On October 27, 2016 Integra LifeSciences Holdings Corporation (NASDAQ:IART) reported its financial results for the third quarter ending September 30, 2016 (Press release, Integra LifeSciences, OCT 27, 2016, View Source [SID1234516072]).

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Highlights:

Third quarter revenue increased 10.6% over the prior-year quarter to $250.3 million, and year-to-date revenue grew 14.8% over the prior year period;
Organic revenue increased 9.5% over the prior-year quarter, and year-to-date organic revenue grew 9.7% over the prior-year period;
Both GAAP and adjusted gross margin increased 230 basis points over the prior-year quarter to 64.3% and 69.3%, respectively;
GAAP net income increased to $20.1 million, or $0.50 per share, versus a loss of $31.9 million in the third quarter of 2015;
Adjusted net income increased 33.7% to $36.1 million and adjusted earnings per share of $0.93 increased 24%, compared to the third quarter of 2015;
Operating cash flow was $46.8 million in the third quarter, more than double the prior-year quarter; free cash flow conversion exceeded 75% on a trailing twelve-month basis; and,
The Company is maintaining its previously issued 2016 full-year sales guidance range of $992 million to $1.002 billion, raising organic growth guidance to a range of 9.0% to 9.5% and increasing the low end of its diluted adjusted EPS guidance by $0.04 to a new range of $3.47 to $3.53.
Total revenues for the third quarter were $250.3 million, reflecting an increase of $24.0 million, or 10.6%, over the third quarter of 2015. Both global segments contributed to the growth, with revenue in Orthopedics and Tissue Technologies and Specialty Surgical Solutions increasing by 14.7% and 8.4%, respectively, compared to the prior year.

Excluding the revenue contribution from acquisitions, discontinued products, and the effect of currency exchange rates, revenues increased 9.5% over the third quarter of 2015.

"We are seeing consistent and solid organic growth across both our global segments driven by our differentiated products, leading brand positions, new product introductions and end market growth," said Peter Arduini, Integra’s President and Chief Executive Officer. "Double-digit growth outside the United States in both segments reflects improved execution of our international strategy."

The Company reported GAAP net income of $20.1 million, or $0.50 per diluted share, for the third quarter of 2016, compared to a GAAP net loss of $31.9 million, or $0.90 per diluted share, for the third quarter of 2015. Results for the third quarter of 2015 included a $35.6 million non-cash tax charge to establish a valuation allowance for certain deferred tax assets associated with the SeaSpine separation.

Adjusted measures discussed below are computed with the adjustments to GAAP reporting set forth in the attached reconciliation.

Adjusted net income for the third quarter of 2016 was $36.1 million, or $0.93 per share, compared to adjusted net income of $27.0 million, or $0.75 per share, in the third quarter of 2015.

Adjusted EBITDA for the third quarter of 2016 was $58.6 million, or 23.4% of revenue, compared to $47.7 million, or 21.1% of revenue, in the third quarter of 2015.

Operating cash flow for the third quarter was $46.8 million, more than double the prior-year period. Trailing twelve month adjusted free cash flow conversion ended September 30, 2016, was 75.6%, versus 73.4% in the prior year.

Outlook for 2016

Based on third quarter results, the Company is maintaining its full-year 2016 revenue guidance in the range of $992 million to $1.002 billion. Guidance for full-year 2016 organic revenue growth is being increased to a new range of 9.0% to 9.5%, up from 9% previously. The Company is raising the low end of its full-year GAAP and adjusted earnings per share guidance range by $0.04, to a new range of $1.82 – $1.88 and $3.47 – $3.53, respectively, mainly due to a lower effective tax rate.

"We executed on our operational and financial plans in the third quarter, which drove double-digit revenue growth, a record adjusted gross margin, EBITDA margin expansion of 230 basis points and over 20% improvement in adjusted earnings per share," said Glenn Coleman, Integra’s Chief Financial Officer. "We are on track to meet our full-year 2016 financial objectives and are well positioned to achieve the 2018 financial targets provided at our analyst meeting last November."

In the future, the Company may record, or expects to record, certain additional revenues, gains, expenses, or charges as described in the Discussion of Adjusted Financial Measures below that it will exclude in the calculation of adjusted EBITDA and adjusted earnings per share for historical periods and in providing adjusted earnings per share guidance.

On October 27, 2016 Adaptimmune Therapeutics plc (Nasdaq:ADAP), a leader in T-cell therapy to treat cancer, reported that it has entered into a clinical trial collaboration agreement with Merck & Co., Inc., Kenilworth, NJ, USA (known as MSD outside the US and Canada), for the assessment of Adaptimmune’s NY-ESO SPEAR (Specific Peptide Enhanced Affinity Receptor) T-cell therapy in combination with MSD’s anti-programmed death-1 (PD-1) inhibitor, KEYTRUDA (pembrolizumab), in patients with multiple myeloma (Press release, Adaptimmune, OCT 27, 2016, View Source;p=RssLanding&cat=news&id=2216661 [SID1234516040]). The study will evaluate the safety, pharmacokinetics, pharmacodynamics, and preliminary efficacy of the combination, and is planned for initiation in 1H 2017.

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Adaptimmune’s SPEAR T-cell candidates are novel cancer immunotherapies that have been engineered to target and destroy cancer cells. Its NY-ESO SPEAR T-cell therapy has previously been evaluated in multiple myeloma in a single agent Phase I/II trial in which 20 out of 22 patients (91 percent) experienced a response at day 100 post autologous stem cell transplant. KEYTRUDA is a humanized monoclonal antibody that works by increasing the ability of the body’s immune system to help detect and fight tumor cells. KEYTRUDA blocks the interaction between PD-1 and its ligands, PD-L1 and PD-L2, thereby activating T lymphocytes which may affect both tumor cells and healthy cells. Blocking this interaction is reported to enable T-cell activation and potentiates antitumor activity.

"In initial single-agent studies of our NY-ESO SPEAR T-cell therapy in patients with advanced myeloma in the context of stem cell transplantation, we have seen encouraging evidence of antitumor effect, safe administration and prolonged persistence of transduced cells," said Rafael Amado, Adaptimmune’s chief medical officer. "KEYTRUDA has shown preliminary evidence of activity in multiple myeloma, and there is preclinical evidence to support the view that the combination of NY-ESO SPEAR T-cell therapy and anti-PD1 therapy may lead to meaningful anti-tumor activity. We look forward to evaluating our therapy alone and in combination with KEYTRUDA in a randomized trial of patients with multiple myeloma who are refractory or have relapsed with standard therapy. "

The agreement is between Adaptimmune and Merck & Co., Inc., Kenilworth, NJ, USA, through a subsidiary. Under the agreement, the trial will be sponsored by Adaptimmune. The agreement also includes provision for potential expansion to include Phase III registration studies in the same indication. Additional details were not disclosed.

About Multiple Myeloma
Multiple myeloma is a cancer formed by malignant plasma cells. Normal plasma cells are found in the bone marrow and are an important part of the immune system, which is made up of several types of cells that work together to fight infections and other diseases. Multiple myeloma is characterized by several features, including low blood counts, bone and calcium problems, infections, kidney problems, monoclonal gammopathy, and others; and by the proliferation of these plasma cells within bone marrow. The American Cancer Society estimates that approximately 30,300 new cases will be diagnosed in the United States in 2016. Average five-year survival rates are estimated to be approximately 45 percent with survival rates depending on factors such as age, stage of diagnosis and suitability for auto-SCT, which is used as part of the treatment for eligible patients with multiple myeloma. Despite recent therapeutic advances, multiple myeloma remains an incurable but treatable cancer. Patients are typically treated with repeat rounds of combination therapy with the time intervals to relapse becoming shorter with each successive line of therapy. The majority of patients eventually have a relapse which cannot be further treated.

About Adaptimmune’s TCR Technology
Adaptimmune’s proprietary SPEAR (Specific Peptide Enhanced Affinity Receptor) T-cell receptor (TCR) technology enables the company to genetically optimize TCRs, equipping them to recognize cancer antigens that are presented in small quantities on the surface of a cancer cell, whether of intracellular or extracellular origin, thus initiating cell death. The company’s differentiated, proprietary technology allows it to reliably generate parental TCRs to naturally presented targets, affinity optimize its TCRs to bind cancer proteins from solid and hematologic cancers that are generally unavailable to naturally occurring TCRs, and to significantly reduce the risk of side effects resulting from off-target binding of healthy tissues.

On October 27, 2016 Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) reported financial results for the third quarter of 2016 (Press release, Alexion, OCT 27, 2016, View Source [SID1234516041]). Total revenues grew to $799 million, a 20 percent increase, compared to $667 million for the same period in 2015. In the third quarter, the negative impact of foreign currency on total revenue was 2.5 percent or $16 million, net of hedging activities, compared to the same quarter last year. On a GAAP basis, diluted earnings per share (EPS) for the third quarter of 2016 was $0.42 per share, compared to a loss of $0.81 per share in the third quarter of 2015. Non-GAAP diluted EPS for the third quarter of 2016 was $1.23 per share. Non-GAAP diluted EPS was $1.08 per share in the third quarter of 2015, reflecting a reduction of $0.08 per share to conform to the current non-GAAP income tax expense definition.

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"In Q3 2016, we delivered strong financial performance and served an increasing number of patients with PNH, aHUS, HPP and LAL-D, while also achieving significant R&D milestones," said David Hallal, Chief Executive Officer of Alexion. "As we continue to grow our complement and metabolic businesses, we are working with urgency to file our regulatory submissions for eculizumab for the treatment of patients with refractory gMG in both the U.S. and Europe, and to enroll patients with PNH and aHUS into the global ALXN1210 registration trials."

Third Quarter 2016 Financial Highlights

Soliris (eculizumab) net product sales were $729 million, compared to $665 million in Q3 2015.
Strensiq (asfotase alfa) net product sales were $61 million.
Kanuma (sebelipase alfa) net product sales were $9 million.
GAAP R&D expense was $196 million, compared to $166 million in the same quarter last year. Non-GAAP R&D expense was $180 million, compared to $147 million in the same quarter last year.
GAAP SG&A expense was $230 million, compared to $213 million in the same quarter last year. Non-GAAP SG&A expense was $201 million, compared to $182 million in the same quarter last year.
GAAP diluted EPS was $0.42 per share, compared to a loss of $0.81 per share in the same quarter last year. Non-GAAP diluted EPS was $1.23 per share. Non-GAAP diluted EPS was $1.08 per share in the third quarter of 2015, reflecting a reduction of $0.08 per share to conform to the current non-GAAP income tax expense definition.
Product and Pipeline Updates

Complement Portfolio

Eculizumab- Refractory Generalized Myasthenia Gravis (gMG): Alexion plans to file regulatory submissions for eculizumab for the treatment of patients with refractory gMG in both the United States and Europe in the first quarter of 2017.
Eculizumab- Relapsing Neuromyelitis Optica Spectrum Disorder (NMOSD): The PREVENT study, a single, multinational, placebo-controlled registration trial of eculizumab in patients with relapsing NMOSD is on-going, with data expected in 2017.
Eculizumab- Delayed Graft Function (DGF): Data from the PROTECT study, a single, multinational, placebo-controlled registration trial of eculizumab in the prevention of DGF, are expected during the fourth quarter of 2016.
ALXN1210- PNH: Alexion has initiated a PNH registration trial of ALXN1210 administered intravenously every eight weeks. Enrollment is expected to begin in the fourth quarter of 2016.
ALXN1210- aHUS: Alexion has initiated an aHUS registration trial with ALXN1210 administered intravenously every eight weeks. Enrollment is expected to begin in the fourth quarter of 2016.
ALXN1210- Subcutaneous: Alexion has commenced dosing of a new formulation of ALXN1210 administered subcutaneously in healthy volunteers in a Phase I study.
ALXN1007: Alexion is evaluating higher doses of ALXN1007, a complement inhibitor that targets C5a, in a Phase 2 study of patients with graft-versus-host disease involving the lower gastrointestinal tract (GI-GVHD). The FDA and the European Commission granted orphan drug designation to ALXN1007 for the treatment of patients with GVHD.
Metabolic Portfolio

SBC-103: A Phase 1/2 study of SBC-103, a recombinant form of the NAGLU enzyme, in patients with mucopolysaccharidosis IIIB, or MPS IIIB, is on-going. Alexion has completed the planned dose escalation, with all patients now randomized to either a 5 mg/kg or 10 mg/kg dose. A natural history study to characterize the course of disease progression in patients with MPS IIIB is also ongoing.
cPMP Replacement Therapy (ALXN1101): Alexion is enrolling patients in a pivotal study to evaluate ALXN1101 in neonates with Molybdenum Cofactor Deficiency (MoCD) Type A.
Immuno-Oncology Program

Samalizumab (ALXN6000): Samalizumab is a first-in-class immunomodulatory humanized monoclonal antibody that blocks the key immune checkpoint protein, CD200. The Leukemia and Lymphoma Society announced the BEAT AML Master Trial, a multi-arm clinical trial in acute myeloid leukemia (AML), which will evaluate samalizumab as well as other potential therapies for the treatment of AML.
Preclinical Portfolio

Alexion has more than 30 diverse preclinical programs across a range of therapeutic modalities.
2016 Financial Guidance

Alexion expects 2016 total revenues to be at the upper end of our previously guided range of $3.05 to $3.10 billion. Alexion is reiterating its Soliris revenue guidance and based on the strength of the Strensiq launch is further increasing its Metabolic revenue guidance to $225 to $235 million.

R&D and SG&A expense guidance has been increased to reflect acceleration of the ALXN1210 programs and additional investment in the global infrastructure to support the launches of Strensiq and Kanuma, as well as an increase in legal expenses.

Alexion’s updated 2016 GAAP EPS guidance is expected to be in the range of $1.79 to $2.09 and non-GAAP EPS guidance is now expected to be at the upper end of the previously guided range of $4.50 to $4.65 per share.

Updated 2016 financial guidance is as follows:

Updated GAAP Updated Non-GAAP Prior Non-GAAP
Guidance Prior GAAP Guidance Guidance Guidance
Total revenues Upper end of $3,050 to $3,100 million $3,050 to $3,100 million Upper end of $3,050 to $3,100 million $3,050 to $3,100 million
Soliris revenues $2,835 to $2,875 million $2,835 to $2,875 million $2,835 to $2,875 million $2,835 to $2,875 million
Metabolic revenues $225 to $235 million $200 to $220 million $225 to $235 million $200 to $220 million
Cost of sales 8% to 9% 8% to 9% 8% to 9% 8% to 9%
Research and development expense $740 to $781 million $708 to $779 million $680 to $690 million High end of $650 to $680 million
Selling, general and administrative expense $913 to $955 million $883 to $935 million $790 to $810 million High end of $760 to $790 million
Interest expense $100 million $100 million $100 million $100 million
Effective tax rate 32% to 34% 32% to 34% 15.5% to 16.5% 15.5% to 16.5%
Earnings per share $1.79 to $2.09 $1.91 to $2.26 Upper end of $4.50 to $4.65 $4.50 to $4.65
Diluted shares outstanding 228 million 228 million 230 million 230 million

Alexion’s 2016 financial guidance is based on current foreign exchange rates net of hedging activities and does not include the effect of business combinations, license and collaboration agreements, asset acquisitions, intangible asset impairments, changes in fair value of contingent consideration or restructuring activity that may occur after the day prior to the date of this press release.

On October 27, 2016 argenx (Euronext Brussels: ARGX), a clinical-stage biopharmaceutical company focused on creating and developing differentiated therapeutic antibodies for the treatment of cancer and severe autoimmune diseases, reported a business update and announced financial results for the third quarter ended 30 September 2016(Press release, arGEN-X, OCT 27, 2016, View Source [SID1234516078]).

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"This is a very exciting time for the company as we finalize later-stage clinical development plans for our two lead antibody programs, ARGX-113 and ARGX-110. Over the next six months, we expect to launch four Phase 2 studies, all in therapeutic settings with a strong scientific rationale. For ARGX-113, we have seen the potential of the drug to reduce IgGs, and look forward to initiating trials and reporting results in indications such as myasthenia gravis and immune thrombocytopenia, where pathogenic IgG’s are a key contributor to disease. For ARGX-110, we plan to initiate two combination trials with the goal of enhancing standard of care for TCL and AML patients," commented Tim Van Hauwermeiren, Chief Executive Officer of argenx.

THIRD QUARTER 2016

Hosted inaugural R&D day in New York with updates on lead programs in auto-immune disease and oncology including:

Myasthenia gravis (MG) and immune thrombocytopenia (ITP) will be the initial indications for Phase 2 studies of ARGX-113. The first of the studies in myasthenia gravis is expected to initiate by the end of 2016.
T-cell lymphoma (TCL) and acute myeloid leukemia (AML) are the indications for Phase 2 combination studies of ARGX-110. The studies are expected to initiate by the end of 2016.

FINANCIAL HIGHLIGHTS (as of 30 September, 2016) (compared to financial highlights as of 30 September 2015)

Operating income of EUR 12.5 million (30 September 2015: EUR 7.3 million).
Net loss of EUR 12.6 million (30 September 2015: EUR 10.1 million).
Cash position of EUR 103.1 million (cash, cash-equivalents and financial assets) allowing Company to pursue development of its product portfolio as planned.

DETAILS OF OPERATIONAL RESULTS

Products in clinical development:
ARGX-113

Data set from Phase 1 single ascending dose (SAD) and multiple ascending dose (MAD) studies showed favorable safety profile and specific IgG reduction of up to 85 % with a long duration of effect, with repeated dosing of the drug.
Complete MAD data will be presented at a workshop being held in conjunction with the American Society of Hematology (ASH) (Free ASH Whitepaper) annual meeting.
Start of Phase 2 study in MG by the end of 2016.
Start of Phase 2 study in ITP in Q1 2017.

ARGX-110

T-cell lymphoma (TCL):
Interim data of Phase 1b safety expansion study in TCL show partial responses and improvement of skin lesions in cutaneous TCL patients.
Update from safety expansion study to be presented by the end of 2016 at a workshop being held in conjunction with the ASH (Free ASH Whitepaper) annual meeting.
First combination study with romidepsin to initiate by the end of 2016.
Acute myeloid leukemia (AML):
Role of CD70 in newly diagnosed AML patients was presented during R&D day.
First combination study with azacitidine to initiate by the end of 2016.
Preclinical data to be presented by the end of 2016 at a workshop being held in conjunction with ASH (Free ASH Whitepaper) annual meeting.
ARGX-111

Twenty-five patients have been treated in the dose escalation and safety expansion cohort of the Phase 1b study. No additional recruitment of MET-amplified patients is planned and the Company is focused on partnering the asset ahead of any Phase 2 study.

Products in Preclinical Development

ARGX-115

In collaboration with AbbVie to develop and commercialize ARGX-115.
Under agreement, argenx will conduct research and development through IND-enabling studies. Upon successful completion of IND-enabling studies, AbbVie may exercise the exclusive option to license ARGX-115 and assume responsibility for further clinical development and commercialization.
Corporate

Increased FTEs to 71.3 in support of the expansion of the business.
Recognized by the 2016 European Frost & Sullivan Award for Technology Innovation for SIMPLE Antibody discovery platform.
The Company continues to collaborate with Shire, LEO Pharma and Bird Rock Bio. Milestone payments to be expected in 2017.
Mr. Tony Rosenberg will serve as an independent advisor to the Board of Directors, effective 1 October 2016. Previously he served as Global Head, M&A and Licensing for Novartis and has held diverse leadership positions with Novartis predecessor company, Sandoz.

KEY FIGURES (CONSOLIDATED)

in thousands of euros

Period ended

Sept 30, 2016

Period ended

Sept 30, 2015

Variance

Revenue

10,515

4,981

5,535

Other operating income

2,010

2,320

(310)

Total operating income

12,525

7,300

5,225

Research and development expenses

(20,170)

(14,200)

(5,970)

General and administrative expenses

(4,927)

(3,345)

(1,581)

Operating profit/(loss)

(12,572)

(10,245)

(2,327)

Financial income/(expense)

55

51

4

Exchange gains/(losses)

(51)

119

(170)

Profit/loss for the period

(12,568)

(10,075)

(2,494)

Net increase (decrease) in cash, cash-equivalents and financial assets (compared to year end 2015 and 2014)

60,740

(9,336)

Cash, cash-equivalents and financial assets at the end of the period

103,067

46,637

THIRD QUARTER 2016 FINANCIAL RESULTS

On 30 September 2016, operating income reached EUR 12.5 million compared to EUR 7.3 million at the same date in 2015. The increase of EUR 5.2 million in operating income in 2016 results primarily from (i) the deferred revenue recognized from the collaboration agreement signed with Abbvie in April 2016 and (ii) the milestone payment received in February 2016 from the collaboration with LEO Pharma.

Research and development expenses totalled EUR 20.2 million and EUR 14.2 million for the nine-month period ended 30 September 2016 and 2015, respectively. The increase of EUR 6 million in R&D expenses in the first nine months of 2016 correspond principally to (i) increased clinical trial and product manufacturing activities (ii) the recruitment of additional R&D personnel and consultants in relation to increased R&D activities and (iii) the share based payment costs recognized in compensation for the grant of stock options to the R&D employees.

General and administrative expenses amounted to EUR 4.9 million on 30 September 2016, compared to EUR 3.3 million on 30 September 2015. The increase of EUR 1.6 million in G&A expenses in the first nine months of 2016 is principally explained by (i) the increase of personnel expenses related to the employees recruited to strengthen the Group’s G&A activities and support R&D activities, (ii) increased expenses in relation with the growth of the operational activities of the Company (including notably the new offices and laboratory, travel, business development and ICT expenses), and (iii) the share based payment costs recognized in compensation for the grant of stock options to the G&A employees.

During the first nine months of 2016, the Company generated a net loss of EUR 12.6 million compared to a net loss of EUR 10.1 million in the same period of 2015.

On 30 September 2016 the Company’s cash, cash equivalents and financial assets amounted to EUR 103.1 million compared to EUR 42.3 million on 31 December 2015 and EUR 46.6 million on 30 September 2015. The significant increase in the Company’s cash, cash equivalents and financial assets is explained by (i) the two financings completed in January and June 2016 with institutional investors for total gross proceeds of EUR 46 million and (ii) the upfront payment of USD 40 million received following the signature of the collaboration agreement with Abbvie in April 2016.

On October 27, 2016 West Pharmaceutical Services, Inc. (NYSE: WST) reported its financial results for the third quarter 2016, updated financial guidance for the full-year 2016, introduced sales growth outlook for full-year 2017 and reaffirmed long-term 2020 financial targets (Press release, West Pharmaceutical Services, OCT 27, 2016, View Source;reqid=2216475 [SID1234516080]).

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West Pharmaceutical Services, Inc.
Third Quarter 2016 Highlights

Reported net sales of $376.7 million grew 9.4% over the prior-year quarter. Net sales at constant currency grew by 10.0%.
Third quarter 2016 reported diluted EPS was $0.50 as compared to $0.02 in the prior-year quarter. Adjusted diluted EPS was $0.53 as compared to $0.44 in the prior-year quarter, representing 20% year-over-year growth. Both reported and adjusted diluted EPS comparisons to the prior-year period were adversely impacted by $0.04 of currency impacts.
Raising full-year 2016 net sales guidance and tightening adjusted diluted EPS guidance range.
Full-year net sales are now expected to be between $1.510 billion and $1.520 billion compared to prior range of $1.505 billion to $1.520 billion.
Full-year 2016 adjusted diluted EPS is now expected to be between $2.17 and $2.22 compared to prior range of $2.15 to $2.25.
Providing preliminary 2017 sales growth guidance at the high-end of our long-term guidance and reaffirms 2020 financial targets.
"Net sales at constant currency" and "adjusted diluted EPS" are Non-GAAP measurements. See discussion under the heading "Non-GAAP Financial Measures" in this release.

Executive Commentary

"West had another successful quarter with double-digit organic sales growth, year-over-year increases in gross and operating profit margins and strong double-digit growth in adjusted earnings," said Eric M. Green, President and Chief Executive Officer. "Sales growth contribution came from both Proprietary Products and Contract-Manufactured Products segments. The growth was broad-based across our Biologics, Generics and Pharma market units as well as in all geographies. We continue to see strong double-digit sales growth and growing customer demand for our high-value product offerings including FluroTec, Westar RU, Daikyo, administration systems and NovaPure components."

"Fueled by our organic sales growth and a favorable product mix of high-value products, we had year-over-year gross margin expansion. Importantly, our Global Operations team remains on track to achieve our targets of reduced lead times and backlog, which is critical in ensuring a stable supply chain for our customers."

Mr. Green continued, "Last year, we issued 5-year financial targets for 2020. We are off to a good start, and we are reaffirming those targets. In the first year of the plan, we realigned our organization to a market-led strategy, expanded manufacturing capacity and launched new high-value products. In addition, our customers have received regulatory approval for several products using Crystal Zenith and SmartDose technologies."

In the first three quarters of 2016, we have generated almost 10% organic sales growth, expanded both gross and operating profit margins and grown adjusted diluted EPS by 21%. We are raising our full-year 2016 organic sales growth guidance to the upper end of our prior range of 7% to 9% and expect full-year 2016 adjusted diluted EPS to grow approximately 20% at the mid-point of our updated range of $2.17 to $2.22. As we look to 2017, we see continued demand trends from the markets we serve, and we expect to be at the high end of our long-term guidance range of 6% to 8% organic sales growth."

Third Quarter 2016 Results

Gross profit margin was 32.1%, an increase of 70 basis points compared to the prior-year quarter. Proprietary Products gross profit margin was 36.4%, an increase of 90 basis points, primarily due to product mix improvements and modest price increases partially offset by increased labor and overhead costs and changes in foreign currency rates. Contract-Manufactured Products gross profit margin was 16.0%, a decrease of 80 basis points, primarily due to an unfavorable mix of products sold, including low-margin tooling sales.

Third quarter 2016 reported operating profit margin was 13.6%, compared with -1.0% in the prior-year quarter. Excluding 2016 restructuring activities and a 2015 pension settlement charge, third quarter 2016 adjusted operating profit margin was 14.2% compared to 13.2% in the 2015 quarter, an increase of 100 basis points.

Third Quarter 2016 Business Segment Results

Proprietary Products ($298.1 million, 79% of overall net sales)

Proprietary Products reported sales growth was 10.7% over the prior-year quarter. Organic sales growth was 11.6%, led by double-digit growth in the Biologics market unit, high-single digit sales growth in the Generics market unit and mid-single digit sales growth in the Pharma market unit. High-value product offerings had organic sales growth of 25%.

The Proprietary Products backlog of committed orders at September 30, 2016 was $388 million, a decrease of 2% at constant currency compared to September 30, 2015. This continues the 2016 quarterly trend of reduced lead times and backlog as a result of successful Global Operations initiatives and capacity enhancements.

Operating profit for the segment was $57.5 million, resulting in an operating profit margin of 19.3%, compared to $49.5 million and 18.4% in the 2015 period. The margin increase was primarily due to an improvement in gross profit margin.

Contract-Manufactured Products ($79.0 million, 21% of overall net sales)

Contract-Manufactured Products reported sales growth and organic sales growth both were 4.6%, primarily due to higher drug delivery and diagnostic product sales.

Operating profit for the segment was $8.9 million, resulting in an operating profit margin of 11.1%, compared to $8.3 million and 11.0% in the 2015 period. Cost controls on selling, general and administrative expenses offset the decline in gross profit margin.

Corporate and Other

General corporate costs declined by $1.2 million to $6.0 million. Stock-based compensation costs increased by $1.0 million to $4.6 million. U.S. pension expense increased $0.7 million, to $2.2 million.

The effective tax rate used in determining reported net income was 29.3% for the third quarter of 2016. The effective tax rate used in determining adjusted net income was 28.8% as compared to 26.7% in the same quarter of 2015.

During the quarter, the Company repurchased 117,310 shares for $9.6 million. During the first nine months of 2016, the Company has repurchased 370,810 shares for $26.8 million. There are up to 329,190 shares remaining to be repurchased in the program authorized in December 2015.

Full-Year 2016 Financial Guidance

West’s full-year 2016 net sales, margin and EPS guidance are as follows:

(in millions, except EPS)
2016 Updated
Guidance

Prior Guidance
Consolidated net sales
$1,510 to $1,520
$1,505 to $1,520

Consolidated gross profit margin (% of net sales)
33.6% to 33.7%
33.6% to 34.0%

Proprietary Products net sales
$1,195 to $1,200
$1,195 to $1,200

Proprietary Products
Gross profit margin (% of net sales)

38.0% to 38.2%

37.9% to 38.4%

Contract-Manufactured Products net sales
$315 to $320
$310 to $320

Contract-Manufactured Products
Gross profit margin (% of net sales)

16.8% to 17.2%

17.1% to 17.6%

Full-Year adjusted diluted EPS*
$2.17 to $2.22
$2.15 to $2.25
* Adjusted diluted EPS is a non-GAAP measurement. See discussion under the heading "Non-GAAP Financial Measures" in this release.

The principal currency assumption used in preparing these estimates is the translation of the euro at $1.10 for the remainder of 2016 as compared to the prior guidance exchange rate of $1.12 per euro.

With one quarter remaining in the year, the gross profit margin guidance range has been tightened and reflects the expected positive impact from the mix of high-value product sales growth offset by changes in foreign currency exchange rates, in particular the Japanese yen, and incremental sales of low-margin contract manufacturing tooling sales.

The Company expects that its annual effective tax rate, used in determining adjusted net income and adjusted diluted EPS, will be approximately 28.5%.

The Company estimates its 2016 capital spending at between $150 million and $175 million.

2017 Revenue and Long-Term Outlook

The Company expects 2017 organic sales growth to grow at the high end of its long-term outlook of 6% to 8%. Sales growth of high-value products is expected to be in the low-double digits.

The Company is reaffirming its 2020 financial targets of sales between $2.2 billion and $2.4 billion with a consolidated operating profit margin in the range of 19% to 23%. Over this period, the Company continues to estimate capital spending to be in the range of $150 million to $175 million per year.