Deerfield, Ill. - April 23, 2015
Pipeline Momentum Continues with Achievement of Regulatory Milestones, Regulatory Submissions, and ApprovalsCompany Progresses Toward Mid-Year Separation into Two Independent Companies
Baxter International Inc. (NYSE:BAX) today reported first quarter financial results that exceeded the company's previously issued guidance. Baxter reported first quarter net income of $430 million and earnings per diluted share of $0.78, compared to net income of $556 million and earnings per diluted share of $1.01 in the same period last year. First quarter 2015 results include net after-tax special items totaling $120 million (or $0.22 per diluted share), primarily for intangible asset amortization, costs associated with the company's planned separation and the integration of its Gambro AB acquisition, partially offset by a benefit related to the reversal of certain business optimization reserves. First quarter 2014 results included net after-tax charges totaling $96 million (or $0.18 per diluted share).
On an adjusted basis, excluding special items in both periods, Baxter reported first quarter net income of $550 million compared to $652 million reported in 2014. For the quarter, adjusted earnings of $1.00 per diluted share, which included unplanned other income of $74 million (or $0.11 per diluted share), exceeded the company's previously issued earnings guidance of $0.85 to $0.90 per diluted share.
Worldwide sales of $3.76 billion declined 2 percent from the $3.85 billion reported in the first quarter of 2014. Excluding the impact of foreign currency, Baxter's sales increased 4 percent. Sales in the United States grew 4 percent to $1.7 billion, while international sales of $2.1 billion declined 6 percent from the prior-year period. Excluding foreign currency, international sales increased
Baxter's BioScience business generated revenues of $1.4 billion in the quarter, reflecting an increase of 2 percent. Excluding foreign currency, sales advanced 8 percent, driven by strong demand for the company's immunoglobulin treatments for patients with primary immunodeficiency (PI), hemophilia and inhibitor therapies, and certain biotherapeutics.
Medical Products sales of $2.4 billion declined 5 percent from the prior-year period. Excluding foreign currency, sales increased 2 percent. Strong sales of products for peritoneal dialysis (PD), intravenous therapies and anesthesia products, as well as improved demand for injectable drug compounding services contributed to the performance.
"We continue to successfully deliver on a wide range of strategic and operational objectives that will drive future growth and position us for sustained success," said Robert L. Parkinson, Jr., chairman and chief executive officer. "As the separation we announced more than a year ago is nearing completion, we continue to believe that all stakeholders will benefit from the unique attributes, distinct profiles, growth prospects and strategies of the two new companies."
Baxter achieved a number of pipeline and portfolio milestones since the beginning of the year, including:
- Completion of CE marking (market approval) in Europe for HOMECHOICE CLARIA automated peritoneal dialysis system with the SHARESOURCE web-based connectivity platform, which provides secure two-way connectivity so healthcare providers can have increased visibility to monitor their patients' home peritoneal dialysis treatments. Baxter plans to initiate the commercial launch of the system in select European and Asian countries beginning in the second quarter of this year.
- Receipt of FDA approval and orphan drug designation of PHOXILLUM Renal Replacement Solutions for use in continuous renal replacement therapy, or CRRT, to correct electrolyte and acid-base imbalances. The company expects to introduce these solutions in the United States in the coming weeks.
- Submission of a new drug application to Japan's Ministry of Health for the approval of BAX 855, an investigational, extended half-life recombinant factor VIII treatment for hemophilia A based on ADVATE.
- Completion of enrollment in the BAX 855 pediatric study, which will support post-approval label expansion in the U.S. for previously treated pediatric patients and European regulatory submission in 2016.
- Positive results from the Phase III study of BAX 817 for patients with hemophilia A or B who develop inhibitors. The trial met its endpoint of successful resolution of bleeding episodes (overall success rate of 92%). No patients developed inhibitors or binding antibodies during the study and none discontinued treatment due to adverse events.
- Announcement with CTI BioPharma of positive top-line results from PERSIST-1, a randomized, controlled Phase III registration clinical trial examining pacritinib, a next generation oral JAK2/FLT3 inhibitor for the treatment of patients with primary or secondary myelofibrosis. The trial met its primary endpoint of reduction in spleen volume and the safety profile was consistent with previous studies. Data will be highlighted in a late-breaking oral presentation at the upcoming American Society of Clinical Oncology (ASCO) 2015 Meeting in Chicago, Illinois.
- Initiation of a pharmacokinetic trial in Europe for BAX 923 (adalimumab), a biosimilar version of HUMIRA®, being developed in collaboration with Momenta Pharmaceuticals for patients with autoimmune and inflammatory diseases.
- Presentation of interim data in the Phase I/II study of BAX 335, an investigational factor IX gene therapy treatment for hemophilia B. The trial is assessing the safety of ascending doses of BAX 335 in up to 16 patients to determine the optimal single dose. At the end of 2014, a total of six patients in three dosing cohorts had been treated, with evidence of a dose-related response. In the two highest dose cohorts, FIX activity levels of 10 percent or above were observed in two patients with no bleeding events. The investigational treatment has also been granted orphan drug designation by the FDA.
- Acquisition of SuppreMol GmbH, a biopharmaceutical company based in Germany. The acquisition includes SuppreMol's early-stage development portfolio of biologic immunoregulatory therapeutics for the treatment of autoimmune and IgE-mediated allergic diseases.
- An exclusive global licensing and distribution agreement with Laboratoire Aguettant SAS for trace elements, which are essential micronutrients used in parenteral nutrition (PN) therapy.
Outlook for Second Quarter 2015
Baxter also announced today its outlook for the second quarter 2015. The company expects sales growth of approximately 1 percent, excluding the impact of foreign currency. Including the impact of foreign currency, the company expects sales to decline approximately 9 to 10 percent. Baxter also expects earnings from continuing operations, before special items, of $0.92 to $0.96 per diluted share. The second quarter 2015 earnings guidance excludes approximately $0.08 per diluted share of projected intangible amortization expense. Reconciling for the inclusion of intangible asset amortization results in expected GAAP (Generally Accepted Accounting Principles) earnings of $0.84 to $0.88 per diluted share, before other special items, for the quarter.
With the separation of the two companies anticipated to occur mid-2015, company executives will be providing investors an overview of both companies' long-term, strategic outlooks and financial guidance, the afternoon of May 18, 2015 for Baxter International Inc., and the morning of May 19, 2015 for Baxalta Incorporated, in New York City. Please visit www.baxter.com to register for the event and for additional details.
Baxter plans to report its second quarter 2015 results the afternoon of Wednesday, July 29, followed by a separate financial report by Baxalta Incorporated the morning of Thursday, July 30. Each company will conduct separate conference calls for investors following their respective second quarter results.
A webcast of Baxter's first quarter conference call for investors can be accessed live from a link on the company's website at www.baxter.com beginning at 7:30 a.m. CDT on April 23, 2015. Also, the company's Annual Meeting of Shareholders will take place on May 5, 2015. Please visit www.baxter.com for more information regarding these upcoming investor events and webcasts.
Baxter International Inc., through its subsidiaries, develops, manufactures and markets products that save and sustain the lives of people with hemophilia, immune disorders, cancer, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. As a global, diversified healthcare company, Baxter applies a unique combination of expertise in medical devices, pharmaceuticals and biotechnology to create products that advance patient care worldwide.
This release includes forward-looking statements concerning the company's financial results, business development activities, R&D pipeline including regulatory actions and commercial launch events, outlook for second quarter 2015, and the planned separation of Baxter's biopharmaceutical and medical products businesses. The statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those in the forward-looking statements: product development risks; product quality or patient safety concerns; future actions of regulatory bodies and other governmental authorities, including the FDA and foreign counterparts; failures with respect to compliance programs; future actions of third-parties, including payors; U.S. healthcare reform and other global austerity measures; pricing, reimbursement, taxation and rebate policies of government agencies and private payers; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; global, trade and tax policies; accurate identification of and execution on business development and R&D opportunities and realization of anticipated benefits; fluctuations in supply and demand and the pricing of plasma-based therapies; the availability of acceptable raw materials and component supply; the inability to create timely production capacity or other manufacturing or supply difficulties; the ability to successfully separate the biopharmaceutical and medical products businesses on the terms or timeline currently contemplated, if at all, and achieve the intended results; the ability to enforce owned or in-licensed patents, or the patents of third parties preventing or restricting manufacture, sale or use of affected products or technology; the impact of global economic conditions; fluctuations in foreign exchange and interest rates; any changes in law concerning the taxation of income, including income earned outside the United States; actions by tax authorities in connection with ongoing tax audits; breaches or failures of the company's information technology systems; loss of key employees or inability to identify and recruit new employees; the outcome of pending or future litigation; the adequacy of the company's cash flows from operations to meet its ongoing cash obligations and fund its investment program; and other risks identified in the company's most recent filing on Form 10-K and other Securities and Exchange Commission filings, all of which are available on the company's website. The company does not undertake to update its forward-looking statements. Financial schedules are attached to this release and available on the company's website.