[October 29, 2015] |
|
Baxalta Announces Strong Sales and Earnings for Third Quarter Exceeding Guidance, Raises Second Half 2015 Outlook
Baxalta Incorporated (NYSE:BXLT) today reported strong third quarter
financial results, exceeding its previously-issued sales and earnings
guidance. The company also raised its outlook for the second half of
2015 and provided preliminary 2016 guidance.
"We are already delivering on our promise to patients and shareholders
in the short time that we have been an independent, standalone company,"
said Ludwig Hantson, chief executive officer and president. "Baxalta's
strong financial performance, increasing depth and breadth across the
portfolio and meaningful pipeline achievements all validate our
company's compelling growth prospects, vision and commitment to driving
shareholder value."
Results for the Third Quarter 2015
In the third quarter, Baxalta generated net income on a GAAP (Generally
Accepted Accounting Principles) basis of $309 million and earnings of
$0.45 per diluted share. These results include net after-tax special
items totaling $76 million, or $0.11 per diluted share, primarily for
intangible asset amortization, expenses associated with the company's
separation, certain business development and collaboration-related
items, and a gain from the sale of the company's vaccines business which
is classified as a discontinued operation.
On an adjusted pro forma basis, excluding special items, Baxalta
reported third quarter net income of $385 million and earnings of $0.56
per diluted share, which exceeded the company's previously-issued
guidance of $0.48 to $0.50 per diluted share. These financial results
reflect positive sales momentum from across the portfolio, including
meaningful sales contributions, value from new product launches, and
strong operational performance.
Positive Sales Momentum Across Market-Leading Portfolio
In the third quarter, Baxalta's worldwide revenues on a GAAP basis of
$1.6 billion advanced 7 percent from the prior-year period. Excluding
the impact of foreign currency, sales advanced 16 percent.
On a pro forma basis, worldwide revenues grew 4 percent. Excluding the
impact of foreign currency, sales advanced 13 percent, exceeding the
company's previously-issued guidance of growth in the 8 to 10 percent
range. Within the United States, sales of $841 million rose 14 percent,
and international sales of $754 million declined 5 percent. Excluding
foreign currency, international sales increased 12 percent.
Baxalta's leading hematology and immunology businesses generated
double-digit sales growth (excluding the impact of foreign currency) in
the quarter. Hematology revenues of $935 million increased 10 percent
(excluding the impact of foreign currency) as the company continues to
focus on enhancing access and elevating standards of care worldwide. Key
drivers of growth include heightened demand for ADVATE [Antihemophilic
Factor (Recombinant)], a treatment for hemophilia A, and FEIBA
[Anti-Inhibitor Coagulant Complex], an inhibitor treatment. A benefit
from newly launched products, such as RIXUBIS [Coagulation Factor IX
(Recombinant)] for the treatment of hemophilia B, and OBIZUR
[Antihemophilic Factor (Recombinant), Porcine Sequence], for the
treatment of acquired hemophilia A, also contributed to performance.
Immunology sales of $626 million advanced 13 percent (excluding the
impact of foreign currency) on a pro forma basis. The company continues
to capitalize on its broad and differentiated portfolio of
immunoglobulin therapies, including HYQVIA [Immune Globulin Infusion 10%
(Human) with Recombinant Human Hyaluronidase], and is driving strong
sales of specialty biotherapeutics. Baxalta's new oncology business,
which leverages the company's heritage and expertise in orphan diseases,
recorded sales of $34 million in the quarter. This reflects the recent
acquisition of ONCASPAR (pegaspargase), a marketed biologic treatment
for acute lymphocytic leukemia (ALL).
Nine-Month Sales Results
For the nine-month period, Baxalta reported worldwide revenues on a GAAP
basis of $4.4 billion, which increased 3 percent from the prior-year
period. Excluding the impact of foreign currency, sales advanced 11
percent.
On a pro forma basis, worldwide revenues for the nine-month period grew
2 percent, and excluding the impact of foreign currency, sales advanced
10 percent. Within the United States, sales of $2.4 billion rose 9
percent, and international sales of $2.1 billion declined 5 percent.
Excluding the impact of foreign currency, international sales increased
10 percent.
Advancing Pipeline with Key Milestone Achievements
Baxalta is building a solid track record with an array of meaningful
milestone achievements toward its objective of launching 20 new products
by 2020.
"We continue to make progress toward our goal of achieving 20 new
product launches by 2020 with a rich pipeline of promising late-stage
assets, novel mechanisms of action and disruptive technologies," added
Hantson. "Successful commercial launches of these products are projected
to result in approximately $2.8 billion in risk-adjusted revenues by
2020, and approximately $7 billion on a risk-adjusted basis by 2025,
creating enhanced value for patients, customers and shareholders."
Recent highlights include:
-
Approval in Canada of OBIZUR [Antihemophilic Factor (Recombinant),
Porcine Sequence] for the treatment of bleeding episodes in patients
with acquired hemophilia A, a very rare and life-threatening acute
bleeding disorder. OBIZUR is the first recombinant porcine sequence
FVIII treatment specifically designed to enable physicians to monitor
treatment response by measuring FVIII activity levels in addition to
clinical assessments. The company has also received a positive opinion
on OBIZUR from the European Committee for Medicinal Products for Human
Use (CHMP) of the European Medicines Agency (EMA), and expects
marketing authorization from the European Commission later this year.
-
Publication of pivotal phase III data for BAX 111 (to be marketed in
the U.S. as VONVENDI) in Blood, the journal of the American
Society of Hematology. The data showed 100 percent of patients treated
with this highly purified recombinant von Willebrand factor (rVWF)
candidate achieved success in the management of bleeding episodes.1
VONVENDI is currently under review by the FDA and, if approved, would
become the first recombinant replacement treatment for managing
bleeding episodes for von Willebrand patients.2
-
FDA submission for approval of an investigational 20% concentration
subcutaneous immune globulin (IGSC) treatment for primary
immunodeficiencies. As Baxalta expands its immunoglobulin portfolio to
address patient needs, the higher potency IG treatment is intended to
offer faster infusions with less volume. The product is also under
regulatory review in Europe.
-
Initiation of a pivotal phase III clinical trial in collaboration with
Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) in patients with chronic
plaque psoriasis for M923, a biosimilar version of HUMIRA®
(adalimumab). The trial will compare the safety, efficacy and
immunogenicity of M923 with HUMIRA, and the companies are targeting
first regulatory submission in 2017 and first commercial launch in
2018.
-
Announcement of plans to submit a new drug application (NDA) to the
FDA with partner CTI BioPharma Corp. (NASDAQ: CTIC) for pacritinib, an
investigational oral kinase inhibitor with specificity for JAK2 and
FLT3 for the treatment of patients with myelofibrosis, in the fourth
quarter of 2015. The companies plan to request priority review for the
treatment of patients with intermediate and high-risk myelofibrosis
with low platelet counts of less than 50,000 per microliter
(<50,000/uL) for whom there are no approved treatments.
-
Completion of the ONCASPAR leukemia portfolio acquisition from
Sigma-Tau Finanziaria S.p.A. The acquisition includes ONCASPAR, a
marketed biologic treatment for acute lymphocytic leukemia (ALL), the
investigational biologic calaspargase pegol, and an established
oncology infrastructure with clinical and sales resources.
Financial Outlook for Fourth Quarter and Second Half 2015
For the fourth quarter of 2015, Baxalta expects pro forma sales growth,
excluding the impact of foreign currency, of 3 to 5 percent. Including
the impact of foreign currency, the company expects pro forma sales to
decline 1 to 3 percent. Baxalta also expects fourth quarter 2015
adjusted earnings, before special items, of $0.55 to $0.57 per diluted
share.
This guidance translates into an improved outlook for the second half of
2015, which now includes adjusted earnings, before special items, of
$1.11 to $1.13 per diluted share. This is an increase from the
previously communicated earnings guidance range of $1.02 to $1.04 per
diluted share. Also for the second half of 2015, Baxalta now expects pro
forma sales growth, excluding the impact of foreign currency, of
approximately 8 to 9 percent, compared to its prior guidance of growth
in the 5 to 6 percent range. Including the impact of foreign currency,
pro forma sales growth is expected to be flat to up 1 percent.
For the full-year 2015, Baxalta projects pro forma sales growth,
excluding the impact of foreign currency, of approximately 8 percent,
compared to its prior guidance of growth in the 6 to 7 percent range.
Including the impact of foreign currency, the company now expects pro
forma sales in 2015 to be comparable to 2014.
Preliminary Full-Year 2016 Guidance
Baxalta is also providing preliminary guidance for full-year 2016, which
includes pro forma sales growth, excluding the impact of foreign
currency, of 8 to 9 percent. Including the impact of foreign currency,
the company expects pro forma sales growth of approximately 7 to 8
percent. Based on strong sales momentum and operating performance,
Baxalta expects adjusted earnings, before special items, of $2.15 to
$2.25 per diluted share for full-year 2016.
"Baxalta has a competitive and compelling financial profile with an
outlook that balances accelerating growth with attractive returns," said
Robert J. Hombach, chief financial officer and chief operations officer.
"We firmly believe that our focus on orphan diseases and underserved
conditions combined with numerous new product opportunities uniquely
positions us to drive enhanced and sustainable value for our
shareholders."
Reconciliation of GAAP and Non-GAAP Results
The company's guidance for earnings in the fourth quarter of 2015
excludes approximately $0.02 per diluted share of projected intangible
asset amortization expense. The company's adjusted earnings guidance for
the second half excludes $0.13 per diluted share of special items
comprising $0.11 per diluted share of special items recorded during the
third quarter and $0.02 of projected intangible asset amortization
expense for the fourth quarter. Reconciling for the inclusion of these
items results in expected GAAP earnings of $0.53 to $0.55 per diluted
share for the fourth quarter of 2015, and earnings of $0.98 to $1.00 per
diluted share for the second half of 2015.
The company's guidance for full-year 2016 excludes approximately $0.08
per diluted share of projected intangible asset amortization expense.
Reconciling for the inclusion of this item results in expected GAAP
earnings of $2.07 to $2.17 per diluted share.
Conference Call and Webcast Information
Baxalta will host a conference call to discuss its third quarter 2015
results on Thursday, Oct. 29, 2015, at 7:30 a.m. Central Time. To access
the call, please dial 855-213-3946 (domestic) or 347-983-2217
(international). The Conference ID is 52018017. Please dial into the
call several minutes in advance to allow sufficient time for the
operator to connect participants. A simultaneous webcast and
corresponding slide presentation may be accessed by visiting the Baxalta
corporate website at baxalta.com.
A replay of the webcast will be available on the website approximately
two hours after the live webcast.
About Baxalta
Baxalta Incorporated (NYSE: BXLT) is a $6 billion global
biopharmaceutical leader developing, manufacturing and commercializing
therapies for orphan diseases and underserved conditions in hematology,
oncology and immunology. Driven by passion to make a meaningful impact
on patients' lives, Baxalta's broad and diverse pipeline includes
biologics with novel mechanisms and advanced technology platforms such
as gene therapy. The Baxalta Global Innovation and R&D Center is located
in Cambridge, Massachusetts. Launched in 2015 following separation from
Baxter International Inc., Baxalta's heritage in biopharmaceuticals
spans decades. Baxalta's therapies are available in more than 100
countries and it has advanced biological manufacturing operations across
12 facilities, including state-of-the-art recombinant production and
plasma fractionation. Headquartered in Northern Illinois, Baxalta
employs 16,000 employees worldwide.
Forward-Looking Statements
This release includes forward-looking statements concerning Baxalta's
financial results, business prospects including new product revenue
expectations through 2020 and 2025, R&D pipeline including regulatory
actions and commercial launch events, business development activities
and other growth strategies, and outlook for 2015 and 2016. Such
statements are made of the date that they were first issued and are
based on current expectations, beliefs and assumptions of management.
Forward-looking statements are subject to a number of risks and
uncertainties, many of which involve factors or circumstances that are
beyond Baxalta's control and which could cause actual results to differ
materially from those in the forward-looking statements, including, but
not limited to, the following: demand for and market acceptance of risks
for new and existing products; 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 payers; 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
achieve the intended results of the spin-off from Baxter International
Inc.; 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 Baxalta'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 Baxalta's cash flows from operations to meet
its ongoing cash obligations and fund its investment program; future
actions that may be taken by Shire plc in furtherance of its unsolicited
proposal; and other risks identified in Baxalta's registration statement
on Form 10 and other Securities and Exchange Commission filings, all of
which are available on Baxalta's website. Baxalta expressly disclaims
any intent or obligation to update these forward-looking statements
except as required by law.
References
1. Gill JC, et al. Hemostatic efficacy, safety and pharmacokinetics of a
recombinant von Willebrand factor in severe von Willebrand disease. Blood.
2015
2. Turecek PL, Mitterer A, Matthiessen HP, et al. Development of a
plasma- and albumin-free recombinant von Willebrand factor. Hamostaseologie.
2009;29 (Suppl 1):32-38.
|
BAXALTA INCORPORATED
|
GAAP Product Category Sales by U.S. and International
|
Three and Nine Months Ended September 30, 2015 and 2014
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The below information presents Baxalta's product category net sales
on a GAAP basis by U.S. and International. Refer to the following
page for product category net sales on a pro forma basis.
|
|
|
|
|
Q3 2015
|
|
|
Q3 2014
|
|
|
% Growth @ Actual Rates
|
|
|
% Growth @ Constant Rates
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
Hemophilia
|
|
|
$337
|
|
$390
|
|
$727
|
|
|
$318
|
|
$437
|
|
$755
|
|
|
6%
|
|
(11%)
|
|
(4%)
|
|
|
6%
|
|
7%
|
|
7%
|
Inhibitor Therapies
|
|
|
78
|
|
130
|
|
208
|
|
|
55
|
|
132
|
|
187
|
|
|
42%
|
|
(2%)
|
|
11%
|
|
|
42%
|
|
14%
|
|
22%
|
Hematology
|
|
|
$415
|
|
$520
|
|
$935
|
|
|
$373
|
|
$569
|
|
$942
|
|
|
11%
|
|
(9%)
|
|
(1%)
|
|
|
11%
|
|
9%
|
|
10%
|
Immunoglobulin Therapies
|
|
|
334
|
|
101
|
|
435
|
|
|
305
|
|
102
|
|
407
|
|
|
10%
|
|
(1%)
|
|
7%
|
|
|
10%
|
|
19%
|
|
12%
|
BioTherapeutics
|
|
|
64
|
|
127
|
|
191
|
|
|
60
|
|
79
|
|
139
|
|
|
7%
|
|
61%
|
|
37%
|
|
|
7%
|
|
81%
|
|
49%
|
Immunology
|
|
|
$398
|
|
$228
|
|
$626
|
|
|
$365
|
|
$181
|
|
$546
|
|
|
9%
|
|
26%
|
|
15%
|
|
|
9%
|
|
46%
|
|
21%
|
Oncology
|
|
|
$28
|
|
$6
|
|
$34
|
|
|
$ -
|
|
$ -
|
|
$ -
|
|
|
N/M
|
|
N/M
|
|
N/M
|
|
|
N/M
|
|
N/M
|
|
N/M
|
Total Baxalta
|
|
|
$841
|
|
$754
|
|
$1,595
|
|
|
$738
|
|
$750
|
|
$1,488
|
|
|
14%
|
|
1%
|
|
7%
|
|
|
14%
|
|
19%
|
|
16%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2015
|
|
|
YTD 2014
|
|
|
% Growth @ Actual Rates
|
|
|
% Growth @ Constant Rates
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
Hemophilia
|
|
|
$964
|
|
$1,076
|
|
$2,040
|
|
|
$938
|
|
$1,212
|
|
$2,150
|
|
|
3%
|
|
(11%)
|
|
(5%)
|
|
|
3%
|
|
5%
|
|
4%
|
Inhibitor Therapies
|
|
|
210
|
|
347
|
|
557
|
|
|
151
|
|
372
|
|
523
|
|
|
39%
|
|
(7%)
|
|
7%
|
|
|
39%
|
|
9%
|
|
17%
|
Hematology
|
|
|
$1,174
|
|
$1,423
|
|
$2,597
|
|
|
$1,089
|
|
$1,584
|
|
$2,673
|
|
|
8%
|
|
(10%)
|
|
(3%)
|
|
|
8%
|
|
6%
|
|
7%
|
Immunoglobulin Therapies
|
|
|
980
|
|
297
|
|
1,277
|
|
|
906
|
|
292
|
|
1,198
|
|
|
8%
|
|
2%
|
|
7%
|
|
|
8%
|
|
21%
|
|
11%
|
BioTherapeutics
|
|
|
189
|
|
288
|
|
477
|
|
|
182
|
|
216
|
|
398
|
|
|
4%
|
|
33%
|
|
20%
|
|
|
4%
|
|
48%
|
|
28%
|
Immunology
|
|
|
$1,169
|
|
$585
|
|
$1,754
|
|
|
$1,088
|
|
$508
|
|
$1,596
|
|
|
7%
|
|
15%
|
|
10%
|
|
|
7%
|
|
32%
|
|
15%
|
Oncology
|
|
|
$28
|
|
$6
|
|
$34
|
|
|
$ -
|
|
$ -
|
|
$ -
|
|
|
N/M
|
|
N/M
|
|
N/M
|
|
|
N/M
|
|
N/M
|
|
N/M
|
Total Baxalta
|
|
|
$2,371
|
|
$2,014
|
|
$4,385
|
|
|
$2,177
|
|
$2,092
|
|
$4,269
|
|
|
9%
|
|
(4%)
|
|
3%
|
|
|
9%
|
|
13%
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BAXALTA INCORPORATED
|
Pro Forma Product Category Sales by U.S. and International
|
Three and Nine Months Ended September 30, 2015 and 2014
|
(unaudited)
|
($ in millions)
|
|
The below information presents Baxalta's product category net sales
on a pro forma basis by U.S. and International. A reconciliation to
GAAP net sales and a description of the pro forma adjustment is also
included below.
|
|
|
|
|
Q3 2015
|
|
|
Q3 2014
|
|
|
% Growth @ Actual Rates
|
|
|
% Growth @ Constant Rates
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
Hemophilia
|
|
|
$337
|
|
$390
|
|
$727
|
|
|
$318
|
|
$437
|
|
$755
|
|
|
6%
|
|
(11%)
|
|
(4%)
|
|
|
6%
|
|
7%
|
|
7%
|
Inhibitor Therapies
|
|
|
78
|
|
130
|
|
208
|
|
|
55
|
|
132
|
|
187
|
|
|
42%
|
|
(2%)
|
|
11%
|
|
|
42%
|
|
14%
|
|
22%
|
Hematology
|
|
|
$415
|
|
$520
|
|
$935
|
|
|
$373
|
|
$569
|
|
$942
|
|
|
11%
|
|
(9%)
|
|
(1%)
|
|
|
11%
|
|
9%
|
|
10%
|
Immunoglobulin Therapies
|
|
|
334
|
|
101
|
|
435
|
|
|
305
|
|
102
|
|
407
|
|
|
10%
|
|
(1%)
|
|
7%
|
|
|
10%
|
|
19%
|
|
12%
|
Pro Forma BioTherapeutics 1
|
|
|
64
|
|
127
|
|
191
|
|
|
60
|
|
121
|
|
181
|
|
|
7%
|
|
5%
|
|
6%
|
|
|
7%
|
|
18%
|
|
14%
|
Pro Forma Immunology
|
|
|
$398
|
|
$228
|
|
$626
|
|
|
$365
|
|
$223
|
|
$588
|
|
|
9%
|
|
2%
|
|
6%
|
|
|
9%
|
|
18%
|
|
13%
|
Oncology
|
|
|
$28
|
|
$6
|
|
$34
|
|
|
$ -
|
|
$ -
|
|
$ -
|
|
|
N/M
|
|
N/M
|
|
N/M
|
|
|
N/M
|
|
N/M
|
|
N/M
|
Pro Forma Total Baxalta
|
|
|
$841
|
|
$754
|
|
$1,595
|
|
|
$738
|
|
$792
|
|
$1,530
|
|
|
14%
|
|
(5%)
|
|
4%
|
|
|
14%
|
|
12%
|
|
13%
|
|
|
|
|
YTD 2015
|
|
|
YTD 2014
|
|
|
% Growth @ Actual Rates
|
|
|
% Growth @ Constant Rates
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
Hemophilia
|
|
|
$964
|
|
$1,076
|
|
$2,040
|
|
|
$938
|
|
$1,212
|
|
$2,150
|
|
|
3%
|
|
(11%)
|
|
(5%)
|
|
|
3%
|
|
5%
|
|
4%
|
Inhibitor Therapies
|
|
|
210
|
|
347
|
|
557
|
|
|
151
|
|
372
|
|
523
|
|
|
39%
|
|
(7%)
|
|
7%
|
|
|
39%
|
|
9%
|
|
17%
|
Hematology
|
|
|
$1,174
|
|
$1,423
|
|
$2,597
|
|
|
$1,089
|
|
$1,584
|
|
$2,673
|
|
|
8%
|
|
(10%)
|
|
(3%)
|
|
|
8%
|
|
6%
|
|
7%
|
Immunoglobulin Therapies
|
|
|
980
|
|
297
|
|
1,277
|
|
|
906
|
|
292
|
|
1,198
|
|
|
8%
|
|
2%
|
|
7%
|
|
|
8%
|
|
21%
|
|
11%
|
Pro Forma BioTherapeutics 1
|
|
|
189
|
|
370
|
|
559
|
|
|
182
|
|
339
|
|
521
|
|
|
4%
|
|
9%
|
|
7%
|
|
|
4%
|
|
18%
|
|
13%
|
Pro Forma Immunology
|
|
|
$1,169
|
|
$667
|
|
$1,836
|
|
|
$1,088
|
|
$631
|
|
$1,719
|
|
|
7%
|
|
6%
|
|
7%
|
|
|
7%
|
|
19%
|
|
12%
|
Oncology
|
|
|
$28
|
|
$6
|
|
$34
|
|
|
$ -
|
|
$ -
|
|
$ -
|
|
|
N/M
|
|
N/M
|
|
N/M
|
|
|
N/M
|
|
N/M
|
|
N/M
|
Pro Forma Total Baxalta
|
|
|
$2,371
|
|
$2,096
|
|
$4,467
|
|
|
$2,177
|
|
$2,215
|
|
$4,392
|
|
|
9%
|
|
(5%)
|
|
2%
|
|
|
9%
|
|
10%
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Net Sales Reconciliations
|
|
|
|
|
Q3 2015
|
|
|
Q3 2014
|
|
|
% Growth @ Actual Rates
|
|
|
% Growth @ Constant Rates
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
BioTherapeutics
|
|
|
$64
|
|
$127
|
|
$191
|
|
|
$60
|
|
$79
|
|
$139
|
|
|
7%
|
|
61%
|
|
37%
|
|
|
7%
|
|
81%
|
|
49%
|
Pro forma MSA revenue 1
|
|
|
-
|
|
-
|
|
-
|
|
|
-
|
|
42
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma BioTherapeutics
|
|
|
$64
|
|
$127
|
|
$191
|
|
|
$60
|
|
$121
|
|
$181
|
|
|
7%
|
|
5%
|
|
6%
|
|
|
7%
|
|
18%
|
|
14%
|
|
|
|
|
YTD 2015
|
|
|
YTD 2014
|
|
|
% Growth @ Actual Rates
|
|
|
% Growth @ Constant Rates
|
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
|
|
U.S.
|
|
International
|
|
Total
|
BioTherapeutics
|
|
|
$189
|
|
$288
|
|
$477
|
|
|
$182
|
|
$216
|
|
$398
|
|
|
4%
|
|
33%
|
|
20%
|
|
|
4%
|
|
48%
|
|
28%
|
Pro forma MSA revenue 1
|
|
|
-
|
|
82
|
|
82
|
|
|
-
|
|
123
|
|
123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma BioTherapeutics
|
|
|
$189
|
|
$370
|
|
$559
|
|
|
$182
|
|
$339
|
|
$521
|
|
|
4%
|
|
9%
|
|
7%
|
|
|
4%
|
|
18%
|
|
13%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 In connection with the company's separation from
Baxter International Inc. (Baxter) on July 1, 2015, the company
and Baxter entered into a manufacturing and supply agreement
whereby Baxalta manufactures and sells certain products to Baxter.
The pro forma net sales figures assume that the manufacturing and
supply agreement was in effect in periods prior to the separation.
Net sales related to the manufacturing and supply agreement with
Baxter are reported in the company's GAAP net sales figures in
periods following the separation and were $35 million during the
three months ended September 30, 2015.
|
|
BAXALTA INCORPORATED
|
Consolidated and Combined Statements of Income A
|
Three and Nine Months Ended September 30, 2015 and 2014
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
|
2015
|
|
2014
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES
|
|
|
$1,595
|
|
$1,488
|
|
|
|
$4,385
|
|
$4,269
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF SALES
|
|
|
633
|
|
614
|
|
|
|
1,705
|
|
1,772
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS MARGIN
|
|
|
962
|
|
874
|
|
|
|
2,680
|
|
2,497
|
% of Net Sales
|
|
|
60.3%
|
|
58.7%
|
|
|
|
61.1%
|
|
58.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
|
|
|
378
|
|
278
|
|
|
|
984
|
|
742
|
% of Net Sales
|
|
|
23.7%
|
|
18.7%
|
|
|
|
22.4%
|
|
17.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
RESEARCH AND DEVELOPMENT EXPENSES
|
|
|
286
|
|
310
|
|
|
|
682
|
|
639
|
% of Net Sales
|
|
|
17.9%
|
|
20.8%
|
|
|
|
15.6%
|
|
15.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST EXPENSE
|
|
|
23
|
|
-
|
|
|
|
26
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME, NET
|
|
|
(79)
|
|
(23)
|
|
|
|
(87)
|
|
(16)
|
|
|
|
|
|
|
|
|
|
|
|
|
PRE-TAX INCOME FROM CONTINUING OPERATIONS
|
|
|
354
|
|
309
|
|
|
|
1,075
|
|
1,132
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE
|
|
|
73
|
|
84
|
|
|
|
248
|
|
280
|
% of Pre-Tax Income from Continuing Operations
|
|
|
20.6%
|
|
27.2%
|
|
|
|
23.1%
|
|
24.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME FROM CONTINUING OPERATIONS
|
|
|
281
|
|
225
|
|
|
|
827
|
|
852
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX B
|
|
|
28
|
|
21
|
|
|
|
34
|
|
122
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
|
$309
|
|
$246
|
|
|
|
$861
|
|
$974
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EPS FROM CONTINUING OPERATIONS
|
|
|
$0.42
|
|
$0.33
|
|
|
|
$1.22
|
|
$1.26
|
DILUTED EPS FROM CONTINUING OPERATIONS
|
|
|
$0.41
|
|
$0.33
|
|
|
|
$1.21
|
|
$1.25
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EPS FROM DISCONTINUED OPERATIONS
|
|
|
$0.04
|
|
$0.03
|
|
|
|
$0.05
|
|
$0.18
|
DILUTED EPS FROM DISCONTINUED OPERATIONS
|
|
|
$0.04
|
|
$0.03
|
|
|
|
$0.05
|
|
$0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EPS
|
|
|
$0.46
|
|
$0.36
|
|
|
|
$1.27
|
|
$1.44
|
DILUTED EPS
|
|
|
$0.45
|
|
$0.36
|
|
|
|
$1.26
|
|
$1.43
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING C
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
677
|
|
676
|
|
|
|
677
|
|
676
|
Diluted
|
|
|
683
|
|
681
|
|
|
|
682
|
|
681
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma and Non-GAAP Measures D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRO FORMA NET SALES
|
|
|
$1,595
|
|
$1,530
|
|
|
|
$4,467
|
|
$4,392
|
ADJUSTED PRO FORMA OPERATING INCOME
|
|
|
$498
|
|
$500
|
|
|
|
$1,424
|
|
$1,414
|
ADJUSTED PRO FORMA EBITDA
|
|
|
$548
|
|
$549
|
|
|
|
$1,577
|
|
$1,559
|
ADJUSTED PRO FORMA NET INCOME
|
|
|
$385
|
|
$396
|
|
|
|
$1,035
|
|
$1,179
|
ADJUSTED PRO FORMA DILUTED EPS
|
|
|
$0.56
|
|
$0.58
|
|
|
|
$1.52
|
|
$1.73
|
A
|
|
Consolidated and combined statements of income presented in
accordance with generally accepted accounting principles (GAAP)
unless otherwise noted.
|
|
|
|
B
|
|
Operating results and gain from the sale of the company's vaccines
business are classified as discontinued operations for all periods
presented.
|
|
|
|
C
|
|
On July 1, 2015 Baxter distributed approximately 544 million shares
of Baxalta Incorporated (Baxalta) common stock and retained an
additional 132 million shares. The computation of basic
weighted-average shares outstanding for periods prior to the
separation was calculated using the shares distributed and the
shares retained by Baxter on July 1, 2015. The diluted
weighted-average number of shares outstanding for periods prior to
the separation include the dilutive effect of common share
equivalents for employee equity awards outstanding as of July 1,
2015.
|
|
|
|
D
|
|
Refer to pages 11 through 13 for reconciliations of GAAP to pro
forma and non-GAAP measures.
|
|
|
|
BAXALTA INCORPORATED
|
Notes to Consolidated and Combined Statements of Income
|
Three and Nine Months Ended September 30, 2015 and 2014
|
Reconciliation of GAAP to Pro Forma and Non-GAAP Measures
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Below are reconciliations of Adjusted Pro Forma Operating Income,
Adjusted Pro Forma EBITDA, Adjusted Pro Forma Net Income and
Adjusted Pro Forma Diluted Earnings per Share to their most directly
comparable GAAP financial measures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Operating Income and Adjusted Pro Forma EBITDA
|
|
Pre-tax Income from Continuing Operations - GAAP
|
|
$354
|
|
$309
|
|
|
$1,075
|
|
$1,132
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma adjustments1
|
|
-
|
|
(36)
|
|
|
(63)
|
|
(107)
|
Special item adjustments1
|
|
140
|
|
203
|
|
|
322
|
|
308
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Pre-tax Income
|
|
$494
|
|
$476
|
|
|
$1,334
|
|
$1,333
|
|
|
|
|
|
|
|
|
|
|
|
Remove: Net interest expense
|
|
23
|
|
47
|
|
|
117
|
|
141
|
Remove: Other income, net
|
|
(19)
|
|
(23)
|
|
|
(27)
|
|
(60)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Operating Income
|
|
$498
|
|
$500
|
|
|
$1,424
|
|
$1,414
|
% of Pro Forma Net Sales
|
|
31.2%
|
|
32.7%
|
|
|
31.9%
|
|
32.2%
|
|
|
|
|
|
|
|
|
|
|
|
Remove: Depreciation expense
|
|
50
|
|
49
|
|
|
153
|
|
145
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma EBITDA
|
|
$548
|
|
$549
|
|
|
$1,577
|
|
$1,559
|
% of Pro Forma Net Sales
|
|
34.4%
|
|
35.9%
|
|
|
35.3%
|
|
35.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Net Income
|
|
|
|
|
|
|
|
|
|
|
|
Net Income - GAAP
|
|
$309
|
|
$246
|
|
|
$861
|
|
$974
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax pro forma adjustments 1
|
|
-
|
|
(36)
|
|
|
(63)
|
|
(107)
|
|
Impact of pro forma adjustments on income tax expense
|
|
-
|
|
15
|
|
|
24
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
Special Item Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax special item adjustments 1
|
|
140
|
|
203
|
|
|
322
|
|
308
|
|
Impact of special item adjustments on income tax expense
|
|
(36)
|
|
(37)
|
|
|
(76)
|
|
(55)
|
|
Income from discontinued operations special item adjustments, net of
tax
|
|
(28)
|
|
5
|
|
|
(33)
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Net Income
|
|
$385
|
|
$396
|
|
|
$1,035
|
|
$1,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS - GAAP
|
|
$0.45
|
|
$0.36
|
|
|
$1.26
|
|
$1.43
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of pro forma adjustments on diluted EPS
|
|
-
|
|
(0.03)
|
|
|
(0.05)
|
|
(0.09)
|
|
|
|
|
|
|
|
|
|
|
|
Special Item Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of special item adjustments on diluted EPS
|
|
0.11
|
|
0.25
|
|
|
0.31
|
|
0.39
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pro Forma Diluted EPS
|
|
$0.56
|
|
$0.58
|
|
|
$1.52
|
|
$1.73
|
|
|
|
|
|
|
|
|
|
|
|
1 Refer to pages 12 and 13 for descriptions of pro
forma and special item adjustments and the impacted statement of
income line items.
|
|
BAXALTA INCORPORATED
|
Notes to Consolidated and Combined Statements of Income
|
Three and Nine Months Ended September 30, 2015 and 2014
|
Reconciliation of GAAP to Pro Forma and Non-GAAP Measures
(continued)
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
The company's pro forma and special item adjustments by statement of
income line item are listed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Net Sales - GAAP
|
|
$1,595
|
|
$1,488
|
|
$4,385
|
|
$4,269
|
Pro forma adjustments
|
|
|
|
|
|
|
|
|
|
Manufacturing and supply arrangements with Baxter 1
|
|
-
|
|
42
|
|
82
|
|
123
|
Pro Forma Net Sales
|
|
$1,595
|
|
$1,530
|
|
$4,467
|
|
$4,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin - GAAP
|
|
$962
|
|
$874
|
|
$2,680
|
|
$2,497
|
Pro forma adjustments
|
|
|
|
|
|
|
|
|
|
Pension expense 2
|
|
-
|
|
4
|
|
8
|
|
12
|
|
Depreciation expense 3
|
|
-
|
|
(2)
|
|
(1)
|
|
(6)
|
|
Manufacturing and supply arrangements with Baxter 1
|
|
-
|
|
-
|
|
(1)
|
|
1
|
Pro Forma Gross Margin
|
|
$962
|
|
$876
|
|
$2,686
|
|
$2,504
|
Special item adjustments
|
|
|
|
|
|
|
|
|
|
Intangible asset amortization expense 6
|
|
19
|
|
3
|
|
35
|
|
10
|
|
Separation costs 7
|
|
6
|
|
-
|
|
7
|
|
-
|
Adjusted Pro Forma Gross Margin
|
|
$987
|
|
$879
|
|
$2,728
|
|
$2,514
|
% of Pro Forma Net Sales
|
|
61.9%
|
|
57.5%
|
|
61.1%
|
|
57.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, General and Administrative Expenses - GAAP
|
|
$378
|
|
$278
|
|
$984
|
|
$742
|
Pro forma adjustments
|
|
|
|
|
|
|
|
|
|
Pension expense 2
|
|
-
|
|
(4)
|
|
(12)
|
|
(12)
|
|
Depreciation expense 3
|
|
-
|
|
1
|
|
2
|
|
2
|
|
Supply chain TSA 4
|
|
-
|
|
(5)
|
|
(10)
|
|
(15)
|
Pro Forma Selling, General and Administrative Expenses
|
|
$378
|
|
$270
|
|
$964
|
|
$717
|
Special item adjustments
|
|
|
|
|
|
|
|
|
|
Separation costs 7
|
|
(49)
|
|
(10)
|
|
(119)
|
|
(11)
|
|
Business optimization items 8
|
|
-
|
|
(4)
|
|
(2)
|
|
(3)
|
|
Business development items 9
|
|
(16)
|
|
-
|
|
(16)
|
|
-
|
|
Branded Prescription Drug Fee 10
|
|
-
|
|
(26)
|
|
-
|
|
(26)
|
|
Plasma related litigation 11
|
|
-
|
|
-
|
|
-
|
|
10
|
Adjusted Pro Forma Selling, General and Administrative Expenses
|
|
$313
|
|
$230
|
|
$827
|
|
$687
|
% of Pro Forma Net Sales
|
|
19.6%
|
|
15.0%
|
|
18.5%
|
|
15.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development Expenses - GAAP
|
|
$286
|
|
$310
|
|
$682
|
|
$639
|
Pro forma adjustments
|
|
|
|
|
|
|
|
|
|
Pension expense 2
|
|
-
|
|
(1)
|
|
(2)
|
|
(2)
|
Pro Forma Research and Development Expenses
|
|
$286
|
|
$309
|
|
$680
|
|
$637
|
Special item adjustments
|
|
|
|
|
|
|
|
|
|
Separation costs 7
|
|
(1)
|
|
-
|
|
(13)
|
|
-
|
|
Business optimization items 8
|
|
-
|
|
(22)
|
|
6
|
|
(26)
|
|
Upfront and milestone payments to collaboration partners 12
|
|
(15)
|
|
(138)
|
|
(102)
|
|
(198)
|
|
IPR&D and other impairment charges 13
|
|
(94)
|
|
-
|
|
(94)
|
|
-
|
Adjusted Pro Forma Research and Development Expenses
|
|
$176
|
|
$149
|
|
$477
|
|
$413
|
% of Pro Forma Net Sales
|
|
11.0%
|
|
9.7%
|
|
10.7%
|
|
9.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Expense - GAAP
|
|
$23
|
|
$ -
|
|
$26
|
|
$ -
|
Pro forma adjustments
|
|
|
|
|
|
|
|
|
|
Interest expense 5
|
|
-
|
|
47
|
|
91
|
|
141
|
Pro Forma Net Interest Expense
|
|
$23
|
|
$47
|
|
$117
|
|
$141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income, Net - GAAP
|
|
$(79)
|
|
$(23)
|
|
$(87)
|
|
$(16)
|
Special item adjustments
|
|
|
|
|
|
|
|
|
|
Business development items 9
|
|
(1)
|
|
-
|
|
(1)
|
|
-
|
|
Change in fair value of contingent payment liabilities 14
|
|
61
|
|
-
|
|
61
|
|
(44)
|
Adjusted Other Income, Net
|
|
$(19)
|
|
$(23)
|
|
$(27)
|
|
$(60)
|
|
|
|
|
|
|
|
|
|
|
Refer to page 13 for tickmark explanations
|
|
BAXALTA INCORPORATED
|
Notes to Consolidated and Combined Statements of Income
|
Three and Nine Months Ended September 30, 2015 and 2014
|
Reconciliation of GAAP to Pro Forma and Non-GAAP Measures
(continued)
|
(unaudited)
|
($ in millions)
|
|
The company's pro forma and special item adjustments by statement of
income line item are listed below (continued):
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Pre-Tax Income - GAAP
|
|
$354
|
|
$309
|
|
$1,075
|
|
$1,132
|
|
Impact of pro forma adjustments
|
|
-
|
|
(36)
|
|
(63)
|
|
(107)
|
|
Impact of special item adjustments
|
|
140
|
|
203
|
|
322
|
|
308
|
Adjusted Pro Forma Pre-Tax Income
|
|
$494
|
|
$476
|
|
$1,334
|
|
$1,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Expense - GAAP
|
|
$73
|
|
$84
|
|
$248
|
|
$280
|
|
Impact of pro forma adjustments
|
|
-
|
|
(15)
|
|
(24)
|
|
(46)
|
|
Impact of special item adjustments
|
|
36
|
|
37
|
|
76
|
|
55
|
Adjusted Pro Forma Income Tax Expense
|
|
$109
|
|
$106
|
|
$300
|
|
$289
|
% of Adjusted Pro Forma Pre-tax Income from Continuing
Operations
|
|
22.1%
|
|
22.3%
|
|
22.5%
|
|
21.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Discontinued Operations
|
|
$28
|
|
$21
|
|
$34
|
|
$122
|
|
Impact of special item adjustments on discontinued operations 15
|
|
(28)
|
|
5
|
|
(33)
|
|
13
|
Adjusted Pro Forma Income from Discontinued Operations
|
|
$ -
|
|
$26
|
|
$1
|
|
$135
|
Description of pro forma adjustments:
|
|
|
The pro forma adjustments impact periods prior to the July 1, 2015
separation of Baxalta from Baxter and illustrate the financial
impacts of the separation and the related transactions described
below. The pro forma adjustments give effect to the separation and
related transactions described below as if they had occurred as of
January 1, 2014. The pro forma adjustments are for informational
purposes only and do not purport to represent what Baxalta's results
of operations actually would have been had the separation and
related transactions occurred on the dates indicated, or to project
Baxalta's financial performance for any future period.
|
|
|
(1)
|
Reflects the effect of the manufacturing and supply agreement that
Baxalta and Baxter entered into in connection with the separation.
The net sales adjustment reflects additional sales that Baxalta
would have recorded in periods prior to the separation for products
manufactured and sold to Baxter. The cost of sales adjustment
reflects the impact of costs incurred to manufacture these products
as well as incremental costs that Baxalta would have recorded for
purchases of other products from Baxter under the manufacturing and
supply agreement.
|
(2)
|
Reflects a reduction in operating expenses related to the impact of
net retirement obligations transferred to Baxalta as part of the
separation.
|
(3)
|
Reflects a net increase in depreciation expense related to certain
assets transferred to Baxalta pursuant to the separation agreement
that were not included in the company's historical financial
statements.
|
(4)
|
Reflects a reduction in selling, general and administrative expenses
for the difference in costs to be incurred by Baxalta for certain
supply chain services to be provided by Baxter under terms of the
transition services agreement.
|
(5)
|
Reflects interest expense associated with approximately $5 billion
of debt issued by Baxalta in advance of the separation. The pro
forma adjustment does not include an estimate of the portion that
may have been capitalized.
|
|
|
Description of special item adjustments
|
(6)
|
The company's GAAP results included intangible asset amortization
expense for each period presented, including amortization of an
inventory fair value step-up during the three months ended
September 30, 2015 related to the acquisition of the ONCASPAR
leukemia portfolio from Sigma-Tau Finanziaria S.p.A. (ONCASPAR).
|
(7)
|
The company's GAAP results were impacted by costs incurred to
separate from Baxter and establish Baxalta as an independent,
standalone public company.
|
(8)
|
The company's GAAP results were impacted by costs, and favorable
adjustments to previously estimated costs, associated with the
company's execution of certain strategies to optimize its
organizational structure.
|
(9)
|
The company's GAAP results included costs associated with the
acquisition of ONCASPAR, which primarily consisted of legal fees
and other transaction costs.
|
(10)
|
The company's GAAP results included a charge to account for an
additional year of the Branded Prescription Drug Fee in accordance
with final regulations issued by the Internal Revenue Service.
|
(11)
|
The company's GAAP results included a benefit associated with the
reversal of a portion of a legal charge following the settlement of
class-action litigation associated with pricing of plasma-derived
therapies.
|
(12)
|
The company's GAAP results included R&D charges associated with
upfront payments to collaboration partners and payments to
collaboration partners upon the achievement of development
milestones.
|
(13)
|
The company's GAAP results included an impairment charge resulting
from a decrease in the fair value of IPR&D acquired in a previously
completed business combination and other impairment charges
associated with property, plant and equipment used for research and
development activities.
|
(14)
|
The company's GAAP results were impacted by gains and losses
resulting from decreases and increases in the fair value of
contingent payment liabilities associated with previously completed
business combinations.
|
(15)
|
The company's GAAP results were impacted by gains from the sale of
discontinued operations, as well as amortization expense and
business optimization charges associated with discontinued
operations.
|
|
|
For more information on the company's use of non-GAAP financial
measures in this release, please see the company's Current Report on
Form 8-K filed with the SEC on the date of this release.
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151029005673/en/
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