On July 25, 2017 Amgen (NASDAQ:AMGN) reported financial results for the second quarter of 2017 (Press release, Amgen, JUL 25, 2017, View Source [SID1234519879

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Key results include:

Total revenues increased 2 percent versus the second quarter of 2016 to $5.8 billion.
Product sales grew 2 percent driven by Prolia (denosumab), Repatha (evolocumab) and KYPROLIS (carfilzomib).
GAAP earnings per share (EPS) increased 18 percent to $2.91 driven by higher operating margins.
GAAP operating income increased 13 percent to $2.7 billion and GAAP operating margin increased 4.9 percentage points to 48.4 percent.
Non-GAAP EPS increased 15 percent to $3.27 driven by higher operating margins.
Non-GAAP operating income increased 9 percent to $3.1 billion and non-GAAP operating margin increased 3.8 percentage points to 55.2 percent.
2017 EPS guidance increased to $10.79-$11.37 on a GAAP basis and $12.15-$12.65 on a non-GAAP basis; total revenues guidance revised to $22.5-$23.0 billion.
The Company generated $2.1 billion of free cash flow.
“Our continued solid performance this quarter is yet another indication that we are on track to deliver on our long-term growth objectives,” said Robert A. Bradway, chairman and chief executive officer. “Our newer products are registering strong volume-driven growth globally and we expect their contribution to continue to increase over time, offsetting declines in mature products.”

$Millions, except EPS and percentages

Q2’17

Q2’16

YOY Δ

Total Revenues

$ 5,810

$ 5,688

2%
GAAP Operating Income

$ 2,698

$ 2,380

13%
GAAP Net Income

$ 2,151

$ 1,870

15%
GAAP EPS

$ 2.91

$ 2.47

18%
Non-GAAP Operating Income

$ 3,075

$ 2,812

9%
Non-GAAP Net Income

$ 2,410

$ 2,146

12%
Non-GAAP EPS

$ 3.27

$ 2.84

15%
References in this release to “non-GAAP” measures, measures presented “on a non-GAAP basis” and to “free cash flow” (computed by subtracting capital expenditures from operating cash flow) refer to non-GAAP financial measures. Adjustments to the most directly comparable GAAP financial measures and other items are presented on the attached reconciliations.

Product Sales Performance

Total product sales increased 2 percent for the second quarter of 2017 versus the second quarter of 2016.
Repatha sales increased driven by higher unit demand.
BLINCYTO (blinatumomab) sales increased 43 percent driven by higher unit demand.
KYPROLIS sales increased 23 percent driven by higher unit demand.
Prolia sales increased 15 percent driven primarily by higher unit demand.
Nplate (romiplostim) sales increased 15 percent driven primarily by higher unit demand.
Sensipar/Mimpara (cinacalcet) sales increased 10 percent driven primarily by net selling price.
Aranesp (darbepoetin alfa) sales increased 6 percent driven by higher unit demand.
Vectibix (panitumumab) sales increased 5 percent driven by higher unit demand.
XGEVA (denosumab) sales increased 4 percent driven primarily by higher unit demand.
Enbrel (etanercept) sales decreased 1 percent due to the impact of competition, offset partially by favorable changes in inventory and net selling price.
Neulasta (pegfilgrastim) sales decreased 5 percent driven by lower unit demand.
EPOGEN (epoetin alfa) sales decreased 12 percent driven primarily by net selling price.
NEUPOGEN (filgrastim) sales decreased 30 percent driven primarily by the impact of competition.
Product Sales Detail by Product and Geographic Region

$Millions, except percentages

Q2’17

Q2’16

YOY Δ

US
ROW
TOTAL

TOTAL

TOTAL

Repatha
$60
$23
$83

$27

*
BLINCYTO
28
15
43

30

43%
KYPROLIS

140
71
211

172

23%
Prolia

326
179
505

441

15%
Nplate

99
65
164

142

15%
Sensipar / Mimpara

342
85
427

389

10%
Aranesp

288
247
535

504

6%
Vectibix

62
106
168

160

5%
XGEVA

292
103
395

381

4%
Enbrel

1,411
55
1,466

1,484

(1%)
Neulasta

937
150
1,087

1,149

(5%)
EPOGEN

292
0
292

331

(12%)
NEUPOGEN

90
47
137

196

(30%)
Other**

19
42
61

68

(10%)

Total product sales

$4,386
$1,188
$5,574

$5,474

2%

* Change in excess of 100%
** Other includes Bergamo, MN Pharma, IMLYGIC and Corlanor

Operating Expense, Operating Margin and Tax Rate Analysis

On a GAAP basis:

Total Operating Expenses decreased 6 percent, with all expense categories reflecting savings from our transformation and process improvement efforts. Cost of Sales margin improved by 0.8 percentage points driven primarily by reduced royalties. Research & Development (R&D) expenses decreased 3 percent driven by lower spending required to support certain later-stage clinical programs. Selling, General & Administrative (SG&A) expenses decreased 6 percent due to the expiration of ENBREL residual royalty payments, offset partially by investments in product launches.
Operating Margin improved by 4.9 percentage points to 48.4 percent.
Tax Rate increased 0.2 percentage points.
On a non-GAAP basis:

Total Operating Expenses decreased 5 percent, with all expense categories reflecting savings from our transformation and process improvement efforts. Cost of Sales margin improved by 0.8 percentage points driven primarily by reduced royalties. R&D expenses decreased 3 percent driven by lower spending required to support certain later-stage clinical programs. SG&A expenses decreased 7 percent due to the expiration of ENBREL residual royalty payments, offset partially by investments in product launches.
Operating Margin improved by 3.8 percentage points to 55.2 percent.
Tax Rate decreased 1.2 percentage points, reflecting discrete benefits associated with the effective settlement of certain state and federal tax matters and favorable changes in the geographic mix of earnings, offset partially by a prior year benefit associated with tax incentives.
$Millions, except percentages

GAAP

Non-GAAP

Q2’17

Q2’16

YOY Δ

Q2’17

Q2’16

YOY Δ

Cost of Sales
$1,024

$1,050

(2%)

$710

$738

(4%)

% of product sales
18.4%

19.2%

(0.8) pts

12.7%

13.5%

(0.8) pts
Research & Development
$873

$900

(3%)

$851

$878

(3%)

% of product sales
15.7%

16.4%

(0.7) pts

15.3%

16.0%

(0.7) pts
Selling, General & Administrative
$1,209

$1,292

(6%)

$1,174

$1,260

(7%)

% of product sales
21.7%

23.6%

(1.9) pts

21.1%

23.0%

(1.9) pts
Other
$6

$66

(91%)

$0

$0

NM
TOTAL Operating Expenses
$3,112

$3,308

(6%)

$2,735

$2,876

(5%)

Operating Margin

operating income as a % of product sales
48.4%

43.5%

4.9 pts

55.2%

51.4%

3.8 pts

Tax Rate
15.4%

15.2%

0.2 pts

17.4%

18.6%

(1.2) pts

NM: Not Meaningful

pts: percentage points

Cash Flow and Balance Sheet

The Company generated $2.1 billion of free cash flow in the second quarter of 2017 versus $2.5 billion in the second quarter of 2016, the difference driven by the timing of tax payments.
The Company’s second quarter 2017 dividend of $1.15 per share was paid on June 8, 2017, a 15 percent increase versus the second quarter of 2016.
During the second quarter, the Company repurchased 6.2 million shares of common stock at a total cost of $1.0 billion. At the end of the second quarter, the Company had $2.5 billion remaining under its stock repurchase authorization.
$Billions, except shares

Q2’17

Q2’16

YOY Δ

Operating Cash Flow
$2.3

$2.7

($0.4)
Capital Expenditures
0.2

0.2

0.0
Free Cash Flow
2.1

2.5

(0.3)
Dividends Paid
0.8

0.8

0.1
Share Repurchase
1.0

0.6

0.4
Avg. Diluted Shares (millions)
738

756

(18)

Cash and Investments
39.2

35.0

4.2
Debt Outstanding
35.1

33.2

1.8
Stockholders’ Equity
31.7

30.1

1.6

Note: Numbers may not add due to rounding

2017 Guidance

For the full year 2017, the Company now expects:

Total revenues in the range of $22.5 billion to $23.0 billion.
Previously, the Company expected total revenues in the range of $22.3 billion to $23.1 billion.
On a GAAP basis, EPS in the range of $10.79 to $11.37 and a tax rate in the range of 16 percent to 18 percent.
Previously, the Company expected GAAP EPS in the range of $10.64 to $11.32. Tax rate guidance is unchanged.
On a non-GAAP basis, EPS in the range of $12.15 to $12.65 and a tax rate in the range of 18.5 percent to 19.5 percent.
Previously, the Company expected non-GAAP EPS in the range of $12.00 to $12.60. Tax rate guidance is unchanged.
Capital expenditures to be approximately $700 million.
Second Quarter Product and Pipeline Update
Key development milestones:

Clinical Program
Indication
Projected Milestone
Repatha
Hyperlipidemia
Regulatory reviews (CV outcomes data)
KYPROLIS
Relapsed multiple myeloma
Regulatory reviews (ENDEAVOR OS data)
Regulatory submissions (ASPIRE OS data)
XGEVA
Prevention of SREs in multiple myeloma
Regulatory reviews
EVENITY†
Postmenopausal osteoporosis
Regulatory submissions
Aimovig† (erenumab)
Migraine prevention
U.S. regulatory review
ABP 215
(biosimilar bevacizumab)
Oncology
Regulatory reviews
ABP 980
(biosimilar trastuzumab)
Oncology
U.S. regulatory submission
†Trade name provisionally approved by FDA; CV = cardiovascular; OS = overall survival; SRE = skeletal-related event
The Company provided the following updates on selected product and pipeline programs:

Repatha

In June, the Company announced the submission of a supplemental Biologics License Application (sBLA) to the U.S. Food and Drug Administration (FDA) and a variation to the marketing authorization to the European Medicines Agency (EMA) to include data from the 27,564-patient Phase 3 Repatha cardiovascular outcomes study.
KYPROLIS

In July, the Phase 3 ASPIRE study met the key secondary endpoint of OS, demonstrating that KYPROLIS, lenalidomide and dexamethasone reduced the risk of death by 21 percent over lenalidomide and dexamethasone alone.
In July, the Company announced the submission of a supplemental New Drug Application to the FDA and a variation to the marketing application to the EMA to include OS data from the Phase 3 head-to-head ENDEAVOR study.
In June, a Phase 3 study evaluating KYPROLIS in combination with DARZALEX (daratumumab) and dexamethasone compared to KYPROLIS and dexamethasone alone in patients with relapsed or refractory multiple myeloma began enrollment.
XGEVA

In June, the FDA accepted the sBLA seeking to expand the currently approved indication to include the prevention of SREs in patients with multiple myeloma, assigning a Feb. 3, 2018, Prescription Drug User Fee Act (PDUFA) target action date.
Vectibix

In June, the FDA approved a label update for Vectibix to more precisely molecularly define patients with wild-type RAS metastatic colorectal cancer as first-line therapy in combination with FOLFOX and as monotherapy following disease progression after prior treatment with fluoropyrimidine, oxaliplatin, and irinotecan-containing chemotherapy.
BLINCYTO

In July, the FDA approved the sBLA for BLINCYTO to include OS data from the Phase 3 TOWER study, converting BLINCYTO’s accelerated approval to a full approval. The approval also expanded the indication to include patients with Ph+ relapsed or refractory B-cell precursor acute lymphoblastic leukemia.
EVENITY

In May, the Phase 3 active-comparator ARCH study in postmenopausal women with osteoporosis met the primary and the key secondary endpoints, and an imbalance in positively adjudicated cardiovascular serious adverse events was observed as a new safety signal.
In July, the FDA issued a Complete Response Letter for the Biologics License Application (BLA) for EVENITY as a treatment for postmenopausal women with osteoporosis. The resubmission will include data from the Phase 3 ARCH study and the Phase 3 BRIDGE study evaluating EVENITY in men with osteoporosis, in addition to the Phase 3 FRAME study.
Aimovig (erenumab)

In May, a BLA was submitted to FDA for the prevention of migraine based on data from pivotal studies in patients with episodic and chronic migraine. In July, FDA accepted the BLA and assigned a May 17, 2018, PDUFA target action date.
DARZALEX is a registered trademark of Janssen Biotech, Inc.
EVENITY trade name is provisionally approved by FDA
EVENITY is developed in collaboration with UCB globally, as well as our joint venture partner Astellas in Japan
Aimovig trade name is provisionally approved by FDA
Aimovig is developed in collaboration with Novartis AG

Non-GAAP Financial Measures
In this news release, management has presented its operating results for the second quarters of 2017 and 2016, in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on a non-GAAP basis. In addition, management has presented its full year 2017 EPS and tax rate guidance in accordance with GAAP and on a non-GAAP basis. These non-GAAP financial measures are computed by excluding certain items related to acquisitions, restructuring and certain other items from the related GAAP financial measures. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release. Management has also presented Free Cash Flow (FCF), which is a non-GAAP financial measure, for periods in 2017 and 2016. FCF is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP.

The Company believes that its presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. The Company uses certain non-GAAP financial measures to enhance an investor’s overall understanding of the financial performance and prospects for the future of the Company’s ongoing business activities by facilitating comparisons of results of ongoing business operations among current, past and future periods. The Company believes that FCF provides a further measure of the Company’s liquidity.

The Company uses the non-GAAP financial measures set forth in the news release in connection with its own budgeting and financial planning internally to evaluate the performance of the business, including to allocate resources and to evaluate results relative to incentive compensation targets. The non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

On July 25, 2017 Seattle Genetics, Inc. (Nasdaq: SGEN) reported that Health Canada has issued a non-conditional marketing authorization for use of ADCETRIS as post-autologous stem cell transplant (ASCT) consolidation treatment of patients with Hodgkin lymphoma (HL) at increased risk of relapse or progression (Press release, Seattle Genetics, JUL 25, 2017, View Source [SID1234519873]). The indication was based on positive results from the phase 3 AETHERA clinical trial. ADCETRIS previously received approval with conditions in Canada for two lymphoma indications: HL patients who relapse after ASCT or relapse after at least two multi-agent chemotherapy regimens in patients who are not ASCT candidates; and for systemic anaplastic large cell lymphoma (sALCL) patients who relapse after at least one multi-agent chemotherapy regimen.

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"With this expanded ADCETRIS label, physicians and eligible patients in Canada will have further access to this important therapeutic option for treating Hodgkin lymphoma," said Clay Siegall, Ph.D., President and Chief Executive Officer of Seattle Genetics. "This is one of several ADCETRIS regulatory milestones during 2017 towards our goal of expanding its availabilty globally to patients in need. We recently submitted a supplemental Biologics License Application (BLA) to the U.S. Food and Drug Administration (FDA) for ADCETRIS approval in cutaneous T-cell lymphoma based primarily on our phase 3 ALCANZA clinical trial, and we plan to submit a supplemental BLA to the FDA for ADCETRIS in frontline Hodgkin lymphoma based on the positive phase 3 ECHELON-1 clinical trial. We plan to follow up with submissions to Health Canada for indications in these settings."

ADCETRIS is not currently approved for use in CTCL or frontline Hodgkin lymphoma.

About Hodgkin Lymphoma
Lymphoma is a general term for a group of cancers that originate in the lymphatic system. There are two major categories of lymphoma: Hodgkin lymphoma and non-Hodgkin lymphoma. Hodgkin lymphoma is distinguished from other types of lymphoma by the presence of one characteristic type of cell, known as the Reed-Sternberg cell. The Reed-Sternberg cell expresses CD30.

About ADCETRIS
ADCETRIS is being evaluated broadly in more than 70 ongoing clinical trials, including four phase 3 studies: the ECHELON-1 trial in frontline classical Hodgkin lymphoma from which positive top-line results were recently reported, the ongoing ECHELON-2 trial in frontline mature T-cell lymphomas, the completed ALCANZA trial in cutaneous T-cell lymphoma that supported a recent supplemental BLA to the FDA, and the recently initiated trial of ADCETRIS in combination with Opdivo (nivolumab) for relapsed/refractory Hodgkin lymphoma.

ADCETRIS is an ADC comprising an anti-CD30 monoclonal antibody attached by a protease-cleavable linker to a microtubule disrupting agent, monomethyl auristatin E (MMAE), utilizing Seattle Genetics’ proprietary technology. The ADC employs a linker system that is designed to be stable in the bloodstream but to release MMAE upon internalization into CD30-positive tumor cells.

ADCETRIS for intravenous injection has received approval from the FDA for three indications: (1) regular approval for the treatment of patients with classical Hodgkin lymphoma after failure of autologous hematopoietic stem cell transplantation (auto-HSCT) or after failure of at least two prior multi-agent chemotherapy regimens in patients who are not auto-HSCT candidates, (2) regular approval for the treatment of classical Hodgkin lymphoma patients at high risk of relapse or progression as post-auto-HSCT consolidation, and (3) accelerated approval for the treatment of patients with systemic anaplastic large cell lymphoma (sALCL) after failure of at least one prior multi-agent chemotherapy regimen. The sALCL indication is approved under accelerated approval based on overall response rate. Continued approval for the sALCL indication may be contingent upon verification and description of clinical benefit in confirmatory trials.

Health Canada granted ADCETRIS approval with conditions for relapsed or refractory Hodgkin lymphoma and sALCL in 2013, and non-conditional approval for post-ASCT consolidation treatment of Hodgkin lymphoma patients at increased risk of relapse or progression.

ADCETRIS was granted conditional marketing authorization by the European Commission in October 2012 for two indications: (1) for the treatment of adult patients with relapsed or refractory CD30-positive Hodgkin lymphoma following autologous stem cell transplant (ASCT), or following at least two prior therapies when ASCT or multi-agent chemotherapy is not a treatment option, and (2) the treatment of adult patients with relapsed or refractory sALCL. The European Commission extended the current conditional marketing authorization of ADCETRIS and approved ADCETRIS for the treatment of adult patients with CD30-positive Hodgkin lymphoma at increased risk of relapse or progression following ASCT.

ADCETRIS has received marketing authorization by regulatory authorities in 67 countries for relapsed or refractory
Hodgkin lymphoma and sALCL. See important safety information below.

Seattle Genetics and Takeda are jointly developing ADCETRIS. Under the terms of the collaboration agreement, Seattle Genetics has U.S. and Canadian commercialization rights and Takeda has rights to commercialize ADCETRIS in the rest of the world. Seattle Genetics and Takeda are funding joint development costs for ADCETRIS on a 50:50 basis, except in Japan where Takeda is solely responsible for development costs.

ADCETRIS (brentuximab vedotin) U.S. Important Safety Information

BOXED WARNING
Progressive multifocal leukoencephalopathy (PML): JC virus infection resulting in PML and death can occur in patients receiving ADCETRIS.

Contraindication
ADCETRIS is contraindicated with concomitant bleomycin due to pulmonary toxicity (e.g., interstitial infiltration and/or inflammation).

Warnings and Precautions

· Peripheral neuropathy (PN): ADCETRIS treatment causes a PN that is predominantly sensory. Cases of motor PN have also been reported. ADCETRIS-induced PN is cumulative. Monitor patients for symptoms of neuropathy, such as hypoesthesia, hyperesthesia, paresthesia, discomfort, a burning sensation, neuropathic pain or weakness and institute dose modifications accordingly.

· Anaphylaxis and infusion reactions: Infusion-related reactions, including anaphylaxis, have occurred with ADCETRIS. Monitor patients during infusion. If an infusion-related reaction occurs, interrupt the infusion and institute appropriate medical management. If anaphylaxis occurs, immediately and permanently discontinue the infusion and administer appropriate medical therapy. Patients who experienced a prior infusion-related reaction should be premedicated for subsequent infusions. Premedication may include acetaminophen, an antihistamine, and a corticosteroid.

· Hematologic toxicities: Prolonged (≥1 week) severe neutropenia and Grade 3 or 4 thrombocytopenia or anemia can occur with ADCETRIS. Febrile neutropenia has been reported with ADCETRIS. Monitor complete blood counts prior to each dose of ADCETRIS and consider more frequent monitoring for patients with Grade 3 or 4 neutropenia. Monitor patients for fever. If Grade 3 or 4 neutropenia develops, consider dose delays, reductions, discontinuation, or G-CSF prophylaxis with subsequent doses.

· Serious infections and opportunistic infections: Infections such as pneumonia, bacteremia, and sepsis or septic shock (including fatal outcomes) have been reported in patients treated with ADCETRIS. Closely monitor patients during treatment for the emergence of possible bacterial, fungal or viral infections.

· Tumor lysis syndrome: Closely monitor patients with rapidly proliferating tumor and high tumor burden.

· Increased toxicity in the presence of severe renal impairment: The frequency of ≥Grade 3 adverse reactions and deaths was greater in patients with severe renal impairment compared to patients with normal renal function. Avoid the use of ADCETRIS in patients with severe renal impairment.

· Increased toxicity in the presence of moderate or severe hepatic impairment: The frequency of ≥Grade 3 adverse reactions and deaths was greater in patients with moderate or severe hepatic impairment compared to patients with normal hepatic function. Avoid the use of ADCETRIS in patients with moderate or severe hepatic impairment.

· Hepatotoxicity: Serious cases of hepatotoxicity, including fatal outcomes, have occurred with ADCETRIS. Cases were consistent with hepatocellular injury, including elevations of transaminases and/or bilirubin, and occurred after the first dose of ADCETRIS or rechallenge. Preexisting liver disease, elevated baseline liver enzymes, and concomitant medications may also increase the risk.

· Monitor liver enzymes and bilirubin. Patients experiencing new, worsening, or recurrent hepatotoxicity may require a delay, change in dose, or discontinuation of ADCETRIS.

· Progressive multifocal leukoencephalopathy (PML): JC virus infection resulting in PML and death has been reported in ADCETRIS-treated patients. First onset of symptoms occurred at various times from initiation of ADCETRIS therapy, with some cases occurring within 3 months of initial exposure. In addition to ADCETRIS therapy, other possible contributory factors include prior therapies and underlying disease that may cause immunosuppression. Consider the diagnosis of PML in any patient presenting with new-onset signs and symptoms of central nervous system abnormalities. Hold ADCETRIS if PML is suspected and discontinue ADCETRIS if PML is confirmed.

· Pulmonary toxicity: Events of noninfectious pulmonary toxicity including pneumonitis, interstitial lung disease, and acute respiratory distress syndrome, some with fatal outcomes, have been reported. Monitor patients for signs and symptoms of pulmonary toxicity, including cough and dyspnea. In the event of new or worsening pulmonary symptoms, hold ADCETRIS dosing during evaluation and until symptomatic improvement.

· Serious dermatologic reactions: Stevens-Johnson syndrome (SJS) and toxic epidermal necrolysis (TEN), including fatal outcomes, have been reported with ADCETRIS. If SJS or TEN occurs, discontinue ADCETRIS and administer appropriate medical therapy.

· Gastrointestinal (GI) complications: Fatal and serious GI complications, including perforation, hemorrhage, erosion, ulcer, intestinal obstruction, enterocolitis, neutropenic colitis, and ileus have been reported in ADCETRIS-treated patients. Lymphoma with preexisting GI involvement may increase the risk of perforation. In the event of new or worsening GI symptoms, perform a prompt diagnostic evaluation and treat appropriately.

· Embryo-fetal toxicity: Based on the mechanism of action and findings in animals, ADCETRIS can cause fetal harm when administered to a pregnant woman. Females of reproductive potential should avoid pregnancy during ADCETRIS treatment and for at least 6 months after the final dose of ADCETRIS.

Adverse Reactions
In two uncontrolled single-arm trials of ADCETRIS as monotherapy in 160 patients with relapsed classical HL and sALCL, the most common adverse reactions (≥20%), regardless of causality, were: neutropenia, peripheral sensory neuropathy, fatigue, nausea, anemia, upper respiratory tract infection, diarrhea, pyrexia, rash, thrombocytopenia, cough and vomiting.

In a placebo-controlled trial of ADCETRIS in 329 patients with classical HL at high risk of relapse or progression post-auto-HSCT, the most common adverse reactions (≥20%) in the ADCETRIS-treatment arm (167 patients), regardless of causality, were: neutropenia, peripheral sensory neuropathy, thrombocytopenia, anemia, upper respiratory tract infection, fatigue, peripheral motor neuropathy, nausea, cough, and diarrhea.

Drug Interactions
Concomitant use of strong CYP3A4 inhibitors or inducers, or P-gp inhibitors, has the potential to affect the exposure to monomethyl auristatin E (MMAE).

Use in Specific Populations
MMAE exposure and adverse reactions are increased in patients with moderate or severe hepatic impairment or severe renal impairment. Avoid use.

Advise females of reproductive potential to avoid pregnancy during ADCETRIS treatment and for at least 6 months after the final dose of ADCETRIS.

Advise males with female sexual partners of reproductive potential to use effective contraception during ADCETRIS treatment and for at least 6 months after the final dose of ADCETRIS.

Advise patients to report pregnancy immediately and avoid breastfeeding while receiving ADCETRIS.
For additional Important Safety Information, including Boxed WARNING, please see the full Prescribing Information for ADCETRIS at www.seattlegenetics.com or www.ADCETRIS.com.

On July 25, 2017 NantKwest Inc. (Nasdaq:NK), a clinical-stage immunotherapy company focused on harnessing the unique power of the immune system using natural killer (NK) cells to treat cancer, infectious diseases, and inflammatory diseases, reported a paper entitled "ADCC employing an NK cell line (haNK) expressing the high affinity CD16 allele with avelumab, an anti-PD-L1 antibody" published in the International Journal of Cancer (10.1002/ijc.30767) by the National Cancer Institute (NCI) (Press release, NantKwest, JUL 25, 2017, http://ir.nantkwest.com/phoenix.zhtml?c=254059&p=irol-newsArticle&ID=2288495 [SID1234519872]). All the authors are from NCI. The paper reported preclinical data that are associated with the company’s haNK cell therapy platform in combination with avelumab, an anti-PD-L1 checkpoint inhibitor being co-developed by Merck KGaA, Darmstadt, Germany and Pfizer Inc. The preclinical data were generated under a Cooperative Research and Development Agreement (CRADA) between NCI and NantBioScience and a CRADA between NCI and Merck KGaA, Darmstadt, Germany.

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In this study, haNK cells, which are NantKwest’s proprietary NK cells, engineered to express the IL-2 cytokine and the high affinity CD16 allele, have been combined with avelumab, a human IgG1 anti-PD-L1 antibody.

Consistent with previous studies, results demonstrate the enhanced cancer cell killing abilities of haNK cells in combination with avelumab in a range of cancer cell types via the antibody dependent cell-mediated cytotoxicity (ADCC) mechanism.

ADCC is part of the human cell-mediated immune defense system associated with the interaction of natural killer cells with antibodies to directly kill a target cell that has been identified by an antigen-specific antibody. It is one of the key mechanisms that antibodies utilize to target and kill cancer cells.

In addition, engineering haNK cells to express IL-2 enables a "serial killer like" capacity, killing greater levels of target cells by increasing the exposure to target cells and increasing activity while also replenishing the granular stock of NK cells, enhancing the granzyme-mediated lysis of NK cells which exhibit an exhausted phenotype.

Of note, consistent with previous studies with haNK cells, this study demonstrated that activity, cytotoxicity and immune signaling capabilities of haNK cells remained intact post-irradiation.

haNK Cell Therapy Platform
NantKwest’s haNK cell therapy platform, an allogeneic, off-the-shelf therapy, was developed to optimize the key role of natural killer cells in mediating innate immunity, enhancing adaptive immune responses, and, specifically in the case of haNK, improving anti-tumor responses via antibody-dependent cell-mediated cytotoxicity.

To achieve this objective, haNK cells have been engineered to express the IL-2 cytokine and the high-affinity variant of the CD16 receptor (V158 FcγRIIIa). In preclinical studies, the addition of haNK to a variety of therapeutic antibodies has led to increased tumor cell killing when compared to the antibody alone. Human clinical studies are designed to provide the necessary safety data to rapidly transition the haNK Phase I safety study to haNK-antibody combination trials as quickly as possible.

haNK Phase I Study Background
The primary objective of the Phase I study is to determine the safety of haNK cell monotherapy administered intravenously once per week in up to 16 patients with metastatic or locally advanced solid tumors. Secondary objectives include the determination of objective response rate, progression-free survival, overall survival, and any correlations between tumor molecular profiles (based on genomics, transcriptomics, and quantitative proteomics) and patient outcomes.

For additional information, including exclusion and inclusion criteria, contact information and other details, please visit www.clinicaltrials.gov, QUILT trial #3.028.

A second haNK clinical trial, QUILT trial #3.046, NANT Melanoma Vaccine: Combination Immunotherapy in Subjects with Melanoma Who Have Progressed On or After Chemotherapy and PD-1/PD-L1 Therapy, was also recently been posted on clinicaltrials.gov and will be open for participant recruitment in the next few months.

On July 25, 2017 Moleculin Biotech, Inc., (NASDAQ: MBRX) ("Moleculin" or the "Company"), a preclinical pharmaceutical company focused on the development of anti-cancer drug candidates, some of which are based on license agreements with The University of Texas System on behalf of the M.D. Anderson Cancer Center, reported it has agreed to provide support to help accelerate the start of a physician-sponsored Investigational New Drug (IND) application to study the Company’s drug candidate WP1066 for the treatment of adult glioblastoma (brain tumors) (Press release, Moleculin, JUL 25, 2017, View Source [SID1234519871]).

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Dr. Robert Shepard, Moleculin’s Chief Medical Officer added: "We have never seen a drug like WP1066 that appears capable in vitro of both stimulating a natural immune response and directly killing tumor cells to block tumor progression. There continues to be a serious unmet need for the treatment of glioblastomas, the most aggressive and lethal form of brain cancer, which is why we are working so hard and are excited to get WP1066 into the clinic."

A recent Facebook post by MD Anderson Brain and Spine expanded: "The drug, known as WP1066, is modeled after a natural compound that has certain tumor-fighting properties. WP1066 amplifies these properties to potent levels, and it can cross the blood-brain barrier. WP1066 belongs to a class of drugs known as STAT3 inhibitors; they prevent tumors from using the STAT3 pathway to evade the immune system. WP1066 can also induce tumor cell death. It’s effective against human glioblastoma in preclinical models. The next step is to see if this unique drug is effective when given to glioblastoma patients." (link to post: www.facebook.com/MDAndersonBrainandSpine/photos/a.293040624101698.69475.221408934598201/1603466399725774/)

An IND application sponsored by an MD Anderson physician is currently on clinical hold because FDA has requested additional chemistry, manufacturing and control (CMC) data, among other things. The Company also announced on June 26, 2017 its agreement to support research at the Mayo Clinic on the potential for WP1066 to treat pediatric brain tumors.

"By providing additional guidance and data, we think we can help accelerate the ability of the physician investigator to respond to FDA’s requests in a way that will allow the study to begin," commented Walter Klemp, CEO of Moleculin, "which we believe could position WP1066 for a brain tumor trial this year."

On July 25, 2017 Verastem, Inc. (NASDAQ:VSTM), focused on discovering and developing drugs to improve the survival and quality of life of cancer patients, reported scientific findings from studies evaluating focal adhesion kinase (FAK) inhibition in preclinical models of pancreatic and breast cancer with the publication of two papers in the peer-reviewed journals, PLoS One and Oncotarget (Press release, Verastem, JUL 25, 2017, View Source [SID1234519867]). The two published articles continue to validate the underlying thesis for ongoing clinical collaborations evaluating Verastem’s lead FAK inhibitor defactinib in combination with chemotherapeutic and leading immunotherapeutic agents in several difficult to treat types of cancer.

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Jonathan Pachter, Ph.D., Chief Scientific Officer of Verastem, stated, "The data published in PLoS One illustrate the impact of combining a FAK inhibitor with standard chemotherapy, demonstrating inhibited tumor growth, along with limited metastatic dissemination in pancreatic ductal adenocarcinoma (PDAC), one of the deadliest types of cancer. Importantly, these data also provide additional rationale for the ongoing clinical studies evaluating defactinib in combination with Merck’s pembrolizumab for the treatment of patients with pancreatic cancer. Our data in the Oncotarget paper further delineate the anti-tumor mechanisms of our FAK inhibitors, and demonstrate the benefit of adding a FAK inhibitor to overcome key restrictive features of the tumor microenvironment (TME) to enable longer survival and reduced metastatic outgrowth."

PLoS ONE Publication Highlights Potential Role of FAK Inhibition in Pancreatic Cancer
In a paper titled "The Extracellular Matrix and Focal Adhesion Kinase Signaling Regulate Cancer Stem Cell Function in Pancreatic Ductal Adenocarcinoma," Verastem researchers, along with scientific collaborators led by William Matsui at Johns Hopkins University School of Medicine, describe findings demonstrating that FAK inhibition extended the anti-tumor response to gemcitabine and nab-paclitaxel (Gem-Pac) in preclinical models of PDAC. Prior research has demonstrated that the desmoplastic TME of PDAC plays a role in therapeutic resistance, and this study demonstrates that intra-tumoral fibrosis enhances tumor-initiating and self-renewal potential.

The researchers show that the TME in PDAC is dramatically altered by several ECM proteins, including type I collagen. Type I collagen increases PDAC tumor-initiating potential, self-renewal and the frequency of cancer stem cells (CSCs) through the activation of FAK. While FAK overexpression increased tumor initiation, it was demonstrated that FAK inhibition reduced PDAC growth in vitro and in vivo. In an in vivo murine PDAC model, FAK inhibitor-treated tumors grew significantly slower than tumors in vehicle-treated control animals. In addition, tumor regression was enhanced by the addition of a FAK inhibitor to Gem-Pac and tumor regrowth was also significantly delayed in animals treated with the combination of a FAK inhibitor with Gem-Pac, as compared to Gem-Pac alone.

Oncotarget Publication Describing the Preferential Targeting of Cancer Stem Cells by FAK Inhibition in Breast Cancer Models

In a paper by Vihren Kolev et al., titled "Inhibition of FAK Kinase Activity Preferentially Targets Cancer Stem Cells," Verastem researchers demonstrated that FAK inhibition significantly reduced the proportion of CSCs in mice bearing xenograft models of triple-negative breast cancer (TNBC), as evidenced by a reduced tumor-initiating capability upon re-implantation. In contrast, the cytotoxic chemotherapeutic agents, paclitaxel and carboplatin, enriched the number of CSCs. Importantly, FAK inhibition weakened the chemotherapy-induced enrichment of CSCs in vitro and delayed tumor regrowth following cessation of chemotherapy. In addition, an active mutant form of β-catenin reversed the preferential targeting of CSCs by FAK inhibition, suggesting that this targeting is mediated, at least in part, through attenuating β-catenin activation. The preferential targeting of CSCs by FAK inhibitors provides a rationale for the clinical development of FAK inhibitors aimed to increase durable responses for cancer patients.

About the Tumor Microenvironment
The TME encompasses multiple tumor and non-tumor cell populations and an extracellular matrix that support cancer cell survival. This includes immunosuppressive regulatory T-cells, myeloid-derived suppressor cells, tumor-associated macrophages, cancer-associated fibroblasts, and extracellular matrix proteins that can hamper the entry and therapeutic benefit of cytotoxic T-cells and anti-cancer drugs. In addition to targeting the proliferative and survival signaling of cancer cells, Verastem’s product candidates, including duvelisib and defactinib, also target the TME to potentially improve response to therapy.

About Focal Adhesion Kinase and Defactinib
Defactinib (VS-6063) is an investigational inhibitor of Focal Adhesion Kinase (FAK), a non-receptor tyrosine kinase encoded by the PTK-2 gene that mediates oncogenic signaling in response to cellular adhesion and growth factors.1 Based on the multi-faceted roles of FAK, defactinib is used to treat cancer through modulation of the tumor microenvironment, enhancement of anti-tumor immunity, and reduction of cancer stem cells.2,3 Defactinib is currently being evaluated in three separate clinical collaborations in combination with immunotherapeutic agents for the treatment of several different cancer types including pancreatic, ovarian, non-small cell lung cancer, and mesothelioma. These studies are combination clinical trials with pembrolizumab and avelumab from Merck & Co. and Pfizer/Merck KGaA, respectively.4,5,6 Information about these and additional clinical trials evaluating the safety and efficacy of defactinib can be found on www.clinicaltrials.gov.