On July 30, 2015 Amgen (NASDAQ:AMGN) reported financial results for the second quarter of 2015 (Press release, Amgen, JUL 30, 2015, View Source;p=RssLanding&cat=news&id=2073172 [SID:1234506769]). Key results include:

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

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

                  Schedule Your 30 min Free Demo!

Total revenues increased 4 percent versus the second quarter of 2014 to $5,370 million, with 6 percent product sales growth driven primarily by Enbrel (etanercept), Prolia (denosumab), Sensipar (cinacalcet), Kyprolis (carfilzomib) and XGEVA (denosumab). Unfavorable changes in foreign exchange rates impacted total revenue and product sales growth by approximately 2.5 percentage points.

Adjusted EPS grew 8 percent versus the second quarter of 2014 to $2.57 driven by higher revenues and lower operating expenses. Adjusted operating income increased 10 percent to $2,551 million.

Adjusted operating margin improved by approximately 2 percentage points to 49 percent.

GAAP EPS were $2.15 compared to $2.01 and GAAP operating income was $2,076 million compared to $1,902 million.

The Company generated $2.7 billion of free cash flow compared to $2.1 billion in the second quarter of 2014.
"Focused execution with our growth products drove record revenues in the second quarter, and expense discipline further leveraged earnings and our ability to invest in new and forthcoming launches," said Robert A. Bradway, chairman and chief executive officer. "Our pipeline continues to deliver, with Repatha approval in the European Union and Kyprolis approval for relapsed multiple myeloma in the United States. We are on track to deliver on our long-term objectives for patients and shareholders."

Second Quarter 2015 Product Sales Performance

Total product sales increased 6 percent for the second quarter of 2015 versus the second quarter of 2014. The increase was driven primarily by ENBREL, Prolia, Sensipar, Kyprolis and XGEVA. Growth for the quarter was due to price and higher unit demand.
Neulasta (pegfilgrastim) sales increased 2 percent year-over-year driven by price. NEUPOGEN (filgrastim) sales decreased 14 percent year-over-year driven primarily by the impact of competition in the United States (U.S.).

ENBREL sales increased 8 percent year-over-year driven by price, offset partially by the impact of competition.

Prolia sales increased 29 percent year-over-year driven by higher unit demand.

XGEVA sales increased 11 percent year-over-year driven primarily by higher unit demand.

EPOGEN (epoetin alfa) sales decreased 4 percent year-over-year driven primarily by a shift in dialysis customer purchases to Aranesp (darbepoetin alfa), as well as the impact of competition, offset partially by price.

Aranesp sales decreased 7 percent year-over-year driven by unfavorable changes in foreign exchange rates and a prior year positive Medicaid rebate estimate adjustment, offset partially by higher unit demand, including the shift from EPOGEN.

Sensipar/Mimpara sales increased 15 percent year-over-year driven by higher unit demand and price.

Vectibix (panitumumab) sales increased 21 percent year-over-year driven by higher unit demand.

Nplate (romiplostim) sales increased 6 percent year-over-year driven primarily by higher unit demand.

Kyprolis sales increased 53 percent year-over-year driven by higher unit demand.

Product Sales Detail by Product and Geographic Region

Second Quarter Operating Expense, Operating Margin and Tax Rate Analysis, on an Adjusted Basis

Operating Expenses decreased 1 percent, including a 3 percentage point benefit from foreign exchange rates.

Cost of Sales margin improved 0.8 points driven by lower royalty expense and higher product sales.

Research & Development (R&D) expenses decreased 6 percent driven by savings from transformation and process improvement efforts, offset partially by increased support for later-stage clinical programs.

Selling, General & Administrative expenses increased 2 percent as increased commercial expenses for new product launches were enabled by savings from transformation and process improvement efforts.

Operating Margin improved by approximately 2 percentage points to 49 percent.

Tax Rate increased 3.8 percentage points to 20.0 percent primarily due to changes in the geographic mix of earnings.

Cash Flow and Balance Sheet Discussion

The Company generated $2.7 billion of free cash flow in the second quarter of 2015 versus $2.1 billion in the second quarter of 2014. The increase was driven by improved working capital and higher operating income, as well as the termination of foreign exchange forward contracts.

The Company’s third quarter 2015 dividend of $0.79 per share declared on July 28, 2015, will be paid on Sept. 8, 2015, to all stockholders of record as of the close of business on Aug. 17, 2015.

During the second quarter, the Company repurchased 3.3 million shares of common stock at a total cost of $0.5 billion. At the end of the second quarter, the Company had $2.9 billion remaining under its stock repurchase authorization.

2015 Guidance

For the full year 2015, the Company now expects:

Total revenues in the range of $21.1 billion to $21.4 billion and adjusted EPS in the range of $9.55 to $9.80. Previously, the Company expected total revenues in the range of $20.9 billion to $21.3 billion and adjusted EPS in the range of $9.35 to $9.65.

Adjusted tax rate to be in the range of 18 percent to 19 percent. This excludes the benefit of the federal R&D tax credit, which has not yet been extended for 2015.

Capital expenditures to be approximately $700 million.

Second Quarter Product and Pipeline Update

The Company provided the following updates on selected product and pipeline programs:

Repatha

In July, the European Commission approved Repatha for the treatment of high cholesterol, as an adjunct to diet:
In combination with statins or other lipid lowering therapies in patients unable to control their LDL cholesterol with maximum tolerated statin doses, or
Alone or in combination with other lipid lowering therapies in patients who are statin intolerant or for whom a statin is contraindicated.

Repatha is also approved in the EU in combination with other lipid-lowering agents in patients with homozygous familial hypercholesterolemia (age 12 and over).
Enrollment has completed in the Phase 3 cardiovascular outcomes study.

Kyprolis

In July, the U.S. Food and Drug Administration expanded the indication of Kyprolis to include the treatment of patients who have received 1 to 3 prior lines of therapy, in combination with lenalidomide and dexamethasone.
A Marketing Authorization Application (MAA) is currently under accelerated assessment in the EU for relapsed multiple myeloma.
Supplemental New Drug Application submitted in the U.S. based on data from the phase 3 ENDEAVOR study.
Enrollment recently completed in the Phase 3 CLARION study versus Velcade (bortezomib) in newly diagnosed multiple myeloma patients.

A Phase 3 study initiated with weekly dosing in relapsed and refractory multiple myeloma.

AMG 416

Submissions of a New Drug Application in the U.S. and a MAA in the EU are planned for the third quarter of 2015 for secondary hyperparathyroidism.

AMG 334

Phase 3 studies initiated in episodic migraine.
Note: VELCADE is a registered trademark of Millennium Pharmaceuticals, Inc.

Non-GAAP Financial Measures

In this news release, management has presented its operating results for the second quarters of 2015 and 2014 in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on an adjusted (or non-GAAP) basis. In addition, management has presented its full year 2015 EPS and tax rate guidance in accordance with GAAP and on an adjusted (or 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. Management has also presented Free Cash Flow (FCF), which is a non-GAAP financial measure, for the second quarters of 2015 and 2014. FCF is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release.

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 core business activities by facilitating comparisons of results of core business operations among current, past and future periods. In addition, the Company believes that excluding the non-cash amortization of intangible assets, including developed product technology rights, acquired in business combinations treats those assets as if the Company had developed them internally in the past, and thus provides a supplemental measure of profitability in which the Company’s acquired intellectual property is treated in a comparable manner to its internally developed intellectual property. 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 press release in connection with its own budgeting and financial planning. 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 30, 2015 Varian Medical Systems (NYSE:VAR), world leader in radiotherapy, reported it has been awarded an eight-year tender to supply advanced radiotherapy equipment and software to a network of hospitals in Galicia, in the northwest of Spain (Press release, Varian Medical Systems, JUL 30, 2015, View Source [SID:1234506767]). Varian booked the order, worth an estimated €21m ($23m), in its fiscal third quarter.

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

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

                  Schedule Your 30 min Free Demo!

Under the terms of the agreement Varian will supply 10 linear accelerators, including three advanced TrueBeam systems, to five hospitals in the SERGAS network of hospitals in the Galicia region. Varian will also be installing its full suite of treatment planning software and oncology information management systems across the network.

"This is the largest single order that Varian has been awarded in Spain and we are excited to work closely with the SERGAS group to make the most advanced radiation therapy available to cancer patients in the region," said Jaime Calderon, Varian’s Iberia region managing director.

Under this investment project, the five public hospitals – Centro Oncologico de Galicia, Hospital Lucus Augusti de Lugo, Complejo Hospitalario Universitario de Santiago, Complejo Hospitalario Universitario de Vigo and Complejo Hospitalario Universitario de Ourense – will also be connected within Varian’s ARIA network, enabling greater integration and knowledge-sharing between the five departments. This will be the first time the five centers have been connected in this way.

"This long-term project is intended to increase patient access to advanced radiation therapy and increase efficiency and throughput at the five hospitals," said Dr. Rocio Mosquera, the Galician minister of health. "By implementing such advanced treatment equipment and integrated software, it will also enable the networked hospitals to become more involved in international research and innovation programs."

In total, Varian will be supplying three TrueBeam systems, six Clinac iX machines, and a Unique system to the five hospitals. Two of the hospitals currently use Varian equipment, while two more are equipped with systems from other suppliers. The fifth center is being upgraded to deliver radiotherapy for the first time.

Varian Medical Systems, Inc., of Palo Alto, California, focuses energy on saving lives by equipping the world with advanced technology for fighting cancer and for X-ray imaging. The company is the world’s leading manufacturer of medical devices and software for treating cancer and other medical conditions with radiation. The company provides comprehensive solutions for radiotherapy, radiosurgery, proton therapy and brachytherapy. The company supplies informatics software for managing comprehensive cancer clinics, radiotherapy centers and medical oncology practices. Varian is also a premier supplier of X-ray imaging components, including tubes, digital detectors, and image processing software and workstations for use in medical, scientific, and industrial settings, as well as for security and non-destructive testing. Varian Medical Systems employs approximately 6,900 people who are located at manufacturing sites in North America, Europe, and China and approximately 70 sales and support offices around the world. For more information, visit View Source or follow us on Twitter.

On July 30, 2015 Amgen (NASDAQ:AMGN) reported financial results for the second quarter of 2015 (Filing, 8-K, Amgen, JUL 30, 2015, View Source [SID:1234506764]). Key results include:
• Total revenues increased 4 percent versus the second quarter of 2014 to $5,370 million, with 6 percent product sales growth driven primarily by Enbrel (etanercept), Prolia (denosumab), Sensipar (cinacalcet), Kyprolis (carfilzomib) and XGEVA (denosumab). Unfavorable changes in foreign exchange rates impacted total revenue and product sales growth by approximately 2.5 percentage points.

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

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

                  Schedule Your 30 min Free Demo!

• Adjusted EPS grew 8 percent versus the second quarter of 2014 to $2.57 driven by higher revenues and lower operating expenses. Adjusted operating income increased 10 percent to $2,551 million.

• Adjusted operating margin improved by approximately 2 percentage points to 49 percent.

• GAAP EPS were $2.15 compared to $2.01 and GAAP operating income was $2,076 million compared to $1,902 million.

• The Company generated $2.7 billion of free cash flow compared to $2.1 billion in the second quarter of 2014.

Second Quarter 2015 Product Sales Performance

• Total product sales increased 6 percent for the second quarter of 2015 versus the second quarter of 2014. The increase was driven primarily by ENBREL, Prolia, Sensipar, Kyprolis and XGEVA. Growth for the quarter was due to price and higher unit demand.

• Neulasta (pegfilgrastim) sales increased 2 percent year-over-year driven by price. NEUPOGEN (filgrastim) sales decreased 14 percent year-over-year driven primarily by the impact of competition in the United States (U.S.).

• ENBREL sales increased 8 percent year-over-year driven by price, offset partially by the impact of competition.

• Prolia sales increased 29 percent year-over-year driven by higher unit demand.

• XGEVA sales increased 11 percent year-over-year driven primarily by higher unit demand.

• EPOGEN (epoetin alfa) sales decreased 4 percent year-over-year driven primarily by a shift in dialysis customer purchases to Aranesp (darbepoetin alfa), as well as the impact of competition, offset partially by price.

• Aranesp sales decreased 7 percent year-over-year driven by unfavorable changes in foreign exchange rates and a prior year positive Medicaid rebate estimate adjustment, offset partially by higher unit demand, including the shift from EPOGEN.

• Sensipar/Mimpara sales increased 15 percent year-over-year driven by higher unit demand and price.

• Vectibix (panitumumab) sales increased 21 percent year-over-year driven by higher unit demand.

• Nplate (romiplostim) sales increased 6 percent year-over-year driven primarily by higher unit demand.

• Kyprolis sales increased 53 percent year-over-year driven by higher unit demand.

Second Quarter Operating Expense, Operating Margin and Tax Rate Analysis, on an Adjusted Basis

• Operating Expenses decreased 1 percent, including a 3 percentage point benefit from foreign exchange rates.

• Cost of Sales margin improved 0.8 points driven by lower royalty expense and higher product sales.

• Research & Development (R&D) expenses decreased 6 percent driven by savings from transformation and process improvement efforts, offset partially by increased support for later-stage clinical programs.

• Selling, General & Administrative expenses increased 2 percent as increased commercial expenses for new product launches were enabled by savings from transformation and process improvement efforts.

• Operating Margin improved by approximately 2 percentage points to 49 percent.

• Tax Rate increased 3.8 percentage points to 20.0 percent primarily due to changes in the geographic mix of earnings.

Cash Flow and Balance Sheet Discussion

• The Company generated $2.7 billion of free cash flow in the second quarter of 2015 versus $2.1 billion in the second quarter of 2014. The increase was driven by improved working capital and higher operating income, as well as the termination of foreign exchange forward contracts.

• The Company’s third quarter 2015 dividend of $0.79 per share declared on July 28, 2015, will be paid on Sept. 8, 2015, to all stockholders of record as of the close of business on Aug. 17, 2015.

• During the second quarter, the Company repurchased 3.3 million shares of common stock at a total cost of $0.5 billion. At the end of the second quarter, the Company had $2.9 billion remaining under its stock repurchase authorization.

2015 Guidance
For the full year 2015, the Company now expects:

• Total revenues in the range of $21.1 billion to $21.4 billion and adjusted EPS in the range of $9.55 to $9.80. Previously, the Company expected total revenues in the range of $20.9 billion to $21.3 billion and adjusted EPS in the range of $9.35 to $9.65.

• Adjusted tax rate to be in the range of 18 percent to 19 percent. This excludes the benefit of the federal R&D tax credit, which has not yet been extended for 2015.

• Capital expenditures to be approximately $700 million.

The Company provided the following updates on selected product and pipeline programs:
Repatha
• In July, the European Commission approved Repatha for the treatment of high cholesterol, as an adjunct to diet:
• In combination with statins or other lipid lowering therapies in patients unable to control their LDL cholesterol with maximum tolerated statin doses, or
• Alone or in combination with other lipid lowering therapies in patients who are statin intolerant or for whom a statin is contraindicated.
• Repatha is also approved in the EU in combination with other lipid-lowering agents in patients with homozygous familial hypercholesterolemia (age 12 and over).
• Enrollment has completed in the Phase 3 cardiovascular outcomes study.
Kyprolis
• In July, the U.S. Food and Drug Administration expanded the indication of Kyprolis to include the treatment of patients who have received 1 to 3 prior lines of therapy, in combination with lenalidomide and dexamethasone.
• A Marketing Authorization Application (MAA) is currently under accelerated assessment in the EU for relapsed multiple myeloma.
• Supplemental New Drug Application submitted in the U.S. based on data from the phase 3 ENDEAVOR study.
• Enrollment recently completed in the Phase 3 CLARION study versus Velcade (bortezomib) in newly diagnosed multiple myeloma patients.
• A Phase 3 study initiated with weekly dosing in relapsed and refractory multiple myeloma.
AMG 416
• Submissions of a New Drug Application in the U.S. and a MAA in the EU are planned for the third quarter of 2015 for secondary hyperparathyroidism.
AMG 334
• Phase 3 studies initiated in episodic migraine.

Non-GAAP Financial Measures
In this news release, management has presented its operating results for the second quarters of 2015 and 2014 in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on an adjusted (or non-GAAP) basis. In addition, management has presented its full year 2015 EPS and tax rate guidance in accordance with GAAP and on an adjusted (or 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. Management has also presented Free Cash Flow (FCF), which is a non-GAAP financial measure, for the second quarters of 2015 and 2014. FCF is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release.

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 core business activities by facilitating comparisons of results of core business operations among current, past and future periods. In addition, the Company believes that excluding the non-cash amortization of intangible assets, including developed product technology rights, acquired in business combinations treats those assets as if the Company had developed them internally in the past, and thus provides a supplemental measure of profitability in which the Company’s acquired intellectual property is treated in a comparable manner to its internally developed intellectual property. 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 press release in connection with its own budgeting and financial planning. 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 30, 2015 Threshold Pharmaceuticals, Inc. (NASDAQ: THLD) reported financial results for the second quarter 2015 (Press release, Threshold Pharmaceuticals, JUL 30, 2015, View Source [SID:1234506763]). Revenue for the second quarter ended June 30, 2015 was $3.7 million. The operating loss for the second quarter ended June 30, 2015 was $8.9 million. The net loss for the second quarter ended June 30, 2015 was $8.3 million, which included the operating loss of $8.9 million and non-cash income of $0.6 million related to the changes in fair value of the Company’s outstanding warrants and was classified as other income (expense). As of June 30, 2015, Threshold had $67.0 million in cash, cash equivalents and marketable securities, with no debt outstanding.

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

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

                  Schedule Your 30 min Free Demo!

"We are pleased with progress being made in the development programs for both of our product candidates, evofosfamide and tarloxotinib," said Barry Selick, Ph.D., Chief Executive Officer of Threshold. "We expect to announce top-line results from the two pivotal Phase 3 clinical trials of evofosfamide in patients with advanced soft tissue sarcoma and in patients with advanced pancreatic cancer (MAESTRO) around the end of this year. We are initiating two proof-of-concept Phase 2 clinical trials of tarloxotinib this year in patients whom we believe may benefit from treatment with our proprietary and novel hypoxia-activated EGFR tyrosine kinase inhibitor."

Second Quarter 2015 Financial and Operational Results

Revenue of $3.7 million was recognized for both the second quarter of 2015 and 2014. Revenue is related to the amortization of the aggregate of $110 million in upfront and milestone payments earned in 2013 and 2012 from Threshold’s collaboration with Merck KGaA, Darmstadt, Germany. The revenue from the upfront and milestone payments earned under the agreement is being amortized over the relevant performance period, rather than being immediately recognized when the upfront and milestone payments are earned or received.

The net loss for the second quarter of 2015 was $8.3 million compared to a net loss of $0.8 million for the second quarter of 2014. Included in the net loss for the second quarter of 2015 was an operating loss of $8.9 million and non-cash income of $0.6 million compared to an operating loss of $7.5 million and non-cash income of $6.7 million included in the net loss for the second quarter of 2014. The non-cash income is related to the change in fair value of the Company’s outstanding warrants and was classified as other income (expense).

Research and development expenses were $10.1 million for the second quarter of 2015 compared to $8.7 million for the second quarter of 2014. The increase in research and development expenses was due primarily to a $1.2 million increase in clinical development expenses, net of reimbursement from Merck KGaA, Darmstadt, Germany related to their 70% share of total development expenses for evofosfamide (previously known as TH-302).

General and administrative expenses were $2.5 million for both the second quarter of 2015 and 2014.

Non-cash stock-based compensation expense included in total operating expenses was $1.9 million for the second quarter of 2015 versus $1.5 million for the second quarter of 2014. The increase in stock-based compensation expense was due to the amortization of a greater number of options with higher fair values.

As of June 30, 2015 and March 31, 2015, Threshold had $67.0 million and $83.1 million in cash, cash equivalents and marketable securities, respectively. The net decrease of $16.1 million in cash, cash equivalents and marketable securities during the second quarter of 2015 was primarily due to the Company’s operating cash requirements for the second quarter of 2015.

Second Quarter and Recent Key Achievements

Evofosfamide

In May, Threshold announced that the U.S. Food and Drug Administration (FDA) granted Fast Track designation to the Company’s partner Merck KGaA, Darmstadt, Germany, for the development of evofosfamide (TH-302), administered in combination with gemcitabine, for the treatment of previously untreated patients with locally advanced unresectable or metastatic pancreatic cancer. This is the second Fast Track designation for evofosfamide, the first having been granted to Threshold in November 2014 for the development of evofosfamide in combination with doxorubicin for the treatment of patients with locally advanced or metastatic soft tissue sarcoma.

Also in May, Threshold presented data from the Phase 2 component of an ongoing Phase 1/2 trial of evofosfamide in combination with the proteasome inhibitor Velcade (bortezomib) and low-dose dexamethasone ("EBorD") in patients with relapsed or refractory multiple myeloma at the annual meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) (Abstract 8579). A clinical benefit rate of 29% (one complete response, two partial responses, and one minimal response) was observed in 4 of 14 patients treated at the recommended Phase 2 dose of evofosfamide (340 mg/m2) in EBorD. These patients had already received multiple types of treatment prior to enrollment including a median of 3 prior bortezomib-containing regimens. The most common adverse events were thrombocytopenia and anemia and no patients discontinued treatment due to an adverse event.

In April, preclinical data evaluating the potential use of evofosfamide in a variety of tumor types were presented by Threshold and Merck KGaA, Darmstadt, Germany, at the annual meeting of the American Association for Cancer Research (AACR) (Free AACR Whitepaper) (Abstract Nos. 2424, 2603, 3867, 5271, and 5333).

Tarloxotinib bromide* ("tarloxotinib")

In April, data on tarloxotinib (TH-4000; previously referred to as PR610 or Hypoxin), Threshold’s proprietary, hypoxia-activated irreversible epidermal growth factor receptor (EGFR) tyrosine kinase inhibitor, were presented in collaboration with the molecule’s co-inventors from The University of Auckland at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) annual meeting (Abstract 5358). The Company believes the data presented support its planned Phase 2 proof-of-concept clinical trials of tarloxotinib in patients with EGFR-positive, T790M-negative NSCLC after conventional EGFR-TKI therapy has failed as well as in patients with recurrent or metastatic squamous cell carcinoma of the head and neck or skin.

Clinical Development Outlook for Threshold- and Merck KGaA, Darmstadt, Germany-Sponsored Trials of Evofosfamide

The development plan for evofosfamide is designed to investigate its safety and efficacy across a broad range of solid tumors and hematologic malignancies. Evofosfamide is being developed in therapeutic areas supported by preclinical and clinical data and where there is high unmet need for new anti-cancer agents. To date, evofosfamide has been evaluated in more than 1,500 patients with cancer. Threshold anticipates the following development activities related to Threshold- and Merck KGaA, Darmstadt, Germany-sponsored clinical trials for evofosfamide in 2015:

Continue to efficiently execute the two Phase 3 clinical trials of evofosfamide to allow for timely data analyses and to prepare for the potential submission of marketing applications, assuming the data from the trials are supportive;
Continue enrollment in the Phase 2 clinical trial of evofosfamide designed to support registration for the treatment of patients with non-squamous non-small cell lung cancer;
Complete enrollment in the Phase 2 clinical trial of evofosfamide in combination with bortezomib (Velcade) and low-dose dexamethasone in patients with relapsed or refractory multiple myeloma; and
Threshold is in the process of closing the Phase 2 clinical trial of evofosfamide in patients with melanoma due to a slower than anticipated enrollment rate in light of the evolving treatment landscape and new therapeutic options for patients with melanoma since the trial began.

About Evofosfamide

Evofosfamide is an investigational hypoxia-activated prodrug that is designed to be preferentially activated under severe tumor hypoxic conditions, a feature of many solid tumors. Areas of low oxygen levels (hypoxia) in solid tumors are due to insufficient blood vessel supply. Similarly, the bone marrow of patients with hematological malignancies has also been shown, in some cases, to be severely hypoxic.

Evofosfamide is currently in two Phase 3 trials, both of which are fully recruited: one in combination with doxorubicin versus doxorubicin alone in patients with locally advanced unresectable or metastatic soft tissue sarcoma (STS) (the TH-CR-406 trial), and the other in combination with gemcitabine versus gemcitabine and placebo in patients with locally advanced unresectable or metastatic pancreatic cancer (the MAESTRO trial). Both Phase 3 trials are being conducted under Special Protocol Assessment (SPA) agreements with the FDA. The FDA and the European Commission have granted evofosfamide Orphan Drug designation for the treatment of STS and pancreatic cancer. The FDA has also granted Fast Track designation for evofosfamide for both STS and pancreatic cancer. Evofosfamide is also being investigated in a Phase 2 trial designed to support registration for the treatment of non-squamous non-small cell lung cancer, and in earlier-stage clinical trials of other solid tumors and hematological malignancies.

Threshold has a global license and co-development agreement for evofosfamide with Merck KGaA, Darmstadt, Germany, which includes an option for Threshold to co-commercialize in the U.S.

About Tarloxotinib Bromide

Tarloxotinib bromide, or "tarloxotinib", (TH-4000) is a hypoxia-activated, covalent (irreversible) epidermal growth factor receptor tyrosine kinase inhibitor (EGFR-TKI) that targets the activating mutations of EGFR (L858R and Del19) and wild-type, or "normal", EGFR. Tarloxotinib is designed as a prodrug to selectively release its EGFR-TKI upon encountering severe tumor hypoxic conditions, a feature of many solid tumors. Accordingly, it has the potential to effectively shut down aberrant wild-type and mutant EGFR signaling in a tumor-selective manner, thus potentially avoiding or reducing the toxic side effects associated with currently available EGFR-TKIs and systemic wild-type EGFR inhibition. Threshold expects to initiate two Phase 2 proof-of-concept trials with tarloxotinib in 2015: one in patients with mutant EGFR-positive, T790M-negative advanced non-small cell lung cancer progressing on an EGFR-TKI, and the other in patients with recurrent or metastatic squamous cell carcinoma of the head and neck or skin. Threshold licensed exclusive worldwide rights to tarloxotinib from the University of Auckland in September 2014.

On July 30, 2015 Teva Pharmaceutical Industries Ltd. (NYSE:TEVA) reported results for the quarter ended June 30, 2015 (Press release, Teva, JUL 30, 2015, View Source;p=RssLanding&cat=news&id=2072734 [SID:1234506762]).
"Teva’s second quarter solid performance was driven by important contributions from across our integrated portfolio of high-quality generic and specialty medicines," stated Erez Vigodman, Teva’s President and CEO. "We continue to deliver on our promise to take bold steps forward, both organic and inorganic, to position Teva for sustainable, profitable growth, execute on our strategic and operational initiatives, improve our profitability, strengthen our cash flow generation, and build the most competitive operating network in the industry."

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

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

                  Schedule Your 30 min Free Demo!

Mr. Vigodman continued, "Based on our strong performance in the first half of the year, we are raising our guidance for 2015. We expect to complete the acquisition of Allergan’s global generics business in the first quarter of 2016, which will further diversify our business and support the continued creation of shareholder value. We remain excited about our future as we continue the positive momentum to transform our Company."

Second Quarter 2015 Results
Revenues in the second quarter of 2015 amounted to $5.0 billion, down 2% compared to the second quarter of 2014. Excluding the impact of foreign exchange fluctuations and the sale of our U.S. OTC plants in July 2014, revenues grew 6%.

Exchange rate differences (net of profits from certain hedging transactions) between the second quarter of 2015 and the second quarter of 2014 decreased our revenues by $341 million and reduced our non-GAAP operating income by $4 million but increased our GAAP operating income by $17 million.

Non-GAAP gross profit was $3.1 billion in the second quarter of 2015, up 7% from the second quarter of 2014. Non-GAAP gross profit margin was 62.8% in the second quarter of 2015, compared to 58.1% in the second quarter of 2014. GAAP gross profit was $2.9 billion in the second quarter of 2015, compared to $2.7 billion in the second quarter of 2014. GAAP gross profit margin was 58.4% in the quarter, compared to 52.7% in the second quarter of 2014.

Research and Development (R&D) expenditures (excluding equity compensation expenses and purchase of in-process R&D) in the second quarter of 2015 amounted to $357 million, compared to $340 million in the second quarter of 2014. R&D expenses were 7.2% of revenues in the quarter, compared to 6.7% in the second quarter of 2014. R&D expenses related to our generic medicines segment amounted to $134 million, up 7% compared to $125 million in the second quarter of 2014. In local currency terms, expenses increased 12%. The increase is the result of additional development activities for the U.S. market. R&D expenses related to our specialty medicines segment amounted to $220 million, an increase of 4% compared to $211 million in the second quarter of 2014. In local currency terms, expenses increased 6%, mainly as a result of investments in the assets acquired via the Labrys and Auspex deals.

Selling and Marketing (S&M) expenditures (excluding amortization of purchased intangible assets and equity compensation expenses) amounted to $846 million, or 17.0% of revenues, in the second quarter of 2015, compared to $911 million, or 18.1% of revenues, in the second quarter of 2014. S&M expenses related to our generic medicines segment amounted to $335 million, a decrease of 14% compared to $388 million in the second quarter of 2014. In local currency terms, S&M expenses decreased 1%. S&M expenses related to our specialty medicines segment amounted to $457 million, a decrease of 5% compared to $481 million in the second quarter of 2014. In local currency terms, S&M expenses increased 1%.

General and Administrative (G&A) expenditures (excluding equity compensation expenses) amounted to $307 million in the second quarter of 2015, or 6.2% of revenues, compared to $291 million and 5.8% in the second quarter of 2014.
Quarterly non-GAAP operating income was $1.6 billion, an increase of 16% compared to the second quarter of 2014. Quarterly GAAP operating income was $662 million in the second quarter of 2015, a decrease of 28% compared to $925 million in the second quarter of 2014.

Non-GAAP financial expenses amounted to $41 million in the second quarter of 2015, compared to $76 million in the second quarter of 2014. GAAP financial expenses for the second quarter of 2015 amounted to $41 million, compared to $78 million in the second quarter of 2014. The decrease was mainly due to finance income from derivative financial instruments as well as a lower cost of debt, partially offset by the impact of higher debt.

The provision for non-GAAP tax for the second quarter of 2015 amounted to $345 million on pre-tax non-GAAP income of $1.6 billion, for a quarterly tax rate of 22%. The provision for non-GAAP tax in the second quarter of 2014 was $245 million on pre-tax non-GAAP income of $1.3 billion, for a quarterly tax rate of 19%. GAAP tax expenses for the second quarter of 2015 amounted to $88 million or 14% on pre-tax income of $621 million. In the second quarter of 2014, the provision for taxes amounted to$102 million or 12% on pre-tax income of $847 million.

Non-GAAP net income and non-GAAP diluted EPS were $1.2 billion and $1.43, respectively, in the second quarter of 2015, up 15% and 14%, respectively, compared to the second quarter of 2014. GAAP net income and GAAP diluted EPS were $539 million and $0.63, respectively, in the second quarter of 2015, compared to $748 million and $0.87, respectively, in the second quarter of 2014.

Non-GAAP information: Net non-GAAP adjustments in the second quarter of 2015 amounted to $691 million. Non-GAAP net income and non-GAAP EPS for the quarter were adjusted to exclude the following items:

Legal settlements and loss contingencies of $384 million mainly related to the booking of an additional reserve for the settlement of the modafinil antitrust litigation;

Amortization of purchased intangible assets totaling $214 million, of which $206 million is included in cost of goods sold and the remaining $8 million in selling and marketing expenses;

Acquisition expenses of $132 million;

Impairment of long-lived assets of $81 million;

Restructuring expenses and other non-GAAP items of $54 million;

Equity compensation of $31 million;

Purchase of research and development in process of $24 million;

Contingent consideration of $18 million;

Costs related to regulatory actions taken in facilities of $10 million; and
Related tax benefit of $257 million.

Teva believes that excluding such items facilitates investors’ understanding of its business. See the attached tables for a reconciliation of the U.S. GAAP results to the adjusted non-GAAP figures.

Cash flow from operations generated during the second quarter of 2015 amounted to $1.5 billion, compared to $1.1 billion in the second quarter of 2014, an increase of 41%. The increase was mainly due to a decrease in accounts receivable net of SR&A and lower payments related to legal settlements in the second quarter of 2015. Free cash flow, excluding net capital expenditures, amounted to $1.3 billion compared to $0.9 in the second quarter of 2014, an increase of 51%.

Cash and investments at June 30, 2015 decreased to $2.8 billion, compared to $3.8 billion at March 31, 2015, mainly due to the Auspex acquisition payment and a repayment of $1 billion of senior notes, partially offset by short term borrowing and free cash flow generated during the quarter.

For the second quarter of 2015, the weighted average outstanding shares for the fully diluted earnings per share calculation was 859 million on both a GAAP and non-GAAP basis. At June 30, 2015, the outstanding shares for calculating Teva’s market capitalization were approximately 850 million.

Shareholders’ equity was $23.1 billion at June 30, 2015, compared to $22.7 billion at March 31, 2015. The increase primarily reflects $0.5 billion of GAAP net income offset by $0.3 billion of dividend payments.

Segment Results for the Second Quarter 2015

Generic Medicines Revenues

Generic medicines revenues in the second quarter of 2015 amounted to $2.5 billion, a decrease of 2% compared to the second quarter of 2014. In local currency terms, revenues increased 6%.

Generic revenues consisted of:
U.S. revenues of $1.3 billion, an increase of 24% compared to the second quarter of 2014. The increase resulted mainly from the launch of aripiprazole tablets (the generic equivalent of Abilify) this quarter, and from sales of other products that were not sold in the second quarter of 2014, the most significant of which was esomeprazole (the generic equivalent of Nexium). This was partially offset by declines in sales of other products, the most significant of which was capecitabine (the generic equivalent of Xeloda).
European revenues of $665 million, a decrease of 18%, or 3% in local currency terms, compared to the second quarter of 2014.

The decrease in local currency terms resulted mainly from our strategy of pursuing profitable and sustainable business in the region, with decreases in Spain, the U.K. and France offset by increases in Italy and Germany. This strategy has continued to lead to notable improvements in the profitability of our European generics business.

ROW revenues of $475 million, a decrease of 25%, or of 13% in local currency terms, compared to the second quarter of 2014. The decrease in local currency terms was mainly due to lower revenues in Canada and Japan, which were partially offset by higher revenues in Latin America and Russia.

API sales to third parties of $183 million (which is included in the market revenues above), an increase of 1%, compared to the second quarter of 2014.

Generic medicines revenues comprised 50% of our total revenues in the quarter, as in the second quarter of 2014.

Generic Medicines Gross Profit

Gross profit from our generic medicines segment in the second quarter of 2015 amounted to $1.2 billion, an increase of 14% compared to the second quarter of 2014. Gross profit margin for our generic medicines segment in the second quarter of 2015 increased to 48.6%, from 41.7% in the second quarter of 2014. The higher gross profit was mainly a result of the launches of arpiprazole (the generic equivalent of Abilify) and esomeprazole (the generic equivalent of Nexium) in the United States partially offset by lower gross profit in our ROW markets.

Generic Medicines Profit

Our generic medicines segment generated profit of $729 million in the second quarter of 2015, an increase of 36% compared to the second quarter of 2014. Generic medicines profitability as a percentage of generic medicines revenues was 29.6% in the second quarter of 2015, up from 21.3% in the second quarter of 2014. The increase was primarily due to higher gross profit coupled with a reduction in S&M expenses, partially offset by higher R&D expenses.

Specialty Medicines Revenues
Specialty medicines revenues in the second quarter of 2015 amounted to $2.1 billion, an increase of 3% compared to the second quarter of 2014. In local currency terms, revenues increased 8%. U.S. specialty medicines revenues amounted to $1.6 billion, up 14% compared to the second quarter of 2014. European specialty medicines revenues amounted to $378 million, a decrease of 25%, or of 8% in local currency terms, compared to the second quarter of 2014. ROW specialty revenues amounted to $90 million, down 16%, or 2% in local currency terms, compared to the second quarter of 2014.

Specialty medicines revenues comprised 42% of our total revenues in the quarter, compared to 40% in the second quarter of 2014.
The increase in specialty medicines revenues compared to the second quarter of 2014 was primarily due to higher sales of Copaxone in the U.S.

Global sales of Copaxone (20 mg/mL and 40 mg/mL), the leading multiple sclerosis therapy in the U.S. and globally, amounted to $1.1 billion, an increase of 12% compared to the second quarter of 2014.

In the United States, sales of Copaxone amounted to $870 million, an increase of 31% compared to the second quarter of 2014.
The increase was mainly due to higher sales volume in the second quarter of 2015 as well as price increases in August 2014 and January 2015. In addition, our U.S. Copaxone revenues in the second quarter of 2014 were relatively low following the launch of Copaxone 40 mg/mL in January 2014. At the end of the second quarter of 2015, according to June 2015 IMS data, our U.S. market shares for the Copaxone products in terms of new and total prescriptions were 23.8% and 31.2%, respectively. Copaxone 40 mg/mL accounted for 68.5% of total Copaxone prescriptions in the U.S.

In June 2015, Sandoz launched its once daily generic version of Copaxone 20 mg/mL, Glatopa, in the United States.

Sales outside the United States amounted to $184 million, a decrease of 34%, or of 20% in local currency terms, compared to the second quarter of 2014. The decrease in local currency terms stemmed from lower volumes sold in Europe due to increased competition, and from the effect of macro-economic conditions in certain Latin American countries.

Our global Azilect revenues amounted to $105 million, an increase of 2% compared to the second quarter of 2014. In local currency terms, sales increased 15%. The increase in local currency terms was mainly due to higher sales to Lundbeck, our marketing partner in certain territories. Global in-market sales decreased 10%.

Sales of our respiratory products amounted to $253 million, down 2% compared to the second quarter of 2014. ProAir revenues in the quarter amounted to $128 million, down 4% compared to the second quarter of 2014, as negative price fluctuations were partially offset by volume growth. In April 2015, the FDA approved ProAir RespiClick (albuterol sulfate) inhalation powder, a breath-actuated, multi-dose, dry-powder, short-acting beta-agonist inhaler. It was launched in the U.S. in May 2015.

QVAR global revenues amounted to $83 million in the second quarter of 2015, up 12% compared to the second quarter of 2014, due to volume growth.

Sales of our oncology products amounted to amounted to $293 million in the second quarter of 2015, up 3% from the second quarter of 2014. Sales of Treanda amounted to $179 million, down 1% compared to the second quarter of 2014.

Specialty Medicines Gross Profit
Gross profit from our specialty medicines segment amounted to $1.8 billion, up $40 million compared to the second quarter of 2014. Gross profit margin for our specialty medicines segment in the second quarter of 2015 was 86.5%, compared to 87.2% in the second quarter of 2014.

Specialty Medicines Profit
Our specialty medicines segment profit amounted to $1.1 billion in the second quarter of 2015, up 5% compared to the second quarter of 2014, mainly due to higher revenues and lower S&M expenses, which were partially offset by higher R&D expenses.
Specialty medicines profit as a percentage of segment revenues was 54.1% in the second quarter of 2015, up from 53.1% in the second quarter of 2014.

Beginning in 2015, expenses related to our equity compensation are excluded from our franchise results. The data presented have been conformed to reflect the exclusion of equity compensation expenses for all periods.

Other Activities
Our OTC revenues related to PGT amounted to $210 million, a decrease of 7% compared to $226 million in the second quarter of 2014. In local currency terms, revenues increased 10%. The increase in local currency terms was mainly due to higher sales in Latin America. PGT’s in-market sales amounted to $325 million in the second quarter of 2015, a decrease of $25 million compared to the second quarter of 2014. This decrease was due to foreign currency exchange fluctuations.

Our revenues from OTC products in the second quarter of 2015 amounted to $210 million, compared to $274 million in the second quarter of 2014. The decline was mainly due to the sale of our U.S. OTC plants, previously purchased from P&G, back to P&G in July 2014.

Other revenues amounted to $200 million in the second quarter of 2015, mostly from the distribution of third-party products in Israel and Hungary, compared to revenues of $229 million, in the second quarter of 2014.

Updated 2015 Financial Outlook
We are updating our 2015 full-year financial outlook. See detailed guidance below:

Dividend
The Board of Directors, at its meeting on July 26, 2015, declared a cash dividend for the second quarter of 2015 of $0.34.

The record date will be August 20, 2015, and the payment date will be September 3, 2015. Tax will be withheld at a rate of 15%.