On October Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) reported consolidated financial results for the quarter ended September 30, 2016 and reviewed recent progress with its approved and investigational cystic fibrosis (CF) medicines (Press release, Vertex Pharmaceuticals, OCT 25, 2016, View Source [SID1234516000]). Vertex also reiterated its financial guidance for total 2016 ORKAMBI and KALYDECO revenues and expenses. Key financial results include:

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

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

Three Months Ended September 30,
2016 2015 % Change
(in millions, except per share and percentage data)
ORKAMBI product revenues, net $ 234 $ 131 79 %
KALYDECO product revenues, net $
176
$
166
6 %
TOTAL CF product revenues, net $
410
$
297
38 %

GAAP net loss $ (42 ) $ (95 ) (56 )%
GAAP net loss per share $ (0.17 ) $ (0.39 ) (56 )%

Non-GAAP net income (loss) $ 40 $ (32 ) N/A
Non-GAAP net income (loss) per share $ 0.16 $ (0.13 ) N/A
"Vertex continues to make significant progress with the key growth drivers for our business – increasing the number of people being treated with ORKAMBI and KALYDECO, expanding the number of people eligible for these medicines through label-expansions and developing new medicines to treat potentially all people with CF in the future," said Jeffrey Leiden, M.D., Ph.D., Chairman, President and Chief Executive Officer of Vertex. "Our progress toward treating more people with CF was marked by several important milestones in recent weeks, including the approval of ORKAMBI for children ages six to eleven in the U.S. and today’s announcement regarding the advancement of our pipeline of next-generation correctors. Importantly, we’re also continuing to generate important additional data about the long-term benefits of treating the underlying cause of CF with both ORKAMBI and KALYDECO."

Vertex today reviewed recent progress from across its CF program:

ORKAMBI

FDA approval of ORKAMBI for the treatment of children ages 6 to 11: On September 28, 2016 the U.S. Food and Drug Administration (FDA) approved ORKAMBI for the treatment of children ages 6 through 11 who have two copies of the F508del mutation. There are approximately 2,400 children ages 6 through 11 who have two copies of the F508del mutation in the U.S.

Data from Phase 3 efficacy study to support approval in children ages 6 to 11 in Europe expected by year-end: Vertex completed enrollment in a six-month Phase 3 efficacy study evaluating ORKAMBI in children ages 6 through 11 who have two copies of the F508del mutation and expects data from this study by the end of 2016. The primary endpoint of the study is the absolute change in lung clearance index. Pending data from the study, Vertex plans to submit a Marketing Authorization Application variation in the European Union in the first half of 2017. In Europe, there are approximately 3,400 children ages 6 through 11 who have two copies of the F508del mutation.

Tezacaftor (VX-661) in Combination with Ivacaftor

Enrollment complete in two Phase 3 studies of tezacaftor (VX-661); data expected in first half of 2017: Vertex has now completed enrollment in two of three ongoing Phase 3 studies of the investigational combination of tezacaftor and ivacaftor. Enrollment is complete in the Phase 3 study in people ages 12 and older who have two copies of the F508del mutation and also in the Phase 3 study in people ages 12 and older who have one F508del mutation and one residual function mutation. Data from both studies are expected in the first half of 2017. The Phase 3 study of tezacaftor in combination with ivacaftor in people with one F508del mutation and one gating mutation is expected to complete enrollment in early 2017. Vertex plans to submit a New Drug Application (NDA) to the FDA for tezacaftor in combination with ivacaftor in the second half of 2017, pending data from the Phase 3 program.

Next-Generation Correctors

Planned initiation of Phase 2 studies in CF patients: In a separate press release issued today, Vertex announced that it plans to initiate two Phase 2 studies to evaluate the next-generation correctors VX-440 and VX-152 in triple combination regimens with tezacaftor (VX-661) and ivacaftor in people with cystic fibrosis (CF). Both studies are expected to start by the end of 2016. Additional details on the design of these studies were provided today in a separate press release.

Additional next-generation correctors moving into clinical development: Vertex also reported that it plans to begin a Phase 1 study of VX-659, the company’s third next-generation corrector, by the end of 2016 and to advance a fourth next-generation corrector into clinical development in 2017. Additional details were provided today in a separate press release.

Third Quarter 2016 Financial Highlights

Revenues:

Net product revenues from ORKAMBI were $234.0 million compared to $130.8 million for the third quarter of 2015. ORKAMBI was launched in the U.S. in July 2015.
Net product revenues from KALYDECO were $175.6 million, compared to $165.9 million for the third quarter of 2015.
Expenses:

GAAP operating expenses were $435.5 million compared to $379.8 million for the third quarter of 2015. Non-GAAP operating expenses (combined non-GAAP R&D and SG&A) were $298.0 million compared to $277.7 million for the third quarter of 2015. The increases were primarily driven by increased costs related to the progression of our CF pipeline and to increased investment in global commercial support for the launch of ORKAMBI.
GAAP R&D expenses were $275.4 million compared to $246.3 million for the third quarter of 2015. Non-GAAP R&D expenses were $214.0 million compared to $201.6 million for the third quarter of 2015. The increases were primarily driven by increased investment to progress our portfolio of CF medicines.
GAAP SG&A expenses were $106.1 million compared to $99.8 million for the third quarter of 2015. Non-GAAP SG&A expenses were $84.0 million compared to $76.1 million for the third quarter of 2015. The increases were primarily driven by increased investment to support the global launch of ORKAMBI.
Net Income (Loss) Attributable to Vertex:

GAAP net loss was $(41.8) million, or $(0.17) per diluted share, compared to GAAP net loss of $(95.1) million, or $(0.39) per diluted share, for the third quarter of 2015. Non-GAAP net income was $40.1 million, or $0.16 per diluted share, compared to a non-GAAP net loss of $(31.9) million, or $(0.13) per diluted share, for the third quarter of 2015.
Cash Position:

As of September 30, 2016, Vertex had $1.13 billion in cash, cash equivalents and marketable securities compared to $1.04 billion in cash, cash equivalents and marketable securities as of December 31, 2015.
As of September 30, 2016, Vertex had $300 million outstanding from a credit agreement, which was refinanced on October 13, 2016 to lower the company’s interest expense. The $300 million outstanding under the new credit agreement matures in the fourth quarter of 2021.
2016 Financial Guidance:

Vertex today reiterated its 2016 revenue guidance for ORKAMBI and KALYDECO. The company also reiterated guidance for its 2016 combined non-GAAP R&D and SG&A expenses. The guidance is summarized below:

ORKAMBI: The company continues to expect total 2016 product revenues for ORKAMBI of $950 to $990 million.
KALYDECO: The company continues to expect total 2016 product revenues for KALYDECO of $685 to $705 million. 2016 guidance for KALYDECO currently excludes any revenues related to the potential approval of KALYDECO for people in the U.S. who have residual function mutations.
Operating Expenses (Combined Non-GAAP R&D and SG&A Expenses): Vertex continues to expect that its combined non-GAAP R&D and SG&A expenses in 2016 will be in the range of $1.18 to $1.23 billion. Vertex’s expected non-GAAP R&D and SG&A expenses exclude stock-based compensation expense and certain other expenses.
Non-GAAP Financial Measures

In this press release, Vertex’s financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. In particular, non-GAAP financial results and guidance exclude stock-based compensation expense, revenues and expenses related to consolidated variable interest entities, costs and credits related to the relocation of the company’s corporate headquarters and hepatitis C-related revenues and costs and other adjustments. These results are provided as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help indicate underlying trends in the company’s business, are important in comparing current results with prior period results and provide additional information regarding the company’s financial position. Management also uses these non-GAAP financial measures to establish budgets and operational goals that are communicated internally and externally and to manage the company’s business and to evaluate its performance. The company adjusts, where appropriate, for both revenues and expenses in order to reflect the company’s operations. The company provides guidance regarding product revenues in accordance with GAAP and provides guidance regarding combined non-GAAP research and development and sales, general, and administrative expenses. The company does not provide guidance regarding GAAP research and development and sales, general, and administrative expenses because of the difficulty of estimating stock-based compensation expenses, and predicting whether or not there will be additional expense items for which adjustments are appropriate. A reconciliation of the GAAP financial results to non-GAAP financial results is included in the attached financial information.

Vertex Pharmaceuticals Incorporated
Third Quarter Results
Consolidated Statements of Operations Data
(in thousands, except per share amounts)
(unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
Revenues:
Product revenues, net $ 409,689 $ 302,511 $ 1,229,750 $ 593,774
Royalty revenues 3,835 5,759 12,713 17,628
Collaborative revenues 259 1,546 1,008 2,999
Total revenues 413,783 309,816 1,243,471 614,401
Costs and expenses:
Cost of product revenues (Note 1) 53,222 30,269 147,165 55,059
Royalty expenses 855 1,691 2,813 6,068
Research and development expenses 275,370 246,284 802,238 685,741
Sales, general and administrative expenses 106,055 99,772 322,921 280,026
Restructuring expenses 8 1,826 1,038 682
Total costs and expenses 435,510 379,842 1,276,175 1,027,576
Loss from operations (21,727 ) (70,026 ) (32,704 ) (413,175 )
Interest expense, net (20,140 ) (21,134 ) (60,993 ) (63,552 )
Other income (expenses), net (167 ) (1,326 ) 3,025 (5,025 )
Loss from operations before provision for income taxes (42,034 ) (92,486 ) (90,672 ) (481,752 )
Provision for income taxes 503 1,330 24,118 31,760
Net loss (42,537 ) (93,816 ) (114,790 ) (513,512 )
Loss (income) attributable to noncontrolling interest 696 (1,333 ) (33,207 ) 30,909
Net loss attributable to Vertex $ (41,841 ) $ (95,149 ) $ (147,997 ) $ (482,603 )

Amounts per share attributable to Vertex common shareholders:
Net loss:
Basic and diluted $ (0.17 ) $ (0.39 ) $ (0.61 ) $ (2.00 )
Shares used in per share calculations:
Basic and diluted 244,920 241,969 244,529 240,749

Reconciliation of GAAP to Non-GAAP Net Income (Loss)
Third Quarter Results
(in thousands, except per share amounts)
(unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
GAAP loss attributable to Vertex $ (41,841 ) $ (95,149 ) $ (147,997 ) $ (482,603 )
Stock-based compensation expense 61,209 65,734 178,623 186,379
Real estate restructuring costs and income (Note 2) 121 214 696 (2,186 )
HCV related revenues and costs (Note 3) (2,448 ) (7,734 ) (3,257 ) (18,207 )
Other adjustments (Notes 4 and 5) 23,090 5,007 92,460 5,631
Non-GAAP net income (loss) attributable to Vertex $ 40,131 $ (31,928 ) $ 120,525 $ (310,986 )

Amounts per diluted share attributable to Vertex common shareholders:
GAAP $ (0.17 ) $ (0.39 ) $ (0.61 ) $ (2.00 )
Non-GAAP $ 0.16 $ (0.13 ) $ 0.49 $ (1.29 )
Shares used in diluted per share calculations:
GAAP 244,920 241,969 244,529 240,749
Non-GAAP 248,009 241,969 247,433 240,749

Reconciliation of GAAP to Non-GAAP Revenues and Expenses
Third Quarter Results
(in thousands)
(unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
GAAP total revenues $ 413,783 $ 309,816 $ 1,243,471 $ 614,401
HCV related revenues (Note 3) (43 ) (6,415 ) (405 ) (15,378 )
Other adjustments (Note 4) (203 ) (1,105 ) (850 ) (1,379 )
Non-GAAP total revenues $ 413,537 $ 302,296 $ 1,242,216 $ 597,644

Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
GAAP cost of product revenues and royalty expenses $ 54,077 $ 31,960 $ 149,978 $ 61,127
HCV related costs (Note 3) 16 1,546 (117 ) (422 )
Non-GAAP cost of product revenues and royalty expenses $ 54,093 $ 33,506 $ 149,861 $ 60,705

GAAP research and development expenses $ 275,370 $ 246,284 $ 802,238 $ 685,741
Stock-based compensation expense (39,980 ) (44,700 ) (115,068 ) (124,550 )
HCV related costs (Note 3) 2,465 (294 ) 3,342 707
Other adjustments (Note 4) (23,889 ) 298 (36,828 ) (1,222 )
Non-GAAP research and development expenses $ 213,966 $ 201,588 $ 653,684 $ 560,676

GAAP sales, general and administrative expenses $ 106,055 $ 99,772 $ 322,921 $ 280,026
Stock-based compensation expense (21,229 ) (21,034 ) (63,555 ) (61,829 )
HCV related costs (Note 3) (76 ) (43 ) (106 ) 2,807
Other adjustments (Note 4) (758 ) (2,578 ) (2,999 ) (3,725 )
Non-GAAP sales, general and administrative expenses $ 83,992 $ 76,117 $ 256,261 $ 217,279

Combined non-GAAP R&D and SG&A expenses $ 297,958 $ 277,705 $ 909,945 $ 777,955

Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
GAAP interest expense, net and other expense, net $ (20,307 ) $ (22,460 ) $ (57,968 ) $ (68,577 )
Other adjustments (Note 4) (36 ) — 138 —
Non-GAAP interest expense, net and other expense, net $ (20,343 ) $ (22,460 ) $ (57,830 ) $ (68,577 )

GAAP provision for income taxes $ 503 $ 1,330 $ 24,118 $ 31,760
Other adjustments (Note 4) 509 (777 ) (20,063 ) (30,367 )
Non-GAAP provision for income taxes $ 1,012 $ 553 $ 4,055 $ 1,393

Condensed Consolidated Balance Sheets Data
(in thousands)
(unaudited)

September 30, 2016 December 31, 2015
Assets
Cash, cash equivalents and marketable securities $ 1,128,441 $ 1,042,462
Restricted cash and cash equivalents (VIE) (Note 5) 58,420 78,910
Accounts receivable, net 182,229 173,838
Inventories 71,799 57,207
Property and equipment, net 687,613 697,715
Intangible assets and goodwill 334,724 334,724
Other assets 141,612 113,731
Total assets $ 2,604,838 $ 2,498,587

Liabilities and Shareholders’ Equity
Other liabilities $ 434,142 $ 426,482
Deferred tax liability 133,270 110,439
Accrued restructuring expense 7,237 15,358
Deferred revenues 15,806 26,010
Capital leases 49,491 58,468
Construction financing lease obligation 468,500 473,043
Senior secured term loan 297,751 295,159
Shareholders’ equity 1,198,641 1,093,628
Total liabilities and shareholders’ equity $ 2,604,838 $ 2,498,587

Common shares outstanding 248,029 246,307
Note 1 : Cost of product revenues in the nine months ended September 30, 2016 includes the second and final $13.9 million commercial milestone that was earned by CFFT in the first quarter of 2016 related to sales of ORKAMBI.

Note 2: The company excludes restructuring expense (income) from its non-GAAP income (loss) attributable to Vertex. In the three and nine months ended September 30, 2016 and 2015, "Real estate restructuring costs and income" consisted of restructuring charges related primarily to the company’s relocation from Cambridge to Boston, Massachusetts.

Note 3: In the three and nine months ended September 30, 2016 and 2015, "HCV related revenues and costs" included net product revenues from Incivek, royalty revenues from Incivo, HCV collaborative revenues and operating costs and expenses related to HCV. The Company withdrew Incivek from the market in the United States in 2014.

Note 4: In the three months ended September 30, 2016, "Other adjustments" was primarily attributable to payments for collaborations. In the nine months ended September 30, 2016, "Other adjustments" was primarily attributable to a $58.5 million increase in the fair value of contingent milestone payments and royalties payable by Vertex to Parion due to the Phase 2 study meeting its primary safety endpoint and payments for collaborations and the acquisition of certain early stage assets.

Note 5: The company consolidates the financial statements of two of its collaborators as variable interest entities ("VIEs") as of September 30, 2016 and December 31, 2015. These VIEs are consolidated because Vertex has licensed the rights to develop the company’s collaborators’ most significant intellectual property assets. The company’s interest and obligations with respect to these VIEs’ assets and liabilities are limited to those accorded to the company in its collaboration agreements with these collaborators. Restricted cash and cash equivalents (VIE) reflects the VIEs’ cash and cash equivalents, which Vertex does not have any interest in and which will not be used to fund the collaboration. Each reporting period Vertex estimates the fair value of the contingent milestone payments and royalties payable by Vertex to these collaborators. Any increase in the fair value of these contingent milestone and royalty payments results in a decrease in net income attributable to Vertex (or an increase in net loss attributable to Vertex) on a dollar-for-dollar basis. The fair value of contingent milestone and royalty payments is evaluated each quarter and any change in the fair value is reflected in the company’s statement of operations.

INDICATION AND IMPORTANT SAFETY INFORMATION FOR KALYDECO (ivacaftor)

KALYDECO (ivacaftor) is a prescription medicine used for the treatment of cystic fibrosis (CF) in patients age 2 years and older who have one of the following mutations in their CF gene: G551D, G1244E, G1349D, G178R, G551S, S1251N, S1255P, S549N, S549R, or R117H. KALYDECO is not for use in people with CF due to other mutations in the CF gene. KALYDECO is not effective in patients with CF with two copies of the F508del mutation (F508del/F508del) in the CF gene. It is not known if KALYDECO is safe and effective in children under 2 years of age.

Patients should not take KALYDECO if they are taking certain medicines or herbal supplements such as: the antibiotics rifampin or rifabutin; seizure medications such as phenobarbital, carbamazepine, or phenytoin; or St. John’s wort.

Before taking KALYDECO, patients should tell their doctor if they: have liver or kidney problems; drink grapefruit juice, or eat grapefruit or Seville oranges; are pregnant or plan to become pregnant because it is not known if KALYDECO will harm an unborn baby; and are breastfeeding or planning to breastfeed because is not known if KALYDECO passes into breast milk.

KALYDECO may affect the way other medicines work, and other medicines may affect how KALYDECO works. Therefore the dose of KALYDECO may need to be adjusted when taken with certain medications. Patients should especially tell their doctor if they take antifungal medications such as ketoconazole, itraconazole, posaconazole, voriconazole, or fluconazole; or antibiotics such as telithromycin, clarithromycin, or erythromycin.

KALYDECO can cause dizziness in some people who take it. Patients should not drive a car, use machinery, or do anything that needs them to be alert until they know how KALYDECO affects them. Patients should avoid food containing grapefruit or Seville oranges while taking KALYDECO.

KALYDECO can cause serious side effects including:

High liver enzymes in the blood have been reported in patients receiving KALYDECO. The patient’s doctor will do blood tests to check their liver before starting KALYDECO, every 3 months during the first year of taking KALYDECO, and every year while taking KALYDECO. For patients who have had high liver enzymes in the past, the doctor may do blood tests to check the liver more often. Patients should call their doctor right away if they have any of the following symptoms of liver problems: pain or discomfort in the upper right stomach (abdominal) area; yellowing of their skin or the white part of their eyes; loss of appetite; nausea or vomiting; or dark, amber-colored urine.

Abnormality of the eye lens (cataract) has been noted in some children and adolescents receiving KALYDECO. The patient’s doctor should perform eye examinations prior to and during treatment with KALYDECO to look for cataracts. The most common side effects include headache; upper respiratory tract infection (common cold), which includes sore throat, nasal or sinus congestion, and runny nose; stomach (abdominal) pain; diarrhea; rash; nausea; and dizziness.

These are not all the possible side effects of KALYDECO.

Please click here to see the full Prescribing Information for KALYDECO (ivacaftor).

INDICATION AND IMPORTANT SAFETY INFORMATION FOR ORKAMBI (lumacaftor/ivacaftor) TABLETS

ORKAMBI is a prescription medicine used for the treatment of cystic fibrosis (CF) in patients age 6 years and older who have two copies of the F508del mutation (F508del/F508del) in their CFTR gene. ORKAMBI should only be used in these patients. It is not known if ORKAMBI is safe and effective in children under 6 years of age.

Patients should not take ORKAMBI if they are taking certain medicines or herbal supplements, such as: the antibiotics rifampin or rifabutin; the seizure medicines phenobarbital, carbamazepine, or phenytoin; the sedatives/anti-anxiety medicines triazolam or midazolam; the immunosuppressant medicines everolimus, sirolimus, or tacrolimus; or St. John’s wort.

Before taking ORKAMBI, patients should tell their doctor if they: have or have had liver problems; have kidney problems; have had an organ transplant; are using birth control (hormonal contraceptives, including oral, injectable, transdermal or implantable forms). Hormonal contraceptives should not be used as a method of birth control when taking ORKAMBI. Patients should tell their doctor if they are pregnant or plan to become pregnant (it is unknown if ORKAMBI will harm the unborn baby) or if they are breastfeeding or planning to breastfeed (it is unknown if ORKAMBI passes into breast milk).

ORKAMBI may affect the way other medicines work and other medicines may affect how ORKAMBI works. Therefore, the dose of ORKAMBI or other medicines may need to be adjusted when taken together. Patients should especially tell their doctor if they take: antifungal medicines such as ketoconazole, itraconazole, posaconazole, or voriconazole; or antibiotics such as telithromycin, clarithromycin, or erythromycin.

When taking ORKAMBI, patients should tell their doctor if they stop ORKAMBI for more than 1 week as the doctor may need to change the dose of ORKAMBI or other medicines the patient is taking. It is unknown if ORKAMBI causes dizziness. Patients should not drive a car, use machinery, or do anything requiring alertness until the patient knows how ORKAMBI affects them.

ORKAMBI can cause serious side effects including:

High liver enzymes in the blood, which can be a sign of liver injury, have been reported in patients receiving ORKAMBI. The patient’s doctor will do blood tests to check their liver before they start ORKAMBI, every three months during the first year of taking ORKAMBI, and annually thereafter. The patient should call the doctor right away if they have any of the following symptoms of liver problems: pain or discomfort in the upper right stomach (abdominal) area; yellowing of the skin or the white part of the eyes; loss of appetite; nausea or vomiting; dark, amber-colored urine; or confusion.

Respiratory events such as shortness of breath or chest tightness were observed in patients when starting ORKAMBI. If a patient has poor lung function, their doctor may monitor them more closely when starting ORKAMBI.

An increase in blood pressure has been seen in some patients treated with ORKAMBI. The patient’s doctor should monitor their blood pressure during treatment with ORKAMBI.

Abnormality of the eye lens (cataract) has been noted in some children and adolescents receiving ORKAMBI and ivacaftor, a component of ORKAMBI. For children and adolescents, the patient’s doctor should perform eye examinations prior to and during treatment with ORKAMBI to look for cataracts.

The most common side effects of ORKAMBI include: shortness of breath and/or chest tightness; upper respiratory tract infection (common cold), including sore throat, stuffy or runny nose; gastrointestinal symptoms including nausea, diarrhea, or gas; rash; fatigue; flu or flu-like symptoms; increase in muscle enzyme levels; and irregular, missed, or abnormal menstrual periods and heavier bleeding.

Please click here to see the full Prescribing Information for ORKAMBI.

On October 25, 2016 Horizon Pharma plc (NASDAQ:HZNP) a biopharmaceutical company focused on improving patients’ lives by identifying, developing, acquiring and commercializing differentiated and accessible medicines that address unmet medical needs, reported that it has completed the acquisition of Raptor Pharmaceutical Corp. (NASDAQ:RPTP) (Press release, Horizon Biopharm, OCT 25, 2016, View Source [SID1234515996]).

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

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"The acquisition of Raptor directly aligns with our long-term strategy and evolution into a rare disease focused company, where now more than half of our medicines are used to treat patients with rare diseases," said Timothy P. Walbert, chairman, president and chief executive officer, Horizon Pharma plc. "The added infrastructure in Europe and other key international markets will further benefit the access to both our current and newly acquired medicines as well as position us for the potential introduction of ACTIMMUNE for Friedreich’s ataxia in Europe in future years if the results of the Phase 3 trial are positive."

Strategic rationale

Strengthens Horizon Pharma’s focus on rare diseases and provides expansion into Europe and other international markets.
Adds PROCYSBI (cysteamine bitartrate) delayed-release capsules and QUINSAIR (aerosolized form of levofloxacin) global rights, with PROCYSBI having strong patent protection through 2034.
Diversifies revenue with 11 medicines across three business units: orphan, rheumatology and primary care.
Financial impact

Including the expected impact of the Raptor acquisition for the remainder of 2016, Horizon Pharma is raising its full-year 2016 net sales guidance on a GAAP basis, including the previously announced $65 million settlement with Express Scripts as a one-time reduction, to approximately $980 to $985 million. Horizon Pharma is raising its net sales guidance on a non-GAAP adjusted basis to approximately $1.045 to $1.050 billion excluding the $65 million settlement. The exclusion of the $65 million settlement from GAAP net sales guidance is the only adjustment reflected in Horizon Pharma’s full-year 2016 non-GAAP adjusted net sales guidance. Net sales from Raptor medicines for the last two months of 2016 are expected to add between $20 and $25 million to Horizon Pharma total net sales.
Including the expected impact of the Raptor acquisition for the remainder of 2016, Horizon Pharma is confirming its full-year 2016 adjusted EBITDA guidance of approximately $450 to $460 million.
As previously announced, Horizon Pharma expects the acquisition of Raptor to be accretive to adjusted EBITDA in 2017. Horizon Pharma will provide guidance for 2017 net sales and adjusted EBITDA in the first quarter of 2017.
Transaction details
The depositary for the tender offer has advised Horizon Pharma and Raptor that, as of the expiration of the tender offer at midnight, New York time, at the end of the day on October 24, 2016, a total of 71,590,496 shares of Raptor common stock were validly tendered and not validly withdrawn, representing approximately 83% of Raptor’s outstanding shares. In addition, the depositary advised that Notices of Guaranteed Delivery have been delivered with respect to 3,014,509 additional shares, representing approximately 3.5% of Raptor’s outstanding shares. All of the conditions to the offer have been satisfied and on October 25, 2016, Horizon Pharma and Misneach Corporation accepted for payment and will promptly pay for all shares validly tendered and not validly withdrawn prior to the expiration of the tender offer.

Following its acceptance of the tendered shares, Horizon Pharma completed its acquisition of Raptor through the merger of Misneach Corporation with and into Raptor without a vote of Raptor’s stockholders pursuant to Section 251(h) of the Delaware General Corporation Law. As a result of the merger, Raptor became an indirect wholly owned subsidiary of Horizon Pharma. In connection with the merger, all Raptor shares not validly tendered into the tender offer (other than shares owned by Raptor, Horizon Pharma, Misneach Corporation or any of their respective direct or indirect wholly owned subsidiaries and shares held by any person who was entitled to and has properly demanded statutory appraisal of his, her or its shares) have been canceled and converted into the right to receive the same $9.00 per share in cash, without interest (less any required withholding taxes) as will be paid for all shares that were validly tendered and not validly withdrawn in the tender offer. Raptor common stock will cease to be traded on the NASDAQ Global Select Market

On October 25, 2016 Array BioPharma (NASDAQ: ARRY) and Pierre Fabre reported that results from the Phase 3 COLUMBUS trial of binimetinib and encorafenib in BRAF-mutant melanoma will be presented at the 2016 Society for Melanoma Research (SMR) Annual Congress in Boston, Massachusetts on November 9 (Press release, Array BioPharma, OCT 25, 2016, View Source;p=RssLanding&cat=news&id=2215774 [SID1234515994]). Findings from COLUMBUS evaluating the combination of encorafenib plus binimetinib ("combination") in patients with unresectable or metastatic BRAF-mutant melanoma will be presented as an oral, late-breaking abstract. Two data analyses from the NEMO Phase 3 trial will also be presented, which evaluated binimetinib in patients with NRAS-mutant melanoma.

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

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

COLUMBUS TRIAL DATA

Data from the Phase 3 study will be featured as an oral presentation during the late-breaking abstract session on Wednesday, November 9 from 10:00 – 10:15 AM ET:

Abstract 2617508: Results of COLUMBUS Part 1: A Phase 3 Trial of Encorafenib (ENCO) Plus Binimetinib (BINI) Versus Vemurafenib (VEM) or ENCO in BRAF-Mutant Melanoma
Presenter: Keith T. Flaherty, M.D., Director of the Termeer Center for Targeted Therapy, Massachusetts General Hospital and Professor of Medicine, Harvard Medical School, Boston, Massachusetts
As reported in late September, 577 patients were randomized 1:1:1 to receive the combination of encorafenib plus binimetinib, encorafenib alone, or vemurafenib alone. In the analysis of the primary endpoint, the median PFS for patients treated with the combination of encorafenib plus binimetinib ("combination") was 14.9 months versus 7.3 months for patients treated with vemurafenib; HR (0.54), [95% CI 0.41-0.71], p<0.001. Analysis of a secondary endpoint comparing the PFS of patients treated with combination to patients treated with encorafenib showed a median of 14.9 months versus 9.6 months with HR (0.75), [95% CI 0.56-1.00], p=0.051, which did not reach statistical significance. The combination was generally well-tolerated and reported adverse events were overall consistent with previous combination encorafenib plus binimetinib clinical trial results in BRAF-mutant melanoma patients.

ARRAY BIOPHARMA INVESTOR RECEPTION

Array will be hosting an investor reception immediately following the conclusion of SMR. The event will be held on Wednesday, November 9 from 1 – 3 pm ET in Boston and will include an encore presentation of the COLUMBUS results by Dr. Flaherty at 1 pm ET. The public is welcome to participate in the presentation through a webcast (live and replay): View Source

For questions regarding the reception, please contact Melissa Green/ConferenceSource at 303-325-8800 or [email protected].

About Metastatic Melanoma
Melanoma is the fifth most common cancer among men and the seventh most common cancer among women in the United States, with more than 76,000 new cases and over 10,000 deaths from the disease expected in 2016. Novel therapies that target the RAS/RAF/MEK/ERK pathway have a strong scientific rationale for activity in advanced melanoma, as up to 50 percent of patients with metastatic melanoma have activating BRAF mutations, the most common gene mutation in this patient population. Activating NRAS mutations are present in up to 20 percent of patients with metastatic melanoma, and is a poor prognostic indicator for these patients.

About Binimetinib & Encorafenib
MEK and BRAF are key protein kinases in the MAPK signaling pathway (RAS-RAF-MEK-ERK). Research has shown this pathway regulates several key cellular activities including proliferation, differentiation, survival and angiogenesis. Inappropriate activation of proteins in this pathway has been shown to occur in many cancers, such as melanoma, colorectal and thyroid cancers. Binimetinib is a late-stage small molecule MEK inhibitor and encorafenib is a late-stage small molecule BRAF inhibitor, both of which target key enzymes in this pathway.

Binimetinib and encorafenib are being studied in clinical trials in advanced cancer patients, including the recently initiated Phase 3 BEACON CRC trial that is evaluating encorafenib in combination with cetuximab with or without binimetinib in patients with BRAF V600E-mutant colorectal cancer. Array submitted a New Drug Application (NDA) for binimetinib in NRAS-mutant melanoma to the FDA at the end of June 2016. The FDA accepted the NDA with a target action date under the Prescription Drug User Fee Act (PDUFA) of June 30, 2017. Array also expects to submit an NDA for binimetinib and encorafenib in BRAF-mutant melanoma to the FDA in 2017.

Array BioPharma retains exclusive rights to binimetinib and encorafenib in key markets including the U.S., Japan, Canada, Korea and Israel. Pierre Fabre will have exclusive rights to commercialize both products in all other countries, including Europe, Asia and Latin America.

On October 25, 2016 Baxter International Inc. (NYSE:BAX) reported results for the third quarter of 2016, and increased its earnings per share outlook for full-year 2016. Baxter’s third quarter worldwide sales totaled $2.6 billion, an increase of 3 percent on a reported basis and 4 percent on a constant currency basis as compared to the prior-year period (Press release, Baxter, OCT 25, 2016, View Source [SID1234515982]).

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

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"We are pleased with the continued strength across our core franchises as well as our improved financial performance, both of which are reflected in our third quarter results," said José (Joe) E. Almeida. "Given this progress, we are intensifying our focus on portfolio management and innovation to accelerate our efforts to introduce new products and therapies."

Financial Results

During the quarter, Baxter reported income from continuing operations of $127 million, or $0.23 per diluted share, on a GAAP (Generally Accepted Accounting Principles) basis. These results included net after-tax special items totaling $184 million, primarily related to business optimization initiatives, intangible asset amortization, debt extinguishment and Baxalta related spin-off costs.

On an adjusted basis, excluding special items, Baxter’s third quarter income from continuing operations totaled $311 million, or $0.56 per diluted share, exceeding the company’s previously-issued guidance of $0.43 to $0.45 per diluted share.

Baxter’s worldwide sales totaled $2.6 billion in the third quarter, an increase of 3 percent on a reported basis and 4 percent on a constant currency basis as compared to the prior-year period. Sales within the U.S. were $1.1 billion, advancing 6 percent, while international sales totaled $1.5 billion, representing a 1 percent increase on a reported basis, and an increase of 3 percent on a constant currency basis. Adjusting for the impact of foreign exchange, generic competition for cyclophosphamide, and 2015 PROTOPAM orders, Baxter’s sales increased 12 percent in the U.S. and rose 6 percent globally in the third quarter.

By business, Hospital Products sales of $1.6 billion in the third quarter increased 2 percent on a reported basis and 3 percent on a constant currency basis. Adjusting for the impact of foreign exchange, cyclophosphamide and PROTOPAM, Hospital Products sales advanced 7 percent from the prior-year period. Hospital Products performance in the quarter benefited from strong sales across the portfolio, driven by increased demand and favorable pricing in the U.S. for the company’s IV solutions, nutritional therapies, pharmacy injectables and IV access administration sets. Strength internationally in the company’s hospital pharmacy compounding services and cytotoxic contract manufacturing business also contributed to growth in the quarter.

Baxter’s Renal sales totaled $977 million in the third quarter, representing a 4 percent increase on a reported basis, and a 6 percent increase on a constant currency basis. Growth was driven by strong sales of peritoneal dialysis products as well as increased demand globally for continuous renal replacement therapies. Contributing to growth in the quarter were the recent launches of Baxter’s new Automated Peritoneal Dialysis (APD) systems, AMIA in the U.S. and HOMECHOICE CLARIA outside the U.S. Both of these systems utilize Baxter’s SHARESOURCE Connectivity Platform, which is the first and only two-way, remote patient management system for home dialysis therapy globally.

Financial Outlook

Based on the company’s strong performance in the first three quarters of the year, Baxter is raising its financial outlook for full-year 2016 including sales growth of approximately 2 percent on a reported basis or 4 percent on a constant currency basis, and earnings from continuing operations, before special items, of $1.88 to $1.91 per diluted share for the full year. Previous guidance called for reported sales of 1 to 2 percent (or 3 to 4 percent constant currency) and earnings of $1.69 to $1.74 per diluted share.

For the fourth quarter, the company expects sales growth of approximately 2 percent on both a reported and constant currency basis. Baxter expects earnings from continuing operations, before special items, of $0.49 to $0.52 per diluted share for the fourth quarter of 2016.

The earnings per share guidance for the fourth quarter and full-year 2016 excludes $0.05 and $0.22, respectively, per diluted share of intangible asset amortization expense; an estimated $0.01 and $0.07, respectively, per diluted share of Baxalta separation-related expense activities; an estimated $0.07 and $0.51, respectively, per diluted share of business optimization charges; and $7.84 per diluted share of asset impairment, debt extinguishment loss, product related reserve adjustments, and Baxalta retained stake gains for full-year 2016. These estimates are based on information reasonably available at the time of this release and future events or new information may result in different actual results. Reconciling for the inclusion of these items results in GAAP earnings of $0.36 to $0.39 per diluted share for the fourth quarter of 2016, and $8.92 to $8.95 per diluted share for full-year 2016.

A webcast of Baxter’s third quarter conference call for investors can be accessed live from a link on the company’s website at www.baxter.com beginning at 7:30 a.m. CDT on October 25, 2016.
Please see www.baxter.com for more information regarding this and future investor events and webcasts.

Baxter provides a broad portfolio of essential renal and hospital products, including home, acute and in-center dialysis; sterile IV solutions; infusion systems and devices; parenteral nutrition; biosurgery products and anesthetics; and pharmacy automation, software and services. The company’s global footprint and the critical nature of its products and services play a key role in expanding access to healthcare in emerging and developed countries. Baxter’s employees worldwide are building upon the company’s rich heritage of medical breakthroughs to advance the next generation of healthcare innovations that enable patient care.