On July 27, 2017 Celgene Corporation (NASDAQ:CELG) reported net product sales of $3,256 million for the second quarter of 2017, a 19 percent increase from the same period in 2016 (Press release, Celgene, JUL 27, 2017, View Source [SID1234519906]).
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Celgene reported second quarter of 2017 total revenue of $3,268 million, a 19 percent increase compared to $2,754 million in the second quarter of 2016.
Based on U.S. GAAP (Generally Accepted Accounting Principles), Celgene reported net income of $1,061 million and diluted earnings per share (EPS) of $1.31 for the second quarter of 2017. For the second quarter of 2016, GAAP net income was $598 million and diluted EPS was $0.75.
Adjusted net income for the second quarter of 2017 increased 28 percent to $1,474 million compared to $1,152 million in the second quarter of 2016. For the same period, adjusted diluted EPS increased 26 percent to $1.82 from $1.44.
“We delivered outstanding second quarter results and significantly advanced our high-potential pipeline,” said Mark J. Alles, Celgene’s Chief Executive Officer. “Exceptional execution of key strategic initiatives strengthened and expanded our opportunities for long-term growth.”
Second Quarter 2017 Financial Highlights
Unless otherwise stated, all comparisons are for the second quarter of 2017 compared to the second quarter of 2016. The adjusted operating expense categories presented below exclude share-based employee compensation expense, collaboration-related upfront expense and litigation-related loss contingency accrual expense. Please see the attached Use of Non-GAAP Financial Measures and Reconciliation of GAAP to Adjusted Net Income for further information relevant to the interpretation of adjusted financial measures and reconciliations of these adjusted financial measures to the most comparable GAAP measures, respectively.
Net Product Sales Performance
REVLIMID sales for the second quarter increased 20 percent to $2,034 million. Sales growth was driven primarily by increased volume as a result of increases in duration of treatment and market share gains. U.S. sales of $1,358 million and international sales of $676 million increased 26 percent and 9 percent year-over-year, respectively. REVLIMID sales for the second quarter of 2016 were favorably impacted by a Russian tender.
POMALYST/IMNOVID sales for the second quarter were $391 million, an increase of 23 percent year-over-year. U.S. sales were $241 million and international sales were $150 million, an increase of 30 percent and 13 percent year-over-year, respectively. POMALYST/IMNOVID sales grew due to increased volume driven by duration gains.
OTEZLA sales for the second quarter were $358 million, a 49 percent increase year-over-year. Second quarter U.S. sales of $306 million and international sales of $52 million increased 41 percent and 117 percent, respectively. Sales were driven by increased prescriber adoption and market share gains in the U.S. with increasing contribution from early launch markets in Europe and Japan.
ABRAXANE sales for the second quarter were $254 million, a 2 percent increase year-over-year. U.S. sales were $161 million and international sales were $93 million, a decrease of 7 percent and an increase of 24 percent, respectively. ABRAXANE market shares in the U.S. for pancreatic cancer, first-line advanced non-squamous lung cancer and metastatic breast cancer remain stable. Growth in Europe was driven by market share gains for ABRAXANE in pancreatic cancer.
In the second quarter, all other product sales, which include THALOMID, ISTODAX, VIDAZA and an authorized generic version of VIDAZA drug product in the U.S., were $219 million compared to $236 million in the second quarter of 2016.
Total net product sales for the second quarter of 2017 increased 19 percent year-over-year, driven by operational growth which includes the impact from both volume and price. Net product sales growth also includes a 0.7 percent negative impact from currency exchange effects.
Research and Development (R&D)
On a GAAP basis, R&D expenses were $835 million for the second quarter of 2017 versus $949 million for the same period in 2016. The second quarter decrease was due to a reduction in collaboration-related upfront expense.
Adjusted R&D expenses were $690 million for the second quarter of 2017 compared to $601 million for the second quarter of 2016. The second quarter increase was due to increased spending related to clinical trial and drug discovery activity.
Selling, General, and Administrative (SG&A)
On a GAAP basis, SG&A expenses were $939 million for the second quarter of 2017 compared to $732 million for the same period in 2016. The increase in SG&A expenses was primarily due to higher litigation-related loss contingency accrual expense as a result of the recently announced civil litigation settlement.
Adjusted SG&A expenses were $532 million for the second quarter of 2017 compared to $547 million for the second quarter of 2016.
Cash, Cash Equivalents, and Marketable Securities
Operating cash flow was $1.6 billion in the second quarter of 2017, compared to $1.0 billion for the second quarter of 2016. In the second quarter, Celgene purchased approximately 4.2 million of its shares at a total cost of approximately $507 million. As of June 30, 2017, the Company had approximately $3.9 billion remaining under its stock repurchase program. Celgene ended the quarter with approximately $10.1 billion in cash, cash equivalents and marketable securities.
2017 Guidance Updated
Previous 2017 Guidance
Updated 2017 Guidance
Net Product Sales
REVLIMID() $8.0B to $8.3B Unchanged
POMALYST()/IMNOVID() Approximately $1.6B Unchanged
OTEZLA( ) $1.5B to $1.7B Unchanged
ABRAXANE() Approximately $1.0B Unchanged
Total Revenue $13.0B to $13.4B Unchanged
GAAP operating margin Approximately 46.0% Approximately 41.5%
GAAP diluted EPS $5.95 to $6.29 $5.36 to $5.62
Adjusted operating margin Approximately 57.0% Approximately 57.5%
Adjusted diluted EPS $7.15 to $7.30 $7.25 to $7.35
Weighted average diluted shares Approximately 815M Unchanged
Product and Pipeline Updates
Hematology & Oncology
In July, the phase III ROBUST trial evaluating REVLIMID in combination with rituximab plus chemotherapy (R-CHOP) in patients with ABC type diffuse large B-cell lymphoma (DLBCL) completed enrollment. Data from the phase III ROBUST trial are expected in 2018.
The phase III QUAZAR trial evaluating CC-486 as maintenance therapy in patients with acute myeloid leukemia (AML) completed enrollment in the second quarter. Data from the phase III QUAZAR trial are expected in 2018.
At the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting in June, data were presented on Celgene’s marketed products and pipeline assets. Presentations included:
Updated data from the phase I/II trial evaluating IDHIFA (enasidenib) in patients with relapsed and/or refractory acute AML with an isocitrate dehydrogenase-2 (IDH2) mutation. The results were largely consistent with previously reported data and formed the basis of the New Drug Application (NDA) package submitted to the U.S. Food and Drug Administration (FDA) with a Prescription Drug User Fee Act (PDUFA) action date of August 30, 2017.
Updated data from the phase III MAGNIFY trial with REVLIMID in combination with rituximab (R2) in patients with relapsed and/or refractory indolent non-Hodgkin lymphoma (NHL). The interim data focused on a subset of patients with relapsed or refractory follicular lymphoma (FL) with early relapse and double-refractory disease. Additionally, interim data from the phase III MAGNIFY trial in a subset of patients with marginal zone lymphoma (MZL) were presented at the International Conference on Malignant Lymphoma (ICML) in June. Interim data from the MAGNIFY trial continue to support the clinical potential of the R2 combination across a broad range of lymphomas.
In collaboration with partner bluebird bio, results from the phase I trial evaluating bb2121, a B-cell maturation antigen (BCMA) chimeric antigen receptor (CAR)-T cell therapy, in patients with relapsed and/or refractory multiple myeloma (RRMM) were presented. Celgene and bluebird bio plan to initiate a pivotal trial with bb2121 in RRMM by year-end.
In collaboration with partner Juno Therapeutics, updated data from the ongoing phase I TRANSCEND trial evaluating investigational CAR-T cell candidate, JCAR017, in patients with relapsed or refractory aggressive NHL were presented. In June, JCAR017 was granted Orphan Drug Designation for DLBCL by the European Medicines Agency (EMA) Committee for Orphan Medicinal Products (COMP). Celgene and Juno Therapeutics plan to initiate the pivotal program with JCAR017 in DLBCL in the second half of 2017.
In collaboration with partner Jounce Therapeutics, results from the phase I portion of the phase I/II ICONIC trial evaluating JTX-2011, an agonist monoclonal antibody targeting Inducible T cell CO-Stimulator (ICOS), as a single agent and in combination with nivolumab in patients with advanced solid tumors were presented.
In June, the phase III abound.sqm trial evaluating the investigational use of ABRAXANE as maintenance treatment in patients with squamous non-small cell lung cancer (NSCLC) met the endpoint of a pre-planned interim futility analysis and no new safety signals were observed. Follow-up of patients who had enrolled in the study will continue and findings will be reported when the dataset matures.
In June, Celgene and partner Acceleron Pharma, announced the completion of enrollment in the phase III MEDALIST and BELIEVE trials evaluating luspatercept in patients with lower-risk myelodysplastic syndromes (MDS) and transfusion dependent beta-thalassemia. Top-line data from the MEDALIST and BELIEVE trials are expected mid-2018. At the 14th International Symposium on MDS in May, data from the phase II trial evaluating luspatercept in patients with first-line, lower-risk MDS were presented. Celgene plans to initiate the phase III COMMANDS trial with luspatercept in first-line, lower-risk MDS in early 2018. Additionally, a phase II trial evaluating luspatercept in myelofibrosis was initiated in the second quarter of 2017.
Inflammation & Immunology
In May, Celgene disclosed positive top-line results from the confirmatory phase III RADIANCE trial evaluating ozanimod in RMS. The trial met its primary endpoint in reducing annualized relapse rate (ARR), compared to weekly interferon (IFN) β-1a (Avonex). The overall safety and tolerability profile was consistent with results from the recently completed phase III SUNBEAM trial and previously reported phase II trials. The full data set will be presented at an upcoming medical congress in the second half of 2017. An NDA submission to the FDA, based on the combined phase III SUNBEAM and RADIANCE trials for RMS is expected by the end of 2017.
The phase III trial evaluating OTEZLA in patients with scalp psoriasis initiated in the second quarter.
The phase III RELIEF trial evaluating OTEZLA in patients with Behҫet’s disease completed enrollment in the second quarter. Data from the phase III RELIEF trial are expected in 2018.
The phase II proof-of-concept trial evaluating OTEZLA in ulcerative colitis completed enrollment in the second quarter. Top-line results from the phase II trial are expected by year-end 2017.
At the European League Against Rheumatism (EULAR) meeting in June, data presentations included:
Long-term results from Celgene’s phase III PALACE program evaluating OTEZLA in patients with active psoriatic arthritis including 4-year efficacy and safety data, 3-year analysis of treatment impact on enthesitis and dactylitis and 3-year pooled analysis on the impact of OTEZLA on productivity and physical function. Long-term safety data presented did not demonstrate new safety signals and continue to support the safety profile for OTEZLA in patients with psoriatic arthritis.
An encore presentation of data from the phase IIa trial evaluating CC-220 in patients with systemic lupus erythematosus (SLE). Results were presented across multiple measures of disease activity and continue to support development of CC-220 in SLE. Celgene plans to initiate a phase IIb trial with CC-220 in the second half of 2017.
Business Update
In July, Celgene announced a strategic collaboration with BeiGene, Ltd. for the development and commercialization of investigational programmed death-1 (PD-1) inhibitor, BGB-A317, for the treatment of solid tumors. This transaction accelerates Celgene’s immuno-oncology strategy in solid tumors by expanding development optionality through combinatorial opportunities with novel, early-stage pipeline assets. Potential combinations for investigation include proprietary CELMoD agent CC-122 in hepatocellular carcinoma (HCC) and numerous partnered assets targeting T cell immunoglobulin and ITIM domain protein (TIGIT), ICOS, retinoic acid-related orphan receptor gamma (RORɣ) and metabolic pathway modulators. Furthermore, the BeiGene transaction adds to Celgene’s ongoing immuno-oncology efforts with partner AstraZeneca, evaluating IMFINZI in hematological malignancies. The transaction is expected to close in the third quarter of 2017, subject to the expiration or termination of applicable waiting periods under all applicable antitrust laws and satisfaction of other usual and customary closing conditions.
In July, Celgene exercised its option, pursuant to the March 2014 collaboration arrangement, to expand its strategic collaboration with FORMA Therapeutics Holdings LLC (FORMA) to evaluate additional therapeutic candidates across important emerging target families in the areas of Protein Homeostasis, Inflammation & Immunology and Neurology. Upon signing the agreement, Celgene was granted an option to license ex-U.S. rights to select current and future drug candidates for the next two years and three months (or through October 1, 2019). Under the terms of the agreement, FORMA received an upfront cash payment of $195 million. In addition, also pursuant to the March 2014 collaboration arrangement, Celgene has the option to enter into a second additional collaboration, during which Celgene will have the exclusive option to acquire FORMA, including the U.S. rights to all licensed programs, and worldwide rights to other wholly-owned programs within FORMA at that time.
Key Milestones Expected During the Second Half of 2017
Hematology & Oncology
Approval decision by the U.S. FDA for IDHIFA for the treatment of patients with relapsed and/or refractory AML with IDH2 mutation
Data from the phase III RELEVANCE trial with REVLIMID in combination with rituximab in patients with newly diagnosed FL
Data from the phase III AUGMENT trial with REVLIMID in combination with rituximab in patients with relapsed and/or refractory FL
Data from the phase III apact (PANC-003) trial with ABRAXANE as adjuvant therapy in patients with surgically resected pancreatic cancer
Data from the phase II abound.2L+ trial with ABRAXANE alone or in combination with CC-486 or IMFINZI as a second or third-line treatment in patients with advanced NSCLC
Data from phase I/II trials with CC-122 in patients with RRMM
Data from the phase I/II FUSION program evaluating IMFINZI in combination with POMALYST in multiple myeloma and in combination with VIDAZA in patients with MDS and AML
Initiate a pivotal trial with CC-122 in relapsed and/or refractory DLBCL
Initiate a pivotal trial with marizomib in combination with standard therapy in first-line glioblastoma
Initiate a pivotal trial with bb2121 in RRMM in collaboration with bluebird bio
Initiate the pivotal program with JCAR017 in relapsed and/or refractory DLBCL in collaboration with Juno Therapeutics
Inflammation & Immunology
Submission of an sNDA for OTEZLA once-daily formulation
Submission of an NDA for ozanimod in patients with RMS
Data from a phase II trial with GED-0301 in ulcerative colitis
Data from a phase II trial with OTEZLA in ulcerative colitis
Complete enrollment in the phase III TRUE NORTH trial with ozanimod in ulcerative colitis
Complete enrollment in the phase III REVOLVE trial with GED-0301 in Crohn’s disease
Complete enrollment in a pediatric phase II trial with OTEZLA in plaque psoriasis
Initiate a phase IIb trial with CC-220 in SLE
Initiate a phase IIa trial with CC-90001 in idiopathic pulmonary fibrosis
Research & Early Development
File at least 5 additional Investigational New Drug (IND) or Clinical Trial Applications (CTA) including:
Submission of an IND for CC-92480, a new CELMoD compound in patients with multiple myeloma
Submission of an IND for CC-93269 (EM901), a T-cell bi-specific antibody targeting BCMA in patients with multiple myeloma