On July 28, 2016 ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) reported financial results for the second quarter and first half of 2016, including revenue from sales of Iclusig (ponatinib) (Press release, Ariad, JUL 28, 2016, View Source [SID:1234514087]). Schedule your 30 min Free 1stOncology Demo! The Company also provided an update on corporate developments.
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"We had a strong second quarter, during which we initiated a rolling NDA submission for brigatinib based on our data from the ALTA pivotal trial, presented four-year data from the PACE clinical trial for Iclusig, and advanced AP32788 for EGFR/HER2 exon 20 non-small cell lung cancer patients into a Phase 1/2 trial," said Paris Panayiotopoulos, president and chief executive officer of ARIAD. "We also strengthened our financial position through our agreement with Incyte and the strong sales performance of Iclusig. Our teams are focused on Iclusig growth, preparations for the potential launch of brigatinib in the U.S. and driving forward our promising pipeline."
Financial Results for the Quarter and Six Months Ended June 30, 2016
Revenue
Net product revenue from sales of Iclusig were $65.3 million for the second quarter of 2016, compared to $27.8 million in the second quarter of 2015; and $99.0 million for the first half of 2016, compared to $51.7 million for the first half of 2015. Net product revenue in the quarter and six months ended June 30, 2016 includes one-time revenue of approximately $25.5 million related to cumulative shipments of Iclusig in France that were recorded upon obtaining pricing and reimbursement approval in May 2016.
U.S. sales of Iclusig were $32.6 million for the second quarter of 2016, compared to $21.7 million in the second quarter of 2015, representing growth of 50 percent; and $57.6 million for the first half of 2016, compared to $40.4 million for the first half of 2015, representing growth of 43 percent.
European sales of Iclusig were $32.7 million for the second quarter of 2016, compared to $6.1 million in the second quarter of 2015, representing growth of 436 percent; and $41.4 million for the first half of 2016, compared to $11.3 million for the first half of 2015, representing growth of 266 percent. European sales for the second quarter of 2016 included the one-time French revenue of $25.5 million noted above and approximately $7.2 million of product revenue in the first two months of the second quarter of 2016. On June 1, 2016, ARIAD out-licensed the rights to Iclusig in Europe to Incyte Corporation (Incyte). From June 1, 2016, ARIAD records royalty revenue based on tiered royalty rates from Iclusig sales in Europe recognized by Incyte.
GAAP and Non-GAAP Net Income (Loss)
GAAP net income for the quarter ended June 30, 2016 was $109.8 million, or $0.57 and $0.56 per basic and diluted share, respectively, compared to GAAP net loss of $63.2 million, or $0.33 loss per basic and diluted share, for the quarter ended June 30, 2015. GAAP net income for the six months ended June 30, 2016 was $56.1 million, or $0.29 per basic and diluted share, compared to GAAP net loss of $115.8 million, or $0.62 loss per basic and diluted share, for the six months ended June 30, 2015. During the 2016 periods, the Company recorded $128.7 million of gain related to the Incyte transaction under other income (expense) related to closing the sale of the Company’s European operations and out-license of Iclusig rights in Europe.
Non-GAAP net income for the quarter ended June 30, 2016 was $114.1 million, or $0.59 per diluted share, compared to non-GAAP net loss of $52.5 million, or $0.28 per diluted share for the quarter ended June 30, 2015. Non-GAAP net income for the six months ended June 30, 2016 was $69.9 million, or $0.36 per diluted share, compared to non-GAAP net loss of $96.8 million, or $0.51 per diluted share, for the six months ended June 30, 2015.
Non-GAAP net loss excludes stock-based compensation, restructuring charges for a reduction in force in March 2016 and transaction costs for the Incyte transaction. See "Use of Non-GAAP Financial Measures" below for a description of non-GAAP financial measures and the reconciliation between GAAP and non-GAAP measures at the end of this press release.
Operating Expenses
R&D expenses were $42.9 million for the second quarter of 2016, an increase of $4.2 million or 10.6 percent, compared to $38.7 million for the second quarter of 2015. R&D expenses were $86.9 million for the first half of 2016, an increase of $8.7 million or 11.2 percent compared to $78.2 million for the first half of 2015.
Selling, general and administrative expenses were $34.2 million for the second quarter of 2016, a decrease of $14.4 million or 29.6 percent, compared to $48.6 million for the second quarter of 2015. Selling, general and administrative expenses were $70.2 million for the first half of 2016, a decrease of $12.0 million or 14.5 percent, compared to $82.2 million for the first half of 2015.
Other income (expense), net
For the second quarter and half year ended 2016, other income (expense), net includes a recorded gain on the Incyte transaction of $128.7 million.
Cash Position
As of June 30, 2016, cash, cash equivalents and marketable securities totaled $278.5 million, compared to $168.3 million at March 31, 2016 and $242.3 million at December 31, 2015.
Recent Progress and Key Objectives
Business Development
On June 1, 2016, ARIAD completed the sale of its European operations to Incyte Corporation, as well as an exclusive license under which Incyte will commercialize Iclusig in Europe and other select countries. ARIAD received approximately $140 million at the closing and will receive 32-50 percent of European net sales going forward.
ARIAD also completed two distribution agreements for Iclusig outside of the U.S. In Latin America, our agreement with Pint Pharma International S.A. covers Argentina, Brazil, Chile, Colombia and Mexico. In the Middle East and North Africa (MENA), our agreement with Biologix FZCo. covers Saudi Arabia, the Gulf Coast countries, Lebanon, and selected other countries in the region. Under these agreements ARIAD will receive more than 50 percent of Iclusig net sales moving forward.
Iclusig
Long-term safety and efficacy data from the PACE clinical trial were presented in June at the European Hematology Association (EHA) (Free EHA Whitepaper) meeting. The study shows that Iclusig continued to demonstrate anti-leukemic activity in chronic phase chronic myeloid leukemia (CP-CML) patients treated with Iclusig, with a median follow-up of 4.0 years. Additionally, 96 percent of CP-CML patients who underwent Iclusig dose reductions while in response maintained their responses (major cytogenetic response [MCyR]) at the four-year time point.
ARIAD has submitted the four-year PACE data to the FDA and other health authorities as a label supplement, with an FDA action date in the fourth quarter of this year.
Patient enrollment is ongoing in the OPTIC and OPTIC-2L clinical trials in patients with resistant CP-CML.
Otsuka Pharmaceutical Co., Ltd. (Otsuka) submitted a new drug application (NDA) to the Japanese Pharmaceuticals and Medical Devices Agency (PMDA) seeking approval for Iclusig for the treatment of resistant or intolerant chronic myeloid leukemia (CML) and Philadelphia-chromosome positive acute lymphoblastic leukemia (Ph+ALL). This marketing application was submitted in early 2016, with an anticipated action date in third quarter 2016, and reimbursement and launch expected in late 2016 or early 2017.
Brigatinib
ARIAD initiated the New Drug Application (NDA) submission for brigatinib to the FDA for patients with ALK+ non-small cell lung cancer (NSCLC) who are resistant to crizotinib. The Company will be seeking accelerated approval for brigatinib from the FDA and plans to request a priority review of the application. We anticipate completion of the rolling submission in the third quarter of this year.
Clinical data from the Phase 2 ALTA trial of brigatinib were the subject of an oral presentation at the annual meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper). The data show that, of patients on the 180 mg regimen (Arm B) with a median follow-up of 8.3 months, 54 percent achieved a confirmed objective response, the trial’s primary endpoint. In this arm, the median progression free survival (PFS) exceeded one year (12.9 months) in this post-crizotinib setting. Additionally, a 67 percent confirmed intracranial objective response rate (ORR) was achieved in patients with measurable brain metastases.
Other brigatinib data presented at ASCO (Free ASCO Whitepaper) included more mature efficacy and safety data from the long-term Phase 1/2 trial follow-up, with median time on treatment now at 17 months in ALK+ NSCLC patients and the longest time on treatment now more than 3.5 years. Also, clinical data were presented from molecular analysis of ALK+ NSCLC patients in both the ALTA and Phase 1/2 trials, showing confirmed responses in patients with different secondary ALK mutations, including one G1202R case. There are no currently approved ALK treatments that have demonstrated activity against the G1202R mutation.
The ALTA 1L randomized, front-line clinical trial of brigatinib opened to patient enrollment in early April and patient enrollment is underway. This global, Phase 3 trial is designed to compare brigatinib and crizotinib in patients with ALK+ NSCLC who have not received prior ALK inhibitors. Full enrollment is expected in 2018.
In the U.S. an Expanded Access Program is now open to provide brigatinib access to eligible patients with ALK+ NSCLC who are resistant or intolerant to at least one prior ALK TKI. In Europe, an Early Access Program is being established.
Advancing the Pipeline
At ARIAD’s Analyst and Investor Day in June, the Company detailed its decision to invest in potential new opportunities in immuno-oncology, which leverages its core competency in kinase inhibitors for precision therapies to explore the potential for small molecules in immuno-oncology. ARIAD has achieved genetic and pharmacologic validation on an initial target kinase, with the program anticipated to enter lead optimization by the end of 2016.
The Phase 1/2 trial of ARIAD’s investigational kinase inhibitor AP32788 is now enrolling patients at multiple sites in the U.S. AP32788 targets tumors driven by EGFR or HER2 kinases and was designed to achieve selective inhibition of exon 20 mutations in these kinases. ARIAD estimates that there are approximately 6,000 patients in the U.S. living with EGFR exon 20 or HER2 point mutations.
Upcoming Medical Meetings
European School of Haematology (ESH)/ International Chronic Myeloid Leukemia Foundation (iCMLf), Houston, September 15 to September 18, 2016
European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper), Copenhagen, Denmark, October 7 to October 11, 2016
Japanese Society of Hematology (JSH), Yokohama City, Japan, October 13 to October 15, 2016