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:

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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 Seattle Genetics, Inc. (Nasdaq: SGEN)reported financial results for the second quarter and six months ended June 30, 2015 (Press release, Seattle Genetics, JUL 30, 2015, View Source;p=RssLanding&cat=news&id=2073186 [SID:1234506770]). The company also highlighted ADCETRIS (brentuximab vedotin) commercialization, regulatory and clinical development accomplishments, progress with other proprietary pipeline programs and antibody-drug conjugate (ADC) and other collaborator updates.

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"With record ADCETRIS net sales in the second quarter and a broad ongoing clinical development program comprising four phase 3 trials for a range of CD30-expressing malignancies, we are enthusiastic about the potential to expand ADCETRIS to help patients in need," said Clay Siegall, Ph.D., President and Chief Executive Officer of Seattle Genetics. "Looking ahead, we are increasing our 2015 ADCETRIS net sales guidance by $10 million to now be in the range of $210 million to $220 million. We anticipate a decision from the FDA on our AETHERA supplemental BLA by August 18th, and are on track to complete enrollment in our phase 3 ECHELON-1 and ALCANZA trials before the end of 2015. In addition, our clinical-stage pipeline is gaining increased visibility with data from multiple programs expected over the course of the next six to nine months, notably SGN-CD33A and SGN-CD19A."

Recent ADCETRIS Highlights

The U.S. Food and Drug Administration (FDA) filed the company’s supplemental BLA for use of ADCETRIS in the AETHERA setting for post-transplant consolidation treatment of Hodgkin lymphoma (HL) patients at high risk of relapse or progression. The FDA granted Priority Review and set a Prescription Drug User Fee Act (PDUFA) target action date of August 18, 2015.

Reported data on ADCETRIS in the AETHERA setting, in diffuse large B-cell lymphoma (DLBCL) and in several other HL and non-Hodgkin lymphoma settings at multiple sessions during the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) 50th Annual Meeting and the 13th International Conference on Malignant Lymphoma (ICML). The data demonstrated the breadth of the ADCETRIS clinical development program and its broad potential in a range of CD30-expressing malignancies.

Takeda Pharmaceutical Company Limited (Takeda) continues to receive additional marketing approvals for ADCETRIS, which is now commercially available in 56 countries worldwide.

Initiated a phase 2 clinical trial evaluating ADCETRIS in systemic lupus erythematosus (SLE, or lupus), a chronic autoimmune disease.

Recent Pipeline, Collaborator and Other Highlights

Entered into a strategic collaboration and license agreement with Unum Therapeutics to develop and commercialize novel antibody-coupled T-cell receptor (ACTR) therapies for cancer. Under the terms of the agreement, Seattle Genetics made an upfront payment of $25 million and an equity investment of $5 million in Unum. The companies will initially develop two ACTR products incorporating Seattle Genetics’ antibodies, and Seattle Genetics has an option to expand the collaboration to include a third ACTR product.

Received a milestone payment under a collaboration with AbbVie, triggered by its initiation of a phase 1 trial for an ADC for hematologic malignancies utilizing Seattle Genetics’ technology.

Named Sundos Hamza, M.D. as Senior Vice President, Pharmacovigilance and Risk Management. Dr. Hamza was previously Senior Vice President, Drug Safety Risk Management at InterMune and before that she was Executive Medical Director, Safety and Regulatory at Amgen.

Anticipated Upcoming Activities

Obtain FDA review decision for use of ADCETRIS in the AETHERA setting for post-transplant consolidation treatment of HL patients at high risk of relapse or progression.

Complete enrollment in ADCETRIS phase 3 trials ECHELON-1 and ALCANZA during 2015 and ECHELON-2 during 2016.
Initiate a randomized phase 2 trial of Rituxan (rituximab) and bendamustine with or without ADCETRIS for relapsed/refractory CD30-positive DLBCL.

Initiate phase 1 / 2 trials of ADCETRIS in combination with Opdivo (nivolumab) in HL and non-Hodgkin lymphoma.
Conduct an end of phase 1 meeting with the FDA and seek scientific advice in Europe to determine next steps towards a global registration strategy for SGN-CD33A.

Initiate a randomized phase 2 trial of SGN-CD19A in second-line DLBCL.

Report clinical data from ADCETRIS and pipeline programs, including SGN-CD33A, SGN-CD19A and SGN-LIV1A.

ADCETRIS is not currently approved for the post-transplant consolidation treatment of HL patients at high risk of relapse or progression, or for use in DLBCL, SLE or non-Hodgkin lymphoma other than systemic anaplastic large cell lymphoma.

Second Quarter and Six Months 2015 Financial Results

Total revenues in the second quarter and six month periods ended June 30, 2015 increased to $77.1 million and $159.3 million, respectively, from $68.3 million and $136.6 million for the same periods in 2014. ADCETRIS sales in the second quarter were $55.1 million, compared to $44.8 million for the second quarter of 2014. For the year-to-date, ADCETRIS sales were $104.0 million, compared to $83.5 for the year-to-date period in 2014, an increase of 25 percent. Second quarter 2015 revenues also included royalty revenues driven by international sales of ADCETRIS by Takeda of $7.6 million, compared to $7.3 million in the second quarter of 2014. For the year-to-date in 2015, royalty revenues were $18.7 million, compared to $20.0 million for the first six months of 2014. First quarter 2014 royalty revenues included a $5 million sales milestone payment from Takeda. In addition, revenues included amounts earned under the company’s ADCETRIS and ADC collaborations totaling $14.4 million in the second quarter and $36.6 million for the first six months of 2015, compared to $16.2 million and $33.1 million for the same periods in 2014.

Total costs and expenses for the second quarter of 2014 were $124.7 million, compared to $86.0 million for the second quarter of 2014. For the first six months of 2015, total costs and expenses were $228.6 million, compared to $170.6 million in the first six months of 2014. The increase in 2015 costs and expenses was primarily driven by the $25.0 million upfront payment to Unum and investment in Seattle Genetics’ pipeline programs.

Non-cash, share-based compensation cost for the first six months of 2015 was $17.6 million, compared to $18.7 million for the first six months of 2014.

Net loss for the second quarter of 2015 was $47.5 million, or $0.38 per share, compared to a net loss of $17.6 million, or $0.14 per share, for the second quarter of 2014. For the six months ended June 30, 2015, net loss was $69.2 million, or $0.55 per share, compared to a net loss of $33.9 million, or $0.28 per share, for the same period in 2014.

As of June 30, 2015, Seattle Genetics had $249.5 million in cash, cash equivalents and investments, compared to $313.4 million as of December 31, 2014.

2015 Financial Outlook

Seattle Genetics anticipates that 2015 revenues from ADCETRIS net product sales in the U.S. and Canada will be slightly higher than previously anticipated, and are now expected to be in the range of $210 million to $220 million. The company also now anticipates that 2015 research and development expenses will be in the range of $275 million to $300 million, primarily due to the $25 million upfront payment under the recent collaboration with Unum Therapeutics.

On July 31, 2014 Eisai Co., Ltd. and Halozyme Therapeutics, Inc. (NASDAQ: HALO) reported that they have signed a clinical collaboration agreement to evaluate Eisai’s anticancer agent eribulin mesylate (brand name: Halaven, "eribulin") in combination with Halozyme’s investigational new drug PEGPH20 (PEGylated recombinant human hyaluronidase) in first line HER2- negative advanced breast cancer (Press release, Eisai, JUL 30, 2015, View Source [SID:1234506771]).

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Eribulin, a halichondrin class microtubule dynamics inhibitor with a novel mechanism of action, is currently approved for the treatment of advanced breast cancer in approximately 60 countries worldwide. Structurally, eribulin is a simplified and synthetically produced version of halichondrin B, a natural product isolated from the marine sponge Halichondria okadai. Eribulin is believed to work by inhibition of the growth phase of microtubule dynamics which prevents cell division.

PEGPH20 is an investigational drug administered intravenously that targets the degradation of hyaluronan, a glycosaminoglycan – or chain of natural sugars throughout the body. Hyaluronan accumulates around cancer cells, increasing tumor interstitial fluid pressure and constricting tumor vasculature, subsequently inhibiting anticancer agents from reaching cancer cells. By degrading hyaluronan, PEGPH20 increases blood flow to the tumor which may allow cancer therapies to be more efficiently delivered to their target.

Under the agreement, the companies will jointly conduct and share the costs of a Phase Ib/II clinical study seeking to determine whether or not the combination therapy of eribulin and PEGPH20 can improve the overall response rate in advanced breast cancer patients with high levels of hyaluronan. In hyaluronan-rich triple-negative breast preclinical animal models, the addition of PEGPH20 to eribulin showed a significantly higher tumor growth inhibition including tumor regression when compared to eribulin alone.

"This is a very important collaboration, one that speaks to our continued commitment to address the unmet medical needs of patients with advanced breast cancer," said RuiRong Yuan, MD, Vice President and Chief Medical Officer, Eisai Global Oncology. "We look forward to enrolling patients in the clinical trial and assessing the results."

"This agreement marks the first clinical collaboration agreement for Halozyme and extends the study of PEGPH20 to a substantially wider population of patients with a partner that is a clear leader in the treatment of advanced breast cancer," said Dr. Helen Torley, President and CEO, Halozyme Therapeutics, Inc.

On July 29, 2015 Varian Medical Systems (NYSE: VAR) today is reporting net earnings of $1.13 per diluted share in the third quarter of fiscal year 2015 (Press release, Varian Medical Systems, JUL 29, 2015, View Source [SID:1234506749]). Third quarter net earnings per diluted share rose 11 percent versus the year-ago period when the company recorded a $0.06 per diluted share charge related to the impairment of a portion of the company’s investment in Augmenix. Varian’s company-wide revenues totaled $784 million for the third quarter, up 5 percent from the year-ago quarter and up 11 percent in constant currency. The company ended the third quarter with a $3.1 billion backlog, up 9 percent from the end of the third quarter of fiscal year 2014.

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"The third quarter was mixed for Varian with double-digit constant currency gross orders growth in Oncology Systems, significant challenges in Imaging Components, and strong performance in Particle Therapy," said Dow R. Wilson, CEO of Varian Medical Systems. "The stronger U.S. dollar continued to have a big impact on our performance, contributing to lower margins. Excellent cost controls enabled us to deliver solid earnings for the period."

The company finished the third quarter of fiscal year 2015 with $951 million in cash and cash equivalents and $494 million of debt. Cash flow from operations for the third quarter was $184 million. During the quarter, the company spent $92 million to repurchase about 1 million shares of common stock.

Oncology Systems

Oncology Systems’ third quarter revenues totaled $559 million, down 3 percent from the same quarter of fiscal year 2014, but up mid-single digits on a constant currency basis. Third-quarter Oncology gross orders were $635 million, up 2 percent versus the year-ago quarter and up 10 percent in constant currency. Oncology gross orders rose 4 percent in the Americas in both U.S. dollars and constant currency. EMEA gross orders were down 2 percent, but up 13 percent in constant currency. APAC gross orders rose 8 percent and were up 21 percent in constant currency.

"Continued global demand for versatile, reliable, efficient accelerators and integrated software systems gave Varian a competitive advantage and drove solid growth in the quarter," said Wilson. "We were selected to replace several older machines and software systems from competitors as customers moved to modernize their treatment capabilities."

Imaging Components

Third quarter revenues for Imaging Components were $135 million, down 17 percent from the year-ago quarter while third quarter gross orders decreased by 25 percent to $122 million.

"Continued weak demand for security and inspection products as well as pricing pressure and product mix in flat panels were the prime factors in a challenging quarter for Imaging Components," said Wilson. "The global market for high energy border protection systems appears to have slowed significantly. Imaging product customers are actively looking for lower pricing and alternatives to dollar-based products."

Today, the company announced that it is acquiring Claymount, a Netherlands-based supplier of X-ray imaging components, for approximately €50 million (see separate press release).

Other

The company’s Other category, including the Varian Particle Therapy business and the Ginzton Technology Center, recorded revenues of $91 million and gross orders of $131 million. During the quarter, we announced that we booked orders for installations at the University of Maryland and at the HollandPTC in the Netherlands. The company recognized a substantial amount of revenues from the Maryland installation as well as revenues from several other proton projects that made the particle therapy business profitable in the quarter.

"We have generated real momentum in particle therapy," said Wilson. "We booked two orders during the third quarter and subsequently booked additional orders for three proton systems in the UK and in New York. We now have 11 systems in backlog."

Outlook

"We expect that revenues for the full fiscal year will increase by about 2 percent in dollars and by about 6 percent in constant currency," said Wilson. "We ended the second quarter with earnings guidance for fiscal 2015 in the range of $4.02 to $4.14 per diluted share. As of the end of the third quarter, with the approximately $0.22 per diluted share for the booking of the Maryland proton therapy system partially offset by ongoing challenges in our Imaging Components business, we now believe that our earnings for fiscal 2015 could be in the range of $4.20 to $4.25 per diluted share."

Given recent acquisitions, including Claymount, as well as historical one-time activities that make quarter-over-quarter comparisons difficult, the company will show non-GAAP results starting in its fiscal fourth quarter. Non-GAAP earnings for fiscal year 2015 should be higher than the GAAP range by approximately $0.16 per diluted share, comprised of restructuring charges in the first half of fiscal year 2015, acquisition related costs, and amortization of acquisition related intangibles.

On July 29, 2015 Hanmi Pharmaceutical Co. Ltd and Boehringer Ingelheim reported an exclusive license and collaboration agreement for the development and commercialisation rights, except South Korea, China and Hong Kong, of HM61713, a novel 3rd generation EGFR targeted therapy for the treatment of a specific type of lung cancer (Press release, Hanmi, JUL 29, 2015, View Source;hanmiEnglishNewsDtlSeq=123 [SID:1234508098]). Under the terms of the agreement Hanmi will receive an initial payment of USD50 million and is entitled to potential milestone payments of more than USD700 (600) million plus tiered double-digit royalties on future net sales. The agreement is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, similar requirements outside the U.S., and other customary closing conditions.

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Jee Woong Son, Vice president, of Hanmi Pharmaceutical said, "We are excited at the potential this license agreement with Boehringer Ingelheim will bring to the successful development of HM61713 and the possibilities this will offer to lung cancer patients. Boehringer Ingelheim has significant expertise in the field of lung cancer, specifically with EGFR mutations, and with a strong pipeline which demonstrates long-term commitment to the successful development of lung cancer treatments, we are confident we have found the right partner to make the potential of HM61713 a reality."

HM61713 is a novel 3rd generation, orally active, irreversible EGFR mutation selective tyrosine kinase inhibitor (TKI). Currently in Phase II clinical development for patients with T790M mutation-positive non-small cell lung cancer (NSCLC) who have developed resistance to previous EGFR targeting agents. The interim results of the Phase I/II clinical trial presented at this year’s ASCO (Free ASCO Whitepaper) Annual Meeting showed strong efficacy signals, combined with a favourable safety profile, leading to the preparation of a Phase III trial programme to be initiated in 2016.

Dr Jörg Barth, Corporate Senior Vice President, Therapy Area Head Oncology, Boehringer Ingelheim said, "This exclusive license agreement with Hanmi Pharmaceutical is a significant step towards our vision of providing a wide-range of lung cancer treatments to patients in an area of significant unmet medical need. The in-licensing of a 3rd generation EGFR agent bolsters our existing lung cancer portfolio and reiterates our commitment towards innovation and tailored treatment options for patients."