On February 16, 2016 Baxalta Incorporated (NYSE: BXLT), a global biopharmaceutical leader dedicated to delivering transformative therapies to patients with orphan diseases and underserved conditions, reported strong fourth quarter 2015 financial results (Press release, Baxalta, FEB 16, 2016, View Source [SID:1234509062]).
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"We are pleased to report another quarter of strong financial performance reflecting continued positive momentum across our entire portfolio," said Ludwig Hantson, chief executive officer and president, Baxalta. "In 2015, Baxalta achieved its strategic objectives, exceeded our financial guidance with disciplined execution and established a solid foundation for the future. We will continue to build on this success with our commitment to patient-centric innovation and new product launches to drive enhanced growth and value for patients, customers and other key stakeholders."
Financial Results for the Fourth Quarter 2015
In the fourth quarter, Baxalta generated net income on a GAAP basis of $95 million and earnings of $0.14 per diluted share. These results include net after-tax special items totaling $292 million, or $0.43 per diluted share, primarily for intangible asset amortization, expenses associated with the company’s separation from Baxter International (NYSE: BAX), and certain business development and collaboration-related items.
On an adjusted basis, excluding special items, Baxalta reported fourth quarter net income of $387 million, or $0.57 per diluted share, which compares favorably to the company’s previously-issued guidance of $0.55 to $0.57 per diluted share. These financial results reflect positive sales momentum and higher gross margins, providing enhanced flexibility for accelerated investments in research and development, marketing and launch preparedness, and global infrastructure to position the company for future success.
Positive Sales Momentum Across Differentiated Portfolio
In the fourth quarter, Baxalta’s worldwide revenues on a GAAP basis of $1.8 billion advanced 5 percent from the prior-year period. Excluding the impact of foreign currency, sales advanced 12 percent.
On a pro forma basis, worldwide revenues increased 3 percent. Excluding the impact of foreign currency, sales advanced 10 percent, exceeding the company’s previously-issued guidance of growth in the 3 to 5 percent range. Within the United States, sales of $944 million rose 13 percent; international sales of $819 million declined 7 percent. Excluding foreign currency, international sales increased 8 percent.
By business, global hematology revenues of $1.0 billion increased 6 percent (excluding the impact of foreign currency) as the company continues to focus on enhancing access and elevating standards of care worldwide. Growth was driven by the U.S. introduction of ADYNOVATE [Antihemophilic Factor (Recombinant), PEGylated], an extended circulating half-life recombinant Factor VIII (rFVIII) treatment for hemophilia A, following U.S. Food and Drug Administration (FDA) approval in November, as well as heightened global demand for ADVATE [Antihemophilic Factor (Recombinant)] and FEIBA [Anti-Inhibitor Coagulant Complex], an inhibitor treatment. Also contributing to performance was growth of RIXUBIS [Coagulation Factor IX (Recombinant)], a treatment for hemophilia B, and OBIZUR [Antihemophilic Factor (Recombinant), Porcine Sequence], for the treatment of acquired hemophilia A.
Immunology sales of $680 million advanced 8 percent (excluding the impact of foreign currency) on a pro forma basis. The company continues to capitalize on its broad and differentiated portfolio of immunoglobulin therapies, including HYQVIA [Immune Globulin Infusion 10% (Human) with Recombinant Human Hyaluronidase], and is driving strong sales of specialty biotherapeutics.
Baxalta’s new oncology business recorded sales of $53 million in the quarter. This reflects revenues from the recent acquisition of ONCASPAR (pegaspargase), a marketed biologic treatment for acute lymphoblastic leukemia (ALL).
Full-Year 2015 Sales Results
For the full-year 2015, Baxalta reported worldwide revenues on a GAAP basis of $6.1 billion, a 3 percent increase over the prior-year period. Excluding the impact of foreign currency, sales advanced 11 percent.
On a pro forma basis, worldwide revenues grew 2 percent. Excluding the impact of foreign currency, sales advanced 10 percent, exceeding the company’s original expectations and updated projections provided in the third quarter of approximately 8 percent growth. Within the United States, sales of $3.3 billion rose 10 percent, and international sales of $2.9 billion declined 6 percent. Excluding the impact of foreign currency, international sales increased 10 percent.
2015 Highlights and Key Milestone Achievements
Baxalta has established a solid track record of executing its strategic objectives, delivering strong financial performance and achieving meaningful pipeline milestones following its separation from Baxter International in 2015.
"Our relentless quest for innovation is fostering a culture of purpose-driven performance and success," added Hantson. "Baxalta employees around the world are inspired by and committed to meeting patient needs. Our strong momentum will continue to differentiate our businesses in a highly competitive landscape and create sustainable, long-term value."
2015 highlights include:
Launching Baxalta Incorporated as a global biopharmaceutical leader dedicated to patients with orphan diseases and underserved conditions. The separation from Baxter International allowed Baxalta to advance its leadership position and continue innovation on transformative therapies in hematology, immunology and oncology.
Enhancing commercial execution and driving new product revenues of nearly $300 million for the full-year 2015 led by HYQVIA [Immune Globulin Infusion 10% (Human) with Recombinant Human Hyaluronidase] and ONCASPAR, as well as RIXUBIS [Coagulation Factor IX (Recombinant)], OBIZUR [Antihemophilic Factor (Recombinant), Porcine Sequence] and ADYNOVATE.
Expanding the company’s commitment to oncology with the ONCASPAR (pegaspargase) leukemia portfolio acquisition from Sigma-Tau Finanziaria S.p.A., which provided access to ONCASPAR as well as an established commercial and clinical infrastructure. Complementing its oncology focus in orphan diseases, Baxalta also announced a broad strategic immuno-oncology collaboration with Symphogen, a private biopharmaceutical company based in Denmark developing recombinant antibodies and antibody mixtures, to advance novel therapeutics against six checkpoint targets, with the first program expected to enter clinical studies in 2017.
Making significant progress toward Baxalta’s objective of launching approximately 20 new products by 2020 with three key regulatory approvals in 2015, bringing the total number of new products approved in the last 18 months to ten. This includes FDA approval and subsequent launch of ADYNOVATE [Antihemophilic Factor (Recombinant), PEGylated], an extended circulating half-life recombinant Factor VIII (rFVIII) treatment for hemophilia A, and FDA approval of VONVENDI [von Willebrand factor (Recombinant)], the first and only recombinant treatment for adults living with von Willebrand Disease (VWD). In addition, Baxalta recently secured European Commission Marketing Authorization of ONCASPAR, which allows Baxalta to market this product in 28 member countries of the European Union (EU), as well as Iceland, Liechtenstein and Norway.
Advancing several breakthrough innovations with potential to transform patient care with a number of therapies awaiting regulatory approval, including Baxalta’s investigational 20% subcutaneous immune globulin (IGSC) treatment for primary immunodeficiencies in both the U.S. and Europe, and European approval of ONIVYDE (irinotecan liposome injection) for the treatment of patients with metastatic adenocarcinoma of the pancreas who have been previously treated with gemcitabine-based therapy.
Progressing early-stage hematology assets with the submission of a Clinical Trial Application to the UK Medicines and Healthcare Products Regulatory Agency to initiate a clinical trial to evaluate the safety and efficacy of BAX 826, an investigational, extended half-life rFVIII treatment for hemophilia A. Baxalta also presented interim data and progress updates at the American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting on the Phase 1/2 study of BAX 335, an investigational factor IX (FIX) gene therapy treatment for hemophilia B, which has been granted orphan designation by the FDA. At the end of 2015, a total of eight patients in three dosing cohorts had been treated.
Expanding Baxalta’s global network of quality manufacturing sites including FDA approval for a state-of-the-art recombinant biologic manufacturing facility in Singapore to produce ADVATE bulk drug substance. Additionally, the European Medicines Agency licensed the manufacturing of HYQVIA and GAMMAGARD LIQUID 10% [Immune Globulin Infusion (Human)] (marketed as KIOVIG in the EU) through the company’s manufacturing services agreement with Stichting Sanquin Bloedvoorziening (Sanquin Blood Supply Foundation or Sanquin) in the Netherlands.
Forming new external partnerships and acquiring novel investigational treatments that complement and build upon our leading and differentiated portfolio. In addition to key oncology and biosimilar partnerships, Baxalta also acquired SuppreMol GmbH’s early-stage development portfolio of biologic immunoregulatory therapeutics for the treatment of autoimmune and IgE-mediated allergic diseases.
Financial Outlook for First Quarter 2016
For the first quarter of 2016, Baxalta expects pro forma sales growth, excluding the impact of foreign currency, of 8 to 9 percent. Including the impact of foreign currency, the company expects pro forma sales to increase 4 to 5 percent. Baxalta also expects first quarter 2016 adjusted earnings, before special items, of $0.44 to $0.46 per diluted share.
The company’s earnings guidance for the first quarter of 2016 excludes approximately $0.03 per diluted share of projected intangible asset amortization expense. Reconciling for the inclusion of this item results in expected GAAP earnings of $0.41 to $0.43 per diluted share for the first quarter of 2016.
Additional Information
Given the proposed merger agreement with Shire plc (LSE: SHP, NASDAQ: SHPG) announced on January 11, 2016, going forward Baxalta will not be hosting an investor conference call to discuss financial results. In addition, as is customary, the company will not be updating its financial guidance for full-year 2016, and previously-issued guidance for Baxalta as a standalone entity is no longer applicable. The transaction, which is subject to customary closing conditions including regulatory approvals in several jurisdictions and approval by both Baxalta’s and Shire’s shareholders, is expected to close mid-2016.
Complementary information related to Baxalta’s fourth quarter and full-year 2015 financial results may be accessed by visiting the Baxalta corporate website at investor.baxalta.com.