On April 28, 2016 Ipsen (Euronext: IPN; ADR: IPSEY) reported its sales for the first quarter 2016 (Press release, Ipsen, APR 28, 2016, View Source [SID:1234511572]).

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

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

                  Schedule Your 30 min Free Demo!

First quarter 2016 unaudited IFRS consolidated sales (in million euros) Q1 2016 Q1 2015 % Change % Change at constant currency Specialty care 288.1 265.7 8.4% 9.7% of which Somatuline 121.7 89.3 36.3% 36.3% of which Decapeptyl 78.2 82.9 -5,6% -4.6% of which Dysport 63.2 68.6 -7.9% -4.2% Primary care* 73.9 84.4 -12.4% -11.0% of which Smecta 29.3 35.9 -18.6% -16,9% of which Forlax 10.0 9.1 10.6% 11.5% of which Tanakan 9.8 10.5 -6.9% -4.1% Group Sales 362.0 350.1 3.4% 4.7% * Drug-related sales (active ingredients and raw materials) are recorded within Primary care sales.

Commenting on the first quarter 2016 performance, Marc de Garidel, Chairman and Chief Executive Officer of Ipsen said: "In the first quarter, the Group continued to benefit from the acceleration of the growth of Somatuline in neuroendocrine tumors, both in the United States and Europe. However, the environment in emerging markets, especially in China, is still adversely affecting the performance of Decapeptyl and the primary care." Marc de Garidel added: "We are fully committed, upon regulatory approval, to preparing the upcoming commercial launches of cabozantinib in advanced renal cell carcinoma in Europe, and Dysport in pediatric lower limb spasticity in the United States."

First quarter 2016 sales highlights
Note: Unless stated otherwise, all variations in sales are stated excluding foreign exchange impacts.

Consolidated Group sales grew 4.7% to €362.0 million.

Sales of Specialty care products reached €288.1 million, up 9.7% year-on-year. Oncology sales grew by 16.3% while neurosciences and endocrinology sales decreased by respectively 3.9% and 1.4%. The relative weight of specialty care continued to increase to reach 79.6% of Group sales, compared to 75.9% the previous year.

Sales of Somatuline reached €121.7 million, up 36.3%, driven by a strong growth in North America following the launch of the new indication of neuroendocrine tumors at the beginning of 2015, and the strong performance in most European countries, notably in Germany, France, Poland, Italy and the UK.

Sales of Dysport reached €63.2 million, down 4.2% year-on-year impacted by unfavorable inventory effects in the aesthetic indication through the Galderma partnership. These effects were partly offset by a very good performance in Russia and to a lesser extent in Germany and the United States with a limited growth in therapeutic sales.

Sales of Decapeptyl reached €78.2 million, down 4.6% year-on-year, mainly impacted by negative inventory effects in the Middle East and Algeria. In China, the product suffered from a high comparison base in the first quarter 2015, and from increased price pressure in some provinces. However, the product registered a good performance in some European countries especially in Russia, the United Kingdom and Belgium.

Primary care sales reached €73.9 million, down 11.0% year-on-year. International sales declined 13.7%, while sales were down 3.6% in France. Over the period, primary care sales represented 20.4% of total Group sales, compared to 24.1% the previous year.

Sales of Smecta reached €29.3 million, down 16.9% year-on-year, affected by inventory effects in China related to the change in business model in a slower market.

Sales of Forlax reached €10.0 million, up 11.5%, driven by supply sales to the Group’s partners in charge of marketing the generic versions of the product.

Sales of Tanakan reached €9.8 million, down 4.1% year-on-year, penalized by a market slowdown in France and in Russia.

2016 financial objectives
The Group confirms its financial targets for 2016:
Specialty care sales growth year-on-year in excess of 10.0%;

Slight primary care sales growth year-on-year;

Core operating margin of around 21%, including the impact from the investment required to prepare the commercial launch of cabozantinib for the treatment of advanced renal cell carcinoma in Europe.

Sales objectives are set at constant currency.

On April 28, 2016 Amgen (NASDAQ:AMGN) reported financial results for the first quarter of 2016 (Press release, Amgen, APR 28, 2016, View Source [SID:1234511563]).

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

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

                  Schedule Your 30 min Free Demo!

Key results include:

Total revenues increased 10 percent versus the first quarter of 2015 to $5,527 million, with 7 percent product sales growth driven by Enbrel (etanercept), Prolia (denosumab), Aranesp (darbepoetin alfa), Neulasta (pegfilgrastim), Kyprolis (carfilzomib) and XGEVA (denosumab).

Adjusted EPS grew 17 percent versus the first quarter of 2015 to $2.90 driven by higher revenues and higher operating margins.
Adjusted operating income increased 17 percent to $2,859 million and adjusted operating margin improved by 4.4 percentage points to 54.6 percent.

GAAP EPS were $2.50 compared to $2.11 and GAAP operating income was $2,402 million compared to $2,022 million.
Free cash flow was $1.8 billion compared to $1.4 billion in the first quarter of 2015 driven by higher revenues and higher operating income.

"We are off to a strong start in 2016 delivering results for the year and laying groundwork for our long-term growth with innovative new product launches globally," said Robert A. Bradway, chairman and chief executive officer.

$MILLIONS, EXCEPT EPS AND PERCENTAGES

Q1’16

Q1’15

YOY Δ

Total Revenues

$ 5,527

$ 5,033

10%
Adjusted Operating Income

$ 2,859

$ 2,449

17%
Adjusted Net Income

$ 2,203

$ 1,911

15%
Adjusted EPS

$ 2.90

$ 2.48

17%

GAAP Operating Income

$ 2,402

$ 2,022

19%
GAAP Net Income

$ 1,900

$ 1,623

17%
GAAP EPS

$ 2.50

$ 2.11

18%

REFERENCES IN THIS RELEASE TO "ADJUSTED" MEASURES, MEASURES PRESENTED "ON AN ADJUSTED BASIS" AND TO FREE CASH FLOW REFER TO NON-GAAP FINANCIAL MEASURES. THESE ADJUSTMENTS AND OTHER ITEMS ARE PRESENTED ON THE ATTACHED RECONCILIATIONS.

Product Sales Performance

Total product sales increased 7 percent for the first quarter of 2016 versus the first quarter of 2015. The increase was driven by ENBREL, Prolia, Aranesp, Neulasta, Kyprolis and XGEVA.
ENBREL sales increased 24 percent driven by net selling price and declining inventory levels in the prior year period, offset partially by the impact of competition.
Neulasta sales increased 4 percent driven by both higher unit demand and net selling price in the United States (U.S.).
Aranesp sales increased 11 percent. Unit demand grew due to a shift by some U.S. dialysis customers from EPOGEN (epoetin alfa) to Aranesp. Unit demand growth was offset partially by unfavorable changes in net selling price.
XGEVA sales increased 11 percent driven by higher unit demand.
Sensipar/Mimpara (cinacalcet) sales increased 10 percent driven by net selling price and higher unit demand, offset partially by unfavorable changes in inventory levels.
Prolia sales increased 29 percent driven by higher unit demand.
EPOGEN sales decreased 44 percent driven by the impact of competition and, to a lesser extent, a shift by some U.S. dialysis customers to Aranesp.
NEUPOGEN (filgrastim) sales decreased 13 percent driven by the impact of competition in the U.S.
Kyprolis sales increased 43 percent driven by higher unit demand.
Vectibix (panitumumab) sales increased 18 percent driven by higher unit demand.
Nplate (romiplostim) sales increased 12 percent driven by higher unit demand.
BLINCYTO (blinatumomab) sales increased 80 percent driven by higher unit demand.
PRODUCT SALES DETAIL BY PRODUCT AND GEOGRAPHIC REGION

$Millions, except percentages

Q1’16

Q1’15

YOY Δ


US
ROW
TOTAL

TOTAL

TOTAL

Enbrel

$1,326
$59
$1,385

$1,116

24%
Neulasta

996
187
1,183

1,134

4%
Aranesp

261
271
532

480

11%
XGEVA

271
107
378

340

11%
Sensipar / Mimpara

278
89
367

334

10%
Prolia

221
131
352

272

29%
EPOGEN

300
0
300

534

(44%)
NEUPOGEN

150
63
213

246

(13%)
Kyprolis

129
25
154

108

43%
Vectibix

56
88
144

122

18%
Nplate

86
55
141

126

12%
BLINCYTO
21
6
27

15

80%
Repatha
14
2
16

0

*
Other**

10
37
47

47

0%

Total product sales

$4,119
$1,120
$5,239

$4,874

7%

* Not meaningful

** Other includes MN Pharma, Bergamo, IMLYGIC and Corlanor

Operating Expense, Operating Margin and Tax Rate Analysis, on an Adjusted Basis

Cost of Sales margin improved by 1.6 percentage points driven by manufacturing efficiencies, higher net selling price and lower royalties.
Research & Development (R&D) expenses were flat.
Selling, General & Administrative (SG&A) expenses increased 11 percent driven by investments in new product launches.
Operating Expenses increased 3 percent, with all expense categories reflecting savings from our transformation and process improvement efforts.
Operating Margin improved by 4.4 percentage points to 54.6 percent.
Tax Rate increased 1.9 percentage points due to changes in the geographic mix of earnings and the prior year benefit of a state tax audit settlement, offset partially by the benefit in the first quarter of 2016 of adopting the new Accounting Standard Update 2016-09, Improvements to Employee Share-Based Payment Accounting.
$MILLIONS, EXCEPT PERCENTAGES

On an Adjusted Basis
Q1’16

Q1’15

YOY Δ

Cost of Sales*
$707

$735

(4%)

% of sales
13.5%

15.1%

(1.6) pts.
Research & Development
$858

$856

0%

% of sales
16.4%

17.6%

(1.2) pts.
Selling, General & Administrative
$1,103

$993

11%

% of sales
21.1%

20.4%

0.7 pts.
TOTAL Operating Expenses
$2,668

$2,584

3%

Operating Margin

operating income as a % of sales
54.6%

50.2%

4.4 pts.

Tax Rate*
18.9%

17.0%

1.9 pts.

pts: percentage points

*
Impact of Puerto Rico excise tax is included in Cost of Sales and Tax Rate. Excluding Puerto Rico excise tax, Cost of Sales would be 1.7 pts. and 1.9 pts. lower for 2016 and 2015, respectively; and the Tax Rate would be 2.4 pts. and 2.8 pts. higher for 2016 and 2015, respectively.


Cash Flow and Balance Sheet

The Company generated $1.8 billion of free cash flow in the first quarter of 2016 versus $1.4 billion in the first quarter of 2015 driven by higher revenues and higher operating income.
The Company’s second quarter 2016 dividend of $1.00 per share declared on March 2, 2016, will be paid on June 8, 2016, to all stockholders of record as of May 17, 2016.
During the first quarter, the Company repurchased 4.7 million shares of common stock at a total cost of $690 million. At the end of the first quarter, the Company had $4.2 billion remaining under its stock repurchase authorization.
$BILLIONS, EXCEPT SHARES

Q1’16

Q1’15

YOY Δ

Operating Cash Flow
$1.9

$1.5

$0.4
Capital Expenditures
0.2

0.1

0.0
Free Cash Flow
1.8

1.4

0.4
Dividends Paid
0.8

0.6

0.2
Share Repurchase
0.7

0.5

0.2
Avg. Diluted Shares (millions)
760

770

(10)

Cash and Investments
34.7

27.1

7.6
Debt Outstanding
34.3

30.2

4.1
Stockholders’ Equity
28.7

26.5

2.2

Note: Numbers may not add due to rounding

2016 Guidance
For the full year 2016, the Company now expects:

Total revenues in the range of $22.2 billion to $22.6 billion and adjusted EPS in the range of $10.85 to $11.20. Previously, the Company expected total revenues in the range of $22.0 billion to $22.5 billion and adjusted EPS in the range of $10.60 to $11.00.
Adjusted tax rate in the range of 19 percent to 20 percent.
Capital expenditures to be approximately $700 million.
FIRST QUARTER PRODUCT AND PIPELINE UPDATE
Key 2016 development milestones:

Clinical Program
Indication
Milestone
Repatha (evolocumab)
Hyperlipidemia
Phase 3 coronary imaging data expected H2
Phase 3 CV outcomes data expected H2*
Kyprolis
Relapsed multiple myeloma
EU regulatory review (ENDEAVOR)
Parsabiv (etelcalcetide)†
Secondary hyperparathyroidism
Global regulatory reviews
XGEVA
Prevention of SREs in multiple myeloma
Phase 3 data expected H2*
AMG 334
Migraine Prophylaxis
Phase 2b chronic migraine data expected mid-year
Phase 3 episodic migraine data expected H2
ABP 215
(biosimilar bevacizumab)
Oncology
Global regulatory submissions expected
ABP 501
(biosimilar adalimumab)
Inflammatory diseases
Global regulatory reviews
ABP 980
(biosimilar trastuzumab)
Breast Cancer
Phase 3 data expected H2
*EVENT DRIVEN STUDY; †TRADE NAME PROVISIONALLY APPROVED BY FDA; CV = CARDIOVASCULAR

The Company provided the following updates on selected product and pipeline programs:

Repatha

In February, a Phase 3 study evaluating Repatha in patients with high cholesterol who cannot tolerate statins met the co-primary endpoints: the mean percent reductions from baseline in low-density lipoprotein cholesterol (LDL-C) at weeks 22 and 24, and the percent reduction from baseline in LDL-C at week 24.
BLINCYTO

In March, a supplemental Biologics License Application (sBLA) was submitted to the U.S. Food and Drug Administration (FDA) for the treatment of pediatric and adolescent patients with Philadelphia chromosome-negative relapsed or refractory B-cell precursor acute lymphoblastic leukemia (ALL).
In February, a Phase 3 open-label study evaluating the efficacy of BLINCYTO versus standard of care in adult patients with Philadelphia chromosome-negative relapsed or refractory B-cell precursor ALL met the primary endpoint of improved overall survival at a prespecified interim analysis.
IMLYGIC (talimogene laherparepvec)

In February, enrollment initiated for a Phase 3 study evaluating IMLYGIC in combination with KEYTRUDA (pembrolizumab) in patients with unresectable metastatic melanoma.
XGEVA

In March, enrollment completed for a Phase 3 event-driven study evaluating XGEVA compared with zoledronic acid for the prevention of skeletal-related events in patients with newly diagnosed multiple myeloma. Data from the study are expected in H2 2016.
ENBREL

In March, an sBLA for the treatment of pediatric patients with chronic severe plaque psoriasis was accepted for review by FDA.
Romosozumab

In March, a Phase 3 study evaluating romosozumab in men with osteoporosis met the primary endpoint by increasing bone mineral density at the lumbar spine at 12 months.
In February, a Phase 3 study evaluating romosozumab in postmenopausal women with osteoporosis met the co-primary endpoints by reducing the incidence of new vertebral fracture through months 12 and 24. The study also met a secondary endpoint by reducing the incidence of clinical fractures through 12 months.
AMG 334

Data from a Phase 2b study in patients with chronic migraine are expected mid-year 2016.
Data from two Phase 3 studies in patients with episodic migraine are expected in H2 2016.
Romosozumab is developed in collaboration with UCB globally, as well as Astellas in Japan
AMG 334 is developed in collaboration with Novartis
KEYTRUDA is a registered trademark of Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc.

Non-GAAP Financial Measures
In this news release, management has presented its operating results for the first quarters of 2016 and 2015 in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on an adjusted (or non-GAAP) basis. In addition, management has presented its full year 2016 EPS and tax rate guidance in accordance with GAAP and on an adjusted (or non-GAAP) basis. These non-GAAP financial measures are computed by excluding certain items related to acquisitions, restructuring and certain other items from the related GAAP financial measures. Management has also presented Free Cash Flow (FCF), which is a non-GAAP financial measure, for the first quarters of 2016 and 2015. FCF is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release.

The Company believes that its presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. The Company uses certain non-GAAP financial measures to enhance an investor’s overall understanding of the financial performance and prospects for the future of the Company’s core business activities by facilitating comparisons of results of core business operations among current, past and future periods. In addition, the Company believes that excluding the non-cash amortization of intangible assets, including developed product technology rights, acquired in business combinations treats those assets as if the Company had developed them internally in the past, and thus provides a supplemental measure of profitability in which the Company’s acquired intellectual property is treated in a comparable manner to its internally developed intellectual property. The Company believes that FCF provides a further measure of the Company’s liquidity.

The Company uses the non-GAAP financial measures set forth in the news release in connection with its own budgeting and financial planning. The non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

On April 28, 2016 United Therapeutics Corporation (NASDAQ: UTHR) reported its financial results for the first quarter ended March 31, 2016 (Press release, United Therapeutics, APR 28, 2016, View Source [SID:1234511548]).

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

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

                  Schedule Your 30 min Free Demo!

"Our total revenues increased as compared to the same period in the prior year, which shows that our medicines are continuing to reach an increasing number of patients suffering from pulmonary arterial hypertension (PAH) and other life threatening diseases," said Martine Rothblatt, Ph.D., United Therapeutics’ Chairman and Co-Chief Executive Officer. "Within our PAH product franchise, Orenitram continues to be prescribed to a growing number of patients and this momentum underscores our belief in the increasing clinical support for the use of our orally-administered prostacyclin analogues."

Key financial highlights include (in millions, except per share data):

Three Months Ended
March 31,

Selected
Percentage

2016

2015

Changes

Revenues

$
369.0

$
327.5

12.7
%
Net income (loss)

$
235.5

$
(16.6)

NM
(2)
Non-GAAP earnings(1)

$
147.3

$
135.0

9.1
%
Net income (loss), per diluted share

$
4.84

$
(0.36)

NM
(2)
Non-GAAP earnings, per diluted share(1)

$
3.02

$
2.55

18.4
%

(1) See definition of non-GAAP earnings, a non-GAAP financial measure, and a reconciliation of net income to non-GAAP earnings
below.
(2) Calculation is not meaningful.

Financial Results for the Three Months Ended March 31, 2016
Revenues
The table below summarizes the components of total revenues (dollars in millions):

Three Months Ended
March 31,

Percentage

2016

2015

Change

Net product sales:

Remodulin

$
139.8

$
146.3

(4.4)
%
Tyvaso


102.2

113.4

(9.9)
%
Adcirca


72.6

45.3

60.3
%
Orenitram


40.2

20.9

92.3
%
Unituxin


14.2

—

N/A

Other

—

1.6

(100.0)
%
Total revenues


$
369.0

$
327.5

12.7
%


Revenues for the three months ended March 31, 2016 increased by $41.5 million compared to the same period in 2015. The growth in revenues primarily resulted from: (1) a $27.3 million increase in Adcirca net product sales; (2) a $19.3 million increase in Orenitram net product sales; and (3) a $14.2 million increase in Unituxin net product sales. These revenue increases were partially offset by: (1) an $11.2 million decrease in Tyvaso net product sales; and (2) a $6.5 million decrease in Remodulin net product sales.

Expenses

Cost of product sales. The table below summarizes cost of product sales by major categories (dollars in millions):

Three Months Ended
March 31,

Percentage

2016

2015

Change

Category:

Cost of product sales

$
12.6

$
11.2

12.5
%
Share-based compensation (benefit) expense


(11.9)

9.6

(224.0)
%
Total cost of product sales

$
0.7

$
20.8

(96.6)
%
Share-based compensation. The decrease in share-based compensation of $21.5 million for the three months ended March 31, 2016, as compared to the same period in 2015, corresponded to a 29 percent decrease in the price of our common stock during the three months ended March 31, 2016, compared to a 33 percent increase in the price of our common stock during the same period in 2015.

Research and development expense. The table below summarizes research and development expense by major category (dollars in millions):

Three Months Ended
March 31,

Percentage

2016

2015

Change

Category:

Research and development expense

$
36.8

$
35.2

4.5
%
Share-based compensation (benefit) expense

(37.2)

75.0

(149.6)
%
Total research and development expense

$
(0.4)

$
110.2

(100.4)
%
Share-based compensation. The decrease in share-based compensation of $112.2 million for the three months ended March 31, 2016, as compared to the same period in 2015, corresponded to a 29 percent decrease in the price of our common stock during the three months ended March 31, 2016, compared to a 33 percent increase in the price of our common stock during the same period in 2015.

Selling, general and administrative expense. The table below summarizes selling, general and administrative expense by major categories (dollars in millions):

Three Months Ended
March 31,

Percentage

2016

2015

Change

Category:

General and administrative

$
78.2

$
37.7

107.4
%
Sales and marketing

22.3

23.7

(5.9)
%
Share-based compensation (benefit) expense

(95.5)

149.9

(163.7)
%
Total selling, general and administrative expense


$
5.0

$
211.3

(97.6)
%
General and administrative. The increase in general and administrative expense of $40.5 million for the three months ended March 31, 2016, as compared to the same period in 2015, was primarily attributable to $37.0 million of charitable donations to a non-affiliated, non-profit organization that provides financial assistance to patients with PAH. These donations were made during the first quarter of 2016 and represent the full extent of our funding to this non-affiliated, non-profit organization for 2016. Our donations to the same non-affiliated, non-profit organization in 2015 totaled $17.0 million, all of which were paid during the second quarter of that year. We expense these types of grant payments in the period they are made.

Share-based compensation. The decrease in share-based compensation of $245.4 million for the three months ended March 31, 2016, as compared to the same period in 2015, corresponded to a 29 percent decrease in the price of our common stock during the three months ended March 31, 2016, compared to a 33 percent increase in the price of our common stock during the same period in 2015.

Income Tax Expense

The provision for income tax expense is based on an estimated annual effective tax rate that is subject to adjustment in subsequent quarterly periods if components used to estimate the annual effective tax rate are updated or revised. The estimated annual effective tax rates as of March 31, 2016 and March 31, 2015 were approximately 35 percent and approximately 38 percent, respectively. Our 2016 estimated annual effective tax rate decreased compared to the 2015 estimated annual effective tax rate primarily due to a decrease in non-deductible share-based compensation expense as compared to the prior year, which was driven largely by a decrease in our stock price.

Share Repurchases

In the first quarter of 2016, we repurchased approximately 1.0 million shares of our common stock at a total cost of $123.2 million. These purchases were made pursuant to our $500 million stock repurchase program, which is effective during calendar year 2016.

Non-GAAP Earnings

Non-GAAP earnings is defined as net income, adjusted for the following charges, which are presented net of our annual effective income tax rate, as applicable: (1) interest expense; (2) license fees; (3) depreciation and amortization; (4) impairment charges; and (5) share-based compensation expense (stock option, share tracking award and employee stock purchase plan).

A reconciliation of net income (loss) to non-GAAP earnings is presented below (in millions, except per share data):

Three Months Ended
March 31,

2016

2015

Net income (loss), as reported

$
235.5

$
(16.6)

Adjust for the following charges(1):

Interest expense

0.4

1.3

Depreciation and amortization

5.0

5.1

Share-based compensation (benefit) expense

(93.6)

145.2

Non-GAAP earnings

$
147.3

$
135.0

Non-GAAP earnings per share:

Basic


$
3.24

$
2.89

Diluted


$
3.02

$
2.55

Weighted average number of common shares outstanding:

Basic

45.4

46.7

Diluted

48.7

53.0

(1) Non-GAAP earnings adjustments are presented net of the impact of our estimated effective income tax rates of approximately 35
percent and approximately 38 percent for the three months ended March 31, 2016 and 2015, respectively.

On April 28, 2016 Celgene Corporation (NASDAQ:CELG) reported net product sales of $2,495 million for the first quarter of 2016 (Press release, Celgene, APR 28, 2016, View Source [SID:1234511547]).

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

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

                  Schedule Your 30 min Free Demo!

Net product sales grew 21 percent from the same period in 2015, including a 2 percent negative impact from currency exchange effects. First quarter total revenue increased 21 percent to $2,512 million compared to $2,081 million in the first quarter of 2015. Adjusted net income for the first quarter of 2016 increased 19 percent to $1,064 million compared to $891 million in the first quarter of 2015. For the same period, adjusted diluted earnings per share (EPS) increased 23 percent to $1.32 from $1.07.

Based on U.S. GAAP (Generally Accepted Accounting Principles), Celgene reported first quarter of 2016 net income of $801 million or $0.99 per diluted share. For the first quarter of 2015, net income was $719 million or $0.86 per diluted share.

"Our global teams generated excellent first quarter results and our strong operating momentum makes us confident that we will achieve or exceed our ambitious 2016 goals," said Mark Alles, Chief Executive Officer of Celgene. "We are driving long-term value creation through the continued advancement of our innovative pipeline with significant clinical data expected over the next two years."

First Quarter 2016 Financial Highlights

Unless otherwise stated, all comparisons are for the first quarter of 2016 compared to the first quarter of 2015. The adjusted operating expense categories presented below exclude share-based employee compensation expense and upfront collaboration expense. Please see the attached Reconciliation of GAAP to Adjusted Net Income for further information.

Net Product Sales Performance

REVLIMID sales for the first quarter increased 17 percent to $1,574 million. Growth was driven by increased market share in newly diagnosed multiple myeloma and increases in duration. U.S. sales of $997 million and international sales of $577 million increased 23 percent and 8 percent, respectively.
POMALYST/IMNOVID sales were $274 million, a 38 percent increase year-over-year. U.S. sales of $171 million and international sales of $103 million increased 33 percent and 47 percent, respectively. POMALYST/IMNOVID sales were driven by increases in market share and duration trends.
ABRAXANE sales for the first quarter were $225 million, a 1 percent increase year-over-year. U.S. sales of $144 million and international sales of $81 million decreased 10 percent and increased 26 percent, respectively. The decrease in sales in the U.S. reflects quarterly customer buying patterns and increased competition in breast cancer and lung cancer from new market entrants.
OTEZLA sales in the first quarter were $196 million, a 224 percent increase year-over-year. Growth was driven by market share gains in the U.S. and Europe. U.S. sales were $175 million and international sales were $21 million.
In the first quarter, all other product sales, which include THALOMID, ISTODAX, VIDAZA and an authorized generic version of VIDAZA drug product in the U.S., were $226 million compared to $230 million in the first quarter of 2015.
Research and Development (R&D)

Adjusted R&D expenses were $591 million for the first quarter of 2016 compared to $431 million for the first quarter of 2015. The difference was primarily due to an increase in clinical trial activity across the portfolio and includes $65 million of milestones achieved by collaboration partners in the first quarter of 2016 while there were none in the first quarter of 2015. On a GAAP basis, R&D expenses were $733 million for the first quarter of 2016 and $506 million for the same period in 2015, also reflecting an increase in upfront collaboration expenses.

Selling, General, and Administrative (SG&A)

Adjusted SG&A expenses were $468 million for the first quarter of 2016 compared to $463 million for the first quarter of 2015. On a GAAP basis, SG&A expenses were $543 million for the first quarter of 2016 compared to $529 million for the same period in 2015.

Cash, Cash Equivalents, and Marketable Securities

Operations generated cash flow of $975 million in the first quarter of 2016, an increase of 14 percent year-over-year. In the first quarter, Celgene purchased approximately $1,410 million of its shares. As of March 31, 2016, Celgene had $2,481 million remaining under the existing share repurchase program. Celgene ended the quarter with $5,707 million in cash and marketable securities.

2016 Guidance Updated


Previous 2016
Guidance

Updated 2016
Guidance
Net Product Sales:
Total $10.5B-$11.0B $10.75B-$11.0B
REVLIMID $6.6B-$6.7B Approximately $6.7B
POMALYST/IMNOVID
Greater than $1.0B
Greater than $1.0B
ABRAXANE Greater than $1.0B $950M-$1.0B
OTEZLA Greater than $1.0B Greater than $1.0B
Adjusted operating margin Approximately 53.5% Approximately 53.5%
GAAP operating margin Approximately 42% Approximately 42%
Adjusted diluted EPS $5.50 to $5.70 $5.60 to $5.70
GAAP diluted EPS $4.26 to $4.64 $4.26 to $4.56
Weighted average diluted shares 825M 811M

2017 Targets Updated

Updated targets reflect current exchange rates, inclusive of existing hedging contracts
Total net product sales are expected to be in the range of $12.7 billion to $13.0 billion versus the previous range of $13.0 billion to $14.0 billion
REVLIMID net sales are expected to be approximately $8.0 billion versus the previous target of $7.0 billion
ABRAXANE net sales are expected to be approximately $1.0 billion versus the previous range of $1.5 billion to $2.0 billion
Adjusted diluted EPS is expected to be in the range of $6.75 to $7.00 versus the previous target of $7.25
Weighted average diluted shares expected to be 825 million versus the previous target of 830 million
2020 Net Product Sales and Adjusted Diluted EPS Targets On-Track

Updated targets reflect current exchange rates
Total net product sales are expected to be more than $21.0 billion
Adjusted diluted EPS expected to be more than $13.00
Product and Pipeline Updates

Hematology/Oncology

In collaboration with our partner Agios Pharmaceuticals Inc., enrollment began in a phase III trial with AG-221 in IDH-2 mutated relapsed and/or refractory acute myeloid leukemia (AML). In collaboration with our partner Acceleron Pharma Inc., enrollment began in a phase III trial evaluating luspatercept in patients with anemia due to low- or intermediate-risk myelodysplastic syndromes and a phase III trial in regularly transfused beta-thalassemia patients is initiating.

During the quarter, several early- and mid-stage clinical trials began enrollment. These include:

The phase I/II ENHANCETM trial evaluating CC-122 in combination with ibrutinib and obinutuzumab in patients with relapsed and/or refractory chronic lymphocytic leukemia (CLL)
A phase II trial evaluating luspatercept in patients with anemia due to low- or intermediate-risk myelodysplastic syndromes who are ring sideroblasts negative or are eligible but have not yet received an erythropoiesis-stimulating agent
A safety trial with AG-120 or AG-221 in combination with standard chemotherapy in patients with newly diagnosed AML with an IDH-1 and/or IDH-2 mutation
A phase Ib trial from the FUSIONTM program combining durvalumab and POMALYST/IMNOVID in patients with relapsed and refractory multiple myeloma
The phase III apact trial evaluating ABRAXANE in combination with gemcitabine as adjuvant therapy in patients with surgically resected pancreatic cancer completed enrollment. Data from this trial are expected in 2017.

At the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting in June 2016, expected presentations include:

A meta-analysis of overall survival in patients treated with REVLIMID maintenance after high-dose melphalan and autologous stem cell transplant
Data on combinations with REVLIMID or POMALYST/IMNOVID with novel agents in relapsed and/or refractory multiple myeloma
Data from the ETNA (Evaluating Treatment with Neoadjuvant Abraxane) phase III trial comparing neoadjuvant ABRAXANE to paclitaxel in patients with HER2-negative high-risk breast cancer
Inflammation & Immunology (I&I)

In March, a New Drug Application in Japan was submitted for OTEZLA for the treatment of psoriasis and psoriatic arthritis. A decision from the Japan Pharmaceuticals and Medical Devices Agency is now expected by year-end.

At the American Academy of Dermatology in March, an analysis of pooled 182-week (3.5-year) safety data from the ESTEEM 1 and 2 trials of patients with moderate to severe plaque psoriasis who are candidates for phototherapy or systemic therapy and pooled 3-year safety data from the PALACE 1-3 trials of patients with active psoriatic arthritis were presented.

The phase IIIb PSA-006 trial evaluating OTEZLA in psoriatic arthritis patients with early disease met the primary endpoint of ACR 20 response rate. The data will be presented at a future medical congress.

The registration-enabling endoscopy trial (CD-001) with GED-0301 in patients with active Crohn’s disease completed enrollment. Data from the trial are expected to be presented at a major medical meeting in 2017.

Data from the phase II TOUCHSTONE trial with ozanimod showing the histologic improvement in patients with ulcerative colitis were presented at the Congress of the European Crohn’s and Colitis Organization (ECCO) in March 2016. Data from the enrolling phase III TRUE NORTH trial of ozanimod in patients with ulcerative colitis are expected in 2018.

Data at 72-weeks from the phase II portion of the RADIANCE trial evaluating ozanimod in patients with multiple sclerosis were presented at the ACTRIMS (Americas Committee for Treatment & Research in Multiple Sclerosis) meeting in February 2016.

In February, data from the phase II portion of the RADIANCE trial evaluating ozanimod in patients with relapsing multiple sclerosis were published in Lancet Neurology. The phase III trials with ozanimod in multiple sclerosis (SUNBEAM and RADIANCE) have completed enrollment and are ongoing with data analysis expected in 2017.

The phase II trial evaluating RPC4046 in eosinophilic esophagitis met the primary endpoint of reduction of mean eosinophil count. Celgene is evaluating the data to determine next steps with the program. AbbVie, Inc. has a co-development option on RPC4046. The study results will be presented at a future medical meeting.

Business Update

In February, Celgene exercised its option to exclusively license bb2121, bluebird bio’s therapy targeting B cell maturation antigen (BCMA). Celgene will be responsible for worldwide development and commercialization of bb2121 after the phase I trial is completed.

At the end of February, Celgene closed on the sale to Human Longevity, Inc. of Celgene Cellular Therapeutics’ (CCT) biobanking business known as LifebankUSA and CCT’s biomaterials portfolio of assets including Biovance.

In April, Celgene exercised its option to develop and commercialize the Juno Therapeutics, Inc. CD19 program outside North America and China. Both companies will now share global development expenses for products in the CD19 program. Celgene has commercial rights outside of North America and China and will pay Juno a royalty at a percentage in the mid-teens on any future net sales of therapeutic products developed through the CD19 program in Celgene’s territories.

First Quarter 2016 Conference Call and Webcast Information

Celgene will host a conference call to discuss the first quarter of 2016 operating and financial performance on Thursday, April 28, 2016, at 9 a.m. ET. The conference call will be available by webcast at www.celgene.com. An audio replay of the call will be available from noon April 28, 2016, until midnight ET May 5, 2016. To access the replay in the U.S., dial (855) 859-2056; outside the U.S. dial (404) 537-3406. The participant passcode is 79676290.

About REVLIMID

In the U.S., REVLIMID (lenalidomide) in combination with dexamethasone is indicated for the treatment of patients with multiple myeloma. REVLIMID is indicated for patients with transfusion-dependent anemia due to Low- or Intermediate-1-risk myelodysplastic syndromes (MDS) associated with a deletion 5q cytogenetic abnormality with or without additional cytogenetic abnormalities. REVLIMID is approved in the U.S. for the treatment of patients with mantle cell lymphoma (MCL) whose disease has relapsed or progressed after two prior therapies, one of which included bortezomib. Limitations of Use: REVLIMID is not indicated and is not recommended for the treatment of chronic lymphocytic leukemia (CLL) outside of controlled clinical trials.

About ABRAXANE

In the U.S., ABRAXANE for Injectable Suspension (paclitaxel protein-bound particles for injectable suspension) (albumin-bound) is indicated for the treatment of metastatic breast cancer after failure of combination chemotherapy for metastatic disease or relapse within six months of adjuvant chemotherapy. Prior therapy should have included an anthracycline unless clinically contraindicated. ABRAXANE is indicated for the first-line treatment of locally advanced or metastatic non-small cell lung cancer, in combination with carboplatin, in patients who are not candidates for curative surgery or radiation therapy. ABRAXANE is also indicated for the first-line treatment of metastatic adenocarcinoma of the pancreas in combination with gemcitabine.

About POMALYST

In the U.S., POMALYST (pomalidomide) is indicated for patients with multiple myeloma who have received at least two prior therapies including lenalidomide and a proteasome inhibitor and have demonstrated disease progression on or within 60 days of completion of the last therapy.

About OTEZLA

In the U.S., OTEZLA (apremilast) is indicated for the treatment of adult patients with active psoriatic arthritis. OTEZLA is indicated in the U.S. for the treatment of patients with moderate to severe plaque psoriasis who are candidates for phototherapy or systemic therapy.

About VIDAZA

In the U.S., VIDAZA (azacitidine for injection) is indicated for treatment of patients with the following French-American-British (FAB) myelodysplastic syndrome subtypes: refractory anemia (RA) or refractory anemia with ringed sideroblasts (RARS) (if accompanied by neutropenia or thrombocytopenia or requiring transfusions), refractory anemia with excess blasts (RAEB), refractory anemia with excess blasts in transformation (RAEB-T), and chronic myelomonocytic leukemia (CMMoL).