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Bristol-Myers Squibb Reports Second Quarter Financial Results

On July 27, 2017 Bristol-Myers Squibb Company (NYSE:BMY) reported results for the second quarter of 2017 which were highlighted by strong sales for key products Opdivo and Eliquis and regulatory approvals for Opdivo, the Daklinza and Sunvepra regimen and Orencia (Press release, Bristol-Myers Squibb, JUL 27, 2017, View Source [SID1234519905]).

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“We had a strong quarter, particularly for Opdivo and Eliquis, and also advanced our portfolio with important clinical and regulatory milestones across multiple therapeutic areas,” said Giovanni Caforio, M.D., chairman and chief executive officer, Bristol-Myers Squibb. “Looking forward, I am excited by our opportunity to continue delivering across our portfolio, maintaining our focus on strong commercial performance and advancing our diversified pipeline.”

Second Quarter
$ amounts in millions, except per share amounts
2017
2016
Change
Total Revenues $5,144 $4,871 6%
GAAP Diluted EPS 0.56 0.69 (19)%
Non-GAAP Diluted EPS 0.74 0.69 7%

SECOND QUARTER FINANCIAL RESULTS

Bristol-Myers Squibb posted second quarter 2017 revenues of $5.1 billion, an increase of 6% compared to the same period a year ago. Revenues increased 7% when adjusted for foreign exchange impact.
U.S. revenues increased 7% to $2.9 billion in the quarter compared to the same period a year ago. International revenues increased 4%. When adjusted for foreign exchange impact, international revenues increased 7%.
Gross margin as a percentage of revenue decreased from 75.2% to 69.6% in the quarter primarily due to product mix and a $127 million impairment charge in connection with the expected sale of manufacturing operations in Swords, Ireland.
Marketing, selling and administrative expenses decreased 6% to $1.2 billion in the quarter.
Research and development expenses increased 31% to $1.7 billion in the quarter primarily due to license and asset acquisition charges of $393 million in the second quarter of 2017.
The effective tax rate was 28.8% in the quarter, compared to 26.4% in the second quarter last year.
The company reported net earnings attributable to Bristol-Myers Squibb of $916 million, or $0.56 per share, in the second quarter compared to net earnings of $1.2 billion, or $0.69 per share, for the same period in 2016.
The company reported non-GAAP net earnings attributable to Bristol-Myers Squibb of $1.2 billion, or $0.74 per share, in the second quarter, compared to $1.2 billion, or $0.69 per share, for the same period in 2016. An overview of specified items is discussed under the “Use of Non-GAAP Financial Information” section.
Cash, cash equivalents and marketable securities were $9.1 billion, with a net cash position of $868 million, as of June 30, 2017.
SECOND QUARTER PRODUCT AND PIPELINE UPDATE

Product Sales/Business Highlights

The increase in global revenues for the second quarter of 2017, compared to the second quarter of 2016, was driven by:

Product
Growth %

Eliquis 51%
Opdivo 42%
Yervoy
34%
Sprycel
12%
Orencia 10%

Opdivo

Regulatory

In July, the U.S. Food and Drug Administration (FDA) accepted the company’s supplemental Biologics License Applications to update Opdivo dosing to include 480 mg infused over 30 minutes every four weeks for all currently approved monotherapy indications. The applications are under review with an action date of March 5, 2018.
In June, the company announced the European Commission (EC) approved Opdivo for the treatment of locally advanced unresectable or metastatic urothelial carcinoma in adults after failure of prior platinum-containing therapy.
In May, the company announced the FDA accepted a supplemental Biologics License Application to extend the use of Opdivo to patients with hepatocellular carcinoma (HCC) after prior sorafenib therapy. The FDA granted the application priority review and previously granted Opdivo orphan-drug designation for the treatment of HCC. The FDA action date is September 24, 2017.
In April, the company announced the EC approval of Opdivo as monotherapy for the treatment of squamous cell cancer of the head and neck in adults progressing on or after platinum-based therapy.
Clinical

In July, the company announced interim analysis of results from a Phase 3 study evaluating Opdivo versus Yervoy in patients with stage IIIb/c or stage IV melanoma who are at high risk of recurrence following complete surgical resection. More detail from study results is included in the original press release for this and other data announced in the second quarter. (link)
In June, at the 14th International Conference on Malignant Lymphoma, the company announced data and analysis from studies evaluating Opdivo monotherapy and Opdivo combination therapy:
CheckMate -205: Extended follow-up data from the Phase 2 study of Opdivo monotherapy in adult patients with relapsed or progressed classical Hodgkin lymphoma (cHL) after autologous stem cell transplant, irrespective of brentuximab vedotin therapy history. (link)
Updated interim analysis from the ongoing Phase 1/2 clinical study evaluating Seattle Genetics’ ADCETRIS (brentuximab vedotin) and Opdivo in relapsed or refractory cHL patients. (link)
In June, during ASCO (Free ASCO Whitepaper) in Chicago, the company announced results from five studies for Opdivo and the Opdivo + Yervoy regimen:
CheckMate -204: First presentation of efficacy data from the Phase 2 study to evaluate the Opdivo + Yervoy regimen in patients with melanoma metastatic to the brain. (link)
CheckMate -142: Interim data from the Phase 2 study evaluating Opdivo monotherapy or the Opdivo + Yervoy regimen in patients with DNA mismatch repair deficient or microsatellite instability-high metastatic colorectal cancer. (link)
CheckMate -358: First disclosure of data from the Phase 1/2 study evaluating Opdivo in patients with advanced cervical, vaginal and vulvar cancers, all associated with infection by the human papillomavirus (HPV). (link)
ECHO-204: Updated data from the Phase 1/2 study evaluating the safety and efficacy of Incyte Corporation’s investigational oral selective IDO1 enzyme inhibitor, epacadostat, in combination with Opdivo in multiple advanced solid tumors. (link)
IFCT-1501 MAPS-2: The first report of data evaluating the safety and efficacy of Opdivo or the Opdivo + Yervoy regimen for previously treated unresectable malignant pleural mesothelioma patients. (link)
Yervoy

Regulatory

In July, the company announced the FDA approved an expanded indication for Yervoy to include the treatment of unresectable or metastatic melanoma in pediatric patients.
Clinical

In June, at ASCO (Free ASCO Whitepaper), the company presented results of an interim descriptive analysis from an ongoing National Cancer Institute Phase 3 study evaluating Yervoy 3 mg/kg and Yervoy 10 mg/kg in patients with stage III or resectable stage IV melanoma who are at high risk of recurrence following complete surgical resection. (link)
Empliciti

In June, at the annual Congress of the European Hematology Association (EHA) (Free EHA Whitepaper), the company presented four-year follow-up data from the Phase 3 ELOQUENT-2 study evaluating Empliciti plus lenalidomide/dexamethasone versus lenalidomide/dexamethasone alone in patients with relapsed/refractory multiple myeloma. (link)
Sprycel

Regulatory

In July, the company announced the FDA accepted its supplemental New Drug Application to include an indication for Sprycel to treat children with Philadelphia chromosome-positive chronic phase (CP) chronic myeloid leukemia (CML), as well as a powder for oral suspension (PFOS) formulation of Sprycel. The application is under priority review with an action date of November 9, 2017.
In May, the company announced the European Medicines Agency (EMA) validated its grouped Type II variation/Extension of Application for Sprycel to treat children and adolescents aged one year to 18 years with CP-CML and to include the PFOS. Validation of the application confirms the submission is complete and begins the EMA’s centralized review process.
Clinical

In June, at ASCO (Free ASCO Whitepaper), the company presented data from the Phase 2 CA180-226 study evaluating Sprycel in imatinib-resistant or -intolerant and newly diagnosed pediatric patients with CP-CML. (link)
Orencia

Regulatory

In July, the EC approved Orencia for the treatment of active Psoriatic Arthritis (PsA) in adult patients for whom the response to previous disease-modifying antirheumatic drug therapy, including methotrexate, has been inadequate, and additional systemic therapy for psoriatic skin lesions is not required.
In July, the company announced the FDA approved Orencia in intravenous and subcutaneous injection formulation for the treatment of adults with active PsA.
In June, the company announced the availability of a new FDA-approved subcutaneous Orencia administration option for use in patients two years of age and older with moderately to severely active polyarticular Juvenile Idiopathic Arthritis, providing the option of Orencia treatment that can be administered at home.
Clinical

In June, at the Annual European Congress of Rheumatology (EULAR 2017), the company presented 23 abstracts related to Orencia, including new data on the role of biomarkers and magnetic resonance imaging in rheumatoid arthritis patient identification and treatment. (link)
Daklinza

In April, the company announced the China Food and Drug Administration approved a direct-acting antiviral regimen comprised of Daklinza and Sunvepra, for the treatment of treatment-naive or -experienced patients, with or without compensated cirrhosis, infected with genotype 1b chronic hepatitis C virus (HCV). Daklinza was also approved in China for use in combination with other agents, including sofosbuvir, for adult patients with HCV genotypes 1-6.
Investigational Compound Highlights

Oncology

In June, during ASCO (Free ASCO Whitepaper) in Chicago, the company announced results from a study for the company’s anti-lymphocyte activation gene-3 (LAG-3) monoclonal antibody (BMS-986016):
CA224-020: Proof-of-Concept data from the Phase 1/2a study combining BMS-986016 with Opdivo in heavily pretreated advanced melanoma patients who were relapsed or refractory on anti-PD-1/PD-L1 therapy. (link)
SECOND QUARTER BUSINESS DEVELOPMENT UPDATE

In June, the company and SK Biotek Co., Ltd announced the signing of a definitive purchase agreement to sell Bristol-Myers Squibb’s manufacturing operations in Swords, Ireland, to SK Biotek, a wholly-owned subsidiary of SK Holdings, based in Seoul, South Korea. The companies intend to complete the deal by the fourth quarter of 2017.
In June, the company and Novartis announced a clinical research collaboration to investigate the safety, tolerability and efficacy of Opdivo and the Opdivo + Yervoy regimen in combination with Novartis’ Mekinist, as a potential treatment option for metastatic colorectal cancer in patients with microsatellite stable tumors where the tumors are proficient in mismatch repair.
In June, the company and QIAGEN announced an agreement to explore the use of next-generation sequencing technology to develop gene expression profiles as predictive or prognostic tools for use with Bristol-Myers Squibb novel immuno-oncology therapies in cancer treatment.
In June, the company and Seattle Genetics, Inc. announced an expanded clinical collaboration agreement for a Phase 3 study to evaluate the combination of Opdivo and Seattle Genetics’ antibody-drug conjugate ADCETRIS versus ADCETRIS alone as a potential treatment option for patients with relapsed/refractory or transplant-ineligible advanced cHL.
In May, the company and Array BioPharma announced a clinical research collaboration to investigate the safety, tolerability and efficacy of Array’s investigational MEK inhibitor, binimetinib, in combination with Opdivo and the Opdivo + Yervoy regimen as a potential treatment for metastatic colorectal cancer in patients with microsatellite stable tumors.
In May, the company and Advaxis, Inc. announced a clinical development collaboration to evaluate Opdivo and Advaxis’ ADXS-DUAL, an investigational immunotherapy targeting HPV-associated cancers, as a potential combination treatment option for women with metastatic cervical cancer.
In May, the company and Calithera Biosciences, Inc. announced an expansion of their existing collaboration to evaluate Opdivo in combination with Calithera’s CB-839, an investigational orally administered glutaminase inhibitor, in patients with non-small cell lung cancer and melanoma.
ADCETRIS is a trademark of Seattle Genetics, Inc.

Mekinist is a trademark of Novartis.

2017 FINANCIAL GUIDANCE

Bristol-Myers Squibb is updating its 2017 GAAP EPS guidance range from $2.72 – $2.87 to $2.66 – $2.76 and raising the lower end of its non-GAAP EPS guidance range from $2.85 – $3.00 to $2.90 – $3.00. Both GAAP and non-GAAP guidance assume current exchange rates. Key revised 2017 GAAP and non-GAAP line-item guidance assumptions are:

An effective tax rate of approximately 23% for GAAP with non-GAAP remaining at approximately 21%.
The financial guidance excludes the impact of any potential future strategic acquisitions and divestitures and any specified items that have not yet been identified and quantified. The non-GAAP guidance also excludes other specified items as discussed under “Use of Non-GAAP Financial Information.” Details reconciling GAAP amounts to non-GAAP amounts, with non-GAAP reflecting specified items are provided in supplemental materials attached to this press release and available on the company’s website.

Use of Non-GAAP Financial Information

This press release contains non-GAAP financial measures, including non-GAAP earnings and related EPS information, that are adjusted to exclude certain costs, expenses, gains and losses and other specified items that are evaluated on an individual basis. These items are adjusted after considering their quantitative and qualitative aspects and typically have one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of future operating results. Similar charges or gains were recognized in prior periods and will likely reoccur in future periods including restructuring costs, accelerated depreciation and impairment of property, plant and equipment and intangible assets, R&D charges in connection with the acquisition or licensing of third party intellectual property rights, divestiture gains or losses, upfront payments from out-licensed assets, pension charges, legal and other contractual settlements and debt redemption gains or losses, among other items. Deferred and current income taxes attributed to these items are also adjusted for considering their individual impact to the overall tax expense, deductibility and jurisdictional tax rates. Non-GAAP information is intended to portray the results of our baseline performance, supplement or enhance management, analysts and investors overall understanding of our underlying financial performance and facilitate comparisons among current, past and future periods. For example, non-GAAP earnings and EPS information is an indication of our baseline performance before items that are considered by us to not be reflective of our ongoing results. In addition, this information is among the primary indicators we use as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting for future periods. This information is not intended to be considered in isolation or as a substitute for net earnings or diluted EPS prepared in accordance with GAAP.

Bayer: Group performance matches prior year despite declines at Crop Science

On July 27, 2017 The Bayer Group reported performance in the second quarter of 2017 matched the prior-year period, despite the company registering declines at Crop Science (Press release, Bayer, JUL 27, 2017, View Source [SID1234519899]).

"At Crop Science, we experienced a significant decline in sales and earnings in connection with high channel inventories in Brazil, the world’s second-largest agriculture market," CEO Werner Baumann said when he presented the interim report for the second quarter on Thursday. "However, we generated an encouraging increase in earnings and margins at Pharmaceuticals and Animal Health," he noted. Business declined at Consumer Health, primarily due to the difficult market environment in the United States. Sales and earnings of the company’s Life Science businesses were down overall. Covestro, for its part, once again posted substantial growth in sales and earnings. In view of performance at Crop Science and Consumer Health, the Bayer Group has revised its outlook for the full year.

As regards the planned acquisition of Monsanto, Baumann believes the company remains on track. "We are making progress in our discussions with regulatory authorities and are on schedule," he said. On June 30, 2017, Bayer had filed an application with the European Commission seeking approval for the planned acquisition of Monsanto, representing a further significant milestone in the transaction.

Sales of the Bayer Group increased by 3.0 percent to EUR 12,193 million (Q2 2016: EUR 11,833 million) in the second quarter of 2017. Adjusted for currency and portfolio effects (Fx & portfolio adj.), sales advanced by 1.9 percent. Sales of the Life Science businesses amounted to EUR 8,714 million (Q2 2016: EUR 8,858 million), down by 2.8 percent (Fx & portfolio adj.) year on year. Group EBITDA before special items came to EUR 3,056 million (Q2 2016: EUR 3,054 million), matching the prior-year quarter (plus 0.1 percent). At EUR 2,151 million (Q2 2016: EUR 2,138 million), EBIT was also in line with the previous year (plus 0.6 percent), and included net special charges in the amount of EUR 205 million (Q2 2016: EUR 104 million). These primarily reflected value adjustments at the Pharmaceuticals segment, expenses in conjunction with the acquisition of Monsanto, and charges relating to efficiency improvement programs. EBIT before special items moved ahead by 5.1 percent to EUR 2,356 million (Q2 2016: EUR 2,242 million).

Net income declined by 11.3 percent to EUR 1,224 million (Q2 2016: EUR 1,380 million), and core earnings per share (total) by 16.2 percent to EUR 1.40 (Q2 2016: EUR 1.67). Core earnings per share from continuing operations fell by 12.6 percent to EUR 1.81 (EUR 2.07). Material effects included the reduction of Bayer’s interest in Covestro and the increased number of shares following the issuance of the mandatory convertible notes in November 2016.

Net cash provided by operating activities (total) climbed by 16.7 percent to EUR 2,313 million (Q2 2016: EUR 1,982 million). Net financial debt of the Bayer Group declined by EUR 1.0 billion to EUR 9.4 billion between March 31, 2017, and the end of the second quarter. Cash inflows from operating activities and positive currency effects offset the outflow for the dividend payment. The Group generated proceeds of approximately EUR 1.0 billion from the sale of Covestro shares.

Pharmaceuticals achieves substantial increase in earnings

Sales of prescription medicines rose in the second quarter by 4.4 percent (Fx & portfolio adj.) to EUR 4,304 million (Q2 2016: EUR 4,104 million). "At Pharmaceuticals, we once again benefited from the strong performance of our key growth products, and achieved a very encouraging increase in earnings and margins," Baumann said. The oral anticoagulant Xarelto, the eye medicine Eylea, the cancer drugs Xofigo and Stivarga, and the pulmonary hypertension treatment Adempas posted total combined sales of EUR 1,555 million (Q2 2016: EUR 1,332 million). Sales of Xarelto once again increased substantially, rising by 18.4 percent adjusted for currency effects (Fx adj.), due primarily to higher volumes in Europe and China. Eylea also delivered significant growth, with sales advancing by 10.6 percent (Fx. adj.), thanks largely to higher volumes in Europe and encouraging sales gains in Canada and Australia. Sales of Xofigo increased by a substantial 28.0 percent (Fx adj.), with business benefiting from a successful market launch in Japan and growth in the United States and Europe. Stivarga also posted significant sales growth of 20.8 percent (Fx adj.). Performance was driven by business in the United States, where, among other things, the product obtained approval as a second-line treatment for patients with hepatocellular carcinoma. Sales of Adempas advanced by 17.9 percent (Fx adj.), buoyed by its continued positive performance in the United States.

Business with the hormone-releasing intrauterine devices of the Mirena product family was up overall, with sales increasing by 4.5 percent (Fx adj.). In the United States, performance continued to be buoyed by the successful market launch of the Kyleena intrauterine device. In contrast, sales of the Kogenate/Kovaltry blood-clotting medicines were down year on year overall, declining by 7.7 percent (Fx adj.), due to order volumes placed by the product’s distribution partner remaining significantly lower. As expected, business with the multiple sclerosis product Betaferon/Betaseron declined, with sales down by 6.4 percent (Fx adj.). This was largely due to lower demand in the United States and Latin America. Overall, the Pharmaceuticals business grew in all regions.

EBITDA before special items of Pharmaceuticals improved by a very encouraging 9.5 percent to EUR 1,481 million (Q2 2016: EUR 1,352 million). Positive earnings effects resulted primarily from higher volumes, while the cost of goods sold and expenses for research and development were lower.

Consumer Health registers decline in business

Sales of self-care products fell by 2.2 percent (Fx & portfolio adj.) to EUR 1,542 million (Q2 2016: EUR 1,553 million). "At Consumer Health, we experienced substantial declines in sales in North America, especially in the United States, due to the difficult market environment," Baumann explained. "In contrast, we expanded our business in Latin America and Europe/Middle East/Africa."

Sales of Bepanthen/Bepanthol wound and skin care products advanced by 4.9 percent (Fx adj.), driven by performance in Asia/Pacific and Latin America. The considerable increase in sales of the prenatal vitamin Elevit, at 9.9 percent (Fx adj.), was largely the result of demand remaining strong in Asia/Pacific, primarily in China. Sales of the analgesic Aspirin matched the strong prior-year quarter. Including business with Aspirin Cardio, which is reported under Pharmaceuticals, sales advanced by 4.9 percent (Fx adj.). In contrast, business with the antihistamine Claritin declined substantially compared with a strong prior-year quarter, primarily in the United States and China. Sales of the product were down 12.3 percent (Fx adj.). In the United States, business was impacted by a weaker allergy season, among other things, while sales in the prior-year quarter had been buoyed by the market launch of ClariSpray. Sales of the sunscreen product Coppertone were significantly lower year on year, falling by 16.7 percent (Fx adj.). This development was mainly due to increased competitive pressure and a weak season to date in the United States.

EBITDA before special items of Consumer Health declined by 4.3 percent to EUR 314 million (Q2 2016: EUR 328 million). The fall in earnings is mainly attributable to lower volumes and the higher cost of goods sold, which resulted in part from inventory write-offs.

Substantial decline in sales and earnings at Crop Science

Second-quarter sales of the agricultural business (Crop Science) fell by 15.8 percent (Fx & portfolio adj.) to EUR 2,163 million (Q2 2016: EUR 2,518 million). "This decline is mainly due to significantly higher provisions for crop-protection product returns in Brazil," Baumann explained. At the end of the harvest season, regular stocktaking revealed high channel inventories in the Brazilian market, requiring measures to be taken to normalize the situation. The high level of channel inventories was caused by weaker demand due to significantly lower insect and fungal infestation levels, while inventory-building among distributors remained at a high level. Excluding the EUR 428 million decline in sales in Brazil, business at Crop Science was up slightly year on year on a currency-adjusted basis. Sales advanced by 5.0 percent (Fx adj.) in North America, while sales in Europe/ Middle East/Africa matched the prior-year level (Fx adj.: minus 0.2 percent). In the Asia/Pacific region, sales declined by 2.0 percent (Fx adj.).

At Crop Protection, sales were lower across all product groups, especially at Fungicides, where they fell by 40.2 percent (Fx & portfolio adj.), and at Insecticides, where they declined by 16.9 percent (Fx & portfolio adj.). At SeedGrowth, sales were down by 6.3 percent (Fx & portfolio adj.) year on year, while sales at Herbicides retreated by 6.0 percent (Fx & portfolio adj.). In contrast, sales at Seeds (which also includes the traits business) rose by 4.6 percent (Fx & portfolio adj.). Environmental Science also delivered positive performance, with sales climbing by 20.6 percent (Fx & currency adj.), in part due to the delivery of products to the company that acquired the consumer business.

EBITDA before special items of Crop Science declined by 52.2 percent to EUR 317 million (Q2 2016: EUR 663 million), in particular due to the situation in Brazil, where Bayer recorded a substantial negative impact on earnings in the amount of EUR 355 million in total. This figure included EUR 173 million in provisions for product returns, EUR 53 million in impairment losses recognized on receivables and EUR 56 million in inventory write-offs, as well as EUR 73 million in other effects. Excluding the Brazil business, earnings were up slightly year on year.

Strong increase in earnings at Animal Health

Sales of the Animal Health business moved ahead by 2.1 percent (Fx and portfolio adj.) to EUR 450 million (Q2 2016: EUR 426 million). The development of business in the Asia/Pacific region was encouraging. In North America, the Cydectin product portfolio that was acquired in January 2017 contributed to sales growth on a currency-adjusted basis. Bayer once again achieved double-digit percentage sales gains with its Seresto flea and tick collar (Fx adj.: plus 17.4 percent), thanks largely to strong demand in the United States and Europe. Sales of the Advantage family of flea, tick and worm control products declined overall (Fx adj.: minus 7.7 percent), primarily due to lower than expected demand in the United States. EBITDA before special items increased by 16.0 percent to EUR 116 million (Q2 2016: EUR 100 million). Positive earnings contributions resulted from price increases, the lower cost of goods sold as well as the Cydectin business that Bayer acquired. These more than offset a decline in volumes and slightly higher expenses for research and development.

Covestro generates significant growth in sales and earnings

Sales of Covestro in the second quarter of 2017 increased by 15.8 percent (Fx & portfolio adj.) to EUR 3,479 million (Q2 2016: EUR 2,975 million). Selling prices were much higher overall, especially at Polyurethanes, while volumes matched the prior-year period overall. EBITDA before special items improved by 49.0 percent to EUR 809 million (Q2 2016: EUR 543 million). Substantially higher selling prices more than offset the effect of increased raw material prices.

EBITDA before special items up 8 percent in the first half of 2017

Group sales in the first half of 2017 increased by 7.4 percent (Fx & portfolio adj.: plus 5.7 percent) to EUR 25,437 million (H1 2016: EUR 23,687 million). EBITDA before special items advanced by 7.9 percent to EUR 6,949 million (H1 2016: EUR 6,441 million), while net income rose by 14.4 percent to EUR 3,307 million (H1 2016: EUR 2,891 million). Core earnings per share from continuing operations came in at EUR 4.44 (H1 2016: EUR 4.42), matching the prior-year period.

Outlook for the full year 2017 adjusted

Due to the current business and currency development, Bayer is adjusting its forecast for the fiscal year 2017. Its forecast for the second half is based on the exchange rates as of June 30, 2017, including a rate of USD 1.14 (previously: USD 1.07) to the euro. Sales of the Bayer Group are now expected to increase to more than EUR 49 billion (previously: around EUR 51 billion). This now corresponds to a mid-single-digit (previously: mid- to high-single-digit) percentage increase on a currency- and portfolio-adjusted basis. EBITDA before special items is now targeted to increase by a high-single-digit percentage (previously: low-teens percentage). The company now aims to grow core earnings per share from continuing operations by a low- to mid-single-digit percentage (previously: mid- to high-single-digit percentage). Here it must be noted that Bayer’s interest in Covestro amounts to only 41 percent as of June 2017 (previously: 53 percent). Excluding capital and portfolio measures, net financial debt is targeted to be around EUR 7 billion at the end of 2017 (previously: around EUR 8 billion).

For its Life Science businesses, Bayer is now budgeting for sales of between EUR 35 billion and EUR 36 billion (previously: approximately EUR 37 billion). This corresponds to a low-single-digit percentage (previously: mid-single-digit percentage) increase on a currency- and portfolio-adjusted basis. EBITDA before special items is expected to come in slightly above the level of the previous year (previously: rise by a mid- to high-single-digit percentage).

Despite negative currency development, Bayer is confirming its February forecast for Pharmaceuticals, and continues to expect sales of more than EUR 17 billion. This corresponds to a mid-single-digit percentage increase on a currency- and portfolio-adjusted basis. In line with its previous forecast, Bayer aims to increase sales of its key growth products to more than EUR 6 billion, and continues to expect a high-single-digit percentage increase in EBITDA before special items. There is no change in the company’s expectation of improving the EBITDA margin before special items.

For Consumer Health, Bayer forecasts a weak second half of the year and now expects to generate full-year sales of about EUR 6 billion (previously: more than EUR 6 billion). This would be in line with the prior-year level on both a reported and a currency- and portfolio-adjusted basis (previously: low- to mid-single-digit percentage increase on a currency- and portfolio-adjusted basis). Meanwhile, Bayer now expects EBITDA before special items of Consumer Health to decline by a high-single-digit percentage (previously: increase by a low- to mid-single-digit percentage).

For Crop Science, Bayer is now budgeting sales of below EUR 10 billion (previously: sales of more than EUR 10 billion). This corresponds to a low-single-digit-percentage decline on a currency- and portfolio-adjusted basis (previously: low-single-digit percentage increase). Meanwhile, Bayer now expects the division’s EBITDA before special items to decline by a mid-teens percentage (previously: at the prior-year level).

For Animal Health, the Reconciliation and Covestro, Bayer confirms the forecasts published in February and April 2017. This also applies to the forecasts for the other key data.

Celgene Reports Second Quarter 2017 Operating and Financial Results

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]).

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

Seattle Genetics Reports Second Quarter 2017 Financial Results

On July 27, 2017 Seattle Genetics, Inc. (NASDAQ: SGEN) reported financial results for the second quarter ended June 30, 2017 (Press release, Seattle Genetics, JUL 27, 2017, View Source [SID1234519911]).

The company also highlighted ADCETRIS (brentuximab vedotin) commercialization and clinical development accomplishments, enfortumab vedotin (ASG-22ME) clinical activities, as well as progress with its pipeline of antibody-drug conjugates (ADCs) and other proprietary programs.

"During the second quarter, we delivered record ADCETRIS revenues and achieved three key development milestones for the program: reporting positive top-line data from the ECHELON-1 trial in frontline advanced classical Hodgkin lymphoma, submitting an application for approval to the FDA for cutaneous T-cell lymphoma, and entering into a clinical collaboration agreement with Bristol-Myers Squibb for an additional pivotal trial in relapsed/refractory Hodgkin lymphoma," said Clay Siegall, Ph.D., President and Chief Executive Officer of Seattle Genetics. "Over the remainder of 2017, our key activities will include reporting full data from the ECHELON-1 trial planned at the American Society of Hematology (ASH) (Free ASH Whitepaper) annual meeting in December, submitting a supplemental Biologics License Application to the FDA based on the ECHELON-1 data, and initiating a pivotal trial of enfortumab vedotin in metastatic urothelial cancer under our collaboration with Astellas."

ADCETRIS Program Highlights

ECHELON-1 Phase 3 Trial Results: Seattle Genetics and its ADCETRIS partner Takeda announced that the phase 3 ECHELON-1 clinical trial met its primary endpoint of a statistically significant improvement in modified progression-free survival (PFS) versus the control arm as assessed by an Independent Review Facility (hazard ratio=0.770; p-value=0.035). The two-year modified PFS rate for patients in the ADCETRIS arm was 82.1 percent compared to 77.2 percent in the control arm. The safety profile was consistent with that known for the single-agent components of the combination regimen. An abstract will be submitted for full data presentation at the American Society of Hematology (ASH) (Free ASH Whitepaper) annual meeting to be held December 9-12, 2017. ECHELON-1 evaluated ADCETRIS as part of a combination regimen in newly diagnosed patients with advanced classical Hodgkin lymphoma.
ECHELON-1 Approval Application: Seattle Genetics expects to submit by the end of 2017 a supplemental Biologics License Application (BLA) to the U.S. Food and Drug Administration (FDA) for approval of ADCETRIS in frontline advanced classical Hodgkin lymphoma. A submission to Health Canada for this indication is also planned by Seattle Genetics, and Takeda plans to submit the results to regulatory authorities in its territory.
ALCANZA Approval Application: Seattle Genetics submitted to the FDA a supplemental BLA based on data from the phase 3 ALCANZA trial, which were recently published in The Lancet, and two phase 2 investigator-sponsored trials of ADCETRIS in patients with cutaneous T-cell lymphoma (CTCL). ADCETRIS previously received Breakthrough Therapy Designation for the most common subtypes of CTCL: mycosis fungoides and primary cutaneous anaplastic large cell lymphoma.
ECHELON-2 Phase 3 Trial: ECHELON-2 is a phase 3 trial in frontline CD30-expressing mature T-cell lymphoma (MTCL), also known as peripheral T-cell lymphoma (PTCL). Based on review of pooled, blinded data, Seattle Genetics has observed a lower rate of reported PFS events than anticipated at this time. The company plans to discuss with the FDA the potential to unblind the trial prior to achieving the target number of PFS events specified by the statistical design. Based on the length of follow-up, the company believes the primary endpoint data will be mature in 2018, and continues to expect to report top-line data next year.
CHECKMATE 812 Phase 3 Trial Initiation: Seattle Genetics and Bristol-Myers Squibb have initiated a pivotal phase 3 clinical trial evaluating ADCETRIS plus nivolumab (Opdivo) versus ADCETRIS alone in patients with relapsed/refractory or transplant-ineligible advanced classical Hodgkin lymphoma.
Health Canada Approval: Health Canada granted non-conditional approval for ADCETRIS in Hodgkin lymphoma patients at high risk of relapse following autologous transplant based on positive data from the phase 3 AETHERA clinical trial.
ADCETRIS is not currently approved for use in CTCL, frontline Hodgkin lymphoma, frontline MTCL or in combination with nivolumab.

Enfortumab Vedotin Program Highlights

Registrational Trial: Seattle Genetics and its collaborator Astellas plan to initiate in the second half of 2017 a pivotal phase 2 trial of single-agent enfortumab vedotin for metastatic urothelial cancer patients who have been previously treated with checkpoint inhibitor therapy. The single-arm trial is designed to enroll approximately 120 patients and could support potential registration under the FDA’s accelerated approval regulations.
Combination Clinical Trial: Seattle Genetics and Astellas are planning a phase 1b trial of enfortumab vedotin in combination with checkpoint inhibitors to begin late in 2017 for patients with metastatic urothelial cancer.
Other Recent Activities

SGN-LIV1A Combination Trial: Seattle Genetics entered into a clinical collaboration agreement with Genentech, a member of the Roche Group, for the evaluation of SGN-LIV1A in combination with atezolizumab (TECENTRIQ) in patients with metastatic triple-negative breast cancer (TNBC). The phase 1b/2 clinical trial will evaluate the combination as second-line therapy as part of Roche’s MORPHEUS trial.
Vadastuximab Talirine (SGN-CD33A): Seattle Genetics discontinued the phase 3 CASCADE clinical trial in frontline older patients with acute myeloid leukemia (AML) after reviewing unblinded data indicating a higher rate of deaths in the vadastuximab talirine-containing arm versus the control arm of the trial. In addition, the company suspended patient enrollment and treatment in all of its vadastuximab talirine clinical trials. Seattle Genetics is reviewing the data to determine future plans for the program.
Polatuzumab Vedotin PRIME Designation: Roche announced that the European Medicines Agency (EMA) granted PRIME (PRIority MEdicines) designation to polatuzumab vedotin in combination with rituximab and bendamustine for relapsed or refractory diffuse large B-cell lymphoma (DLBCL). Polatuzumab vedotin is an ADC utilizing Seattle Genetics’ proprietary technology.
Second Quarter and Six Months 2017 Financial Results

Total revenues in the second quarter and six month periods ended June 30, 2017 increased to $108.2 million and $217.4 million, respectively, compared to $95.4 million and $206.6 million from the same periods in 2016. Revenues included:

ADCETRIS net sales in the second quarter of $74.3 million, a 12 percent increase from net sales of $66.2 million in the second quarter of 2016. For the year-to-date, ADCETRIS sales were $144.7 million, compared to $124.9 million for the year-to-date period in 2016, a 16 percent increase.
Royalty revenues in the second quarter of 2017 of $12.4 million, compared to $9.2 million in the second quarter of 2016. For the year-to-date in 2017, royalty revenues were $29.4 million, compared to $41.5 million for the first six months of 2016. Royalty revenues are primarily driven by international sales of ADCETRIS by Takeda. Royalty revenues for the year-to-date period in 2016 included a $20.0 million sales milestone payment from Takeda earned in the first quarter of 2016.
Amounts earned under the company’s ADCETRIS and ADC collaborations totaling $21.5 million in the second quarter and $43.3 million for the first six months of 2017, compared to $20.0 million and $40.2 million for the same periods in 2016.
Total costs and expenses for the second quarter of 2017 were $167.5 million, compared to $128.8 million for the second quarter of 2016. For the first six months of 2017, total costs and expenses were $336.0 million, compared to $261.0 million in the first six months of 2016. The increase in 2017 costs and expenses was primarily driven by investment in enfortumab vedotin, vadastuximab talirine, ADCETRIS and the company’s pipeline programs.

Non-cash, share-based compensation cost for the first six months of 2017 was $32.0 million, compared to $24.3 million for the same period in 2016.

Net loss for the second quarter of 2017 was $56.4 million, or $0.39 per share, compared to a net loss of $32.7 million, or $0.23 per share, for the second quarter of 2016. For the six months ended June 30, 2017, net loss was $116.4 million, or $0.82 per share, compared to a net loss of $53.2 million, or $0.38 per share, for the six months period ended June 30, 2016.

As of June 30, 2017, Seattle Genetics had $473.0 million in cash, cash equivalents and investments.

2017 Financial Outlook

Seattle Genetics increased its expectations for 2017 ADCETRIS net product sales in the U.S. and Canada to a range of $290 million to $310 million.

Ipsen Delivers Strong Sales Growth of 18.8%1 in the First Half of 2017 and Upgrades Its Guidance for Full Year 2017

On July 27, 2017 Ipsen (Euronext: IPN; ADR: IPSEY), a global specialty-driven biopharmaceutical group, reported financial results for the first half of 2017 (Press release, Ipsen, JUL 27, 2017, View Source [SID1234519893]).

H1 2017 Highlights

Strong operating performance of 18.8%1 Group sales growth and Core Operating Income margin improvement by 1.2 points to 26.2% of sales
Specialty Care sales growth of 23.1%1 reflects continued Somatuline momentum and includes contribution of key new products Cabometyx and Onivyde
Consumer Healthcare sales growth of 1.3%1 including contribution of newly acquired products
Upgraded full year 2017 guidance of Specialty Care sales growth greater than 24.0%1, slight growth1 of Consumer Healthcare sales, and Core Operating Income margin greater than 25.0% of sales
H1 2017 Key figures

tableau 1

David Meek, Chief Executive Officer of Ipsen, stated: “Our performance in the first half of 2017 exceeded expectations, leading to an improved financial outlook for the full year. Sales grew in the first half by an impressive 19% year-on-year and core operating margin improved by 1.2 points, both driven by Specialty Care performance. In the second half of the year, we expect Somatuline to continue along its positive growth trajectory and also an increasing contribution from our new products Cabometyx in Europe and Onivyde in the U.S. We remain focused on the successful execution of the commercial portfolio as well as the transformation of our R&D model to build an innovative and sustainable pipeline.”

Full year 2017 upgraded guidance

Following the strong performance in the first half of 2017, the Group updates its financial targets for the full year 2017:

Specialty Care sales growth upgraded to greater than +24.0%, reflecting the strong momentum for Somatuline and Cabometyx;
Revised slight growth of Consumer Healthcare, reflecting primarily lower sales expected in the second half for Prontalgine following a decree from the French Minister of Health on July 12, 2017 for all medicines containing codeine (e.g. Prontalgine), dextromethorphan, ethylmorphine or noscapine to be available by prescription only to prevent misuse;
Core Operating Income margin upgraded to greater than 25.0% of sales, based on the improved sales guidance and assuming additional investments to support the Cabometyx and Onivyde launches, increased R&D spend and higher employee variable compensation.
tableau 2

Definition of Core Financial Measures

Effective December 31st, 2016, Ipsen updated its definition of Core financial measures (Core Operating income, Core consolidated net profit, Core EPS) to exclude the amortization of intangible assets (excluding software) and the gain or loss on disposal of fixed assets.

These performance indicators do not replace IFRS indicators, and should not be relied upon as such.

Reconciliations between IFRS H1 2016/2017 results and the newly defined Core financial measures are presented in Appendix 4 and in the “Reconciliation from Core consolidated net profit to IFRS consolidated net profit” table on page 13.

Below is a reconciliation of the Core Operating Income from the previous definition to the new reported definition:

tableau 3

Review of the first half 2017 results

Note: Unless stated otherwise, all variations in sales are stated excluding foreign exchange impacts.

Group sales reached €919.5 million, up 18.8% year-on-year.

Specialty Care sales reached €764.6 million, up 23.1%, driven by the strong growth of Somatuline and the contribution of €28.6 million of key new products Cabometyx (mainly sales from Germany and France) and Onivyde (with first sales booked in the second quarter following the closing of the transaction in early April 2017). Somatuline growth of 31.8% was driven by a continued growth in North America, and a solid performance throughout Europe. Dysport growth was fueled by the good performance of our partner Galderma in North America and Europe but still impacted by importation issues related to the temporary cancellation of the certificate of Good Manufacturing Practices (cGMP) in Brazil. Decapeptyl sales reflect good volume growth in most geographies but also some continued price pressure, notably in China.

Consumer Healthcare sales reached €154.8 million, driven by the good performance of Smecta thanks to the retail strategy in China and a positive sales dynamic in Russia, as well as the contribution of the recent acquisitions of new OTC products (including Prontalgine in France) and the new products from Akkadeas Pharma in Italy. This performance was partly offset by some continued pressure in emerging markets like Algeria and Russia.

Core Operating Income totaled €240.5 million, up 25.7%, driven by the strong Specialty Care sales growth and reflects increased commercial investments mainly for the new products Cabometyx and Onivyde.

Core operating margin reached 26.2% of sales, up 1.2 points.

Core consolidated net profit was €169.2 million, compared to €145.7 million in 2016, up 16.2% and impacted by higher financial and income tax expenses.

Fully diluted core earnings per share grew by 15.7% to reach €2.04, compared to €1.76 in 2016.

IFRS Operating income was €176.4 million, up 1.0% compared to €174.6 million in 2016 after higher amortization of intangible assets from Cabometyx and Onivyde, and costs associated primarily with Onivyde integration and R&D restructuring expenses. Operating income margin at 19.2% is down 3.6 points compared to the first half of 2016.

IFRS Consolidated net profit was €125.9 million versus €133.3 million in 2016 after higher financial and income tax expenses.

IFRS Fully diluted EPS (Earning per share) was €1.52 versus €1.61 in 2016.

Free cash flow reached €94.9 million, up by €21.3 million, driven by the improvement in Operating Cash Flow, partially compensated by higher restructuring costs and financial expenses.

Closing net debt reached €669.4 million at the end of June 2017, versus a cash position of €17.3 million at the end of June 2016 reflecting the acquisitions completed during the first half of 2017 for Onivyde, the Consumer Healthcare product portfolio and the equity stake in Akkadeas Pharma.

The interim financial report, with regard to regulated information, is available on the Group’s website, www.ipsen.com, under the Regulated Information tab in the Investor Relations section.