On April 26, 2017 Asterias Biotherapeutics, Inc. (NYSE MKT: AST), a biotechnology company focused on the emerging field of regenerative medicine, reported that the results from its completed Phase 2 clinical trial of AST-VAC1 are now available online in Cancer, a leading peer-reviewed journal of the American Cancer Society (Press release, BioTime, APR 26, 2017, View Source [SID1234518695]). The study publication is available at View Source

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"This important publication in the journal Cancer shows why AST-VAC1 has the potential to become an important new therapy for AML patients by safely prolonging the duration of remission in patients with high-risk AML," said Steve Cartt, President and Chief Executive Officer of Asterias. "We believe these Phase 2 results also demonstrate the potential of our AST-VAC2 allogeneic (non-patient specific) dendritic cell cancer vaccine to achieve promising results in its upcoming Phase 1/2a study in non-small cell lung cancer and to potentially be developed for the treatment of other types of cancer, as well."

The publication, titled "Immune Responses and Long-Term Disease Recurrence Status After Telomerase-Based Dendritic Cell Immunotherapy in Patients With Acute Myeloid Leukemia," describes the previously reported results of the Phase 2 study of AST-VAC1, Asterias’ patient-specific dendritic cell cancer vaccine, in which 57% of patients who received AST-VAC1 had prolonged relapse-free survival, including high-risk patients over 60 years old or in second remission.

The Phase 2 multicenter, open label trial was designed to evaluate the safety and tolerability of the AST-VAC1 vaccination regimen in patients with intermediate or high risk AML who were in complete clinical remission. Additional objectives of the study were to evaluate the immune responses to AST-VAC1 and to explore the effects of vaccination on relapse in this patient population. Long-term follow-up results showed that 11 out of 19 patients (58 percent) receiving AST-VAC1 during complete remission were relapse-free with a median follow-up of 52 months. In addition, four out of seven patients (57 percent) over the age of 60 remained in remission after a median 54 months of follow-up. Such prolonged relapse-free survival was favorable compared to that previously reported for these patient groups (20-40% overall group and 10-20% for subjects over 60 years old). AST-VAC1 was found to be safe and well-tolerated in this study over multiple vaccinations.

About Acute Myeloid Leukemia

Acute myeloid leukemia (AML) is a cancer of the blood and bone marrow. AML is the most common type of acute leukemia and has the potential for rapid progression, if untreated. In AML, the bone marrow produces an excess number of immature cells known as blasts. In AML, these blasts fail to mature into normal red and white blood cells. Instead, the blasts proliferate and accumulate in the bone marrow and peripheral blood, leading to deficiencies in normal mature cells. These deficiencies, often referred to as cytopenias, can induce several adverse effects including anemias and susceptibility to infections. Current treatment strategies for AML are associated with significant morbidities and in most instances, AML leads to death.

Approximately 20,500 new cases of AML are diagnosed in the U.S. annually. AML remains a high unmet clinical need, particularly in patients over the age of 60 years who face poor outcomes and have limited therapeutic options. Treatment and prognosis in AML is strongly influenced by a patient’s age and tumor profile. Successful treatment and survival of advanced age patients or those with a high risk profile is very poor, with a four year relapse-free survival of 10% – 20% (Rolig et al, 2011). Detailed characterizations of genetic abnormalities associated with AML have elucidated their high number and relative complexity, making development of targeted therapeutics to these mutations very challenging. For this reason, broad immunotherapy approaches such as autologous cell vaccines are particularly promising.

About AST-VAC1

AST-VAC1 is a cancer immunotherapy, consisting of autologous mature antigen-presenting dendritic cells pulsed with a messenger RNA for the protein component of human telomerase (hTERT) and a portion of a lysosomal targeting signal (LAMP). hTERT is a common protein in tumor cells and is responsible for the increased proliferative lifespan of cancer cells. In AST-VAC1, the dendritic cells present telomerase to the immune system to induce T cells to target and kill hTERT-expressing tumor cells. The LAMP signal allows AST-VAC1 to stimulate both cytotoxic and helper T cell responses to telomerase, critical elements to induce and maintain immune responses that kill tumor cells. Because of the widespread expression of telomerase in the majority of cancers, AST-VAC1 is a platform immunotherapeutic that could be used alone or in conjunction with other therapeutics such as immune checkpoint inhibitors to target immune-based destruction of tumors.

On April 26, 2017 TESARO, Inc. (NASDAQ:TSRO), an oncology-focused biopharmaceutical company, reported that the European Commission (EC) has approved VARUBY (oral rolapitant tablets) for the prevention of delayed nausea and vomiting associated with highly and moderately emetogenic cancer chemotherapy in adults (Press release, TESARO, APR 26, 2017, View Source [SID1234518692]). Chemotherapy-induced nausea and vomiting (CINV) is a frequent and debilitating, yet often preventable, side effect of chemotherapy.

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VARUBY is a selective and competitive antagonist of human substance P/neurokinin 1 (NK-1) receptors that is rapidly absorbed and slowly eliminated, with a plasma half-life of seven days. A single 180 milligram dose (two tablets) of VARUBY is to be administered within two hours prior to initiation of each chemotherapy cycle, but at no less than 2‑week intervals, as part of combination therapy. Results from three global Phase 3 trials of VARUBY demonstrated a significant reduction in episodes of vomiting or use of rescue medication during the 25 to 120 hour period following administration of emetogenic chemotherapy, including cisplatin, carboplatin and anthracycline/cyclophosphamide-based regimens. In addition, patients who received VARUBY reported experiencing less nausea that interfered with normal daily life and fewer episodes of vomiting over multiple cycles of chemotherapy. Results of each of the three Phase 3 studies were published in The Lancet Oncology in August 2015.i,ii

"With more than half of patients treated with emetogenic chemotherapy experiencing delayed nausea and vomiting, the approval of VARUBY will give physicians in Europe a new option to help prevent this serious side effect," said Orlando Oliveira, Senior Vice President and General Manager of TESARO International. "This approval represents an important milestone in TESARO’s international expansion. With TESARO operating in 17 European countries, we look forward to bringing this important medicine to patients as quickly as possible."

"While important progress in the treatment and prevention of delayed CINV has been made, nausea and vomiting continue to be two of the most common and distressing side effects of cancer chemotherapy," said Florian Scotté, M.D., Ph.D., Head of the Functional Unit of Supportive Care, Department of Medical Oncology at Hôpital Européen Georges Pompidou, Paris, France. "Adding an NK-1 receptor antagonist such as VARUBY, which has a 7-day half-life and greater than 90% receptor occupancy in the cortical regions of the brain five days after dosing, can provide enhanced protection from delayed CINV, which can last for several days."

The centralised marketing authorisation applies to all 28 European Union (EU) member states as well as in the European Economic Area (EEA) countries of Iceland, Lichtenstein and Norway. TESARO is working with the appropriate national authorities in the European countries to support reimbursement and availability of VARUBY to ensure that patients who may benefit from VARUBY have access to it.

Oral rolapitant was approved by the U.S. Food and Drug Administration on September 1, 2015 and is marketed by TESARO in the United States under the brand name VARUBI.

About Chemotherapy-Induced Nausea and Vomiting (CINV)
Chemotherapy-induced nausea and vomiting is a debilitating, yet often preventable, side effect of chemotherapy. Up to 50% of patients undergoing highly or moderately emetogenic chemotherapy experience delayed CINV (>24 to 120 hours post chemotherapy)—even when prescribed a 5-HT3 receptor antagonist and a corticosteroid. Blocking both 5-HT3 and NK-1 receptors has been shown to offer better control of nausea and vomiting than inhibiting 5-HT3 receptors alone. Adding a single dose of VARUBY to an antiemetic regimen, including a 5-HT3 receptor antagonist and corticosteroid, within two hours prior to each chemotherapy cycle as part of combination therapy further improves prevention of delayed CINV.

About the VARUBY (Oral Rolapitant Tablets) Clinical Program
The efficacy of VARUBY was established in multiple randomized, well-controlled, international, blinded clinical trials that enrolled more than 2,500 patients. VARUBY, when administered in combination with a 5-HT3 receptor antagonist and dexamethasone, was superior to a 5-HT3 receptor antagonist and dexamethasone in preventing CINV in patients receiving either moderately or highly emetogenic chemotherapy.

The clinical profile of VARUBY in cisplatin-based highly emetogenic chemotherapy (HEC) was confirmed in two identical Phase 3 studies: HEC1 and HEC2. Both trials met their primary endpoint of complete response (CR), and demonstrated statistical superiority of rolapitant 180 mg compared to active control (5-HT3 receptor antagonist plus dexamethasone) in the delayed phase (25-120 hours) of CINV. In HEC1, 264 patients received rolapitant 180 mg and 262 received control. The proportion of patients achieving a CR was 72.7% vs. 58.4% (p=< 0.001). In HEC2, 271 patients received rolapitant and 273 received control. The proportion of patients achieving a CR was 70.1% vs. 61.9% (p=0.043). The most common adverse reactions (≥3%) among patients receiving cisplatin-based chemotherapy were neutropenia (9% rolapitant vs. 8% control), hiccups (5% vs. 4%), and abdominal pain (3% vs. 2%).

A Phase 3 trial was also conducted to evaluate rolapitant 180 mg compared to active control in 1,332 patients receiving moderately emetogenic chemotherapy regimens, including anthracycline/cyclophosphamide combinations, carboplatin, irinotecan, pemetrexed, oxaliplatin, and doxorubicin. This trial met its primary endpoint of CR, and demonstrated statistical superiority of rolapitant 180 mg compared to active control (5-HT3 receptor antagonist plus dexamethasone) in the delayed phase of CINV. The proportion of patients achieving a CR was 71.3% vs 61.6% (p= < 0.001). The most common adverse reactions (≥3%) among patients receiving these chemotherapies were decreased appetite (9% rolapitant vs. 7% control), neutropenia (7% vs. 6%), dizziness (6% vs. 4%), dyspepsia (4% vs. 2%), urinary tract infection (4% vs. 3%), stomatitis (4% vs. 2%), and anemia (3% vs. 2%).

About VARUBY (oral rolapitant tablets)
VARUBY is a substance P/neurokinin-1 (NK-1) receptor antagonist that is approved in the European Union for use in combination with other antiemetic agents in adults for the prevention of delayed nausea and vomiting associated with highly and moderately emetogenic cancer chemotherapy in adults. VARUBY is contraindicated in combination with St John’s wort. Each tablet contains 90 mg of rolapitant (as hydrochloride monohydrate). The inhibitory effect of a single dose of VARUBI/VARUBY on CYP2D6 lasts at least seven days and may last longer. VARUBI/VARUBY is not recommended in patients who require chronic administration of strong or moderate enzyme inducers. Please see full product information for more details.

VARUBI (rolapitant) is also approved in the United States in combination with other antiemetic agents for the prevention of delayed nausea and vomiting associated with initial and repeat courses of emetogenic cancer chemotherapy, including, but not limited to, highly emetogenic chemotherapy. Please see additional important safety information and full prescribing information at www.varubirx.com.

On April 26, 2017 ArQule, Inc. (Nasdaq: ARQL) reported that the U.S. Patent and Trademark Office has issued U.S. Patent Number 9,630,968 (Press release, ArQule, APR 26, 2017, View Source [SID1234518690]). The patent claims composition of matter of ARQ 531. ArQule will be entitled to patent protection through December 2035 in the U.S. for the allowed claims. ARQ 531 is an investigational, orally bioavailable, potent and reversible inhibitor of both wild type and C481S-mutant Bruton’s tyrosine kinase (BTK). The company plans to begin a phase 1 clinical trial by the third quarter of 2017 with ARQ 531 in patients with B-cell malignancies who are refractory to other therapeutic options.

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"This patent secures long lasting and foundational intellectual protection for ARQ 531," said Peter Lawrence, President, Chief Operating Officer, and General Counsel at ArQule. "We continue to work to extend and strengthen all intellectual property related to chemical equity that has been generated through our multiple years of investment in the BTK discovery program."

B-cell malignancies, like chronic lymphocytic leukemia, Waldenstrom’s macroglobulinemia, diffuse large B-cell lymphoma and mantle cell lymphoma are driven by BTK. The only approved BTK inhibitor, ibrutinib, is irreversible and makes a covalent bond with the C481 residue of the targeted protein. Although ibrutinib has demonstrated excellent responses in patients with elevated B-cell receptor signaling, clinical resistance has been observed, and the BTK C481S mutation is emerging as a predominant mechanism of resistance. As a reversible inhibitor, ARQ 531 does not require interaction with the C481 residue, a binding site essential for irreversible ibrutinib binding to BTK, thus positioning ARQ 531 as a targeted therapy for patients harboring C481S-mutant BTK who have developed resistance to irreversible BTK inhibitors.

About BTK and ARQ 531

ARQ 531 is an investigational, orally bioavailable, potent and reversible Bruton’s tyrosine kinase (BTK) inhibitor. Biochemical and cellular studies have shown that ARQ 531 inhibits both the wild type and C481S-mutant forms of BTK. The C481S mutation is a known emerging resistance mechanism for first generation irreversible BTK inhibitors. In preclinical studies ARQ 531 has demonstrated high oral bioavailability as well as good ADME, pharmacokinetic and metabolic properties. The company plans to initiate a phase 1 trial by the third quarter of 2017. BTK is a therapeutic target that has been clinically proven to inhibit B-cell receptor signaling in blood cancers.

On April 26, 2017 United Therapeutics Corporation (NASDAQ: UTHR) reported its financial results for the first quarter ended March 31, 2017 (Press release, United Therapeutics, APR 26, 2017, View Source [SID1234518691]).

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"Our quarterly financial growth trends are slower than we would like as we are seeing more patients stay longer on front-line pulmonary arterial hypertension (PAH) therapies," said Martine Rothblatt, Ph.D., United Therapeutics Chairman and Chief Executive Officer. "Due to the progressive nature of this disease, we believe that this building backlog of PAH patients ultimately will transition to more advanced therapies, such as Orenitram, Tyvaso and Remodulin. As the PAH patient backlog dynamics unfold, we are continuing to invest in our growing product pipeline of late stage programs in cardiopulmonary diseases and oncology and also in regenerative medicine and organ manufacturing to ultimately find a cure for PAH."

Key financial highlights include (dollars in millions, except per share data):



Three Months Ended
March 31,

Percentage



2017

2016

Changes

Revenues

$
370.5

$
369.0

—
%
Net income

$
178.6

$
235.5

(24)
%
Non-GAAP earnings(1)

$
165.7

$
141.9

17
%
Net income, per diluted share

$
3.89

$
4.84

(20)
%
Non-GAAP earnings, per diluted share(1)

$
3.61

$
2.91

24
%










(1) See definition of non-GAAP earnings, a non-GAAP financial measure, and a reconciliation of net income to non-GAAP earnings below.
Financial Results for the Three Months Ended March 31, 2017 compared to the Three Months Ended March 31, 2016

Revenues

The following table presents the components of total revenues (dollars in millions):



Three Months Ended
March 31,

Percentage



2017

2016

Change

Net product sales:







Remodulin


$
145.8

$
139.8

4
%
Tyvaso


87.4

102.2

(14)
%
Adcirca


80.0

72.6

10
%
Orenitram


39.3

40.2

(2)
%
Unituxin


18.0

14.2

27
%
Total revenues


$
370.5

$
369.0

—
%
Revenues for the three months ended March 31, 2017 increased by $1.5 million compared to the same period in 2016. The growth in revenues resulted from the following: (1) a $7.4 million increase in Adcirca net product sales; (2) a $6.0 million increase in Remodulin net product sales; and (3) a $3.8 million increase in Unituxin net product sales. These increases were partially offset by a $0.9 million decrease in Orenitram net product sales and a $14.8 million decrease in Tyvaso net product sales.

Expenses

Cost of product sales. The table below summarizes cost of product sales by major category (dollars in millions):



Three Months Ended
March 31,

Percentage



2017

2016

Change

Category:







Cost of product sales excluding share-based compensation


$
15.8

$
12.6

25
%
Share-based compensation benefit(1)


(1.5)

(11.9)

87
%
Total cost of product sales


$
14.3

$
0.7

1,943
%











(1) Refer to Share-based compensation (benefit) expense below for discussion.
Research and development expense. The table below summarizes research and development expense by major category (dollars in millions):



Three Months Ended
March 31,

Percentage



2017

2016

Change

Category:







Research and development expense excluding share-based compensation


$
41.3

$
36.8

12
%
Share-based compensation benefit(1)


(5.1)

(37.2)

86
%
Total research and development expense


$
36.2

$
(0.4)

9,150
%











(1) Refer to Share-based compensation (benefit) expense below for discussion.
Selling, general and administrative expense. The table below summarizes selling, general and administrative expense by major category (dollars in millions):



Three Months Ended
March 31,

Percentage



2017

2016

Change

Category:







General and administrative excluding share-based compensation


$
53.5

$
78.2

(32)
%
Sales and marketing excluding share-based compensation


15.4

22.3

(31)
%
Share-based compensation benefit(1)


(12.5)

(95.5)

87
%
Total selling, general and administrative expense


$
56.4

$
5.0

1,028
%











(1) Refer to Share-based compensation (benefit) expense below for discussion.
General and administrative. The decrease in general and administrative expense of $24.7 million for the three months ended March 31, 2017, as compared to the same period in 2016, was primarily attributable to a $32.0 million decrease in charitable donations to non-affiliated, non-profit organizations that provide financial assistance to patients with PAH.

Share-based compensation (benefit) expense. The table below summarizes share-based compensation (benefit) expense by major category (dollars in millions):



Three Months Ended
March 31,

Percentage



2017

2016

Change

Category:







Share tracking awards plan


$
(24.6)
$
(147.9)

83
%
Stock options


4.6

3.1

48
%
Other(1)


0.9

0.2

350
%
Total share-based compensation benefit


$
(19.1)
$
(144.6)

87
%










(1) Includes expense related to restricted stock units for the three months ended March 31, 2017, and employee stock purchase plan for the three months ended March 31, 2017 and 2016.
Share tracking awards plan. We re-measure the fair value of share tracking awards at the end of each financial reporting period. Changes in the liability associated with share tracking awards resulting from such re-measurements are recorded as adjustments to share-based compensation (benefit) expense. Decreases in our stock price will generally result in a reduction in the share tracking award liability. The decrease in share tracking awards plan benefit of $123.3 million for the three months ended March 31, 2017, as compared to the same period in 2016, was primarily due to the smaller decrease in our stock price during the three months ended March 31, 2017, as compared to the same period in 2016.

Income Tax Expense

The provision for income taxes was $85.0 million for the three months ended March 31, 2017 as compared to $128.4 million for the same period in 2016. The provision for income taxes is based on an estimated effective tax rate for the entire year. The estimated annual effective tax rate is subject to adjustment in subsequent quarterly periods if components used to estimate the effective tax rate are updated or revised. The estimated effective tax rate as of March 31, 2017 and March 31, 2016, was approximately 32 percent and approximately 35 percent, respectively. Our 2017 estimated effective tax rate decreased compared to 2016 primarily due to a decrease in non-deductible share-based compensation expense, and the impact of ASU 2016-09 adoption requiring windfall excess tax benefits to be recognized in income tax expense.

Non-GAAP Earnings

Non-GAAP earnings is defined as net income, adjusted for: (1) share-based compensation expense (benefit), net (including expenses relating to stock options, share tracking awards, restricted stock units and our employee stock purchase plan); (2) extraordinary, non-recurring and unusual items; and (3) tax impact on non-GAAP earnings adjustments. Starting in the first quarter of 2017, we will no longer adjust our non-GAAP results for interest expense, depreciation and amortization. We believe these changes will provide a better view of the company’s regular and on-going operations. Prior year amounts will reflect this change for comparability purposes.

A reconciliation of net income to non-GAAP earnings is presented below (in millions, except per share data):



Three Months Ended
March 31,



2017

2016

Net income, as reported

$
178.6

$
235.5

Adjusted for:





Share-based compensation benefit, net


(19.1)

(144.6)

Tax expense(1)


6.2

51.0

Non-GAAP earnings

$
165.7

$
141.9

Non-GAAP earnings per share:





Basic


$
3.72

$
3.13

Diluted


$
3.61

$
2.91

Weighted average number of common shares outstanding:





Basic


44.5

45.4

Diluted


45.9

48.7








(1) Represents the total tax impact of the quarterly non-GAAP earnings adjustments based on our actual quarterly effective income tax rates of approximately 32 percent and approximately 35 percent as of March 31, 2017 and 2016, respectively.

On April 26, 2017 Amgen (NASDAQ:AMGN) reported financial results for the first quarter of 2017 (Press release, Amgen, APR 26, 2017, View Source [SID1234518694]).

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Key results include:

Total revenues decreased 1 percent versus the first quarter of 2016 to $5.5 billion.
GAAP earnings per share (EPS) increased 12 percent to $2.79 driven by higher operating margins.
GAAP operating income increased 8 percent to $2.6 billion and GAAP operating margin increased 4 percentage points to 49.8 percent.
Non-GAAP EPS increased 9 percent to $3.15 driven by higher operating margins.
Non-GAAP operating income increased 5 percent to $3.0 billion and non-GAAP operating margin increased 3 percentage points to 57.6 percent.
2017 EPS guidance increased to $10.64-$11.32 on a GAAP basis and $12.00-$12.60 on a non-GAAP basis; total revenues guidance unchanged at $22.3-$23.1 billion.
The Company generated $2.2 billion of free cash flow in the first quarter versus $1.8 billion in the first quarter of 2016.
"We are well positioned for the long term with our newer products demonstrating volume growth around the world and our tight operational expense management of the Company," said Robert A. Bradway, chairman and chief executive officer. "With robust Repatha (evolocumab) outcomes data, we are working with payers to improve access to this important therapy for patients at risk for heart attacks and strokes."

$Millions, except EPS and percentages

Q1’17

Q1’16

YOY Δ

Total Revenues

$ 5,464

$ 5,527

(1%)
GAAP Operating Income

$ 2,591

$ 2,402

8%
GAAP Net Income

$ 2,071

$ 1,900

9%
GAAP EPS

$ 2.79

$ 2.50

12%
Non-GAAP Operating Income

$ 2,995

$ 2,859

5%
Non-GAAP Net Income

$ 2,333

$ 2,203

6%
Non-GAAP EPS

$ 3.15

$ 2.90

9%

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 decreased 1 percent for the first quarter of 2017 versus the first quarter of 2016.
Neulasta (pegfilgrastim) sales increased 2 percent as favorable changes in accounting estimates and net selling price were offset partially by lower unit demand.
Enbrel (etanercept) sales decreased 15 percent due to the impact of competition as well as lower rheumatology and dermatology segment growth compared to prior quarters.
Aranesp (darbepoetin alfa) sales decreased 4 percent as higher unit demand was more than offset by unfavorable changes in foreign exchange rates, inventory and net selling price.
Prolia (denosumab) sales increased 21 percent driven by higher unit demand.
Sensipar/Mimpara (cinacalcet) sales increased 15 percent driven primarily by net selling price.
XGEVA (denosumab) sales increased 6 percent driven by higher unit demand.
EPOGEN (epoetin alfa) sales decreased 10 percent driven by net selling price.
KYPROLIS (carfilzomib) sales increased 23 percent driven by higher unit demand.
Nplate (romiplostim) sales increased 9 percent driven by higher unit demand.
NEUPOGEN (filgrastim) sales decreased 31 percent driven primarily by the impact of competition.
Vectibix (panitumumab) sales increased 2 percent driven by higher unit demand, offset partially by unfavorable changes in foreign exchange rates.
Repatha sales increased driven by higher unit demand.
BLINCYTO (blinatumomab) sales increased 26 percent driven by higher unit demand.


Product Sales Detail by Product and Geographic Region
$Millions, except percentages

Q1’17

Q1’16

YOY Δ


US
ROW
TOTAL

TOTAL

TOTAL









Neulasta

$1,048
$162
$1,210

$1,183

2%
Enbrel

1,118
63
1,181

1,385

(15%)
Aranesp

278
233
511

532

(4%)
Prolia

279
146
425

352

21%
Sensipar / Mimpara

337
84
421

367

15%
XGEVA

298
104
402

378

6%
EPOGEN

270
0
270

300

(10%)
KYPROLIS

137
53
190

154

23%
Nplate

97
57
154

141

9%
NEUPOGEN

101
47
148

213

(31%)
Vectibix

61
86
147

144

2%
Repatha

33
16
49

16

*
BLINCYTO

23
11
34

27

26%
Other**

15
42
57

47

21%









Total product sales

$4,095
$1,104
$5,199

$5,239

(1%)









* Change in excess of 100%




** Other includes Bergamo, MN Pharma, IMLYGICand Corlanor






Operating Expense, Operating Margin and Tax Rate Analysis

On a GAAP basis:

Total Operating Expenses decreased 8 percent, with all expense categories reflecting savings from our transformation and process improvement efforts. Cost of Sales margin improved by 0.2 percentage points driven primarily by manufacturing efficiencies, offset partially by product mix. Research & Development (R&D) expenses decreased 12 percent driven by a payment in the first quarter of 2016 related to a third-party collaboration agreement, as well as lower spending required to support certain later-stage clinical programs. Selling, General & Administrative (SG&A) expenses decreased 12 percent due to the expiration of ENBREL residual royalty payments and an acquisition charge in the first quarter of 2016, offset partially by investments in product launches.
Operating Margin improved by 4 percentage points to 49.8 percent.
Tax Rate decreased 0.1 percentage points as changes in the geographic mix of earnings were offset partially by lower tax benefits from share-based compensation payments.
On a non-GAAP basis:

Total Operating Expenses decreased 7 percent, with all expense categories reflecting savings from our transformation and process improvement efforts. Cost of Sales margin improved by 0.4 percentage points driven primarily by manufacturing efficiencies, offset partially by product mix. R&D expenses decreased 13 percent driven by a payment in the first quarter of 2016 related to a third-party collaboration agreement, as well as lower spending required to support certain later-stage clinical programs. 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 3 percentage points to 57.6 percent.
Tax Rate decreased 0.4 percentage points as changes in the geographic mix of earnings were offset partially by lower tax benefits from share-based compensation payments.


$Millions, except percentages






GAAP

Non-GAAP



Q1’17

Q1’16

YOY Δ

Q1’17

Q1’16

YOY Δ














Cost of Sales
$996

$1,018

(2%)

$682

$707

(4%)

% of product sales
19.2%

19.4%

(0.2)pts

13.1%

13.5%

(0.4) pts
Research & Development
$769

$872

(12%)

$748

$858

(13%)

% of product sales
14.8%

16.6%

(1.8) pts

14.4%

16.4%

(2) pts
Selling, General & Administrative
$1,064

$1,203

(12%)

$1,039

$1,103

(6%)

% of product sales
20.5%

23.0%

(2.5) pts

20.0%

21.1%

(1.1) pts
Other
$44

$32

38%

$0

$0

NM
TOTAL Operating Expenses
$2,873

$3,125

(8%)

$2,469

$2,668

(7%)














Operating Margin












operating income as a % of product sales
49.8%

45.8%

4 pts

57.6%

54.6%

3 pts














Tax Rate
15.8%

15.9%

(0.1) pts

18.5%

18.9%

(0.4) pts














NM: Not Meaningful
pts: percentage points
Cash Flow and Balance Sheet

The Company generated $2.2 billion of free cash flow in the first quarter of 2017 versus $1.8 billion in the first quarter of 2016 driven by the timing of tax payments and higher net income.
The Company’s second quarter 2017 dividend of $1.15 per share declared on March 7, 2017, will be paid on June 8, 2017, to all stockholders of record as of May 17, 2017.
During the first quarter, the Company repurchased 3.4 million shares of common stock at a total cost of $555 million. At the end of the first quarter, the Company had $3.5 billion remaining under its stock repurchase authorization.


$Billions, except shares

Q1’17

Q1’16

YOY Δ









Operating Cash Flow
$2.4

$1.9

$0.5
Capital Expenditures
0.2

0.2

0.0
Free Cash Flow
2.2

1.8

0.5
Dividends Paid
0.8

0.8

0.1
Share Repurchase
0.6

0.7

(0.1)
Avg. Diluted Shares (millions)
741

760

(19)









Cash and Investments
38.4

34.7

3.7
Debt Outstanding
34.1

34.3

(0.2)
Stockholders’ Equity
30.6

28.7

2.0











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 $22.3 billion to $23.1 billion, unchanged from previous guidance.
On a GAAP basis, EPS in the range of $10.64 to $11.32 and a tax rate in the range of 16 percent to 18 percent.
Previously, the Company expected GAAP EPS in the range of $10.45 to $11.31. Tax rate guidance is unchanged.
On a non-GAAP basis, EPS in the range of $12.00 to $12.60 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 $11.80 to $12.60. Tax rate guidance is unchanged.
Capital expenditures to be approximately $700 million.


First Quarter Product and Pipeline Update
Key development milestones:

Clinical Program
Indication
Projected Milestone
Repatha
Hyperlipidemia
Regulatory submissions (CV outcomes data)
KYPROLIS
Relapsed or refractory multiple myeloma
Phase 3 study initiation with DARZALEX Q2 ’17
XGEVA
Prevention of SREs in multiple myeloma
Regulatory reviews
EVENITY (romosozumab)†
Postmenopausal osteoporosis
July 19, 2017, PDUFA target action date in U.S.
Active controlled Phase 3 fracture data Q2 2017*
Erenumab (AMG 334)
Migraine prevention
Regulatory submissions
ABP 215
(biosimilar bevacizumab)
Oncology
Regulatory reviews
Sept. 14, 2017, BsUFA target action date in U.S.
ABP 980
(biosimilar trastuzumab)
Breast cancer
U.S. regulatory submission

†Trade name provisionally approved by FDA; CV = cardiovascular; SRE = skeletal-related event; PDUFA = Prescription Drug User Fee Act; BsUFA = Biosimilar User Fee Act; *Event driven study
The Company provided the following updates on selected product and pipeline programs:

Repatha

In February, the European Commission (EC) approved a new 420 mg single-dose delivery option for Repatha.
In March, positive Phase 3 data from a cardiovascular outcomes study and a cognitive function study were presented at the American College of Cardiology 66th Annual Scientific Session.
KYPROLIS

In February, the Phase 3 ENDEAVOR study showed KYPROLIS and dexamethasone reduced the risk of death by 21 percent and extended overall survival by an additional 7.6 months compared to Velcade (bortezomib) and dexamethasone in relapsed or refractory multiple myeloma patients.
XGEVA

In April, a supplemental Biologics License Application (sBLA) was submitted to the U.S. Food and Drug Administration (FDA) and an application for a variation to the marketing authorization was submitted to the European Medicines Agency (EMA) for the prevention of SREs in patients with multiple myeloma.
BLINCYTO

In March, FDA accepted the sBLA for priority review for BLINCYTO to include overall survival data from the Phase 3 TOWER study. The application also included new data supporting the treatment of patients with Philadelphia chromosome-positive relapsed or refractory B-cell precursor acute lymphoblastic leukemia.
EVENITY

Primary analysis of an event driven active controlled Phase 3 fracture study (ARCH) in postmenopausal women with osteoporosis is expected in Q2 2017.
Erenumab

Regulatory submissions for migraine prevention are expected in Q2 2017.
CNP520

In February, Phase 3 enrollment commenced for CNP520, a small molecule beta-site amyloid precursor protein-cleaving enzyme-1 (BACE) inhibitor for the potential treatment of Alzheimer’s disease.
Parsabiv (etelcalcetide)

In February, FDA approved Parsabiv for the treatment of secondary hyperparathyroidism (sHPT) in adult patients with chronic kidney disease (CKD) on hemodialysis.
AMG 157/MEDI9929 (tezepelumab)

In February, tezepelumab demonstrated a significant reduction in the rate of asthma exacerbations compared to placebo over the 52-week treatment period in patients with severe asthma in a Phase 2b study.
AMGEVITA (biosimilar adalimumab)

In March, EC granted marketing authorization for AMGEVITA (biosimilar adalimumab) in all available indications. AMGEVITA is authorized for the treatment of certain inflammatory diseases in adults, including moderate-to-severe rheumatoid arthritis; psoriatic arthritis; severe active ankylosing spondylitis (AS); severe axial spondyloarthritis without radiographic evidence of AS; moderate-to-severe chronic plaque psoriasis; moderate-to-severe hidradenitis suppurativa; non-infectious intermediate, posterior and panuveitis; moderate-to-severe Crohn’s disease and moderate-to-severe ulcerative colitis. The EC also approved AMGEVITA for the treatment of certain pediatric inflammatory diseases, including moderate-to-severe Crohn’s disease (ages six and older), severe chronic plaque psoriasis (ages four and older), enthesitis-related arthritis (ages six and older) and polyarticular juvenile idiopathic arthritis (ages two and older).
ABP 980 (biosimilar trastuzumab)

In March, a Marketing Authorization Application was submitted to the EMA.
Erenumab and CNP520 are developed in collaboration with Novartis AG
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
Tezepelumab is developed in collaboration with AstraZeneca
AMGEVITA is registered in the U.S. as AMJEVITA
Velcade is a registered trademark of Millennium Pharmaceuticals, Inc.