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Baxter Reports Third Quarter 2016 Results and Increases Financial Outlook For Full-Year 2016

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]).

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"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.

Opsona Therapeutics Ltd. receives orphan designation for myelodysplastic syndrome (MDS) with OPN-305, a first-in-class monoclonal antibody that blocks Toll-Like Receptor 2

On October 25 2016 Opsona Therapeutics Ltd (‘Opsona’), the innate immune drug and development company focused on novel therapeutic approaches to treat oncology, autoimmune and other inflammatory diseases, reported that it has received orphan drug designation (ODD) from United States Food and Drug Administration for myelodysplastic syndromes (MDS) (Press release, Opsona Therapeutics, OCT 25, 2016, View Source [SID1234516030]).

Myelodysplastic syndromes are a complex and heterogeneous group of bone marrow failure disorders characterized by ineffective hematopoiesis, and poor prognosis. There is an urgent need for the development of novel therapies in the treatment of MDS which can delay progression, improve patient survival and quality of life, and which have fewer adverse effects.

OPN-305 is a novel proprietary humanized IgG4 monoclonal antibody (MAb) against Toll-Like Receptor 2 (TLR2), a key target within the innate immune system.

Evaluation of OPN-305 in MDS is the first of a range of oncology indications that the company is exploring with its leading drug in development, OPN-305. A study in patients with lower risk MDS who have failed hypomethylating agents is ongoing in collaboration with MD Anderson Cancer Center in Houston USA. Opsona believes that OPN-305 has the potential to be first and best-in-class while also providing a novel treatment option for a wide variety of oncology, autoimmune and other inflammatory diseases.

Commenting on today’s announcement, Mary Reilly, VP Pharmaceutical Development and Operations at Opsona Therapeutics, said: "We are pleased to receive FDA Orphan Drug Designation for OPN-305 in MDS. This is an important regulatory milestone for the company and a significant step forward in our clinical development of OPN-305 targeting this rare disease associated with an unmet medical need for safe and effective therapeutics."

OncoGenex Announces Positive Survival Results from Apatorsen Phase 2 Borealis-2™ Trial in Metastatic Bladder Cancer

On October 25, 2016 OncoGenex Pharmaceuticals, Inc. (NASDAQ: OGXI) reported positive survival results from the final analysis of the Phase 2 Borealis-2 trial of apatorsen in combination with docetaxel treatment that enrolled 200 patients with metastatic bladder cancer whose disease had progressed following first-line platinum-based chemotherapy (Press release, OncoGenex Pharmaceuticals, OCT 25, 2016, View Source [SID1234516006]). Patients who received apatorsen treatment experienced a 20% reduction in risk of death, compared to patients receiving docetaxel alone (HR=.80; 95% CI: 0.65-0.98; p=0.078). The primary analysis was a superiority test of overall survival, performed at a one-sided 0.10 significance level using a stratified log-rank test. The trial was conducted by the Hoosier Cancer Research Network at 28 sites across the United States.

Safety results in patients treated with apatorsen and docetaxel were similar to those observed in patients treated with docetaxel alone.

"People living with advanced bladder cancer who have failed initial therapies have few treatment options available to them. While research across different treatment modalities is underway, there continues to be a high unmet therapeutic need," said one of the principal investigators, Jonathan Rosenberg, MD of Memorial Sloan Kettering Cancer Center. "The totality of the data evaluating apatorsen across first- and second-line chemotherapy treatment for bladder cancer suggests that it may provide clinical benefits in this highly aggressive disease."

Apatorsen is designed to inhibit production of heat shock protein 27 (Hsp27) to disable cancer cells’ defenses and overcome treatment resistance. Hsp27 is an intracellular protein that protects cancer cells by helping them survive, leading to resistance and more aggressive cancer phenotypes.

"We are encouraged by these data that further support Hsp27 as a therapeutic target and add an additional level of evidence to previously completed trials of apatorsen in patients with bladder cancer," said Scott Cormack, President and CEO of OncoGenex. "We look forward to completing the full data analysis from Borealis-2 and considering these data in our continuing work with MTS Health Partners in the exploration of strategic alternatives as announced in mid-August."

About the Borealis-2 Trial
Borealis-2 is an investigator-sponsored, randomized Phase 2 trial evaluating a survival benefit with apatorsen in combination with docetaxel treatment compared to docetaxel treatment alone in approximately 200 patients with metastatic bladder cancer who have disease progression following first-line platinum-based chemotherapy.

NewLink Genetics Shares Its Immuno-Oncology Strategy 2016 Analyst and Investor Day

On October 25, 2016 NewLink Genetics Corporation (Nasdaq:NLNK), a biopharmaceutical company focused on bringing novel immuno-oncology therapies to patients with cancer, reported its strategy for becoming a leading immuno-oncology company at the company’s 2016 meeting for analysts and investors in New York City (Press release, NewLink Genetics, OCT 25, 2016, View Source [SID1234516005]).

The program focused on the science and increasing validation of the IDO pathway as a target for oncology drug candidates and NewLink Genetics’ clinical programs. A link to a replay of the webcast and the slides can be accessed in the events tab of the investor and media relations section of the company’s website, View Source

"With data presentations from recent oncology medical meetings, there is a lot of excitement and promise in IDO as an important target. IDO pathway inhibitors are natural potential partners for combination treatments with other immuno-oncology checkpoint inhibitors and chemotherapies. We are excited to have two of the five IDO product candidates in clinical development now," said Charles J. Link, Jr., M.D., Chairman and Chief Executive Officer. "One is indoximod, which is our proprietary IDO pathway inhibitor, and the other is GDC-0919, which is partnered with Genentech, a member of the Roche Group."

Leaders in the field of immuno-oncology who presented at today’s meeting include: George C. Prendergast, PhD, President & CEO, Lankenau Institute for Medical Research (LIMR) and Editor in Chief, Cancer Research; David H. Munn, MD, Professor of Pediatric Hematology-Oncology, Medical College of Georgia Augusta University; Montaser Shaheen MD, Associate Professor, University of New Mexico Cancer Center; and Ashkan Emadi, MD, PhD, Associate Professor, University of Maryland.

Key takeaways include:

Validation of IDO as a Target. The IDO pathway can allow cancer to escape the immune system. Many cancers have developed the ability to employ IDO to evade immune attack. Clinical results are increasingly validating the IDO pathway as a target for cancer therapies. Just as scientists discovered the role of PD-1/PD-L1 expression and the usefulness of PD-1/PD-L1 blockade, there is an increasing body of research into the role of the IDO pathway and the potential for its inhibition.

NewLink’s Two IDO Pathway Inhibitor Clinical Candidates. NewLink Genetics is engaged in clinical trials for two IDO pathway inhibitor product candidates, with two distinct mechanisms of action.

• GDC-0919, a direct IDO enzyme inhibitor, is being developed in partnership with Genentech. GDC-0919 is currently in Phase 1b trials, in combination with atezolizumab in solid tumors. In October, 2014, NewLink and Genentech entered in to a license and collaboration agreement with an upfront payment of $150 million, more than $1 billion in potential milestones and substantial royalties.

• Indoximod, an IDO pathway inhibitor, is proprietary to NewLink Genetics. Indoximod is in the clinic addressing multiple cancers including melanoma, pancreatic, glioblastoma multiforme, breast, acute myeloid leukemia and non-small cell lung.

Indoximod Clinical Development. Our clinical development strategy for indoximod includes formulation optimization intended to improve the candidate’s commercial and clinical potential. The Company reported that it will evaluate the data and report on several clinical trials underway in 2017.

Future R&D. NewLink also discussed its program targeting the PTEN pathway in regulatory T cells (Treg cells) as a central driver of tumor immunosuppression. NewLink Genetics is an early leader in the field of PTEN research just as it was in identifying IDO as a potential pathway for immune suppression.
Nicholas N. Vahanian, MD, Co-founder, President & Chief Medical Officer added, "We have built a strong management team, comprised of scientific, clinical and business leaders, with proven expertise in drug discovery and clinical development."

Dr. Vahanian continued, "With the early clinical results in IDO inhibition from NewLink Genetics and our partner, Genentech, we are very well positioned to execute our strategy in taking these immuno-oncology clinical programs forward. Further, we have a strong balance sheet which supports the execution of our clinical plan."

Caris Life Sciences and Threshold Pharmaceuticals Collaborate to Utilize Caris’ ADAPT Biotargeting System in the Development Program for Evofosfamide

On October 25, 2016 Caris Life Sciences, a leading biotechnology company focused on fulfilling the promise of precision medicine, and Threshold Pharmaceuticals, Inc. (Nasdaq:THLD), a clinical-stage biopharmaceutical company specializing in the development of novel pharmaceutical products for the treatment of cancer, reported that they have entered into a development and commercialization agreement to utilize Caris’ patented and proprietary ADAPT Biotargeting System to develop a tissue-based clinical diagnostic assay for pancreatic cancer patients to predict the likelihood of response to evofosfamide, Threshold’s lead drug candidate for the potential treatment of patients with cancer (Press release, Caris Life Sciences, OCT 25, 2016, View Source [SID1234515999]). Under the terms of the agreement, Caris is eligible to receive several million dollars in clinical development milestones and undisclosed downstream royalty payments. Through Caris’ proprietary ADAPT Biotargeting System, Threshold may gain access to a diagnostic tool that will enable physicians to determine which patients would be most likely to benefit from treatment with evofosfamide.

"We are pleased to work with Threshold Pharmaceuticals to support the development of their novel potential therapy, which has shown promising results in this difficult-to-treat disease," said Bart Howe, Executive Vice President of Business Development and Corporate Strategy at Caris. "Our innovative and revolutionary ADAPT Biotargeting System is uniquely positioned to support the pharmaceutical clinical development process by identifying complex molecular signatures that can predict a patient’s likelihood of response to a particular therapy."

"Since it is well understood that patients exposed to the same chemotherapy often respond differently, we look forward to working with Caris and their innovative ADAPT Biotargeting System to help physicians identify those patients most likely to benefit from evofosfamide," said Barry Selick, Ph.D., Chief Executive Officer of Threshold. "We remain optimistic about the potential role of evofosfamide for the treatment of cancer, and we continue to pursue discussions with Japanese regulatory authorities regarding potential registration pathways for evofosfamide and other development opportunities with evofosfamide."

Caris and Threshold will work together, leveraging tumor samples and outcomes data from the previously completed Phase 3 MAESTRO study in patients with advanced pancreatic cancer, to develop a novel, multiplexed diagnostic assay designed to classify a patient’s likely clinical outcome from the use of evofosfamide.

Evofosfamide (previously known as TH-302) is an investigational hypoxia-activated prodrug of a DNA cross-linking agent that is preferentially activated under hypoxic tumor conditions, a feature of many solid tumors. In December 2015, Threshold announced that a Phase 3 study (MAESTRO) of evofosfamide had not met its primary endpoint. However, data from the MAESTRO study demonstrated meaningful improvement in overall survival in a subgroup of 116 patients from Japan, in which the risk of death was reduced by 48 percent for patients receiving evofosfamide compared to patients in the control arm.

Caris’ ADAPT Biotargeting System is a proprietary platform that uses libraries of synthetically manufactured molecules trained to bind to biological targets of interest in order to characterize complex biological systems. Currently being utilized in discovery research, advanced diagnostics and drug development programs across multiple diseases, the ADAPT Biotargeting System also has potential utility in drug delivery, disease monitoring and direct therapeutic applications.