Novartis continues to deliver strong sales growth and core margin expansion in Q2; raises FY 2024 bottom-line guidance

On July 18, 2024 reporting on Q2 2024 results, Vas Narasimhan, CEO of Novartis, said (Press release, Novartis, JUL 18, 2024, View Source [SID1234644957]):

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"Novartis delivered a strong Q2, with net sales up 11% and core operating income margin approaching 40%. Our performance reflects continued strong momentum of our key growth drivers, both in the US and ex-US, which has allowed us to upgrade our FY2024 guidance. We also advanced our pipeline in Q2, completing submissions to the FDA for Scemblix in first-line CML and atrasentan in IgAN, generating updated data in the NATALEE study to support the strong profile of Kisqali in eBC, and executing multiple deals to expand our pipeline in RLT and prostate cancer. We remain on track to achieve our mid-term sales growth (+5% cc CAGR 2023-2028) and margin (40%+ by 2027) guidance."

Key figures
Continuing operations3

Q2 2024
Q2 2023
% change
H1 2024
H1 2023
% change

USD m
USD m
USD
cc

USD m
USD m
USD
cc
Net sales
12 512
11 437
9
11

24 341
22 235
9
11
Operating income
4 014
2 807
43
47

7 387
5 425
36
43
Net income
3 246
2 271
43
49

5 934
4 421
34
43
EPS (USD)
1.60
1.09
47
52

2.91
2.12
37
47
Free cash flow
4 615
3 292
40

6 653
5 976
11

Core operating income
4 953
4 240
17
19

9 490
8 146
16
21
Core net income
4 008
3 502
14
18

7 689
6 735
14
19
Core EPS (USD)
1.97
1.69
17
21

3.77
3.23
17
22

1. Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 43 of the Interim Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year. 2. Please see detailed guidance assumptions on page 7. 3. As defined on page 33 of the Interim Financial Report, Continuing operations include the retained business activities of Novartis, comprising the innovative medicines business and the continuing corporate activities and Discontinued operations include operational results from the Sandoz business.

Strategy

Our focus

In 2023, Novartis completed its transformation into a "pure-play" innovative medicines business. We have a clear focus on four core therapeutic areas (cardiovascular-renal-metabolic, immunology, neuroscience and oncology), with multiple significant in-market and pipeline assets in each of these areas, that address high disease burden and have substantial growth potential. In addition to two established technology platforms (chemistry and biotherapeutics), three emerging platforms (gene & cell therapy, radioligand therapy and xRNA) are being prioritized for continued investment into new R&D capabilities and manufacturing scale. Geographically, we are focused on growing in our priority geographies – the US, China, Germany and Japan.

Our priorities

1.
Accelerate growth: Renewed attention to deliver high-value medicines (NMEs) and focus on launch excellence, with a rich pipeline across our core therapeutic areas.
2.
Deliver returns: Continuing to embed operational excellence and deliver improved financials. Novartis remains disciplined and shareholder-focused in our approach to capital allocation, with substantial cash generation and a strong capital structure supporting continued flexibility.
3.
Strengthening foundations: Unleashing the power of our people, scaling data science and technology and continuing to build trust with society.

Financials

Following the September 15, 2023, shareholder approval of the spin-off of Sandoz, Novartis reported its consolidated financial statements as "continuing operations" and "discontinued operations."

Continuing operations include the retained business activities of Novartis, comprising the innovative medicines business and the continuing corporate activities. Discontinued operations include the Sandoz Division and selected portions of corporate activities attributable to Sandoz’s business, as well as certain expenses related to the spin-off.

While the commentary below focuses on continuing operations, we also provide information on discontinued operations.

Continuing operations

Second quarter

Net sales were USD 12.5 billion (+9%, +11% cc), with volume contributing 15 percentage points to growth. Generic competition had a negative impact of 2 percentage points and pricing had a negative impact of 2 percentage points.

Operating income was USD 4.0 billion (+43%, +47% cc), mainly driven by higher net sales and lower impairments, partly offset by higher R&D investments.

Net income was USD 3.2 billion (+43%, +49% cc), mainly driven by higher operating income. EPS was USD 1.60 (+47%, +52% cc), benefiting from the lower weighted average number of shares outstanding.

Core operating income was USD 5.0 billion (+17%, +19% cc), mainly driven by higher net sales, partly offset by higher R&D investments. Core operating income margin was 39.6% of net sales, increasing 2.5 percentage points (+2.7 percentage points cc).

Core net income was USD 4.0 billion (+14%, +18% cc), mainly due to higher core operating income. Core EPS was USD 1.97 (+17%, +21% cc), benefiting from the lower weighted average number of shares outstanding.

Free cash flow from continuing operations amounted to USD 4.6 billion (+40% USD), compared with USD 3.3 billion in the prior-year quarter, driven by higher net cash flows from operating activities from continuing operations.

First half

Net sales were USD 24.3 billion (+9%, +11% cc), with volume contributing 15 percentage points to growth. Generic competition had a negative impact of 2 percentage points and pricing had negative impact of 2 percentage points.

Operating income was USD 7.4 billion (+36%, +43% cc), mainly driven by higher net sales and lower impairments and restructuring charges, partly offset by a prior-year one-time income from legal matters.

Net income was USD 5.9 billion (+34%, +43% cc), mainly driven by higher operating income. EPS was USD 2.91 (+37%, +47% cc), benefiting from the lower weighted average number of shares outstanding.

Core operating income was USD 9.5 billion (+16%, +21% cc), mainly driven by higher net sales, partly offset by higher R&D investments. Core operating income margin was 39.0% of net sales, increasing 2.4 percentage points (+3.1 percentage points cc).

Core net income was USD 7.7 billion (+14%, +19% cc), mainly due to higher core operating income. Core EPS was USD 3.77 (+17%, +22% cc), benefiting from the lower weighted average number of shares outstanding.

Free cash flow from continuing operations amounted to USD 6.7 billion (+11% USD), compared with USD 6.0 billion in the prior-year period, driven by higher net cash flows from operating activities from continuing operations.

Discontinued operations

Discontinued operations include the Sandoz generic pharmaceuticals and biosimilars division, certain corporate activities attributable to Sandoz and certain other expenses related to the spin-off of the Sandoz business.

Second quarter

As the Sandoz spin-off was completed on October 3, 2023, there were no operating results in the second quarter of 2024 related to discontinued operations. In the second quarter of 2023, discontinued operations net sales were USD 2.4 billion, operating income amounted to USD 113 million and net income from discontinued operations was USD 46 million. For further details see Note 3 "Significant acquisition of businesses and spin-off of Sandoz business" and Note 11 "Discontinued operations" to the condensed interim consolidated financial statements.

First half

As the Sandoz spin-off was completed on October 3, 2023, there were no operating results in the first half 2024 related to discontinued operations. In the first half 2023, discontinued operations net sales were USD 5.0 billion, operating income amounted to USD 351 million and net income from discontinued operations was USD 190 million. For further details see Note 3 "Significant acquisition of businesses and spin-off of Sandoz business" and Note 11 "Discontinued operations" to the condensed interim consolidated financial statements.

Total Company

Second quarter

Total Company net income was USD 3.2 billion in 2024, compared to USD 2.3 billion in 2023 and basic EPS was USD 1.60 compared to USD 1.11 in prior year quarter. Net cash flows from operating activities for total Company amounted to USD 4.9 billion and free cash flow amounted to USD 4.6 billion.

First half

Total Company net income was USD 5.9 billion in 2024, compared to USD 4.6 billion in 2023 and basic EPS was USD 2.91 compared to USD 2.20 in prior year. Net cash flows from operating activities for total Company amounted to USD 7.1 billion and free cash flow amounted to USD 6.7 billion.

Q2 key growth drivers

Underpinning our financial results in the quarter is a continued focus on key growth drivers (ranked in order of contribution to Q2 growth) including:

Entresto
(USD 1 898 million, +28% cc) sustained robust demand-led growth, with increased penetration in the US and Europe following guideline-directed medical therapy in heart failure, as well as in China with increased penetration in hypertension
Kesimpta
(USD 799 million, +65% cc) sales grew across all regions reflecting increased demand and strong access for a high efficacy product with convenient self-administered dosing
Cosentyx
(USD 1 526 million, +22% cc) sales grew mainly in the US, driven by recent launches (including the HS indication and the IV formulation in the US) in addition to volume growth in core indications
Kisqali
(USD 717 million, +50% cc) sales grew strongly across all regions, based on increasing recognition of its overall survival benefit in HR+/HER2- advanced breast cancer and Category 1 NCCN guidelines recommendation
Leqvio
(USD 182 million, +134% cc) continued to show steady growth, with a focus on increasing account and patient adoption, growing customer confidence in acquisition and access, and continuing medical education
Pluvicto
(USD 345 million, +44% cc) grew in the US and Europe. With supply now unconstrained, the focus is on increasing share in established RLT sites, opening new sites and referral pathways, and initiating new patients
Xolair
(USD 427 million, +22% cc) growth was driven mainly by emerging growth markets and Europe
Ilaris
(USD 368 million, +20% cc) sales grew across all regions, mainly US and Europe
Scemblix
(USD 164 million, +56% cc) sales grew across all regions, demonstrating the high unmet need in later lines of CML
Jakavi
(USD 471 million, +13% cc) sales grew across all regions, with strong demand in both myelofibrosis and polycythemia vera indications
Tafinlar + Mekinist
(USD 523 million, +9% cc) sales grew in all regions, led by emerging growth markets
Lutathera
(USD 175 million, +17% cc) sales grew across all regions due to increased demand, following the presentation of NETTER-2 results in 1L GEP-NET
Fabhalta
(USD 22 million) continued to show encouraging early launch indicators in the US, as the first oral monotherapy approved for PNH patients
Emerging Growth Markets*
Grew +16% (cc) overall. China grew +27% (cc) to USD 1.1 billion, mainly driven by Entresto and Xolair
*All markets except the US, Canada, Western Europe, Japan, Australia, and New Zealand

Net sales of the top 20 brands in Q2 2024


Q2 2024
% change
H1 2024
% change

USD m
USD
cc
USD m
USD
cc
Entresto
1 898
25
28
3 777
30
32
Cosentyx
1 526
20
22
2 852
21
23
Kesimpta
799
63
65
1 436
64
66
Kisqali
717
45
50
1 344
48
52
Promacta/Revolade
544
-7
-5
1 064
-6
-4
Tafinlar + Mekinist
523
5
9
997
5
7
Jakavi
471
8
13
949
12
15
Tasigna
446
-6
-4
841
-10
-9
Xolair
427
18
22
826
15
18
Ilaris
368
16
20
724
12
17
Sandostatin Group
313
-5
-4
668
1
3
Pluvicto
345
44
44
655
45
45
Zolgensma
349
12
14
644
4
6
Lucentis
275
-30
-28
589
-27
-26
Exforge Group
178
-3
1
370
0
3
Lutathera
175
17
17
344
15
16
Leqvio
182
133
134
333
135
137
Gilenya
138
-49
-47
313
-38
-36
Scemblix
164
55
56
300
65
67
Diovan Group
160
3
9
300
-4
1
Top 20 brands total
9 998
15
18
19 326
16
18

R&D update – key developments from the second quarter

New approvals
Fabhalta
(iptacopan)
EU, Japan and China approval for the treatment of adults with the rare blood disorder paroxysmal nocturnal hemoglobinuria (PNH).
Lutathera
(lutetium Lu 177 dotatate)
FDA approval for the treatment of pediatric patients (≥12 years) with somatostatin receptor-positive gastroenteropancreatic neuroendocrine tumors (GEP-NETs).

Regulatory updates
Scemblix
(asciminib)
FDA granted Breakthrough Therapy designation to Scemblix for the treatment of adult patients with newly diagnosed Philadelphia chromosome-positive chronic myeloid leukemia in chronic phase (Ph+ CML-CP).

FDA submission for first-line CML is completed and under Real-Time Oncology Review.
Atrasentan
FDA filing accepted for the treatment of adult patients with IgA nephropathy (IgAN).

Lutathera
(lutetium Lu 177 dotatate)
EU filing accepted for the treatment of newly diagnosed, unresectable or metastatic, well-differentiated (G2 and G3), somatostatin receptor-positive GEP-NETs in adults.

Results from ongoing trials and other highlights
Scemblix
(asciminib)
In the Phase III ASC4FIRST study, Scemblix demonstrated superior major molecular response rates at week 48 vs investigator-selected standard-of-care tyrosine kinase inhibitors (TKIs) (67.7% vs 49.0%) and vs imatinib alone (69.3% vs 40.2%) in adults with newly diagnosed Ph+ CML-CP. Scemblix also demonstrated a favorable safety and tolerability profile. These results have been submitted to the FDA under Real-Time Oncology Review. Data presented at ASCO (Free ASCO Whitepaper) and EHA (Free EHA Whitepaper) 2024 and published in the New England Journal of Medicine.
Kisqali
(ribociclib)
New analyses following the end of Kisqali treatment for all patients in the Phase III NATALEE study in HR+/HER2- early breast cancer showed a continued clinically meaningful benefit with a consistent safety profile. Results to be presented at an upcoming medical meeting.

In addition, a subgroup analysis from the NATALEE study at the time of final iDFS data cut-off showed the addition of Kisqali to endocrine therapy in patients with high-risk node-negative (N0) disease resulted in a 28% risk reduction in iDFS. The efficacy, safety and tolerability profile observed in the high-risk N0 subgroup​ is consistent with the overall NATALEE study population. Data presented at ASCO (Free ASCO Whitepaper) 2024.
Fabhalta
(iptacopan)
Phase III APPEAR-C3G data showed a 35.1% proteinuria reduction vs placebo at 6 months for C3G patients treated with Fabhalta in addition to supportive care. Secondary endpoint data for estimated glomerular filtration rate showed numerical improvement over 6 months vs placebo. The study also showed Fabhalta has a favorable safety profile with no new safety signals. Submissions to the FDA and EMA for the adult C3 glomerulopathy indication are planned for H2 2024. Data presented at ERA 2024.

Phase III APPLAUSE-IgAN data showed a 38.3% proteinuria reduction at nine months vs placebo for patients with IgAN. Fabhalta was well tolerated with a favorable safety profile consistent with previously reported data. Data presented at WCN 2024.
Atrasentan
Results from a pre-specified interim analysis of Phase III ALIGN data showed patients treated with atrasentan, in addition to supportive care with a renin-angiotensin system inhibitor, achieved a statistically significant 36.1% reduction in proteinuria vs placebo on top of supportive care at 36 weeks. Results presented at ERA 2024.
Remibrutinib
Phase III REMIX-1 and REMIX-2 data showed sustained efficacy and long-term safety of oral remibrutinib in chronic spontaneous urticaria (CSU) patients, with improvements in weekly urticaria activity scores observed as early as week 1 and sustained to week 52. Across both studies, remibrutinib demonstrated a favorable and consistent safety profile up to one year, including balanced liver function tests vs placebo. Novartis plans to submit remibrutinib for regulatory approval in 2025. Data presented at EAACI 2024.
Coartem (artemether- lumefantrine)
Phase II/III CALINA study data demonstrated that an optimized dose of Coartem developed for babies weighing <5kg with malaria has the required pharmacokinetic profile and good efficacy and safety. Data presented at the Multilateral Initiative on Malaria Pan-African Malaria Conference 2024.
Deals
In line with our strategic focus on oncology, Novartis acquired >90% of the total share capital of MorphoSys AG, adding to our pipeline pelabresib, a late-stage investigational BET inhibitor for myelofibrosis, and tulmimetostat, an early-stage investigational dual inhibitor of EZH2 and EZH1 for solid tumors or lymphomas.

Novartis acquired Mariana Oncology, a biotech company focused on developing novel radioligand therapies (RLTs) across a range of solid tumors. The acquisition brings a robust portfolio of RLT programs, including MC-339, an actinium-based RLT being investigated in small cell lung cancer.

Novartis expanded its peptide discovery collaboration with PeptiDream. Under the multi-program agreement, PeptiDream will identify and optimize novel macrocyclic peptides against targets selected by Novartis, for potential application in RLT.

Novartis signed an exclusive strategic license agreement with Arvinas for the worldwide development and commercialization of ARV-766, a second generation PROTAC androgen receptor (AR) degrader, complementing our RLT platform in prostate cancer.

Capital structure and net debt

Retaining a good balance between investment in the business, a strong capital structure and attractive shareholder returns remains a priority.

During the first half of 2024, Novartis repurchased a total of 26.7 million shares for USD 2.7 billion on the SIX Swiss Exchange second trading line. These purchases included 25.9 million shares (USD 2.6 billion) under the up-to USD 15 billion share buyback announced in July 2023 (with up to USD 10.1 billion still to be executed). In addition, 0.8 million shares (USD 0.1 billion) were repurchased to mitigate dilution related to participation plans of associates, with the remainder of repurchases for this purpose to be executed in H2 2024. Further, 1.1 million shares (for an equity value of USD 0.1 billion) were repurchased from associates. In the same period, 8.4 million shares (for an equity value of USD 0.5 billion) were delivered as a result of share deliveries related to participation plans of associates. Consequently, the total number of shares outstanding decreased by 19.4 million versus December 31, 2023. These treasury share transactions resulted in an equity decrease of USD 2.3 billion and a net cash outflow of USD 2.7 billion.

As of June 30, 2024, net debt increased to USD 18.8 billion compared to USD 10.2 billion net debt at December 31, 2023. The increase was mainly due to the USD 7.6 billion annual dividend payment, net cash outflow for M&A / intangible assets transactions of USD 5.0 billion and cash outflow for treasury share transactions of USD 2.7 billion, partially offset by USD 6.7 billion free cash flow.

As of Q2 2024, the long-term credit rating for the company is Aa3 with Moody’s Ratings and AA- with S&P Global Ratings.

2024 outlook

Barring unforeseen events; growth vs prior year in cc
Previous guidance
Net sales
Expected to grow high single to low double-digit
(unchanged)
Core operating income
Expected to grow mid- to high teens
(from low double-digit to mid-teens)

Key assumptions:

Our guidance assumes that no Entresto generics and no Promacta generics launch in the US in 2024

Foreign exchange impact

If mid-July exchange rates prevail for the remainder of 2024, the foreign exchange impact for the year would be negative 2 to negative 1 percentage points on net sales and negative 3 percentage points on core operating income. The estimated impact of exchange rates on our results is provided monthly on our website.

2025 Annual General Meeting

Nomination for election to the Board of Directors

The Novartis Board of Directors announced today that it is nominating Elizabeth M. McNally, MD, PhD, for election to the Board. Dr. McNally is Director of the Center for Genetic Medicine at Northwestern University, Feinberg School of Medicine, and as a practicing cardiologist and renowned research leader specializing in the genetics of cardiovascular and neuromuscular disorders, her clinical and scientific expertise will add greatly to the Novartis Board of Directors. Dr. McNally completed her MD and PhD at the Albert Einstein College of Medicine, and trained in Internal Medicine and Cardiology at the Brigham and Women’s Hospital at Harvard Medical School. She is a member of the National Academy of Medicine, serves on the Board of the Muscular Dystrophy Association, and is also the Founder and CEO of Ikaika Therapeutics.

Board of Directors announcements

The Board also noted Charles L. Sawyers and William T. Winters will not stand for re-election at the AGM 2025 in accordance with the 12-year term limit. The Board of Directors and the Executive Committee of Novartis thank them for their outstanding contributions and many years of distinguished service.

Key figures1

Continuing operations2
Q2 2024
Q2 2023
% change

H1 2024
H1 2023
% change

USD m
USD m
USD
cc

USD m
USD m
USD
cc
Net sales
12 512
11 437
9
11

24 341
22 235
9
11
Operating income
4 014
2 807
43
47

7 387
5 425
36
43
As a % of sales
32.1
24.5


30.3
24.4

Net income
3 246
2 271
43
49

5 934
4 421
34
43
EPS (USD)
1.60
1.09
47
52

2.91
2.12
37
47
Cash flows from
operating activities
4 875
3 517
39


7 140
6 369
12

Non-IFRS measures

Free cash flow
4 615
3 292
40


6 653
5 976
11

Core operating income
4 953
4 240
17
19

9 490
8 146
16
21
As a % of sales
39.6
37.1


39.0
36.6

Core net income
4 008
3 502
14
18

7 689
6 735
14
19
Core EPS (USD)
1.97
1.69
17
21

3.77
3.23
17
22


Discontinued operations2
Q2 2024
Q2 2023
% change

H1 2024
H1 2023
% change

USD m
USD m
USD
cc

USD m
USD m
USD
cc
Net sales

2 449
nm
nm

4 952
nm
nm
Operating income

113
nm
nm

351
nm
nm
As a % of sales

4.6

7.1

Net income

46
nm
nm

190
nm
nm
Non-IFRS measures

Core operating income

428
nm
nm

935
nm
nm
As a % of sales

17.5

18.9



Total Company
Q2 2024
Q2 2023
% change

H1 2024
H1 2023
% change

USD m
USD m
USD
cc

USD m
USD m
USD
cc
Net income
3 246
2 317
nm
nm

5 934
4 611
nm
nm
EPS (USD)
1.60
1.11
nm
nm

2.91
2.20
nm
nm
Cash flows from
operating activities
4 875
3 576
nm
nm

7 140
6 533
nm
nm
Non-IFRS measures

Free cash flow
4 615
3 275
nm
nm

6 653
5 995
nm
nm
Core net income
4 008
3 811
nm
nm

7 689
7 425
nm
nm
Core EPS (USD)
1.97
1.83
nm
nm

3.77
3.54
nm
nm
nm=not meaningful

1. Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 43 of the Interim Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year.
2. As defined on page 33 of the Interim Financial Report, Continuing operations include the retained business activities of Novartis, comprising the innovative medicines business and the continuing corporate activities and Discontinued operations include operational results from the Sandoz business.

Detailed financial results accompanying this press release are included in the Interim Financial Report at the link below:
View Source

Kiromic BioPharma to Advance Deltacel-01 Clinical Trial to Part 2, Expansion Phase

On July 18, 2024 Kiromic BioPharma, Inc. (OTCQB: KRBP) ("Kiromic" or the "Company") reported plans to advance the Deltacel-01 Phase 1 clinical trial to the Expansion Phase following a positive assessment from the Deltacel-01 Safety Monitoring Committee (SMC) (Press release, Kiromic, JUL 18, 2024, View Source [SID1234644956]). The SMC convened on July 16th and reviewed safety and efficacy data collected to-date in Deltacel-01, confirming favorable results and optimal dose.

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The Deltacel-01 trial is evaluating Deltacel (KB-GDT-01), the Company’s allogeneic, off-the-shelf, Gamma Delta T-cell (GDT) therapy, in patients with stage 4 metastatic non-small cell lung cancer (NSCLC) who have failed to respond to standard therapies.

This trial consists of two parts: Part 1 is designed to identify the optimal dose of Deltacel. Following approval by the SMC, Part 2 (the Expansion Phase) will then further assess the therapy’s effectiveness at the optimal dose identified in Part 1. Kiromic plans to begin enrolling patients in the Expansion Phase in September, expanding the size of the trial by nine patients.

"We are pleased the SMC’s review and assessment affirmed the positive Deltacel results. Identifying the optimal dose based on encouraging safety and efficacy data is a significant milestone as it establishes a roadmap for Part 2, allowing us to focus on assessing Deltacel’s effectiveness and further validate our innovative gamma delta approach," said Pietro Bersani, CEO of Kiromic BioPharma.

Additionally, the fifth patient in Deltacel-01 completed their 30-day visit, with a favorable safety profile and no dose-limiting toxicities reported. Kiromic expects to report early efficacy data from this patient’s two-month follow-up in August.

About Deltacel-01

In Kiromic’s open-label Phase 1 clinical trial, titled "Phase 1 Trial Evaluating the Safety and Tolerability of Gamma Delta T Cell Infusions in Combination With Low Dose Radiotherapy in Subjects With Stage 4 Metastatic Non-Small Cell Lung Cancer" (NCT06069570), patients with stage 4 NSCLC will receive two intravenous infusions of Deltacel with four courses of low-dose, localized radiation over a 10-day period. The primary objective of the Deltacel-01 trial is to evaluate safety, while secondary measurements include objective response, progression-free survival, overall survival, time to progression, time to treatment response and disease control rates.

About Deltacel

Deltacel (KB-GDT-01) is an investigational gamma delta T-cell (GDT) therapy currently in the Deltacel-01 Phase 1 trial for the treatment of stage 4 metastatic NSCLC. An allogeneic product consisting of unmodified, donor-derived gamma delta T cells, Deltacel is the leading candidate in Kiromic’s GDT platform. Deltacel is designed to exploit the natural potency of GDT cells to target solid cancers, with an initial clinical focus on NSCLC, which represents about 80% to 85% of all lung cancer cases. Data from two preclinical studies demonstrated Deltacel’s favorable safety and efficacy profile when it was combined with low-dose radiation.

Immatics Announces Upcoming Oral Presentation at ESMO Congress 2024

On July 18, 2024 Immatics N.V. (NASDAQ: IMTX, "Immatics"), a clinical-stage biopharmaceutical company active in the discovery and development of T cell-redirecting cancer immunotherapies, reported that the first proof-of-concept clinical data for its next-generation, half-life extended TCR Bispecific molecule, TCER IMA401 (MAGEA4/8), will be presented during an oral presentation at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Congress 2024 on Monday, September 16, 2024 at 11:25 CEST (Press release, Immatics, JUL 18, 2024, View Source [SID1234644954]).

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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

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Full abstracts will be available on the ESMO (Free ESMO Whitepaper) website on Monday, September 9, 2024, at 00:05 CEST.

Oral presentation

Date / Time: September 16, 2024 / 11:25 CEST
Session: Investigational Immunotherapy
Title: Initial safety, pharmacokinetics, and anti-tumor activity data of TCER IMA401, a MAGEA4/8-directed half-life extended TCR Bispecific, in Phase 1 dose escalation
Presenting author: Martin Wermke, MD (University Hospital Dresden, Germany)
Room: Granada Auditorium – Hall 6

About IMA401

IMA401 is Immatics’ most advanced TCER molecule that targets an HLA-A*02-presented (human leukocyte antigen) peptide derived from two different cancer-associated proteins, melanoma-associated antigen 4 and/or 8 ("MAGEA4/8"). The MAGEA4/8 peptide has been identified and validated by Immatics’ proprietary mass spectrometry-based target discovery platform XPRESIDENT and is presented at a 5-fold higher copy number per tumor cell than the MAGEA4 peptide targeted in other clinical trials. Following preclinical proof-of-concept data, including complete remissions of transplanted human-derived tumors in xenograft mouse models, the Phase 1 trial investigates IMA401 in patients with tumors of high MAGEA4/8 prevalence, such as squamous non-small cell lung carcinoma (sqNSCLC), small cell lung cancer (SCLC), head and neck squamous cell carcinoma (HNSCC), bladder, uterine, esophageal and ovarian carcinomas, as well as melanoma, sarcoma subtypes and other solid cancer types.

About TCER

Immatics’ next-generation half-life extended TCER molecules are antibody-like "off-the-shelf" biologics that leverage the body’s immune system by redirecting and activating T cells towards cancer cells expressing a specific tumor target. The design of the TCER molecules enables the activation of any T cell in the body to attack the tumor, regardless of the T cells’ intrinsic specificity. Immatics proprietary biologics are engineered with two binding regions: a TCR domain and a T cell recruiter domain. The TCER format is designed to maximize efficacy while minimizing toxicities in patients. It contains a high-affinity TCR domain that is designed to bind specifically to the cancer target peptide on the cell surface presented by an HLA molecule. The antibody-derived, low-affinity T cell recruiter domain is directed against the TCR/CD3 complex and recruits a patient’s T cells to the tumor to attack the cancer cells. With a low-affinity recruiter aiming for optimized biodistribution and enrichment of the molecule at the tumor site instead of the periphery, TCER are engineered to reduce the occurrence of immune-related adverse events, such as cytokine release syndrome. In addition, the TCER format consists of an Fc-part conferring half-life extension, stability, and manufacturability. TCER are "off-the-shelf" biologics and thus immediately available for patient treatment. They can be distributed through standard pharmaceutical supply chains and provide the opportunity to reach a large patient population without the need for specialized medical centers.

Exscientia Acquires Full Rights to Potential Best-in-Class CDK7 Inhibitor Ahead of Phase 1 Dose Escalation Data Readout

On July 18, 2024 Exscientia plc (Nasdaq: EXAI) reported it has reached an agreement to acquire GT Apeiron’s share of its oral CDK7 inhibitor programme, gaining full control of GTAEXS617 (‘617) and all related intellectual property (Press release, Exscientia, JUL 18, 2024, View Source [SID1234644953]).

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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

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The monotherapy dose escalation phase of ELUCIDATE is designed to assess the safety, pharmacokinetics and pharmacodynamics of ‘617 in advanced solid tumours. Recruitment for the trial is progressing well with monotherapy dose escalation data on track to readout in the second half of 2024. In late 2024/early 2025, the study will transition to a combination dose escalation phase. The first tumour type to be explored in this portion of the study is expected to be HR+/HER2- breast cancer patients that have progressed on CDK4/6 inhibitors, assessing ‘617 in combination with a selective estrogen receptor degrader (SERD).

"We are excited to have full ownership of this potentially transformative asset," said David Hallett, Ph.D., interim Chief Executive Officer and Chief Scientific Officer of Exscientia. "This underlines our confidence that we have not only used AI to design a potent and selective compound, but one that has balanced overall properties; these include a reversible mechanism of action and an appropriate human half-life to maximise the therapeutic index of this important cellular mechanism. CDK inhibitors are a major class of oncology drugs, and we believe our highly differentiated compound has the potential to greatly expand impact for patients and exemplifies our leadership in technology-driven drug design."

Under the terms of the agreement, Exscientia will own full rights to the intellectual property as well as full control of this CDK7 inhibitor programme. Exscientia will pay GT Apeiron $10 million in upfront cash, $10 million in upfront equity, and take on all existing development costs, in addition to paying single digit royalties if Exscientia or a third party commercializes ‘617. Following the transaction, Exscientia’s cash runway is still expected to extend well into 2027.

About ELUCIDATE

The ELUCIDATE trial is a multicentre, open-label, two-stage clinical trial to evaluate safety, pharmacokinetics, pharmacodynamics and efficacy of ‘617 administered orally as monotherapy and in combination with standard of care therapies. The company is enrolling patients with solid tumours including head and neck cancer, colorectal cancer, pancreatic cancer, non-small cell lung cancer(NSCLC), breast cancer and ovarian cancer, who have advanced, recurrent or metastatic disease and have failed standard of care.

Both the monotherapy and combination therapy dose escalation portion of the trial will enrol patients across multiple dose levels to determine the optimal biological dose (OBD). The dose expansion phase of the trial will commence upon identification of the OBD. The primary efficacy endpoint of the expansion phase is objective response rate (ORR).

CDK7 inhibition combines many potential benefits such as transcription inhibition, reduction of aberrant kinome activation, cell cycle inhibition and modulation of estrogen receptor activity. This makes it an attractive target to overcome common resistance pathways associated with CDK4/6 inhibition, which only targets the cell cycle. Exscientia believes ‘617 has the potential to overcome significant safety and efficacy limitations of existing approved treatments due to the underlying biology of CDK7 and our laser focus on maximising therapeutic index through an AI-designed molecule that enables tight control of both extent and duration of target inhibition.

Champions Oncology Reports Quarterly Revenue of $14.0 Million

On JuChampions Oncology, Inc. (Nasdaq: CSBR), a leader in the development of advanced preclinical oncology solutions, reported its financial results for the fiscal year and fourth quarter ended April 30, 2024 (Press release, Champions Oncology, JUL 18, 2024, View Source [SID1234644950]).

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Fourth Quarter Financial Highlights:
•Fourth quarter revenue increased 7% to $14 million
•Adjusted EBITDA fourth quarter income of $884,000
•Fourth quarter gross margin on pharmacology services of 49%

Fiscal Year 2024 Financial Highlights:
•Annual revenue of $50.2 million, a decrease of 7% year-over-year
•Fiscal Year 2024 adjusted EBITDA loss of $3.9 million
•Fiscal Year 2024 gross margin on pharmacology services of 42%

Ronnie Morris, CEO of Champions, commented, "As we discussed over the year, we’d be facing hurdles during fiscal 2024 due to the challenging funding environment in the biotech sector and a range of spending patterns from our larger pharmaceutical companies, leading to a slowdown in sales growth and an increase in cancellations. As we head into our fiscal 2025, the overall market sector is showing some signs of recovery and we feel we’ve turned a corner as we close out the year." Morris added, "With regards to our wholly owned subsidiary, Corellia, AI, we remain actively engaged with investors in an effort to raise capital while also carefully managing its expenses and the impact to our bottom-line results."

David Miller, CFO of Champions added, "In response to the challenges encountered over the course of the year, we’ve strategically implemented cost cutting measures and operational efficiencies to improve our bottom line. We began to see results from these efforts in the fourth quarter with adjusted EBITDA income of $884,000 and we believe we’re back on track to delivering profitable results on a consistent basis into fiscal 2025 and beyond."

Fourth Quarter Financial Results

Total revenue for the fourth quarter of fiscal 2024 was $14.0 million, an increase of 7%, compared to $13.1 million for the same period last year. The increase in revenue was primarily due to the operational improvements implemented over the year positively effecting our revenue conversion. Total costs and operating expenses for the fourth quarter of fiscal 2024 were $14.2 million compared to $15.6 million for the fourth quarter of fiscal 2023, a decrease of $1.4 million or 9%.

For the fourth quarter of fiscal 2024, Champions reported a loss from operations of $190,000, which includes $263,000 in stock-based compensation, $457,000 in depreciation and amortization, and a $354,000 loss on the disposal of lab equipment, compared to a loss from operations of $2.5 million, inclusive of $209,000 in stock-based compensation, $583,000 in depreciation and amortization, and an $807,000 asset impairment charge in the fourth quarter of fiscal 2023. Excluding stock-based compensation, depreciation and amortization expenses, and the disposal of equipment loss, Champions reported adjusted EBITDA income for the quarter of $884,000, compared to an adjusted EBITDA loss of $922,000 in the prior year period.

Cost of oncology solutions was $7.3 million for the three months ended April 30, 2024, a slight decrease of $87,000, or 1% compared to $7.3 million for the three months ended April 30, 2023. For the three months ended April 30, 2024, gross margin was 48% compared to 44% for the three months ended April 30, 2023. The margin expansion resulted from the improved revenue conversion while maintaining a generally stable cost structure.
Research and development expense was $2.0 million for the three months ended April 30, 2024, a decrease of $804,000, or 28%, compared to $2.9 million in the prior year. The decrease was primarily due to a decrease in compensation and lab supply expenses as we carefully monitored our R&D spend in both our core business and target discovery program. Sales and marketing expense for the three months ended April 30, 2024 was $1.8 million, a slight decrease of $73,000, or 4%, compared to $1.8 million for the three months ended April 30, 2023. The decrease was the result of a decrease in compensation expense offset by an increase in marketing opportunities. General and administrative expense was $2.8 million for the three months ended April 30, 2024 compared to $2.7 million for the three months ended April 30, 2023, an increase of $16,000, or 1%.

Net cash used in operating activities for the quarter was approximately $1.8 resulting primarily from an operating loss and changes in our working capital accounts in the ordinary course of business including, but not limited to, an increase in accounts receivable and a decline in deferred revenue. There were no investing activities for the quarter. Net cash used in financing activities for the quarter was $37,000 for the payment of financing leases. The Company ended the quarter with a cash position of $2.6 million and no debt.

Year-to-Date Financial Results

Total revenue for fiscal year 2024 was $50.2 million, a decrease of 7%, compared to $53.9 million for fiscal year 2023. The decline in revenue was primarily from customer cancellations in fiscal year 2023 resulting in lower study revenue during fiscal year 2024. Total operating expenses decreased 3% to $57.5 million for fiscal year 2024, as compared to $59.1 million for the prior year.

For the twelve months ended April 30, 2024, Champions reported a net loss from operations of $7.4 million, inclusive of $1.1 million in stock-based compensation expense, $1.9 million in depreciation and amortization expenses, and a $435,000 loss on the disposal of lab equipment, compared to a net loss from operations of 5.3 million, inclusive of $864,000 in stock-based compensation expense, $2.2 million in depreciation and amortization expenses, and an asset impairment charge of $807,000 for the prior year. Excluding stock-based compensation, depreciation and amortization, and an equipment disposal loss, Champions reported an adjusted EBITDA loss of $3.9 million for fiscal year 2024 compared to an adjusted EBITDA loss of $1.3 million in the prior year.

Cost of oncology solutions was $29.4 million for the twelve months ended April 30, 2024, a decrease of $131,000 or 0.4%, compared to $29.5 million, for the twelve months ended April 30, 2023. Gross margin was 41% for the twelve months ended April 30, 2024 compared to 45% for the twelve months ended April 30, 2023. The lower margin resulted from a decline in revenue against a generally unchanged cost base. Due to some operational inefficiencies, the variable cost component of cost of sales did not decline meaningfully despite the lower study volume.

Research and development expense was $9.5 million for fiscal year 2024, a decrease of $2.0 million, or 17%, compared to $11.5 million for the prior year. The decrease was primarily due to the implementation of cost savings strategies. Sales and marketing expense for fiscal year 2024 was $7.1 million, an increase of $62,000, or 1%, compared to $7.0 million for fiscal year 2023. The increase was primarily due to marketing initiatives, including increased conference attendance. General and administrative expense was $11.1 million for fiscal year 2024, an increase of $827,000, or 8%, compared to $10.2 million for fiscal year 2023. General and administrative expense was primarily comprised of compensation, insurance, professional fees, IT, and depreciation and amortization expenses. The increase in general and administrative expense was primarily due to an increase in compensation related expenses and non-cash depreciation and amortization offset by a decrease in IT expenses.

Net cash used in operations was $6.1 million for fiscal year 2024. Cash used in operations was primarily the result of our net loss. Net cash used in investing activities was $836,000 primarily from investment in additional lab equipment. Net cash used in financing activities was $527,000 resulting from repurchases of our common stock and financing lease payments offset by proceeds from option exercises. The Company has paused its stock repurchase program.

Conference Call Information:

The Company will host a conference call today at 4:30 p.m. EST (1:30 p.m. PST) to discuss its fourth quarter financial results. To participate in the call, please call 888-506-0062 (domestic) or 973-528-0011 (international) ten minutes ahead of the call and enter the access code 135832. A replay of the call will be available by dialing 877-481-4010 (Domestic) or 919-882-2331 (International) and entering passcode: 50895, or by accessing the investors section of the company’s website within 72 hours.

Full details of the Company’s financial results will be available on, or before, Monday July 22, 2024 and no later than Monday July 29, 2024 in the Company’s Form 10-K at View Source