On February 9, 2017 Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) reported financial results for the fourth quarter and full year 2016 and provided a business update (Press release, Regeneron, FEB 9, 2017, View Source [SID1234517671]).

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Financial Highlights
($ in millions, except per share data)

Three Months Ended
December 31,

Year Ended
December 31,


2016

2015*

% Change

2016

2015*

% Change
EYLEA U.S. net product sales

$
858


$
746


15
%

$
3,323


$
2,676


24
%
Total revenues

$
1,227


$
1,098


12
%

$
4,860


$
4,104


18
%
GAAP net income

$
253


$
155


63
%

$
896


$
636


41
%
GAAP net income per share – diluted

$
2.19


$
1.34


63
%

$
7.70


$
5.52


39
%
Non-GAAP net income(2)

$
353


$
258


37
%

$
1,319


$
944


40
%
Non-GAAP net income per share –
diluted(2)

$
3.04


$
2.23


36
%

$
11.32


$
8.12


39
%













* See Table 3 of this press release for an explanation of revisions made to 2015 non-GAAP amounts previously reported.

"The hard work of our scientists over the last decades has brought Regeneron to the next phase of our evolution – this year we anticipate launching two additional important therapies, significantly expanding our impact for patients with serious diseases and our company’s growth potential," said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron. "In March, we look forward to the potential U.S. approval of Dupixent, our innovative and breakthrough IL4/13 blocking antibody, in adults with atopic dermatitis. We believe Dupixent may have the potential to help additional patients with serious allergic diseases, with pivotal Phase 3 data in adult asthma patients expected later this year. We are also studying Dupixent in patients with nasal polyps and pediatric patients with asthma or atopic dermatitis."

Business Highlights

Marketed Product Update
EYLEA (aflibercept) Injection for Intravitreal Injection

In the fourth quarter of 2016, net sales of EYLEA in the United States increased 15% to $858 million from $746 million in the fourth quarter of 2015. For the full year of 2016, net sales of EYLEA in the United States increased 24% to $3.323 billion from $2.676 billion for the full year 2015. Overall distributor inventory levels remained within the Company’s one- to two-week targeted range.
Bayer commercializes EYLEA outside the United States. In the fourth quarter of 2016, net sales of EYLEA outside of the United States(1) were $496 million, compared to $413 million in the fourth quarter of 2015. In the fourth quarter of 2016, Regeneron recognized $165 million from its share of net profit from EYLEA sales outside the United States, compared to $140 million in the fourth quarter of 2015. For the full year of 2016, net sales of EYLEA outside of the United States(1) were $1.872 billion, compared to $1.413 billion for the full year 2015. For the full year of 2016, Regeneron recognized $649 million from its share of net profit from EYLEA sales outside the United States, compared to $467 million for the full year 2015.
Praluent (alirocumab) Injection for the Treatment of Elevated Low-Density Lipoprotein (LDL) Cholesterol

In the fourth quarter of 2016, global net sales of Praluent were $41 million, compared to $7 million in the fourth quarter of 2015. For the full year of 2016, global net sales of Praluent were $116 million, compared to $11 million for the full year 2015. Product sales for Praluent are recorded by Sanofi, and the Company shares in any profits or losses from the commercialization of Praluent. Praluent was launched in the United States in the third quarter of 2015 and in certain countries in the European Union commencing in the fourth quarter of 2015.
On January 5, 2017, the United States District Court for the District of Delaware issued a permanent injunction prohibiting the Company and Sanofi from marketing, selling, or manufacturing Praluent in the United States. On February 8, 2017, the United States Court of Appeals for the Federal Circuit stayed (suspended) the injunction pending appeal. This ruling means that Regeneron and Sanofi will continue marketing, selling, and manufacturing Praluent in the United States during the appeal process.
In the fourth quarter of 2016, the European Commission approved a Praluent dosing regimen of 300mg every 4 weeks. In January 2017, the U.S. Food and Drug Administration (FDA) extended the review period for the supplemental Biologics License Application (sBLA) for a monthly dosing regimen of Praluent. The FDA determined that Regeneron’s and Sanofi’s responses to information requested by the FDA during its review of the sBLA was a major amendment, which results in a three month extension of the Prescription Drug User Fee Act (PDUFA) date to allow time for the FDA to review the additional information. The new target action date is April 24, 2017.
The ODYSSEY OUTCOMES trial remains ongoing, and is assessing the potential of Praluent to demonstrate cardiovascular benefit. In November 2016, an independent Data Monitoring Committee (DMC) completed a second pre-specified interim analysis. Based on the results of this analysis, the DMC recommended the trial continue as planned. The DMC will continue to monitor the ongoing safety and efficacy of Praluent in the trial.
Pipeline Progress
Regeneron has sixteen product candidates in clinical development. These consist of EYLEA and fifteen fully human monoclonal antibody product candidates generated using the Company’s VelocImmune technology, including six in collaboration with Sanofi. In addition to EYLEA and Praluent, highlights from the antibody pipeline include:

Sarilumab, the Company’s antibody targeting IL-6R for rheumatoid arthritis.

In January 2017, Health Canada approved KevzaraTM (sarilumab) for the treatment of adult patients with moderately to severely active rheumatoid arthritis who have an inadequate response to or intolerance to one or more biologic or non-biologic Disease-Modifying Anti-Rheumatic Drugs (DMARDs). This is the first approval of Kevzara worldwide.
In July 2016, the European Medicines Agency (EMA) accepted for review the Marketing Authorization Application (MAA) for sarilumab. In addition, in October 2016, an application for marketing approval for sarilumab was submitted in Japan.
On October 28, 2016, the Company and Sanofi announced that the FDA issued a Complete Response Letter (CRL) regarding the BLA for sarilumab. The CRL refers to certain deficiencies identified during a routine good manufacturing practice inspection of the Sanofi fill-and-finish facility in Le Trait, France.
In the first quarter of 2017, the Company expects to resubmit the sarilumab BLA, contingent upon successful completion of the pre-approval inspection for Dupixent, and anticipates a two-month review cycle for sarilumab with an action date in the second quarter of 2017. Refer to "Sanofi’s Le Trait Facility Update" section below for further information.
In November 2016, the Company and Sanofi presented additional results from the Phase 3 SARIL-RA-MONARCH study, which demonstrated the superiority of sarilumab monotherapy versus adalimumab (marketed by AbbVie Inc. as HUMIRA) monotherapy in improving the clinical signs and symptoms in adults with active rheumatoid arthritis at the American College of Rheumatology (ACR) Annual Meeting.
Dupixent (dupilumab), the Company’s antibody that blocks signaling of IL-4 and IL-13, is currently being studied in atopic dermatitis, asthma, nasal polyps, and eosinophilic esophagitis.

The FDA previously designated Dupixent as a Breakthrough Therapy for the treatment of adult patients with inadequately controlled moderate-to-severe atopic dermatitis, and in September 2016, accepted the BLA for priority review with a target action date of March 29, 2017.
In October 2016, the FDA granted Breakthrough Therapy designation for Dupixent for the treatment of moderate to severe (12 to less than 18 years of age) and severe (6 months to less than 12 years of age) atopic dermatitis in pediatric patients who are not adequately controlled with, or who are intolerant to, topical medication.
In October 2016, additional data from LIBERTY AD SOLO 1 and SOLO 2 atopic dermatitis studies of Dupixent were presented at the European Academy of Dermatology and Venereology conference and simultaneously published in the New England Journal of Medicine.
In December 2016, the EMA accepted for review the MAA for Dupixent for the treatment of adults with moderate-to-severe atopic dermatitis who are candidates for systemic therapy.
The pivotal Phase 3 LIBERTY ASTHMA QUEST study of dupilumab for the treatment of asthma completed enrollment during the third quarter of 2016.
A Phase 3 study of dupilumab for the treatment of nasal polyps was initiated in the fourth quarter of 2016.
Sanofi’s Le Trait Facility Update

Sanofi’s facility in Le Trait, France conducts fill-and-finish activities for certain products, including sarilumab and dupilumab.
The FDA has reclassified the Le Trait fill-and-finish facility as "acceptable" based on review of responses to an FDA Form 483.
A pre-approval inspection for Dupixent has been scheduled for the first quarter of 2017.
REGN2810, the Company’s antibody to programmed cell death protein 1 (PD-1), is being studied in patients with cancer. A Phase 2 potentially pivotal study for the treatment of advanced cutaneous squamous cell carcinoma, as well as various Phase 1 studies, continue to enroll patients.

Fasinumab, the Company’s antibody targeting Nerve Growth Factor (NGF), is being studied in patients with pain due to osteoarthritis and chronic low back pain.

In October 2016, the FDA placed the Phase 2b study of fasinumab in chronic low back pain on clinical hold and requested an amendment of the study protocol; this was based on the FDA’s recommendation that patients with advanced osteoarthritis at baseline not receive higher doses of fasinumab. Following this development, the Company completed an unplanned analysis which showed clear evidence of efficacy with improvement in pain scores in all fasinumab groups compared to placebo at the 8- and 12-week time points, and preliminary safety results are generally consistent with what has been previously reported with the class. The Company and Teva plan to design pivotal Phase 3 studies in chronic low back pain.
In October 2016, the Company announced that at the 36-week analysis of the Phase 2/3 clinical study of fasinumab in patients with moderate-to-severe osteoarthritis pain of the hip or knee, the incidence of adjudicated arthropathies was found to be potentially dose-dependent, with a higher rate of patients experiencing arthropathies in the higher dose groups. In the ongoing fasinumab osteoarthritis pivotal Phase 3 program, the Company and Teva are planning to advance only the lower doses from the Phase 2/3 study, subject to discussion with the FDA and other health authorities.
Nesvacumab, an antibody to Ang2 co-formulated with aflibercept for intravitreal injection, is currently being studied in patients with neovascular age-related macular degeneration (wet AMD) and diabetic macular edema (DME). The Phase 2 RUBY study of nesvacumab/aflibercept for the treatment of DME completed enrollment during the fourth quarter of 2016, and the Phase 2 ONYX study of nesvacumab/aflibercept for the treatment of wet AMD completed enrollment during the first quarter of 2017.

REGN3767, an antibody to Lymphocyte Activation Gene 3 (LAG-3) protein, entered Phase 1 clinical development for treatment of advanced malignancies in the fourth quarter of 2016.

REGN2477, an antibody to Activin A, received orphan drug designation from the FDA for the treatment of Fibrodysplasia Ossificans Progressiva (FOP) in the first quarter of 2017.

Select Upcoming 2017 Milestones

Programs

Milestones
Praluent

Complete ODYSSEY OUTCOMES study
Sarilumab (IL-6R Antibody)

Re-submission of the BLA in the first quarter of 2017 contingent upon successful FDA re-inspection of Le Trait facility. FDA action would then be expected in the second quarter of 2017.


Submission for additional regulatory approvals and regulatory agency decisions on applications outside of the United States
Dupilumab (IL-4R Antibody)

FDA target action date of March 29, 2017 for atopic dermatitis

Report results from Phase 3 asthma study

Submit sBLA for asthma in adults

Report results from Phase 2 study in eosinophilic esophagitis

Initiate Phase 3 studies in pediatric patients in atopic dermatitis and asthma


Initiate Phase 2 study in food allergies
REGN2222 (RSV-F Antibody)

Report results from Phase 3 study
Fasinumab (NGF Antibody)

Initiate additional Phase 3 study in patients with osteoarthritis pain

Initiate Phase 3 study in chronic low back pain
REGN2810 (PD-1 Antibody)

Initiate Phase 2 study in non-small cell lung cancer


Initiate Phase 2 study in basal cell carcinoma
Nesvacumab/aflibercept (Ang2 Antibody co-formulated with aflibercept)

Report data from Phase 2 studies in DME and wet AMD


Fourth Quarter and Full Year 2016 Financial Results

Product Revenues: Net product sales were $863 million in the fourth quarter and $3.338 billion for the full year 2016, compared to $750 million in the fourth quarter and $2.689 billion for the full year 2015. EYLEA net product sales in the United States were $858 million in the fourth quarter and $3.323 billion for the full year 2016, compared to $746 million in the fourth quarter and $2.676 billion for the full year 2015.

Total Revenues: Total revenues, which include product revenues described above, increased by 12% to $1.227 billion in the fourth quarter of 2016, compared to $1.098 billion in the fourth quarter of 2015. Total revenues also include Sanofi and Bayer collaboration revenues of $313 million in the fourth quarter of 2016, compared to $330 million in the fourth quarter of 2015. Full year 2016 total revenues increased by 18% to $4.860 billion, compared to $4.104 billion for the full year 2015, and included collaboration revenues of $1.403 billion for the full year 2016, compared to $1.339 billion for the full year 2015. Refer to Table 4 for a summary of collaboration revenue.

Research and Development (R&D) Expenses: In 2016, GAAP R&D expenses were $479 million in the fourth quarter and $2.052 billion for the full year, compared to $461 million in the fourth quarter and $1.621 billion for the full year 2015. The higher R&D expenses for the full year 2016 compared to the full year 2015 were principally due to the $75 million up-front payment made in connection with the April 2016 license and collaboration with Intellia, the $25 million up-front payment made in connection with the July 2016 license and collaboration agreement with Adicet, higher development costs, including manufacturing drug supplies, primarily related to fasinumab and REGN2810, and higher headcount to support the Company’s increased R&D activities, partly offset by lower development costs primarily related to Praluent. In addition, in 2016, R&D-related non-cash share-based compensation expense was $75 million for the fourth quarter and $313 million for the full year, compared to $73 million in the fourth quarter and $256 million for the full year 2015.

Selling, General, and Administrative (SG&A) Expenses: In 2016, GAAP SG&A expenses were $326 million in the fourth quarter and $1.178 billion for the full year, compared to $295 million in the fourth quarter and $839 million for the full year 2015. The higher SG&A expenses for the full year 2016 compared to the full year 2015 were primarily due to higher commercialization-related expenses in connection with EYLEA and Praluent, higher commercialization-related expenses in connection with preparing to launch sarilumab and dupilumab, and higher headcount. In addition, in 2016, SG&A-related non-cash share-based compensation expense was $74 million for the fourth quarter and $231 million for the full year, compared to $82 million in the fourth quarter and $193 million for the full year 2015.

Cost of Goods Sold (COGS): In 2016, GAAP COGS was $45 million in the fourth quarter and $195 million for the full year, compared to $71 million in the fourth quarter and $242 million for the full year 2015. COGS decreased principally due to a decrease in royalties since the Company’s obligation to pay Genentech based on U.S. sales of EYLEA ended in May 2016, partly offset by an increase in various start-up costs in connection with the Company’s Limerick, Ireland commercial manufacturing facility and an increase in U.S. EYLEA net sales.

Cost of Collaboration and Contract Manufacturing (COCM): In 2016, GAAP COCM was $30 million in the fourth quarter and $105 million for the full year, compared to $40 million in the fourth quarter and $151 million for the full year 2015. COCM decreased primarily due to lower royalties since the Company’s obligation to pay Genentech based on sales of EYLEA outside the United States also ended in May 2016.

Income Tax Expense: In the fourth quarter of 2016, GAAP income tax expense was $88 million and the effective tax rate was 25.9%, compared to $72 million and 31.8% in the fourth quarter of 2015. In 2016, GAAP income tax expense was $434 million and the effective tax rate was 32.7% for the full year, compared to $589 million and 48.1% for the full year 2015. The effective tax rates for the both the fourth quarter and full year of 2016 were positively impacted, compared to the U.S. federal statutory rate, primarily by the tax benefit associated with stock-based compensation, partly offset by the negative impact of losses incurred in foreign jurisdictions with rates lower than the federal statutory rate. As described in Table 3 of this press release, the Company adopted Accounting Standards Update 2016-09 (ASU 2016-09), Compensation – Stock Compensation, Improvements to Employee Share-Based Payment Accounting, during the second quarter of 2016. ASU 2016-09 requires companies to recognize all excess tax benefits and tax deficiencies in connection with stock-based compensation as income tax expense or benefit in the income statement (previously, excess tax benefits were recognized in additional paid-in capital on the balance sheet).

GAAP and Non-GAAP Net Income: The Company reported GAAP net income of $253 million, or $2.41 per basic share and $2.19 per diluted share, in the fourth quarter of 2016, compared to GAAP net income of $155 million, or $1.49 per basic share and $1.34 per diluted share, in the fourth quarter of 2015. The Company reported GAAP net income of $896 million, or $8.55 per basic share and $7.70 per diluted share, for the full year 2016, compared to GAAP net income of $636 million, or $6.17 per basic share and $5.52 per diluted share, for the full year 2015.

The Company reported non-GAAP net income of $353 million, or $3.35 per basic share and $3.04 per diluted share, in the fourth quarter of 2016, compared to non-GAAP net income of $258 million, or $2.48 per basic share and $2.23 per diluted share, in the fourth quarter of 2015. The Company reported non-GAAP net income of $1.319 billion, or $12.60 per basic share and $11.32 per diluted share, for the full year 2016, compared to non-GAAP net income of $944 million, or $9.16 per basic share and $8.12 per diluted share, for the full year 2015.

A reconciliation of the Company’s GAAP to non-GAAP results is included in Table 3 of this press release.

Tarrytown, New York Facilities Update: On December 30, 2016, the Company entered into a Purchase Agreement with BMR-Landmark at Eastview LLC and BMR-Landmark at Eastview IV LLC (collectively, BMR), pursuant to which the Company has agreed to purchase from BMR its Tarrytown, New York facilities (the Facility), which includes laboratory and office space the Company’s currently leases, for a purchase price of $720 million. The closing of the Purchase Agreement is anticipated in the first quarter of 2017.

The Company intends to fund the acquisition contemplated by the Purchase Agreement with a new financing; accordingly, the Company has entered into an engagement letter with Banc of America Leasing & Capital, LLC (BAL) to arrange a $720 million lease financing in connection with this acquisition. Immediately thereafter, the Company intends to lease the Facility from an affiliate of BAL for a term of five years. At the end of the lease term, the Company expects to have an option to extend the term of the lease, purchase the Facility at a predetermined amount, or sell the Facility to a third party on behalf of BAL.

2017 Financial Guidance(3)

The Company’s full year 2017 financial guidance consists of the following components:

EYLEA U.S. net product sales
Single digit percentage growth over 2016
Sanofi reimbursement of Regeneron
commercialization-related expenses
$400 million – $450 million
Non-GAAP unreimbursed R&D(2) (4)
$950 million – $1.025 billion
Non-GAAP SG&A(2) (4)
$1.175 billion – $1.250 billion
Effective tax rate
32% – 38%
Capital expenditures
$375 million – $450 million


(1)
Regeneron records net product sales of EYLEA in the United States. Outside the United States, EYLEA net product sales comprise sales by Bayer in countries other than Japan and sales by Santen Pharmaceutical Co., Ltd. in Japan under a co-promotion agreement with an affiliate of Bayer. The Company recognizes its share of the profits (including a percentage on sales in Japan) from EYLEA sales outside the United States within "Bayer collaboration revenue" in its Statements of Operations.


(2)
This press release uses non-GAAP net income, non-GAAP net income per share, non-GAAP unreimbursed R&D, and non-GAAP SG&A, which are financial measures that are not calculated in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). These non-GAAP financial measures are computed by excluding certain non-cash and other items from the related GAAP financial measure. Non-GAAP adjustments also include the income tax effect of reconciling items.

The Company makes such adjustments for items the Company does not view as useful in evaluating its operating performance. For example, adjustments may be made for items that fluctuate from period to period based on factors that are not within the Company’s control, such as the Company’s stock price on the dates share-based grants are issued. Management uses these non-GAAP measures for planning, budgeting, forecasting, assessing historical performance, and making financial and operational decisions, and also provides forecasts to investors on this basis. Additionally, such non-GAAP measures provide investors with an enhanced understanding of the financial performance of the Company’s core business operations. However, there are limitations in the use of these and other non-GAAP financial measures as they exclude certain expenses that are recurring in nature. Furthermore, the Company’s non-GAAP financial measures may not be comparable with non-GAAP information provided by other companies. Any non-GAAP financial measure presented by Regeneron should be considered supplemental to, and not a substitute for, measures of financial performance prepared in accordance with GAAP. A reconciliation of the Company’s historical GAAP to non-GAAP results is included in Table 3 of this press release.


(3)
The Company’s 2017 financial guidance does not assume the completion of any significant business development transactions not completed as of the date of this press release and assumes that Praluent will remain on the market throughout 2017.


(4)
A reconciliation of full year 2017 non-GAAP to GAAP financial guidance is included below:




Projected Range
(In millions)

Low

High
GAAP unreimbursed R&D (5)

$
1,250


$
1,345

R&D: Non-cash share-based compensation expense

(300)


(320)

Non-GAAP unreimbursed R&D

$
950


$
1,025






GAAP SG&A

$
1,380


$
1,485

SG&A: Non-cash share-based compensation expense

(205)


(235)

Non-GAAP SG&A

$
1,175


$
1,250



(5)
Unreimbursed R&D represents R&D expenses reduced by R&D expense reimbursements from the Company’s collaborators and/or customers.

On February 9, 2017 Peregrine Pharmaceuticals, Inc. (NASDAQ:PPHM) (NASDAQ:PPHMP), a biopharmaceutical company committed to improving patient lives by manufacturing high quality products for biotechnology and pharmaceutical companies and advancing its proprietary R&D pipeline, reported the publication of positive proof-of-concept data for a novel exosome-based cancer detection platform (Press release, Peregrine Pharmaceuticals, FEB 9, 2017, View Source [SID1234517670]). Results of the study, conducted at University of Texas (UT) Southwestern Medical Center, showed researchers were able to distinguish between healthy subjects and patients with ovarian tumors based on the levels of exosomes containing phosphatidylserine (PS) found in their plasma. Furthermore, analysis of the PS-positive exosome levels allowed researchers to distinguish between malignant and benign tumors. These data were recently published online by the peer-reviewed journal, Oncotarget, in a paper titled, "Detection of phosphatidylserine-positive exosomes as a diagnostic marker for ovarian malignancies: a proof-of-concept study."

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Peregrine is currently advancing the proprietary exosome-based cancer diagnostic technology, licensed from UT Southwestern Medical Center in July 2016, with the goal of developing an optimized test for further clinical testing. As part of these efforts, the company is in the process of seeking a strategic partner for collaboration on developing and commercializing the technology. The platform is based on the diagnostic potential of tumor exosomes, which are small vesicles from tumor cells that are released into the blood as tumors grow. Tumor derived exosomes have PS on their surface as a detectable marker. It is believed that even small tumors begin to release PS-positive exosomes and thus the ability to detect these exosomes in the blood may be an indicator of the presence of a tumor.
In the study published by Oncotarget, plasma samples from 34 patients with ovarian tumors and 10 healthy subjects were analyzed for the presence of PS-expressing exosomes in a blinded test. Results demonstrated that those patients with malignant ovarian cancer displayed significantly higher blood PS exosome levels than those with benign tumors (median 0.237 vs. -0.027, p=0.0001) and the malignant and benign groups displayed significantly higher blood PS exosome levels than the healthy subjects (median 0.237 vs -0.158, p < 0.0001 and -0.027 vs -0.158, p=0.0002, respectively).

"These initial proof-of-concept results are encouraging as they appear to support the underlying concept that the measurement of PS-positive exosome levels in blood could be a simple way to detect and monitor cancer. While the work is still early, we think these data serve as an important first step in highlighting the diagnostic potential of this platform," said Steven W. King, president and chief executive officer of Peregrine. "This type of diagnostic technology is particularly important in an area such as ovarian cancer, in which screening options are limited and the ability to detect the disease at an early stage is inadequate. We look forward to continuing to explore the potential of the technology platform in ovarian as well as other types of cancer."

"There is a significant and growing interest in the healthcare industry around the ability to detect cancer and monitor its progression with more readily accessible blood tests. With this area being one of the fastest growing segments of the oncology diagnostics market, we believe that our exosome-based technology represents a significant product development and licensing opportunity," stated Stephen Worsley, vice president of business development at Peregrine. "Based on the fact that PS is a marker associated with a broad range of cancer types, we believe our platform has potential applications in several solid tumors beyond ovarian cancer. With that in mind, we look forward to aligning with a partner to help explore the potential of this promising technology."

On February 8, 2017 Ignyta, Inc. (Nasdaq: RXDX), a biotechnology company focused on precision medicine in oncology, reported that updated results from two Phase 1 trials of entrectinib—the company’s investigational, orally available, CNS-active tyrosine kinase inhibitor targeting tumors that harbor TRK, ROS1 or ALK fusions—were published in the journal Cancer Discovery (Press release, Ignyta, FEB 9, 2017, View Source [SID1234517669]). The studies showed entrectinib to be well tolerated, with responses observed in non-small cell lung cancer (NSCLC), colorectal cancer, mammary analog secretory carcinoma (MASC), melanoma and renal cell carcinoma as early as four weeks after first treatment and lasting as long as 2.5 years and still ongoing. Entrectinib is currently being studied in a separate registration-enabling global Phase 2 basket clinical trial known as STARTRK-2.

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"We are pleased to see the publication in Cancer Discovery of these Phase 1 data, which build upon our previously reported 79% response rate in 24 patients with TRK, ROS1, or ALK-driven extracranial solid tumors. This peer-reviewed article shows entrectinib responses to be both rapid and durable in patients with advanced solid tumors across multiple histologies and each of the molecular targets of interest, including in multiple patients with metastatic CNS disease," said Jonathan Lim, M.D., Chairman and CEO of Ignyta. "Entrectinib remains the only TRK inhibitor to have published data demonstrating RECIST responses in NSCLC and in patients with cancer in the CNS. Additionally, the impressive response rate of 85% and median duration of response of 17.3 months observed in ROS1-fusion positive NSCLC are comparable to those seen with crizotinib, the only currently approved treatment for ROS1 positive NSCLC, but with the added benefit of robust CNS activity."

"These studies show promising potential for entrectinib in both TRK- and ROS1-driven tumors. The anti-tumor activity seen across cancer types and entrectinib’s ability to treat bulky CNS disease, particularly important given the propensity for many solid tumors to metastasize to the brain, is extremely encouraging," said Alexander Drilon, M.D., Memorial Sloan Kettering Cancer Center, one of the lead co-authors on the paper. "In addition, these studies emphasize the utility of basket clinical trials that focus on molecular selection, independent of tumor histology, particularly in NTRK gene fusions, which are detected across multiple cancer types."

Entrectinib demonstrated robust anti-tumor activity in both studies across the twenty-five patients who harbored recurrent gene fusions involving NTRK1/2/3, ROS1 or ALK, had not received prior TKI treatment targeting these fusions and were treated at doses that achieved exposures consistent with the recommended Phase 2 dose of 600 mg of entrectinib daily.

The data cutoff for the Cancer Discovery publication was September 20, 2016. Highlights of the data included:

Efficacy

CNS activity: RECIST responses were noted in 63% of patients (5 out of 8) with primary or metastatic disease involving the brain.
A complete CNS response was achieved in a patient with NTRK1 fusion-positive NSCLC, with an ongoing response at 15.1 months at the time of data cutoff.
Duration of response: Responses to entrectinib therapy were shown to be durable.
Among responding patients with NTRK-rearranged cancer, the longest duration of response was ongoing at 15.1 months as of the data cutoff, with the patient continuing on therapy at 17.1 months.
A median duration of response of 17.4 months and 7.4 months was seen for ROS1 and ALK-rearranged cancers, respectively. Among 13 patients with ROS1-rearranged NSCLC, the median duration of response was 17.3 months.
The longest duration of clinical benefit in patients with fusions observed in the Phase 1 setting was a patient with ROS1-rearranged lung cancer remaining on therapy in confirmed response at 32.2 months as of the data cutoff.
RECIST Response rate:
In three NTRK1/2/3-rearranged solid tumors (NSCLC, MASC and colorectal cancer) with RECIST-measurable disease, the objective response rate (ORR) was 100%, including complete resolution of brain metastases in the patient with NSCLC. An additional patient with an NTRK1-rearranged glioneuronal tumor experienced 60% reduction in tumor burden by 3-dimensional volumetric assessment (stable disease by RECIST, which is not validated for primary brain tumors).
An ORR of 86% was observed in 14 ROS1-rearranged solid tumors (13 NSCLC patients, one melanoma patient), including two complete responses; an ORR of 85% was observed in the 13 patients with ROS1-rearranged NSCLC.
In seven ALK-rearranged solid tumors, the ORR was 57%, and responses were observed in ALK-rearranged NSCLC, renal cell carcinoma and colorectal cancer.
Safety

The publication summarized entrectinib data from a total of 119 patients with advanced solid tumors, the largest published patient safety experience of any TRK inhibitor in clinical development. Entrectinib was well tolerated, with no responding patients discontinuing the study due to adverse events and no evidence of cumulative toxicity, renal or hepatic toxicity, or QTc prolongation. The majority of treatment-related adverse events (AEs) were Grade 1 or 2 in severity; Grade 3 events were reversible with dose modifications. Only one Grade 4 and no treatment-related Grade 5 AEs were reported across the two studies. The most common treatment-related AEs of any grade were fatigue/asthenia (46%), dysgeusia (42%), paresthesias, (29%), nausea (28%) and myalgias (23%).

On February 9, 2017 Seattle Genetics, Inc. (NASDAQ:SGEN), a global biotechnology company, reported financial results for the fourth quarter and year ended December 31, 2016 (Press release, Seattle Genetics, FEB 9, 2017, View Source [SID1234517676]).

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The company also highlighted ADCETRIS (brentuximab vedotin) commercialization and clinical development accomplishments, vadastuximab talirine (SGN-CD33A) and enfortumab vedotin (ASG-22ME) activities, as well as progress with its pipeline of antibody-drug conjugates (ADCs) and other proprietary programs.

“Our accomplishments in 2016 were substantial, highlighted by strong progress with our ADCETRIS phase 3 trials: ALCANZA, ECHELON-1 and ECHELON-2. This progress positions us to potentially achieve a series of regulatory and commercial milestones in 2017 and 2018,” said Clay Siegall, Ph.D., President and Chief Executive Officer of Seattle Genetics. “Also during 2016 we initiated the phase 3 CASCADE clinical trial of vadastuximab talirine (SGN-CD33A; 33A) and reported phase 1 data from enfortumab vedotin (ASG-22ME) that we believe support advancement of this program into registrational trials. As we evolve into a global, multi-product oncology company, we are focused on continuing to deliver on our goals of advancing our pipeline and establishing ADCs as a key component of the future of cancer care.”

ADCETRIS Program Updates

ALCANZA Phase 3 Trial: Seattle Genetics and its collaborator Takeda highlighted full data from the ALCANZA phase 3 clinical trial in patients with CD30-expressing cutaneous T-cell lymphoma (CTCL) during the American Society of Hematology (ASH) (Free ASH Whitepaper) annual meeting in December 2016. The trial met its primary endpoint demonstrating that treatment with ADCETRIS resulted in a highly statistically significant improvement in the rate of objective response lasting at least four months (ORR4) versus the control arm as assessed by an independent review committee (p-value <0.0001). ALCANZA Breakthrough Therapy Designation: In November 2016, the U.S. Food and Drug Administration (FDA) granted ADCETRIS Breakthrough Therapy Designation (BTD) for the treatment of patients with CD30-expressing mycosis fungoides and primary cutaneous anaplastic large cell lymphoma who require systemic therapy and have received one prior systemic therapy. These represent the most common subtypes of CTCL. Based on discussions with the FDA following the BTD, the company now plans to incorporate additional data from investigator-sponsored trials into the planned supplemental Biologics License Application (BLA) to support the potential for a broader label in CTCL. As a result, submission of the supplemental BLA is now planned for mid-2017. ECHELON-1 Phase 3 Trial: Top-line data from the ECHELON-1 phase 3 trial in frontline classical Hodgkin lymphoma are anticipated during 2017. ECHELON-1 is evaluating ADCETRIS as part of a combination regimen in newly diagnosed patients with advanced Hodgkin lymphoma. ECHELON-2 Phase 3 Trial: In November 2016, Seattle Genetics and Takeda completed enrollment of 452 patients in the ongoing phase 3 ECHELON-2 clinical trial in patients with frontline CD30-expressing mature T-cell lymphoma, also known as peripheral T-cell lymphoma (PTCL). The companies anticipate reporting top-line data in 2018 (previously expected in the 2017 to 2018 timeframe). ASH Annual Meeting: Data from multiple ADCETRIS clinical trials were featured at the ASH (Free ASH Whitepaper) annual meeting. These included durability of response data from long-term follow-up of the pivotal trial in systemic anaplastic large cell lymphoma and a phase 1 trial of ADCETRIS in combination with chemotherapy in frontline PTCL. In addition, data from a phase 1/2 trial of ADCETRIS and nivolumab (Opdivo) in pre-transplant relapsed or refractory classical Hodgkin lymphoma patients showed a 90 percent objective response rate and 62 percent complete remission rate, and was generally well tolerated. ADCETRIS is not currently approved for use in CTCL, frontline Hodgkin lymphoma, frontline MTCL or pre-transplant Hodgkin lymphoma patients eligible for an autologous transplant. Vadastuximab Talirine (SGN-CD33A; 33A) Program Updates CASCADE Phase 3 Trial: Seattle Genetics is continuing enrollment in the 500-patient, global, randomized pivotal phase 3 CASCADE clinical trial evaluating vadastuximab talirine in combination with hypomethylating agents (HMAs) in older patients with newly diagnosed acute myeloid leukemia (AML). Clinical Hold: In December 2016, the FDA placed a full or partial clinical hold on several early-stage trials of vadastuximab talirine in AML. The clinical hold was initiated to evaluate the potential risk of hepatotoxicity in patients who were treated with vadastuximab talirine and received an allogeneic stem cell transplant. The company is working with the FDA to determine whether there is any association between hepatotoxicity and treatment with vadastuximab talirine and to resolve the clinical hold. ASH Annual Meeting: Data from vadastuximab talirine abstracts were featured in four oral presentations at the ASH (Free ASH Whitepaper) annual meeting. These included activity and tolerability of vadastuximab talirine in AML, both as monotherapy as well as in combination with standard-of-care agents for newly diagnosed patients. Enfortumab Vedotin (ASG-22ME) Program Update Advancing Clinical Program: Based on data from an ongoing phase 1 clinical trial, Seattle Genetics and its collaborator Astellas are planning discussions with regulatory agencies to advance the program into potential registrational trials for metastatic urothelial cancer patients, including patients who have been previously treated with a checkpoint inhibitor therapy. Additional Pipeline Updates Seattle Genetics is advancing a broad pipeline of nine additional clinical and late-stage preclinical programs for the treatment of hematologic malignancies and solid tumors. Data from several programs are expected during 2017. Recent pipeline activities include the following: SGN-LIV1A: Interim data from a phase 1, dose-escalation trial of SGN-LIV1A were presented at the San Antonio Breast Cancer Symposium in December 2016 showing antitumor activity in patients with triple negative metastatic breast cancer. Enrollment to an expansion cohort is ongoing to further characterize the activity and safety profile of single-agent SGN-LIV1A. In addition, enrollment is ongoing to evaluate SGN-LIV1A in combination with trastuzumab (Herceptin). SGN-CD352A: Seattle Genetics initiated a phase 1 trial of SGN-CD352A for multiple myeloma. SGN-CD352A is a novel ADC targeting CD352 composed of an engineered cysteine antibody (EC-mAb) stably linked to a highly potent DNA binding agent called a pyrrolobenzodiazepine (PBD) dimer via proprietary site-specific linker technology. SGN-2FF: Seattle Genetics initiated a phase 1 trial of SGN-2FF, a novel small molecule immuno-oncology agent. SGN-2FF is an oral agent that has been shown in preclinical models to inhibit fucosylation of proteins, which is intended to stimulate the immune system and slow the growth and spread of cancer cells. The phase 1 trial will be conducted in relapsed or refractory solid tumors, including non-small cell lung cancer. ADC Collaborations: Seattle Genetics recognized a milestone under its ongoing ADC collaboration with Genmab based on its initiation of a phase 1/2 trial of its HuMax-AXL ADC utilizing Seattle Genetics’ technology. In addition, Seattle Genetics received a milestone under its ongoing ADC collaboration with AbbVie. Fourth Quarter and Year 2016 Financial Results Total revenues in the quarter and twelve month period ended December 31, 2016 increased to $105.3 million and $418.1 million, respectively, compared to $93.5 million and $336.8 million from the same periods in 2015. Revenues included: ADCETRIS net sales in the fourth quarter were $70.8 million, a 12 percent increase from net sales of $63.0 million in the fourth quarter of 2015. For the year in 2016, ADCETRIS sales were $265.8 million, compared to $226.1 million for the year in 2015, an 18 percent increase. Royalty revenues in the fourth quarter of 2016 were $13.7 million, compared to $12.6 million in the fourth quarter of 2015. For the year in 2016, royalty revenues were $67.5 million, compared to $41.0 million for the year in 2015. Royalty revenues are primarily driven by international sales of ADCETRIS by Takeda. Royalty revenues for the year in 2016 also 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 totaled $20.8 million in the fourth quarter and $84.9 million for the year in 2016, compared to $17.9 million and $69.8 million for the same periods in 2015. Total costs and expenses for the fourth quarter of 2016 were $161.1 million, compared to $118.6 million for the fourth quarter of 2015. For the year in 2016, total costs and expenses were $560.9 million, compared to $457.8 million for the year in 2015. The increase in 2016 costs and expenses was primarily driven by investment in vadastuximab talirine, ADCETRIS product supply to Takeda and the company’s pipeline programs. Non-cash, share-based compensation cost for the year in 2016 was $52.5 million, compared to $41.8 million for the year in 2015. Net loss for the fourth quarter of 2016 was $55.1 million, or $0.39 per share, compared to a net loss of $24.9 million, or $0.18 per share, for the fourth quarter of 2015. For the year ended December 31, 2016, net loss was $140.1 million, or $1.00 per share, compared to a net loss of $120.5 million, or $0.93 per share, for the year in 2015. As of December 31, 2016, Seattle Genetics had $619.0 million in cash, cash equivalents and investments. 2017 Financial Outlook Seattle Genetics anticipates 2017 total revenues to be in the range of $405 million to $445 million, comprised of the following components: ADCETRIS net product sales $280 million to $300 million Revenues from collaboration and license agreements $75 million to $90 million Royalty revenues $50 million to $55 million Operating expenses and other costs are expected to be within the following ranges for the year in 2017: Research and development (R&D) $460 million to $500 million Selling, general and administration (SG&A) $160 million to $170 million Cost of sales 10 percent to 12 percent of ADCETRIS net product sales Non-cash costs $80 million to $90 million, primarily attributable to share-based compensation distributed approximately evenly between SG&A and R&D