of-concept study of vimseltinib for the treatment of chronic graft versus host disease (cGVHD) in the fourth quarter of 2024.
DCC-3116

Expects to select a recommended Phase 2 dose for expansion cohort(s) for DCC-3116, an investigational switch-control kinase inhibitor of ULK1/2 designed to inhibit autophagy, in 2024.
DCC-3084

Expects to initiate a Phase 1 study for DCC-3084, a potential best-in-class pan-RAF inhibitor, in the first half of 2024.
DCC-3009

Expects to submit an Investigational New Drug (IND) application with the FDA for DCC-3009, a potential best-in-class pan-KIT inhibitor, in the first half of 2024 and initiate a Phase 1 study in the second half of 2024.
Fourth Quarter and Full Year 2023 Financial Results

Revenue: Total revenue for the fourth quarter of 2023 was $48.3 million, which includes $46.7 million of net product revenue of QINLOCK and $1.6 million of collaboration revenue compared to $36.3 million of total revenue, including $32.9 million of net product revenue of QINLOCK and $3.4 million of collaboration revenue, for the same period in 2022. Total revenue for the year ended December 31, 2023 was $163.4 million, which includes $159.1 million of net product revenue of QINLOCK and $4.3 million of collaboration revenue compared to $134.0 million of total revenue, including $125.5 million of net product revenue of QINLOCK and $8.5 million of collaboration revenue, for the same period in 2022.

Cost of Sales: Cost of sales were $1.8 million in the fourth quarter of 2023, which includes $0.9 million in cost of product sales, compared to cost of product sales of $0.7 million for the fourth quarter of 2022. For the year ended December 31, 2023, cost of sales were $3.7 million, including $2.0 million in cost of product sales, compared to cost of sales of $8.7 million in 2022, including cost of product sales of $2.7 million. In the third quarter of 2022, the Company completed the sales of zero cost inventories of QINLOCK that had been expensed prior to FDA approval.
R&D Expenses: Research and development expenses for the fourth quarter of 2023 were $58.6 million, compared to $48.1 million for the same period in 2022, and $234.1 million for the year ended December 31, 2023 compared to $187.8 million for the same period in 2022. The increase was primarily due to higher clinical study costs related to QINLOCK, an increase in clinical study costs related to the Phase 1/2 study of DCC-3116, and the Phase 3 study of vimseltinib. Non-cash, stock-based compensation was $21.8 million and $22.2 million for the year ended December 31, 2023 and 2022, respectively.

SG&A Expenses: Selling, general, and administrative expenses for the fourth quarter of 2023 were $39.1 million, compared to $32.2 million for the same period in 2022 and $136.5 million for the year ended December 31, 2023, compared to $120.2 million for the same period in 2022. The increase was primarily due to an increase in professional and consultant fees and personnel-related costs. Non-cash, stock-based compensation was $28.8 million and $29.7 million for the year ended December 31, 2023 and 2022, respectively.
Net Loss: For the fourth quarter of 2023, Deciphera reported a net loss of $47.2 million, or $0.54 per share, compared with a net loss of $45.9 million, or $0.60 per share, for the same period in 2022. Net loss for the year ended December 31, 2023 was $194.9 million, or $2.29 per share, compared with a net loss of $178.9 million, or $2.37 per share, for the year ended December 31, 2022.
Cash Position: As of December 31, 2023, cash, cash equivalents, and marketable securities were $352.9 million, compared to $339.0 million as of December 31, 2022. Based on its current operating plans, Deciphera expects its current cash, cash equivalents, and marketable securities together with anticipated product, royalty, and supply revenues, but excluding any potential future milestone payments under its collaboration or license agreements, will enable the Company to fund its operating and capital expenditures into the second half of 2026.
Conference Call and Webcast

Deciphera will host a conference call and webcast to discuss this announcement today, February 6, 2024, at 8:00 AM ET. The conference call may be accessed via this link: https://register.vevent.com/register/BI7a0bbbeb53864df9a854d959bbbae709. A live webcast of the conference call will be available in the "Events and Presentations" page in the "Investors & News" section of the Company’s website at View Source A replay will be available on the Company’s website approximately two hours after the conference call and will be available for 30 days following the call.

On February 6, 2024 BridgeBio Pharma, Inc. (Nasdaq: BBIO) ("BridgeBio" or the "Company"), a commercial-stage biopharmaceutical company focused on genetic diseases and cancers, reported that on February 05, 2024, the compensation committee of BridgeBio’s board of directors granted thirty-five new employees restricted stock units for an aggregate of 123,838 shares of the Company’s common stock (Press release, BridgeBio, FEB 6, 2024, View Source [SID1234639867]). One-fourth of the shares underlying each employee’s restricted stock units will vest on February 16, 2025, with one-twelfth of the remaining shares underlying each such employee’s restricted stock units vesting on a quarterly basis thereafter, in each case, subject to each such employee’s continued employment with the Company or one of its subsidiaries on such vesting dates. All of the above-described awards were made under BridgeBio’s Amended and Restated 2019 Inducement Equity Plan (the "Plan").

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The above-described awards were each granted as an inducement material to the employees entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4) and were granted pursuant to the terms of the Plan. The Plan was adopted by BridgeBio’s board of directors in November 2019, and amended and restated on February 10, 2023 and on December 13, 2023.

On February 6, 2024 Immunome, Inc. (Nasdaq: IMNM), a biotechnology company dedicated to developing first-in-class and best-in-class targeted cancer therapies, reported that it entered into a definitive asset purchase agreement with Ayala Pharmaceuticals, Inc. (OTCQX: ADXS), a clinical-stage oncology company, to acquire AL102 and related drug candidate AL101 from Ayala (Press release, Ayala Pharmaceuticals, FEB 6, 2024, View Source [SID1234639866]). Based on the terms of the agreement, Immunome will pay Ayala $20 million in cash and $30 million in Immunome common stock (valued at 30-day VWAP as of February 1, 2024) at the closing and will pay up to an additional $37.5 million in development and commercial milestone payments. Completion of the transaction is subject to customary conditions including Ayala obtaining the requisite stockholder approval.

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AL102 is an investigational small molecule gamma secretase inhibitor currently being evaluated in the randomized Phase 3 RINGSIDE international trial for the treatment of desmoid tumors – a debilitating soft tissue malignancy. AL102 is a potential once-daily oral treatment for desmoid tumors. Data from clinical trials have shown AL102 may be more effective in treating desmoid tumors than OGSIVEO (nirogacestat), which recently became the first treatment approved for desmoid tumors by the U.S. Food and Drug Administration (FDA) in November 2023.

The Phase 2 portion of the RINGSIDE study demonstrated clinically meaningful anti-tumor activity across multiple parameters. The data showed high objective response rates, including 75% of evaluable patients (and 64% of intent-to-treat patients) in the 1.2 mg once daily arm, the dose being evaluated in the current Phase 3 trial. Furthermore, patients receiving the 1.2 mg daily dose experienced a median best reduction in tumor volume of 88% as measured by serial MRI exams, as of the previously reported July 5, 2023 data cut-off, and also demonstrated improvement in other radiographic parameters.

"Immunome is committed to advancing therapies with best-in-class potential. We are especially optimistic about the rapidity and depth of the tumor responses observed in the Phase 2 portion of RINGSIDE," said Clay B. Siegall, Ph.D., President and Chief Executive Officer of Immunome. "AL102 will complement our existing portfolio of targeted cancer agents that are approaching Phase 1 trials. As we complete the work required to advance AL102 to NDA submission, our goal is to bring clinical benefit to an underserved patient population while generating substantial value for stockholders. We also plan to investigate other populations of cancer patients that could benefit from treatment with AL102."

Ken Berlin, CEO of Ayala Pharmaceuticals, stated, "We are pleased that this exciting molecule will be advanced by Immunome and its team of highly-experienced drug developers which, we believe, maximizes the ability to conclude the RINGSIDE study and bring our lead asset to commercialization. I am proud of the work Ayala has done over the last several years to assemble compelling clinical data and reach this point."

It is estimated that as many as 1,650 people in the U.S. are diagnosed annually with desmoid tumors, also known as aggressive fibromatosis, and the population prevalence is much higher. Desmoid tumors, which occur predominantly in young adults, can cause significant pain and disability. Available non-pharmacologic therapies such as surgery or radiation are often ineffective and can lead to long term complications, and unapproved targeted therapies lack long-term potency. In November 2023, AL102 was granted Orphan Drug Designation by the FDA.

A.G.P./Alliance Global Partners is acting as strategic advisor to Ayala Pharmaceuticals, Inc. in connection with the transaction.