Teva Pharmaceutical Industries Ltd (ADR) (TEVA) recently stated results for the year and the quarter ended December 31, 2016.
“2016 was a transitional year for Teva – one that included noteworthyachievements, in addition to challenges,” stated Dr. Yitzhak Peterburg, Interim President and CEO of Teva. “While we continue to manage through a turbulent and constantly evolving industry, we are committed to execute against our strategy with more diversified revenue sources and profit streams, all backed by strong product development engines in both generics and specialty.”
“In 2017, our main focus will be extracting synergies related to the Actavis Generics transaction, driving additional efficiencies throughout the organization, supporting cash generation and paying down our debt to maintain a strong balance sheet and delivering on the promise of the specialty pipeline and key generic launches. We are laser focused on execution at this critical juncture and are determined to deliver on our key priorities.”
Dr. Peterburg continued, “With the entire Teva team, I am conducting a thorough review of the business to find additional opportunities to enhance value. Our administration team is committed to delivering for our shareholders and unlocking the full potential of our pipeline and global business. We remain excited about the future as we strive to create a platform that supports continued growth and value creation for patients, shareholders and healthcare systems around the world.”
2016 Annual Results
Revenues in 2016 were $21.9 billion, a boost of 11% contrast to 2015, mainly because of the inclusion, following the closing on August 2, of the results of the Actavis Generics business.
Exchange rate differences between 2016 and 2015 reduced revenues by $174 million, reduced GAAP operating income by $81 million and reduced non-GAAP operating income by $55 million. In addition, the Venezuelan bolivar exchange rates that we used and inflation-driven price increases in Venezuela raised revenues by $526 million, raised GAAP operating income by $23 million and raised non-GAAP operating income by $133 million.
In light of the economic conditions in Venezuela, we exclude the 2016 increases in revenues and operating profit in any negotiation of currency effects.
GAAP gross profit was $11.9 billion in 2016, up 4% contrast to 2015. GAAP gross profit margin for the year was 54.1%, contrast to 57.8% in 2015. Non-GAAP gross profit was $13.4 billion in 2016, up 10% contrast to 2015. Non-GAAP gross profit margin was 61.3% in 2016, contrast to 62.2% in 2015.
Research and Development (R&D) expenses in 2016 were $2.1 billion, a boost of 38% contrast to 2015. R&D expenses apart from equity compensation expenses and purchase of in-process R&D in 2016 were $1.7 billion or 7.6% of revenues, contrast to $1.4 billion, or 7.3% of revenues, in 2015. R&D expenses related to our generic medicines segment were $659 million, contrast to $519 million in 2015. R&D expenses related to our specialty medicines segment were $998 million, contrast to $918 million in 2015.
Selling and Marketing (S&M) expenses in 2016 were $3.9 billion, a boost of 11% contrast to 2015. S&M expenses apart from amortization of purchased intangible assets and equity compensation expenses were $3.7 million, or 17.0% of revenues, in 2016, contrast to $3.4 million, or 17.4% of revenues, in 2015. S&M expenses related to our generic medicines segment were $1.7 billion, a boost of 18% contrast to $1.5 billion in 2015. S&M expenses related to our specialty medicines segment were $1.9 billion, a decrease of 1% contrast to 2015.
General and Administrative (G&A) expenses in 2016 and in 2015 were $1.2 billion. G&A expenses apart from equity compensation expenses were $1.2 billion in 2016, or 5.4% of revenues, contrast to $1.2 billion and 6.0% in 2015.
Operating income was $2.2 billion in 2016 contrast to $3.4 billion in 2015. Non-GAAP operating income was $6.8 billion, up 11% contrast to $6.2 billion in 2015.
Adjusted EBITDA (non-GAAP operating income, which excludes amortization and certain other items, and apart from depreciation expenses) for 2016 was $7.3 billion, up 11% contrast to 2015.
Inovio Pharmaceuticals Inc (INO) recently declared that it has reached a partnershipand license agreement providing ApolloBio Corporation (NEEQ:430187) with the exclusive right to develop and commercialize VGX-3100, Inovio’s DNA immunotherapy product designed to treat pre-cancers caused by human papillomavirus (HPV), within Greater China (China, Hong Kong, Macao, Taiwan). The agreement provides for potential inclusion of the Republic of Korea three years following the effective date.
Under the partnershipand license agreement, Inovio will receive $15 million in upfront and near term payments comprising an initial $3 million signing fee and a $12 million milestone upon lifting of the VGX-3100 phase 3 pre-initiation clinical hold by the FDA. Under a separate equity agreement, ApolloBio will invest in Inovio common stock subsequent to lifting of the clinical hold at a volume weighted average price encompassing a trading period before and following the lifting of the clinical hold. The aggregate investment, which is expected to be accomplished in the first half of 2017, will not exceed $35 million and may be a lower amount such that ApolloBio will not be the leading shareholder in Inovio. ApolloBio will fund all clinical development costs within the licensed territory, and will pay Inovio up to $20 million based upon the achievement of certain regulatory milestones in the US, China and Korea, and double digit royalties on net sales of VGX-3100. The agreements are subject to People’s Republic of China (PRC) corporate and regulatory approvals, and payments are subject to PRC currency approvals.
This partnershipon VGX-3100 encompasses the treatment and/or prevention of pre-cancerous HPV infections and HPV-driven dysplasias, and excludes HPV-driven cancers and all combinations of VGX-3100 with other immunostimulants.
Dr. J. Joseph Kim, Inovio’s President and Chief Executive Officer, said, “As Inovio continues to focus on the path to regulatory approvals and commercialization strategies in the U.S. and European countries, this agreement opens up Greater China for our lead program and first phase III product. We believe that ApolloBio is a strong partner that brings noteworthycapabilities and expertise regardingproduct development, the Chinese regulatory landscape, and the healthcare market in China.”
Dr. Weiping Yang, Chief Executive Officer of ApolloBio Corporation, said, “We are delighted to begin 2017 with a planned partnershipwith Inovio. VGX-3100 is the world’s first therapeutic vaccine being developed for HPV pre-cancers. This collaboration, license and equity investment marks our determination to introduce late stage innovative new drugs to meet severely unmet medical needs within the Greater China region.”