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Xylem Reports Strong Revenue, Orders and Earnings Growth in Fourth Quarter 2018

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Xylem Inc. (NYSE:XYL), a leading global water technology company dedicated to solving the worlds most challenging water issues, today reported fourth quarter 2018 net income of $225 million, or $1.24 per share. Excluding the impact of restructuring, realignment and special charges, the Company delivered adjusted net income of $159 million or $0.88 per share in the quarter, a 16-percent increase over the prior year period. Fourth quarter revenue was $1.4 billion, up 9 percent organically. Revenue for the quarter was driven by double-digit growth in the Utility and Commercial end markets along with eight percent growth in Industrial. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) improved by 40 basis points year-over-year to 20.6 percent driven by productivity, volume leverage and price realization. Reported operating margin in the quarter was 14.0 percent and adjusted operating margin increased 10 basis points year-over-year to 15.1 percent, including a 20-basis-point impact due to purchase accounting amortization.

For the full year 2018, Xylem generated $5.2 billion in revenue, up 11 percent on a reported basis and eight percent on an organic basis. Full-year reported net income was $549 million, or $3.03 per share, a 66% increase over the prior year. Reported operating margin was 12.6 percent, up 90 basis points versus the prior year. Adjusted net income, which excludes the impact of restructuring, realignment and special charges, was $522 million, or $2.88 per share, a 20-percent increase over the prior year. Adjusted EBITDA improved by 80 basis points to 19.5 percent year-over-year. Xylem delivered a full-year 2018 adjusted operating margin of 13.7 percent, up 40 basis points versus the prior year including a 20-basis-point impact due to purchase accounting amortization.

We continued to build strong momentum throughout 2018, generating solid revenue and orders growth across each of our business lines, said Patrick Decker, President and Chief Executive Officer of Xylem. With our expanded digital offerings and leveraging our extensive installed base, we delivered significant value to our customers, and demand for our solutions grew across all of our end markets. We are well-positioned as we begin the year and focused on delivering each of our 2019 commitments and long-term financial objectives.

Xylem announced that its Board of Directors declared a dividend in the amount of $0.24 per share, an increase of 14 percent. The dividend is payable on March 14, 2019, to shareholders of record as of February 14, 2019.

Full-year 2019 Outlook

Xylem forecasts full-year 2019 revenue in the range of $5.3 to $5.4 billion, up two to four percent. On an organic basis, Xylems revenue growth is anticipated to be in the range of four to six percent.

Full-year 2019 adjusted operating margin is expected to be in the range of 14.7 to 15.2 percent, resulting in adjusted earnings per share of $3.20 to $3.40. This represents an increase of 11 to 18 percent from Xylems 2018 adjusted results. The Companys adjusted earnings outlook excludes projected restructuring and realignment costs of approximately $30 million for the year. Excluding revenue, Xylem provides guidance only on a non-GAAP basis due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort.

Fourth Quarter Segment Results

Water Infrastructure

Xylems Water Infrastructure segment consists of its portfolio of businesses serving clean water delivery, wastewater transport and treatment, and dewatering.

  • Fourth quarter 2018 revenue was $609 million, up nine percent organically compared with fourth quarter 2017. This increase was driven by strong results in the Utility end market across all key geographies, including double-digit growth in the Emerging Markets. The Industrial end market was driven by healthy growth in the U.S., Latin America and Europe.
  • Fourth quarter reported operating income for the segment was $119 million. Adjusted operating income for the segment, which excludes $7 million of restructuring and realignment and special charges, was $126 million, a 15-percent increase over the same period a year ago. Reported operating margin for the Water Infrastructure segment was 19.5 percent, up 130 basis points versus the prior year, and adjusted operating margin was up 180 basis points to 20.7 percent. Productivity gains, volume leverage and increased price realization more than offset inflation, negative currency impacts and investments.

Applied Water

Xylems Applied Water segment consists of its portfolio of businesses in residential and commercial building services, and industrial applications.

  • Fourth quarter 2018 Applied Water revenue was $402 million, a 10-percent increase organically year-over-year, driven by robust growth in the Commercial end market in the U.S., as well as China and India. The Companys business in the Industrial end market also saw healthy growth from project business activity in the U.S.
  • Fourth quarter reported operating income for the segment was $66 million and adjusted operating income, which excludes $3 million of restructuring and realignment costs, was $69 million, a 10-percent increase over the comparable period last year. The segment reported operating margin was 16.4 percent, up 30 basis points over the prior year period. Adjusted operating margin increased 30 basis points to 17.2 percent as continued traction from price, volume and cost reductions more than offset inflation, negative currency impacts and investments.

Measurement & Control Solutions

Xylems Measurement & Control Solutions segment consists of its portfolio of businesses in smart metering, network technologies, advanced infrastructure analytics and analytic instrumentation.

  • Fourth quarter 2018 Measurement & Control Solutions revenue was $375 million, up 11 percent organically versus the prior year, driven by double-digit growth in water in North America and Emerging Markets, as well as the continued deployment of large gas projects.
  • Fourth quarter reported operating income for the segment was $23 million, and adjusted operating income, which excludes $5 million of restructuring and realignment costs and special charges, was $28 million. Measurement & Control Solutions segment reported operating margin was 6.1 percent. Adjusted operating margin of 7.5% decreased 280 basis points over the prior year period, primarily due to higher inflation and adverse sales mix from component shortages, investments and purchase accounting.

Supplemental information on Xylems fourth quarter and full-year 2018 earnings and reconciliations for certain non-GAAP items is posted at www.xylem.com/investors.

About Xylem

Xylem (XYL) is a leading global water technology company committed to developing innovative technology solutions to the worlds water challenges. The Companys products and services move, treat, analyze, monitor and return water to the environment in public utility, industrial, residential and commercial building services settings. Xylem also provides a leading portfolio of smart metering, network technologies and advanced infrastructure analytics solutions for water, electric and gas utilities. The Companys approximately 17,000 employees bring broad applications expertise with a strong focus on identifying comprehensive, sustainable solutions. Headquartered in Rye Brook, New York, with 2018 revenue of $5.2 billion, Xylem does business in more than 150 countries through a number of market-leading product brands.

The name Xylem is derived from classical Greek and is the tissue that transports water in plants, highlighting the engineering efficiency of our water-centric business by linking it with the best water transportation of all “ that which occurs in nature. For more information, please visit us at www.xylem.com.

Forward-Looking Statements

This press release contains information that may constitute forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Generally, the words anticipate, estimate, expect, project, intend, plan, forecast, believe, target, will, could, would, should and similar expressions identify forward-looking statements. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. These forward-looking statements include any statements that are not historical in nature, including any statements about the capitalization of Xylem Inc. (the Company), the Companys restructuring and realignment, future strategic plans and other statements that describe the Companys business strategy, outlook, objectives, plans, intentions or goals. All statements that address operating or financial performance, events or developments that we expect or anticipate will occur in the future including statements relating to orders, revenues, operating margins and earnings per share growth, and statements expressing general views about future operating results are forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such forward-looking statements.

Factors that could cause results to differ materially from those anticipated include: overall economic and business conditions, political and other risks associated with our international operations, including military actions, economic sanctions or trade barriers including tariffs and embargoes that could affect customer markets, and non-compliance with laws, including foreign corrupt practice laws, export and import laws and competition laws; potential for unexpected cancellations or delays of customer orders in our reported backlog; our exposure to fluctuations in foreign currency exchange rates; competition and pricing pressures in the markets we serve; the strength of housing and related markets; weather conditions; ability to retain and attract talent and key members of management; our relationship with and the performance of our channel partners; our ability to successfully identify, complete and integrate acquisitions; our ability to borrow or to refinance our existing indebtedness and availability of liquidity sufficient to meet our needs; changes in the value of goodwill or intangible assets; risks relating to product defects, product liability and recalls; claims or investigations by governmental or regulatory bodies; security breaches or other disruptions of our information technology systems; litigation and contingent liabilities; and other factors set forth under Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2017 and in subsequent filings we make with the Securities and Exchange Commission (SEC).

All forward-looking statements made herein are based on information currently available to the Company. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

XYLEM INC. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS (Unaudited)

(In Millions, except per share data)

       
Year Ended December 31,     2018 2017 2016
Revenue $ 5,207 $ 4,707 $ 3,771
Cost of revenue 3,181   2,860   2,309
Gross profit 2,026 1,847 1,462
Selling, general and administrative expenses 1,161 1,089 914
Research and development expenses 189 181 110
Restructuring and asset impairment charges 22   25   30
Operating income 654 552 408
Interest expense 82 82 70
Other non-operating income, net 13 6 2
(Loss)/gain on sale of businesses   (10 )
Income before taxes 585 466 340
Income tax expense 36   136   80
Net income 549 330 260
Less: Net loss attributable to non-controlling interests   (1 )
Net income attributable to Xylem $ 549   $ 331   $ 260
Earnings per share:
Basic $ 3.05 $ 1.84 $ 1.45
Diluted $ 3.03 $ 1.83 $ 1.45
Weighted average number of shares:
Basic 179.8 179.6 179.1
Diluted 181.1 180.9 180.0
Dividends declared per share $ 0.8400 $ 0.7200 $ 0.6196
 

XYLEM INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In Millions, except per share amounts)

     
December 31,     2018 2017
ASSETS
Current assets:
Cash and cash equivalents $ 296 $ 414
Receivables, less allowances for discounts, returns and doubtful accounts of $35 and $35 in 2018 and 2017, respectively 1,031 956
Inventories 595 524
Prepaid and other current assets 172   177  
Total current assets 2,094 2,071
Property, plant and equipment, net 656 643
Goodwill 2,976 2,768
Other intangible assets, net 1,232 1,168
Other non-current assets 264   210  
Total assets $ 7,222   $ 6,860  
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable $ 586 $ 549
Accrued and other current liabilities 546 551
Short-term borrowings and current maturities of long-term debt 257    
Total current liabilities 1,389 1,100
Long-term debt, net 2,051 2,200
Accrued postretirement benefits 400 442
Deferred income tax liabilities 303 252
Other non-current accrued liabilities 297   347  
Total liabilities 4,440   4,341  
 
Stockholders equity:
Common stock par value $0.01 per share:
Authorized 750.0 shares, issued 192.9 and 192.3 shares in 2018 and 2017, respectively 2 2
Capital in excess of par value 1,950 1,912
Retained earnings 1,639 1,227
Treasury stock “ at cost 13.2 shares and 12.4 shares in 2018 and 2017, respectively (487 ) (428 )
Accumulated other comprehensive loss (336 ) (210 )
Total stockholders equity 2,768   2,503  
Non-controlling interest 14 16
Total equity 2,782   2,519  
Total liabilities and stockholders equity $ 7,222   $ 6,860  
 

XYLEM INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions) (Unaudited)

       
Year Ended December 31,     2018 2017 2016
Operating Activities
Net income $ 549 $ 330 $ 260
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 117 109 87
Amortization 144 125 64
Deferred income taxes (47 ) (33 ) 14
Share-based compensation 30 21 18
Restructuring and asset impairment charges 22 25 30
Loss/(gain) from sale of businesses 10
Other, net 9 19 6
Payments for restructuring (21 ) (28 ) (16 )
Contributions to postretirement benefit plans (41 ) (33 ) (27 )
Changes in assets and liabilities (net of acquisitions):
Changes in receivables (103 ) (79 ) (6 )
Changes in inventories (97 ) 27 (15 )
Changes in accounts payable 51 50 61
Changes in accrued liabilities (6 ) 28 13
Changes in accrued taxes 104 (13 )
Net changes in other assets and liabilities     (21 ) 11   21  
Net Cash Operating activities     586   686   497  
Investing Activities
Capital expenditures (237 ) (170 ) (124 )
Proceeds from the sale of property, plant and equipment 1 1
Acquisitions of businesses and assets, net of cash acquired (433 ) (33 ) (1,782 )
Proceeds from sale of businesses 22 16
Cash received from investments 11 10
Cash paid for investments (11 ) (11 )
Other, net     5   6   19  
Net Cash Investing activities     (643 ) (181 ) (1,886 )
Financing Activities
Short-term debt issued 335 274
Short-term debt repaid, net (52 ) (282 ) (80 )
Long-term debt issued, net 1 1,540
Long-term debt repaid (120 ) (608 )
Repurchase of common stock (59 ) (25 ) (4 )
Proceeds from exercise of employee stock options 7 16 24
Excess tax benefit from share based compensation
Dividends paid (152 ) (130 ) (112 )
Other, net          
Net Cash Financing activities     (40 ) (421 ) 1,034  
Effect of exchange rate changes on cash     (21 ) 22   (17 )
Net change in cash and cash equivalents     (118 ) 106 (372 )
Cash and cash equivalents at beginning of year     414   308   680  
Cash and cash equivalents at end of year     $ 296   $ 414   $ 308  
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 78 $ 78 $ 49
Income taxes (net of refunds received) $ 75 $ 57 $ 78
 
Xylem Inc. Non-GAAP Measures
 
 
Management reviews key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, working capital and backlog, among others. In addition, we consider certain non-GAAP (or “adjusted”) measures to be useful to management and investors evaluating our operating performance for the periods presented, and to provide a tool for evaluating our ongoing operations, liquidity and management of assets. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives, including but not limited to, dividends acquisitions, share repurchases and debt repayment. Excluding revenue, Xylem provides guidance only on a non-GAAP basis due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort. These adjusted metrics are consistent with how management views our business and are used to make financial, operating and planning decisions. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenue, operating income, net income, earnings per share (basic and diluted) or net cash from operating activities as determined in accordance with GAAP. We consider the following non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators:
 
Organic revenue” and “Organic orders defined as revenue and orders, respectively, excluding the impact of fluctuations in foreign currency translation and contributions from acquisitions and divestitures. Divestitures include sales of insignificant portions of our business that did not meet the criteria for classification as a discontinued operation. The period-over-period change resulting from foreign currency translation impacts is determined by translating current period and prior period activity using the same currency conversion rate.
 
Constant currency defined as financial results adjusted for foreign currency translation impacts by translating current period and prior period activity using the same currency conversion rate. This approach is used for countries whose functional currency is not the U.S. dollar.
 
EBITDA defined as earnings before interest, taxes, depreciation and amortization expense. Adjusted EBITDA reflects the adjustment to EBITDA to exclude share-based compensation charges, restructuring and realignment costs, Sensus acquisition related costs, gain or loss from sale of businesses and special charges.
 
“Adjusted Operating Income”, “Adjusted Segment Operating Income”, “Adjusted Net Income” and Adjusted EPS defined as operating income, segment operating income, adjusted net income and earnings per share, adjusted to exclude restructuring and realignment costs, Sensus acquisition related costs, gain or loss from sale of businesses, special charges and tax-related special items, as applicable.
 
Free Cash Flow defined as net cash from operating activities, as reported in the Statement of Cash Flow, less capital expenditures as well as adjustments for other significant items that impact current results which management believes are not related to our ongoing operations and performance. Our definition of free cash flow does not consider certain non-discretionary cash payments, such as debt.
 
Realignment costs defined as costs not included in restructuring costs that are incurred as part of actions taken to reposition our business, including items such as professional fees, severance, relocation, travel, facility set-up and other costs.
 
Sensus Acquisition Related Costs “defined as costs incurred by the Company associated with the acquisition of Sensus that are being reported within operating income. These costs include integration costs, acquisition costs, costs related to the recognition of the backlog intangible asset amortization recorded in purchase accounting.
 
Special charges” defined as costs incurred by the Company, such as acquisition and integration related costs not included in “Sensus Acquisition Related Costs”, non-cash impairment charges, due diligence costs and other special non-operating items.
 
Tax-related special items” defined as tax items, such as tax return versus tax provision adjustments, tax exam impacts, tax law change impacts, significant reserves for cash repatriation, excess tax benefits/losses and other discrete tax adjustments.
 
Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic & Constant Currency Orders
($ Millions)
                                     
(As Reported – GAAP) (As Adjusted – Organic) Constant Currency
  (A)   (B)   (C)   (D)   (E) = B+C+D   (F) = E/A (G) = (E – C) / A
 
Change % Change

 

Change % Change
Orders Orders 2018 v. 2017 2018 v. 2017

Acquisitions / Divestitures

FX Impact Adj. 2018 v. 2017 Adj. 2018 v. 2017  
2018 2017

Year Ended December 31

 
Xylem Inc. 5,437 4,868 569 12% (88) (27) 454 9% 11%
 
Water Infrastructure 2,255 2,112 143 7% (3) 140 7% 7%
Applied Water 1,557 1,476 81 5% 12 (10) 83 6% 5%
Measurement & Control Solutions 1,625 1,280 345 27% (100) (14) 231 18% 26%
 

Quarter Ended December 31

 
Xylem Inc. 1,383 1,270 113 9% (19) 35 129 10% 12%
 
Water Infrastructure 584 566 18 3% 22 40 7% 7%
Applied Water 395 373 22 6% 8 30 8% 8%
Measurement & Control Solutions 404 331 73 22% (19) 5 59 18% 24%
 

Quarter Ended September 30

 

 
Xylem Inc. 1,356 1,249 107 9% (27) 24 104 8% 10%
 
Water Infrastructure 537 558 (21) -4% 17 (4) -1% -1%
Applied Water 377 374 3 1% 2 5 10 3% 2%
Measurement & Control Solutions 442 317 125 39% (29) 2 98 31% 40%
 

Quarter Ended June 30

 
Xylem Inc. 1,378 1,212 166 14% (34) (30) 102 8% 11%
 
Water Infrastructure 580 521 59 11% (14) 45 9% 9%
Applied Water 401 375 26 7% 4 (9) 21 6% 5%
Measurement & Control Solutions 397 316 81 26% (38) (7) 36 11% 23%
 

Quarter Ended March 31

 
Xylem Inc. 1,320 1,137 183 16% (8) (56) 119 10% 11%
 
Water Infrastructure 554 467 87 19% (28) 59 13% 13%
Applied Water 384 354 30 8% 6 (14) 22 6% 5%
Measurement & Control Solutions 382 316 66 21% (14) (14) 38 12% 16%
 
                   
Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic & Constant Currency Revenue
($ Millions)
                             
(As Reported – GAAP) (As Adjusted – Organic) Constant Currency
(A) (B) (C) (D) (E) = B+C+D (F) = E/A (G) = (E – C) / A
 
Change % Change

 

Change % Change
Revenue Revenue 2018 v. 2017 2018 v. 2017

Acquisitions / Divestitures

FX Impact Adj. 2018 v. 2017 Adj. 2018 v. 2017  
2018 2017

Year Ended December 31

 
Xylem Inc. 5,207 4,707 500 11% (87) (23) 390 8% 10%
 
Water Infrastructure 2,176 2,004 172 9% 4 176 9% 9%
Applied Water 1,534 1,421 113 8% 10 (10) 113 8% 7%
Measurement & Control Solutions 1,497 1,282 215 17% (97) (17) 101 8% 15%
 

Quarter Ended December 31

 
Xylem Inc. 1,386 1,277 109 9% (24) 36 121 9% 11%
 
Water Infrastructure 609 583 26 4% 24 50 9% 9%
Applied Water 402 373 29 8% 8 37 10% 10%
Measurement & Control Solutions 375 321 54 17% (24) 4 34 11% 18%
 

Quarter Ended September 30

 
Xylem Inc. 1,287 1,195 92 8% (22) 24 94 8% 10%
 
Water Infrastructure 541 520 21 4% 18 39 8% 8%
Applied Water 378 354 24 7% 2 4 30 8% 8%
Measurement & Control Solutions 368 321 47 15% (24) 2 25 8% 15%
 

Quarter Ended June 30

 
Xylem Inc. 1,317 1,164 153 13% (26) (29) 98 8% 11%
 
Water Infrastructure 546 482 64 13% (13) 51 11% 11%
Applied Water 388 361 27 7% 3 (8) 22 6% 5%
Measurement & Control Solutions 383 321 62 19% (29) (8) 25 8% 17%
 

Quarter Ended March 31

 
Xylem Inc. 1,217 1,071 146 14% (15) (54) 77 7% 9%
 
Water Infrastructure 480 419 61 15% (25) 36 9% 9%
Applied Water 366 333 33 10% 5 (14) 24 7% 6%
Measurement & Control Solutions 371 319 52 16% (20) (15) 17 5% 12%
 
Xylem Inc. Non-GAAP Reconciliation
Adjusted Operating Income
($ Millions)
                                 
Q1 Q2 Q3 Q4 YTD

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

Total Revenue
¢ Total Xylem 1,217 1,071 1,317 1,164 1,287 1,195 1,386 1,277 5,207 4,707
¢ Water Infrastructure 480 419 546 482

 

541 520

 

609 583 2,176 2,004
¢ Applied Water 366 333 388 361

 

378 354

 

402 373 1,534 1,421
¢ Measurement & Control Solutions 371 319 383 321 368 321 375 321 1,497 1,282
                                 
Operating Income
¢ Total Xylem 113 86 171 137 176 152 194 177 654 552
¢ Water Infrastructure 49 41 92 74

 

99 91

 

119 106 359 312
¢ Applied Water 50 36 61 48

 

59 50

 

66 60 236 194
¢ Measurement & Control Solutions 33 25 31 29 31 27 23 29 118 110
¢ Total Segments 132 102 184 151 189 168 208 195 713 616
 
Operating Margin
¢ Total Xylem 9.3% 8.0% 13.0% 11.8% 13.7% 12.7% 14.0% 13.9% 12.6% 11.7%
¢ Water Infrastructure 10.2% 9.8% 16.8% 15.4% 18.3% 17.5% 19.5% 18.2% 16.5% 15.6%
¢ Applied Water 13.7% 10.8% 15.7% 13.3% 15.6% 14.1% 16.4% 16.1% 15.4% 13.7%
¢ Measurement & Control Solutions 8.9% 7.8% 8.1% 9.0% 8.4% 8.4% 6.1% 9.0% 7.9% 8.6%
¢ Total Segments     10.8% 9.5%   14.0% 13.0%   14.7% 14.1%   15.0% 15.3%   13.7% 13.1%
 
Sensus Acquisition Related Costs
¢ Total Xylem 10 4 5 3 22
¢ Water Infrastructure
¢ Applied Water
¢ Measurement & Control Solutions 6 3 4 2 15
¢ Total Segments 6 3 4 2 15
 
Special Charges
¢ Total Xylem 6 5 1 1 3 4 3 12 11
¢ Water Infrastructure 2 2
¢ Applied Water 5 5
¢ Measurement & Control Solutions 2 1 2 5
¢ Total Segments 2 5 1 4 7 5
 
Restructuring & Realignment Costs
¢ Total Xylem 16 11 10 12 11 9 11 9 48 41
¢ Water Infrastructure 5 4 5 5 5 3 5 4 20 16
¢ Applied Water 3 4 2 5 2 5 3 3 10 17
¢ Measurement & Control Solutions 8 3 3 2 4 1 3 2 18 8
¢ Total Segments 16 11 10 12 11 9 11 9 48 41
                                 
Adjusted Operating Income
¢ Total Xylem 135 112 182 153 188 169 209 192 714 626
¢ Water Infrastructure 54 45 97 79

 

104 94

 

126 110 381 328
¢ Applied Water 53 45 63 53

 

61 55

 

69 63 246 216
¢ Measurement & Control Solutions 43 34 35 34

 

35 32

 

28 33 141 133
¢ Total Segments 150 124 195 166 200 181 223 206 768 677
 
Adjusted Operating Margin
¢ Total Xylem 11.1% 10.5% 13.8% 13.1% 14.6% 14.1% 15.1% 15.0% 13.7% 13.3%
¢ Water Infrastructure 11.3% 10.7% 17.8% 16.4% 19.2% 18.1% 20.7% 18.9% 17.5% 16.4%
¢ Applied Water 14.5% 13.5% 16.2% 14.7% 16.1% 15.5% 17.2% 16.9% 16.0% 15.2%
¢ Measurement & Control Solutions 11.6% 10.7% 9.1% 10.6% 9.5% 10.0% 7.5% 10.3% 9.4% 10.4%
¢ Total Segments     12.3% 11.6%   14.8% 14.3%   15.5% 15.1%   16.1% 16.1%   14.7% 14.4%
 
 
Note: 2017 amounts have been restated in accordance with the adoption of the new guidance on presentation of net periodic benefit costs.
 
Xylem Inc. Non-GAAP Reconciliation
Adjusted Diluted EPS
($ Millions, except per share amounts)
           
 
 
 
                           
Q4 2018 Q4 2017

As Reported

Adjustments

Adjusted

As Reported

Adjustments

Adjusted

Total Revenue 1,386 1,386 1,277 1,277
Operating Income 194 15 a 209 177 15 a 192
Operating Margin 14.0% 15.1% 13.9% 15.0%
Interest Expense (19) (19) (20) (20)
Other Non-Operating Income (Expense) 4 1 5 (1) 2 c 1
Gain/(Loss) From Sale of Businesses (14) 14
Income before Taxes 179 16 195 142 31 173
Provision for Income Taxes 46 (82) b (36) (72) 36 b (36)
Income Attributable to Minority Interest   1 (1) d
Net Income Attributable to Xylem 225 (66) 159 71 66 137
Diluted Shares 181.0           181.0   181.3           181.3
Diluted EPS $ 1.24     $ (0.36)     $ 0.88   $ 0.38     $ 0.38     $ 0.76
 
Year-over-year currency translation impact on current year diluted EPS $ (0.02)     $ –     $ (0.02)
Diluted EPS at Constant Currency $ 1.26     $ (0.36)     $ 0.90
 
 
                           
Q4 YTD 2018 Q4 YTD 2017
As Reported Adjustments Adjusted As Reported Adjustments Adjusted
Total Revenue 5,207 5,207 4,707 4,707
Operating Income 654 60 a 714 552 74 a 626
Operating Margin 12.6% 13.7% 11.7% 13.3%
Interest Expense (82) (82) (82) (82)
Other Non-Operating Income (Expense) 13 1 14 6 2 c 8
Gain/(Loss) From Sale of Businesses (10) 10
Income before Taxes 585 61 646 466 86 552
Provision for Income Taxes (36) (88) b (124) (136) 17 b (119)
Income Attributable to Minority Interest   1 (1) d
Net Income Attributable to Xylem 549 (27) 522 331 102 433
Diluted Shares 181.1           181.1   180.9       180.9
Diluted EPS $ 3.03     $ (0.15)     $ 2.88   $ 1.83   $ 0.57   $ 2.40
 
Year-over-year currency translation impact on current year diluted EPS $ 0.05     $ –     $ 0.05
Diluted EPS at Constant Currency $ 2.98     $ (0.15)     $ 2.83
 

Note: 2017 amounts have been restated in accordance with the adoption of the new guidance on presentation of net periodic benefit costs.

a QTD: Restructuring & realignment costs of $11 million and $9 million in 2018 and 2017, respectively; special charges of $4 million in 2018 ($2 million of acquisition related costs and $2 million of asset impairment) and $3 million of acquisition related costs in 2017; and $3 million of Sensus acquisition related costs in 2017.

YTD: Restructuring & realignment costs of $48 million and $41 million in 2018 and 2017, respectively; special charges of $12 million in 2018 ($10 million acquisition of related costs and $2 million of asset impairment) and $11 million n 2017 ($5 million of asset impairment, $3 million of due diligence costs and $3 of other acquisition costs); and 2017 Sensus acquisition related costs of $22 million.

b QTD: Net tax impact on restructuring & realignment costs of $2 million in both 2018 and 2017; net tax impact on special charges of $0 million and $1 million in 2018 and 2017, respectively; net tax impact on 2017 Sensus acquisition related costs of $1 million; and tax-related special items of $80 million of expense and $40 million of benefit in 2018 and 2017, respectively.

YTD: Net tax impact on restructuring & realignment costs of $12 million and $13 million in 2018 and 2017, respectively; net tax impact on special charges of $1 million and $4 million in 2018 and 2017, respectively; net tax impact of $8 million on 2017 Sensus acquisition related costs; net tax impact of $2 million benefit on the gain from sale of business in 2017; and tax-related special items of $75 million of expense and $40 million of benefit in 2018 and 2017, respectively.

c Special charges of a write-down of investment in joint venture of $2 million in the fourth quarter of 2017.

d Special item consisting of minority interest income attributable to the loss on a joint venture held for sale in the fourth quarter of 2017.

 
Xylem Inc. Non-GAAP Reconciliation
Net Cash – Operating Activities vs. Free Cash Flow
($ Millions)
                   
 
Q1 Q2 Q3 Q4 Year Ended
2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
 
Net Cash – Operating Activities $ 63 $ 52 $ 138 $ 99 $ 187 $ 228 $ 198 $ 307 $ 586 $ 686
 
Capital Expenditures (61) (43) (50) (34) (60) (42) (66) (51) (237) (170)
                   
Free Cash Flow $ 2 $ 9 $ 88 $ 65 $ 127 $ 186 $ 132 $ 256 $ 349 $ 516
 
Cash paid for Sensus acquisition related costs (1) (17) (5) (1) (5) (1) (28)
                   
Free Cash Flow, excluding Sensus Acquisition Related Costs $ 3 $ 26 $ 88 $ 70 $ 127 $ 187 $ 132 $ 261 $ 350 $ 544
 
Net Income 79 56 115 100 130 104 225 70 549 330
 
Gain/(Loss) from sale of businesses 5 (2) 2 (1) (14) (10)
 
Special Charges – non-cash impairment (5) (2) (2) (2) (7)
 
Sensus acquisition related costs (10) (4) (5) (3) (22)
 

Net Income, excluding gain on sale of businesses, non-cash impairment charges and Sensus Acquisition Related Costs

$ 79 $ 66 $ 117 $ 104 $ 128 $ 110 $ 227 $ 89 $ 551 $ 369
 
Free Cash Flow Conversion 4% 39% 75% 67% 99% 170% 58% 293% 64% 147%
 
Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
           
($ Millions)
 
2018
Q1 Q2 Q3 Q4 Total
 
Net Income 79 115 130 225 549
 
Income Tax Expense 16 35 31 (46) 36
 
Interest Expense (Income), net 20 20 20 18 78
Depreciation 29 29 29 30 117
Amortization 38 36 34 36 144
EBITDA 182 235 244 263 924
 
Share-based Compensation 9 7 7 7 30
 
Restructuring & Realignment 16 9 11 11 47
 
Loss/(Gain) from sale of business 2 (2)
 
Special Charges 6 1 1 4 12
         
Adjusted EBITDA 213 254 261 285 1,013
 
Revenue 1,217 1,317 1,287 1,386 5,207
 
Adjusted EBITDA Margin 17.5% 19.3% 20.3% 20.6% 19.5%
 
 
 
2017
Q1 Q2 Q3 Q4 Total
 
Net Income 56 100 104 70 330
 
Income Tax Expense 14 21 27 74 136
 
Interest Expense (Income), net 20 20 20 19 79
Depreciation 28 27 28 26 109
Amortization 31 30 30 34 125
EBITDA 149 198 209 223 779
 
Share-based Compensation 6 5 5 5 21
 
Restructuring & Realignment 11 12 9 9 41
 
Loss/(Gain) from sale of business (5) 1 14 10
 
Sensus Acquisition Related Costs 7 2 3 2 14
 
Special Charges 5 3 5 13
         
Adjusted EBITDA 173 217 230 258 878
 
Revenue 1,071 1,164 1,195 1,277 4,707
 
Adjusted EBITDA Margin 16.2% 18.6% 19.2% 20.2% 18.7%
       
Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
Water Infrastructure
($ Millions)
   
2018
Q1 Q2 Q3 Q4 Total
 
Pre-Tax Income 47 90 98 117 352
 
Interest Expense (Income), net (1) (1) (2)
Depreciation 12 11 12 11 46
Amortization 5 5 5 5 20
EBITDA 64 105 114 133 416
 
Share-based Compensation 1 1 2
 
Restructuring & Realignment 5 5 5 5 20
 
Special Charges 2 2
         
Adjusted EBITDA 70 110 120 140 440
 
Revenue 480 546 541 609 2,176
 
Adjusted EBITDA Margin 14.6% 20.1% 22.2% 23.0% 20.2%
 
 
2017
Q1 Q2 Q3 Q4 Total
 
Pre-Tax Income 39 73 90 105 307
 
Interest Expense (Income), net (1) (1) (2)
Depreciation 11 11 12 11 45
Amortization 5 4 5 5 19
EBITDA 55 88 106 120 369
 
Share-based Compensation 1 1 2
 
Restructuring & Realignment 4 5 3 4 16
         
Adjusted EBITDA 60 93 109 125 387
 
Revenue 419 482 520 583 2,004
 
Adjusted EBITDA Margin 14.3% 19.3% 21.0% 21.4% 19.3%
 
 
Note: 2017 amounts have been restated in accordance with the adoption of the new guidance on presentation of net periodic benefit costs.
 
       
Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
Applied Water
($ Millions)
 
2018
Q1 Q2 Q3 Q4 Total
 
Pre-Tax Income 50 61 60 66 237
 
Interest Expense (Income), net
Depreciation 5 5 5 5 20
Amortization 1 1 2
EBITDA 55 67 66 71 259
 
Share-based Compensation 1 1 1 3
 
Restructuring & Realignment 3 2 2 3 10
         
Adjusted EBITDA 59 70 68 75 272
 
Revenue 366 388 378 402 1,534
 
Adjusted EBITDA Margin 16.1% 18.0% 18.0% 18.7% 17.7%
 
 
2017
Q1 Q2 Q3 Q4 Total
 
Pre-Tax Income 40 49 49 62 200
 
Interest Expense (Income), net
Depreciation 5 5 5 5 20
Amortization 1 1 1 3
EBITDA 46 55 55 67 223
 
Share-based Compensation 1 1 2
 
Restructuring & Realignment 4 5 5 3 17
 
Loss/(Gain) from sale of business (5) 1 (2) (6)
 
Special Charges 5 5
         
Adjusted EBITDA 50 61 62 68 241
 
Revenue 333 361 354 373 1,421
 
Adjusted EBITDA Margin 15.0% 16.9% 17.5% 18.2% 17.0%
 
 
Note: 2017 amounts have been restated in accordance with the adoption of the new guidance on presentation of net periodic benefit costs.
 
       
Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
Measurement & Control Solutions
($ Millions)
 
2018
Q1 Q2 Q3 Q4 Total
 
Pre-Tax Income 33 28 33 23 117
 
Interest Expense (Income), net (1) (1)
Depreciation 8 9 8 10 35
Amortization 29 27 26 27 109
EBITDA 70 64 67 59 260
 
Share-based Compensation 1 1 1 1 4
 
Restructuring & Realignment 8 3 4 3 18
 
Loss/(Gain) from sale of business 2 (2)
 
Special Charges 2 1 2 5
         
Adjusted EBITDA 81 71 70 65 287
 
Revenue 371 383 368 375 1,497
 
Adjusted EBITDA Margin 21.8% 18.5% 19.0% 17.3% 19.2%
 
2017
Q1 Q2 Q3 Q4 Total
 
Pre-Tax Income 24 30 26 11 91
 
Interest Expense (Income), net (1) (1)
Depreciation 8 8 7 7 30
Amortization 23 22 22 25 92
EBITDA 55 60 55 42 212
 
Share-based Compensation 1 1 2
 
Restructuring & Realignment 3 2 1 2 8
 
Loss from sale of business 16 16
 
Sensus Acquisition Related Costs 3 1 2 1 7
 
Special Charges 2 2
         
Adjusted EBITDA 61 64 58 64 247
 
Revenue 319 321 321 321 1,282
 
Adjusted EBITDA Margin 19.1% 19.9% 18.1% 19.9% 19.3%
 
 
Note: 2017 amounts have been restated in accordance with the adoption of the new guidance on presentation of net periodic benefit costs.
 

Media
Jenny Rider +1 (914) 323-5745
[email protected]

Investors
Matt Latino +1 (914) 323-5821
[email protected]

News

Hecla Reports Strong Production and Cash Generation

gbafNews28

Hecla Mining Company (NYSE:HL) today announced preliminary production results, anticipated cash position at the end of the third quarter, repayment of the revolving credit facility and increased production estimates for the year.¹

HIGHLIGHTS

  • Estimated silver production between 3.2 million and 3.4 million ounces
  • Estimated gold production between 41,000 and 43,000 ounces.
  • Revolving credit facility repaid in full during the quarter.
  • Cash and Cash Equivalent position anticipated to exceed $90 million.

We are very pleased with third quarter operational performance particularly as the mines continue safe practices to manage COVID-19, said Phillips S. Baker, Jr., President and CEO. Lucky Fridays ramp up is as planned so this years production should double last year and is set up to potentially double again next year. The higher-than-expected silver grades at Greens Creek have driven silver production higher for the quarter and the annual estimate. Gold production was lower at Casa during the quarter where continued major planned maintenance activities in the mill reduced the processing days.

Baker continued, Our strong production for the quarter is expected to translate into robust cash flows in excess of $20 million even after repaying our revolver in full and the interest payments on the bonds. We are close to realizing our financial goal of having in excess of $100 million of cash and cash equivalents on the balance sheet. Finally, if our realized silver price is above $25 for September, we expect the silver-linked dividend to be paid pursuant to our enhanced dividend policy.

Performance Comparison and Updated Outlook

 

Silver (Moz)

Gold (Koz)

Greens Creek

Lucky Friday

San Sebastian

Total

Greens Creek

Casa Berardi

Nevada

San Sebastian

Total

Estimated First 9 months 2020

8.0

1.1

0.8

9.9

 

37

86

32

6

161

 

 

 

 

 

 

 

 

 

 

 

2020 Outlook

8.9-9.3

1.4-1.8

0.6-0.8

10.9-1198

 

46-48

119-124

24-29

6-7

195-208

 

 

 

 

 

 

 

 

 

 

 

2020 Updated Outlook

10-10.3

1.6-1.8

0.8-0.9

12.4-13.0

 

47-48

114-124

32

6

199-210

(1) See cautionary statement regarding estimated results and forward-looking statements at the end of this release.

Greens Creeks estimated nine months production has increased due to higher silver grades. The fourth quarter assumes planned grades. Lucky Friday is ramping up as expected so the lower end of the production range has been raised. San Sebastian mining is expected to be completed in the third quarter with processing concluding in the fourth quarter. Casa Berardis nine-month estimated production is low because of major planned mill maintenance activities but production in the fourth quarter should increase due to expected high-grade underground production from the East Mine. Nevada exceeded expectations as the developed stopes were mined out. For the remainder of the year, ore is being stockpiled for third-party processing expected in the fourth quarter. Gold production might not be realized until first quarter of 2021. Heclas per ounce cost estimates are unchanged at this time.

In September, the Company repaid $50 million on its revolving credit facility and has no remaining balance outstanding. During the third quarter, the Company received three of the four installments of C$12.5 million (US$9.2 million) each of Investissement Quebecs C$50 million (US$36.8 million) senior secured note proceeds. The fourth installment is expected to be received in the fourth quarter. The Companys cash and cash equivalents as of September 30, 2020, are estimated to exceed $90 million with the increase in cash for the third quarter expected to exceed $60 million.

ABOUT HECLA

Founded in 1891, Hecla Mining Company (NYSE:HL) is a leading low-cost U.S. silver producer with operating mines in Alaska, Idaho and Mexico, and is a growing gold producer with operating mines in Quebec and Nevada. The Company also has exploration and pre-development properties in eight world-class silver and gold mining districts in the U.S., Canada, and Mexico.

Cautionary Statements Regarding Estimated Results

In this news release we include certain estimated preliminary third quarter 2020 operating and financial results, including metals production and cash position. Each of these amounts is preliminary and reflects only the Companys estimated third quarter 2020 results as of the date of this news release, based on information available as of September 20, 2020, and should not be regarded as a representation by the Company as to its actual results for such quarter. Actual reported third quarter 2020 results are subject to the Companys financial closing procedures, completion of the financial statements, and managements final review as well as review by the Companys independent registered public accounting firm and may vary significantly from the preliminary estimates due to a number of factors, including, without limitation, additional or revised information, changes in accounting standards or policies or in how those standards are applied, and certain risks the Company faces, including, but not limited to those described under the heading Risk Factors in the Companys Annual Report on Form 10-K for the year ended December 31, 2019 and in the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. You are cautioned not to place undue reliance on these preliminary estimates of our third quarter 2020 operating and financial results.

Cautionary Statements Regarding Forward Looking Statements

Statements made or information provided in this news release that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of Canadian securities laws. Words such as may, will, should, expects, intends, projects, believes, estimates, targets, anticipates and similar expressions are used to identify these forward-looking statements. Forward-looking statements in this news release may include, without limitations, (i) estimates of silver production for the third quarter of 2020 on a consolidated basis and at each of the Greens Creek, Lucky Friday, San Sebastian, and Nevada Operations mines; (ii) estimates of gold production for the third quarter of 2020 on a consolidated basis and at each of Casa Berardi, Greens Creek and Nevada operations; (iii) estimates of lead and zinc production for the third quarter of 2020; (iv) quarter-end cash and cash-equivalent position which is dependent on the Company receiving cash receipts from sales of metals at its operations prior to September 30, which is expected, and zero balance on the revolving credit facility; (v) Lucky Friday expected to increase production and 2020s total production expected to be twice that of 2019, and 2020 could also significantly increase; (vi) production from bulk sample in Nevada expected in fourth quarter; (vii) expected increased production at Casa Berardi due to expected high-grade production; (viii) cash flow generation for the quarter is expected to be in excess of $30 million which is dependent on the Company receiving cash receipts from sales of metals at its operations prior to September 30, which is expected; and (ix) expected payment of the silver-linked dividend in the event the Companys realized silver price per ounce for the third quarter is above $25. The material factors or assumptions used to develop such forward-looking statements or forward-looking information include that the Companys plans for development and production will proceed as expected and will not require revision as a result of risks or uncertainties, whether known, unknown or unanticipated, to which the Companys operations are subject.

Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, expected, or implied. These risks and uncertainties include, but are not limited to, metals price volatility, volatility of metals production and costs, litigation, regulatory and environmental risks, operating risks, project development risks, political risks, labor issues, ability to raise financing and exploration risks and results. Refer to the Company’s Form 10-K and 10-Q reports for a more detailed discussion of factors that may impact expected future results. The Company undertakes no obligation and has no intention of updating forward-looking statements other than as may be required by law.

Russell Lawlar

Treasurer

Jeanne DuPont

Corporate Communications Coordinator

800-HECLA91 (800-432-5291)

Investor Relations

Email: [email protected]

Website: www.hecla-mining.com

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News

Sotorasib (AMG 510) Shows Promising Results in Some Patients With Solid Tumors, Suggests a Study With City of Hope as a Co-Lead Author

gbafNews28

A phase 1 clinical trial of sotorasib (AMG 510) in patients with heavily pretreated advanced solid tumors shows encouraging anti-cancer activity, especially in lung and colorectal cancers, reports a new study led by City of Hope and other renowned comprehensive cancer centers.

The multisite clinical trial included 129 metastatic cancer patients who had received an average of three prior therapies. These patients all had the mutated KRAS G12C gene, which increases the chances that an individual will be diagnosed with an aggressive cancer resistant to treatment.

We have finally shown that RAS targeting and inhibition is feasible. We hope that this will be the first step amongst many to effectively treat RASmutant cancers, one of the most common drivers of cancer, said Marwan Fakih, M.D., medical oncologist at City of Hope and co-lead author of the New England Journal of Medicine study that published today.

The KRAS gene, discovered nearly 40 years ago, is known as an oncogene. When mutated, KRAS could activate a pathway that turns normal cells cancerous. This gene belongs to the RAS gene family, which is responsible for more than 30% of all human cancers, according to the National Cancer Institute.

KRAS mutations have been linked with worse treatment outcomes in a variety of cancers, including lung and colorectal cancers, Fakih added. This proof-of-concept study has, in some cases, demonstrated a median progression-free survival that is two times longer than what we encounter in patients today.

The purpose of the clinical trial was to test the safety of various doses of sotorasib (180mg, 360mg, 720mg and 960mg), which were taken orally once a day. Patients had refractory metastatic non-small cell lung cancer (59 participants), colorectal cancer (42 participants) or other tumor types (28 participants). Their average age was 62, and the median follow-up was 12 months.

Sotorasib is a small molecule that inhibits KRAS G12C by plugging up a specific pocket (P2), inhibiting the ability of this mutated KRAS protein from driving tumor growth and spread. Current studies show that the drug, while able to target many cancers, appears to be most potent in non-small cell lung cancer, where KRAS G12C mutations exist in about 13% of patients.

The KRAS G12C inhibitor sotorasib produced lasting clinical benefits with mostly minor side effects that affected the gastrointestinal tract and included diarrhea (30%), fatigue (23%) and nausea (21%). Although trial patients had stubborn cancers resistant to standard-of-care treatments, those with non-small cell lung cancer had a 32% response rate with the majority (88%) achieving disease control for at least a few months. Their median progression-free survival was 6.3 months. This is a great improvement considering that later lines of treatment in non-small cell lung cancer are typically associated with response rates of only 9-18% and a median progression-free survival of approximately three months.

The other group that saw notable benefit were patients with refractory metastatic colorectal cancer a response rate of about 7%, disease control rate of 74% and major tumor shrinkage in 7% of the group, Fakih said. The median progression-free survival was four months. In comparable lines of treatment, response rates are rarely experienced, and the median progression-free survival is approximately two months.

The benefits of sotorasib appear to be quite durable with at least half of metastatic colorectal cancer patients still experiencing disease control four months after the start of treatment, Fakih said. When you consider the poor prognosis for the metastatic setting and the lack of effective treatments for this population, controlling tumor progression for a few additional months with an oral therapy is a significant and meaningful outcome.

Treatment was discontinued in 107 patients (83%), mostly because of disease progression. Fifty-four patients had died, a reasonable outcome given the prognosis and late stage of the disease.

Fakih, director of the Gastrointestinal Cancer Program at City of Hope, is involved in two sotorasib (AMG 510) clinical trials with a total of six treatment arms to evaluate use of sotorasib as a monotherapy or combination treatment in patients with non-small cell lung cancer, colorectal cancer and other solid tumors.

The inconsistency in tumor response between non-small cell lung cancer and colorectal cancer suggests that KRAS G12C inhibition is not sufficient for colorectal cancer and that additional cancer-causing pathways must be switched off, Fakih said. Combining sotorasib with other therapies that block the epidermal growth factor receptor (EGFR), a protein whose overexpression has been linked to many cancers, is a promising path forward that is under investigation, he added.

About City of Hope

City of Hope is an independent biomedical research and treatment center for cancer, diabetes and other life-threatening diseases. Founded in 1913, City of Hope is a leader in bone marrow transplantation and immunotherapy such as CAR T cell therapy. City of Hopes translational research and personalized treatment protocols advance care throughout the world. Human synthetic insulin and numerous breakthrough cancer drugs are based on technology developed at the institution. A National Cancer Institute-designated comprehensive cancer center and a founding member of the National Comprehensive Cancer Network, City of Hope has been ranked among the nations Best Hospitals in cancer by U.S. News & World Report for 14 consecutive years. Its main campus is located near Los Angeles, with additional locations throughout Southern California. For more information about City of Hope, follow us on Facebook, Twitter, YouTube or Instagram.

The study was supported by Amgen Inc., Cancer Prevention & Research Institute of Texas (RP150535, P30 CA016672), Fox Chase Cancer Centers National Institutes of Health grant (P30 CA006927), Memorial Sloan Kettering Cancer Centers NIH grant (P30 CA008748), NIH/NCI (1R01CA23074501, 1R01CA23026701A1), The Pew Charitable Trusts and the Damon Runyon Cancer Research Foundation.

Zen Vuong

626-409-9367

[email protected]

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News

Merck and Eisai Present First-Time Data From Two Studies Evaluating KEYTRUDA® (pembrolizumab) Plus LENVIMA® (lenvatinib) in Seven Different Tumor Types at ESMO Virtual Congress 2020

gbafNews28

Merck (NYSE: MRK), known as MSD outside the United States and Canada, and Eisai today announced new investigational data from two trials under the LEAP (LEnvatinib And Pembrolizumab) clinical program evaluating KEYTRUDA, Mercks anti-PD-1 therapy, plus LENVIMA, the orally available multiple receptor tyrosine kinase inhibitor discovered by Eisai. In the Phase 2 LEAP-004 trial, KEYTRUDA plus LENVIMA showed an objective response rate (ORR) of 21.4% (95% CI: 13.9-30.5) in patients with unresectable or advanced melanoma who had previously progressed on an anti-PD-1/PD-L1 therapy. In the Phase 2 LEAP-005 trial, KEYTRUDA plus LENVIMA demonstrated an ORR that ranged from 9.7-32.3% (95% CI: 2.0-51.4) in previously treated patients with triple-negative breast cancer (TNBC), ovarian cancer, gastric cancer, colorectal cancer (non-microsatellite instability-high [non-MSI-H]/mismatch repair proficient [pMMR]), glioblastoma multiforme (GBM) and biliary tract cancer (BTC). Results from LEAP-004 (Abstract #LBA44) and LEAP-005 (Abstract #LBA41) were accepted as late-breaking abstracts and are being presented in proffered paper presentations at the European Society for Medical Oncology (ESMO) Virtual Congress 2020.

These new data from our LEAP clinical program show encouraging activity across several aggressive cancer types and expand our knowledge about the potential of KEYTRUDA plus LENVIMA to help a range of patients with these cancers, said Dr. Scot Ebbinghaus, Vice President, Clinical Research, Merck Research Laboratories. This is the first time that clinical data from two LEAP trials are being presented, reflecting important progress we are making to explore the potential of this combination for patients in need of new options, particularly those with advanced melanoma who have progressed on an anti-PD-1 or PD-L1 therapy.

We are encouraged by the growing body of research that we have seen to date, now in 13 different cancers, supporting the potential of the KEYTRUDA plus LENVIMA combination, which were currently evaluating in 19 clinical trials, said Dr. Takashi Owa, Chief Medicine Creation and Chief Discovery Officer, Oncology Business Group at Eisai. These data not only help advance our understanding of the regimen but also fuel our deep-seated determination to work to address the unmet needs of these patients.

LEAP-004 Trial Design and Data (Abstract #LBA44)

LEAP-004 (ClinicalTrials.gov, NCT03776136) is a Phase 2, single-arm, open-label trial evaluating KEYTRUDA in combination with LENVIMA in patients with unresectable or advanced melanoma who had progressed on an anti-PD-1/PD-L1 therapy within 12 weeks. Patients were treated with LENVIMA 20 mg orally once daily until unacceptable toxicity or disease progression in combination with KEYTRUDA 200 mg intravenously every three weeks until unacceptable toxicity or disease progression for up to 35 cycles (approximately two years). The primary endpoint is ORR per Response Evaluation Criteria in Solid Tumors (RECIST) v1.1 as assessed by blinded independent central review (BICR). Secondary endpoints include progression-free survival (PFS) and duration of response (DOR) per RECIST v1.1 by BICR, overall survival (OS) and safety.

At data cutoff (June 10, 2020), a total of 103 patients were enrolled and treated. With a median duration of follow-up of 12 months (range: 8.7-15.6), KEYTRUDA plus LENVIMA demonstrated an overall ORR by BICR of 21.4% (n=22) (95% CI: 13.9-30.5), with a complete response rate of 1.9% (n=2) and a partial response rate of 19.4% (n=20). In the total study population, the median DOR was 6.3 months (range: 2.1+ to 11.1+), with 72.6% (95% CI: 46.2-87.6) of responses lasting for at least six months. Median PFS was 4.2 months (range: 3.5 to 6.3), with 73.8% of patients experiencing disease progression or death, and the nine-month PFS rate was 26.2% (95% CI: 17.4-35.9). Median OS was 13.9 months (range: 10.8-not reached [NR]), with death occurring in 44.7% of patients, and the nine-month OS rate was 65.4% (95% CI: 55.2-73.8).

The exploratory analysis showed that specifically in the 29 patients whose disease progressed after an anti-PD-1/L1 therapy plus an anti-CTLA-4 therapy, the ORR by BICR was 31.0% (95% CI: 15.3-50.8), with a complete response rate of 3.4% (n=1) and a partial response rate of 27.6% (n=8), and the disease control rate (DCR) by BICR was 62.1% (95% CI: 42.3-79.3). In the total study population, the DCR by BICR was 65.0% (95% CI: 55.0-74.2).

Treatment-related adverse events (TRAEs) led to discontinuation of KEYTRUDA and/or LENVIMA in 7.8% of patients. Grade 3-5 TRAEs occurred in 44.7% of patients (Grade 3: 39.8%; Grade 4: 3.9%; Grade 5: 1.0%), and serious TRAEs occurred in 18.4% of patients. The most common TRAEs of any grade occurring in at least 30% of the overall study population were hypertension (56.3%), diarrhea (35.9%), nausea (34.0%), hypothyroidism (33.0%) and decreased appetite (31.1%).

LEAP-005 Trial Design and Data (Abstract #LBA41)

LEAP-005 (ClinicalTrials.gov, NCT03797326) is a Phase 2, single-arm, open-label trial evaluating KEYTRUDA in combination with LENVIMA in patients with select previously treated advanced solid tumors. The study cohorts are TNBC, ovarian cancer, gastric cancer, colorectal cancer (non-MSI-H/pMMR), GBM and BTC. Patients were treated with LENVIMA 20 mg orally once daily until unacceptable toxicity or disease progression in combination with KEYTRUDA 200 mg intravenously every three weeks until unacceptable toxicity or disease progression for up to 35 cycles (approximately two years). The primary endpoints are ORR per RECIST v1.1 as assessed by BICR or Response Assessment in Neuro-Oncology (RANO) criteria (for GBM only) as assessed by BICR, and safety. Secondary endpoints include DCR per RECIST v1.1 by BICR or RANO (for GBM only) by BICR, DOR per RECIST v1.1 by BICR or RANO (for GBM only) by BICR, PFS per RECIST v1.1 by BICR or RANO (for GBM only) by BICR, and OS.

At data cutoff (April 10, 2020), a total of 187 patients were enrolled and treated. The confirmed ORR after a median duration of follow-up of 8.6 months (range: 1.9-13.1) for the six different tumor types, as well as additional efficacy and safety results, showed:

 

2L/3L TNBC

(n=31)

4L Ovarian

(n=31)

3L Gastric

(n=31)

3L Colorectal

(n=32)

2L BTC

(n=31)

2L GBM

(n=31)

ORR, % (95% CI)

29.0 (14.2-48.0)

32.3 (16.7-51.4)

9.7 (2.0-25.8)

21.9 (9.3-40.0)

9.7 (2.0-25.8)

16.1 (5.5-33.7)

DCR, % (95% CI)

58.1 (39.1-75.5)

74.2 (55.4-88.1)

48.4 (30.2-66.9)

46.9 (29.1-65.3)

67.7 (48.6-83.3)

58.1 (39.1-75.5)

DOR, median (range), months

NR (0.0+ to 8.4+)

NR (1.5+ to 7.9+)

NR (2.1+ to 2.3+)

NR (2.1+ to 10.4+)

5.3 (2.1+ to 6.2)

3.2 (2.5 to 4.9+)

Grade ‰¥3 TRAEs, % (n)

55 (17)

68 (21)

42 (13)

50 (16)

48 (15)

35 (11)

Death due to a TRAE, % (n)

3 (1)

3 (1)

3 (1)

3 (1)

0 (0)

3 (1)

Discontinued due to a TRAE, % (n)

10 (3)

13 (4)

6 (2)

9 (3)

6 (2)

6 (2)

+, no progressive disease (PD) as of last disease assessment; DCR, disease control rate (best confirmed response: complete/partial response; stable disease); DOR, duration of response; NR, not reached

The most common TRAEs of any grade occurring in at least 20% of the overall study population were hypertension (39.0%), fatigue (29.4%), diarrhea (26.7%), decreased appetite (25.1%), hypothyroidism (27.8%) and nausea (21.9%). The study is ongoing and will be expanded to enroll approximately 100 patients in each cohort.

About KEYTRUDA (pembrolizumab) Injection, 100 mg

KEYTRUDA is an anti-PD-1 therapy that works by increasing the ability of the bodys immune system to help detect and fight tumor cells. KEYTRUDA is a humanized monoclonal antibody that blocks the interaction between PD-1 and its ligands, PD-L1 and PD-L2, thereby activating T lymphocytes which may affect both tumor cells and healthy cells.

Merck has the industrys largest immuno-oncology clinical research program. There are currently more than 1,200 trials studying KEYTRUDA across a wide variety of cancers and treatment settings. The KEYTRUDA clinical program seeks to understand the role of KEYTRUDA across cancers and the factors that may predict a patient’s likelihood of benefitting from treatment with KEYTRUDA, including exploring several different biomarkers.

Selected KEYTRUDA (pembrolizumab) Indications

Melanoma

KEYTRUDA is indicated for the treatment of patients with unresectable or metastatic melanoma.

KEYTRUDA is indicated for the adjuvant treatment of patients with melanoma with involvement of lymph node(s) following complete resection.

Non-Small Cell Lung Cancer

KEYTRUDA, in combination with pemetrexed and platinum chemotherapy, is indicated for the first-line treatment of patients with metastatic nonsquamous non-small cell lung cancer (NSCLC), with no EGFR or ALK genomic tumor aberrations.

KEYTRUDA, in combination with carboplatin and either paclitaxel or paclitaxel protein-bound, is indicated for the first-line treatment of patients with metastatic squamous NSCLC.

KEYTRUDA, as a single agent, is indicated for the first-line treatment of patients with NSCLC expressing PD-L1 [tumor proportion score (TPS) ‰¥1%] as determined by an FDA-approved test, with no EGFR or ALK genomic tumor aberrations, and is stage III where patients are not candidates for surgical resection or definitive chemoradiation, or metastatic.

KEYTRUDA, as a single agent, is indicated for the treatment of patients with metastatic NSCLC whose tumors express PD-L1 (TPS ‰¥1%) as determined by an FDA-approved test, with disease progression on or after platinum-containing chemotherapy. Patients with EGFR or ALK genomic tumor aberrations should have disease progression on FDA-approved therapy for these aberrations prior to receiving KEYTRUDA.

Small Cell Lung Cancer

KEYTRUDA is indicated for the treatment of patients with metastatic small cell lung cancer (SCLC) with disease progression on or after platinum-based chemotherapy and at least 1 other prior line of therapy. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in confirmatory trials.

Head and Neck Squamous Cell Cancer

KEYTRUDA, in combination with platinum and fluorouracil (FU), is indicated for the first-line treatment of patients with metastatic or with unresectable, recurrent head and neck squamous cell carcinoma (HNSCC).

KEYTRUDA, as a single agent, is indicated for the first-line treatment of patients with metastatic or with unresectable, recurrent HNSCC whose tumors express PD-L1 [combined positive score (CPS) ‰¥1] as determined by an FDA-approved test.

KEYTRUDA, as a single agent, is indicated for the treatment of patients with recurrent or metastatic head and neck squamous cell carcinoma (HNSCC) with disease progression on or after platinum-containing chemotherapy.

Classical Hodgkin Lymphoma

KEYTRUDA is indicated for the treatment of adult and pediatric patients with refractory classical Hodgkin lymphoma (cHL), or who have relapsed after 3 or more prior lines of therapy. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials.

Primary Mediastinal Large B-Cell Lymphoma

KEYTRUDA is indicated for the treatment of adult and pediatric patients with refractory primary mediastinal large B-cell lymphoma (PMBCL), or who have relapsed after 2 or more prior lines of therapy. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in confirmatory trials. KEYTRUDA is not recommended for treatment of patients with PMBCL who require urgent cytoreductive therapy.

Urothelial Carcinoma

KEYTRUDA is indicated for the treatment of patients with locally advanced or metastatic urothelial carcinoma (mUC) who are not eligible for cisplatin-containing chemotherapy and whose tumors express PD-L1 [combined positive score (CPS) ‰¥10], as determined by an FDA-approved test, or in patients who are not eligible for any platinum-containing chemotherapy regardless of PD-L1 status. This indication is approved under accelerated approval based on tumor response rate and duration of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in confirmatory trials.

KEYTRUDA is indicated for the treatment of patients with locally advanced or metastatic urothelial carcinoma (mUC) who have disease progression during or following platinum-containing chemotherapy or within 12 months of neoadjuvant or adjuvant treatment with platinum-containing chemotherapy.

KEYTRUDA is indicated for the treatment of patients with Bacillus Calmette-Guerin (BCG)-unresponsive, high-risk, non-muscle invasive bladder cancer (NMIBC) with carcinoma in situ (CIS) with or without papillary tumors who are ineligible for or have elected not to undergo cystectomy.

Microsatellite Instability-High or Mismatch Repair Deficient Cancer

KEYTRUDA is indicated for the treatment of adult and pediatric patients with unresectable or metastatic microsatellite instability-high (MSI-H) or mismatch repair deficient (dMMR)

  • solid tumors that have progressed following prior treatment and who have no satisfactory alternative treatment options, or
  • colorectal cancer that has progressed following treatment with fluoropyrimidine, oxaliplatin, and irinotecan.

This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials. The safety and effectiveness of KEYTRUDA in pediatric patients with MSI-H central nervous system cancers have not been established.

Microsatellite Instability-High or Mismatch Repair Deficient Colorectal Cancer

KEYTRUDA is indicated for the first-line treatment of patients with unresectable or metastatic MSI-H or dMMR colorectal cancer (CRC).

Gastric Cancer

KEYTRUDA is indicated for the treatment of patients with recurrent locally advanced or metastatic gastric or gastroesophageal junction (GEJ) adenocarcinoma whose tumors express PD-L1 (CPS ‰¥1) as determined by an FDA-approved test, with disease progression on or after two or more prior lines of therapy including fluoropyrimidine- and platinum-containing chemotherapy and if appropriate, HER2/neu-targeted therapy. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials.

Esophageal Cancer

KEYTRUDA is indicated for the treatment of patients with recurrent locally advanced or metastatic squamous cell carcinoma of the esophagus whose tumors express PD-L1 (CPS ‰¥10) as determined by an FDA-approved test, with disease progression after one or more prior lines of systemic therapy.

Cervical Cancer

KEYTRUDA is indicated for the treatment of patients with recurrent or metastatic cervical cancer with disease progression on or after chemotherapy whose tumors express PD-L1 (CPS ‰¥1) as determined by an FDA-approved test. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials.

Hepatocellular Carcinoma

KEYTRUDA is indicated for the treatment of patients with hepatocellular carcinoma (HCC) who have been previously treated with sorafenib. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials.

Merkel Cell Carcinoma

KEYTRUDA is indicated for the treatment of adult and pediatric patients with recurrent locally advanced or metastatic Merkel cell carcinoma (MCC). This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials.

Renal Cell Carcinoma

KEYTRUDA, in combination with axitinib, is indicated for the first-line treatment of patients with advanced renal cell carcinoma (RCC).

Endometrial Carcinoma

KEYTRUDA, in combination with LENVIMA, is indicated for the treatment of patients with advanced endometrial carcinoma that is not MSI-H or dMMR, who have disease progression following prior systemic therapy and are not candidates for curative surgery or radiation. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trial.

Tumor Mutational Burden-High

KEYTRUDA is indicated for the treatment of adult and pediatric patients with unresectable or metastatic tumor mutational burden-high (TMB-H) [‰¥10 mutations/megabase (mut/Mb)] solid tumors, as determined by an FDA-approved test, that have progressed following prior treatment and who have no satisfactory alternative treatment options. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials. The safety and effectiveness of KEYTRUDA in pediatric patients with TMB-H central nervous system cancers have not been established.

Cutaneous Squamous Cell Carcinoma

KEYTRUDA is indicated for the treatment of patients with recurrent or metastatic cutaneous squamous cell carcinoma (cSCC) that is not curable by surgery or radiation.

Selected Important Safety Information for KEYTRUDA (pembrolizumab)

Immune-Mediated Pneumonitis

KEYTRUDA can cause immune-mediated pneumonitis, including fatal cases. Pneumonitis occurred in 3.4% (94/2799) of patients with various cancers receiving KEYTRUDA, including Grade 1 (0.8%), 2 (1.3%), 3 (0.9%), 4 (0.3%), and 5 (0.1%). Pneumonitis occurred in 8.2% (65/790) of NSCLC patients receiving KEYTRUDA as a single agent, including Grades 3-4 in 3.2% of patients, and occurred more frequently in patients with a history of prior thoracic radiation (17%) compared to those without (7.7%). Pneumonitis occurred in 6% (18/300) of HNSCC patients receiving KEYTRUDA as a single agent, including Grades 3-5 in 1.6% of patients, and occurred in 5.4% (15/276) of patients receiving KEYTRUDA in combination with platinum and FU as first-line therapy for advanced disease, including Grades 3-5 in 1.5% of patients.

Monitor patients for signs and symptoms of pneumonitis. Evaluate suspected pneumonitis with radiographic imaging. Administer corticosteroids for Grade 2 or greater pneumonitis. Withhold KEYTRUDA for Grade 2; permanently discontinue KEYTRUDA for Grade 3 or 4 or recurrent Grade 2 pneumonitis.

Immune-Mediated Colitis

KEYTRUDA can cause immune-mediated colitis. Colitis occurred in 1.7% (48/2799) of patients receiving KEYTRUDA, including Grade 2 (0.4%), 3 (1.1%), and 4 (<0.1%). Monitor patients for signs and symptoms of colitis. Administer corticosteroids for Grade 2 or greater colitis. Withhold KEYTRUDA for Grade 2 or 3; permanently discontinue KEYTRUDA for Grade 4 colitis.

Immune-Mediated Hepatitis (KEYTRUDA) and Hepatotoxicity (KEYTRUDA in Combination With Axitinib)

Immune-Mediated Hepatitis

KEYTRUDA can cause immune-mediated hepatitis. Hepatitis occurred in 0.7% (19/2799) of patients receiving KEYTRUDA, including Grade 2 (0.1%), 3 (0.4%), and 4 (<0.1%). Monitor patients for changes in liver function. Administer corticosteroids for Grade 2 or greater hepatitis and, based on severity of liver enzyme elevations, withhold or discontinue KEYTRUDA.

Hepatotoxicity in Combination With Axitinib

KEYTRUDA in combination with axitinib can cause hepatic toxicity with higher than expected frequencies of Grades 3 and 4 ALT and AST elevations compared to KEYTRUDA alone. With the combination of KEYTRUDA and axitinib, Grades 3 and 4 increased ALT (20%) and increased AST (13%) were seen. Monitor liver enzymes before initiation of and periodically throughout treatment. Consider more frequent monitoring of liver enzymes as compared to when the drugs are administered as single agents. For elevated liver enzymes, interrupt KEYTRUDA and axitinib, and consider administering corticosteroids as needed.

Immune-Mediated Endocrinopathies

KEYTRUDA can cause adrenal insufficiency (primary and secondary), hypophysitis, thyroid disorders, and type 1 diabetes mellitus. Adrenal insufficiency occurred in 0.8% (22/2799) of patients, including Grade 2 (0.3%), 3 (0.3%), and 4 (<0.1%). Hypophysitis occurred in 0.6% (17/2799) of patients, including Grade 2 (0.2%), 3 (0.3%), and 4 (<0.1%). Hypothyroidism occurred in 8.5% (237/2799) of patients, including Grade 2 (6.2%) and 3 (0.1%). The incidence of new or worsening hypothyroidism was higher in 1185 patients with HNSCC (16%) receiving KEYTRUDA, as a single agent or in combination with platinum and FU, including Grade 3 (0.3%) hypothyroidism. Hyperthyroidism occurred in 3.4% (96/2799) of patients, including Grade 2 (0.8%) and 3 (0.1%), and thyroiditis occurred in 0.6% (16/2799) of patients, including Grade 2 (0.3%). Type 1 diabetes mellitus, including diabetic ketoacidosis, occurred in 0.2% (6/2799) of patients.

Monitor patients for signs and symptoms of adrenal insufficiency, hypophysitis (including hypopituitarism), thyroid function (prior to and periodically during treatment), and hyperglycemia. For adrenal insufficiency or hypophysitis, administer corticosteroids and hormone replacement as clinically indicated. Withhold KEYTRUDA for Grade 2 adrenal insufficiency or hypophysitis and withhold or discontinue KEYTRUDA for Grade 3 or Grade 4 adrenal insufficiency or hypophysitis. Administer hormone replacement for hypothyroidism and manage hyperthyroidism with thionamides and beta-blockers as appropriate. Withhold or discontinue KEYTRUDA for Grade 3 or 4 hyperthyroidism. Administer insulin for type 1 diabetes, and withhold KEYTRUDA and administer antihyperglycemics in patients with severe hyperglycemia.

Immune-Mediated Nephritis and Renal Dysfunction

KEYTRUDA can cause immune-mediated nephritis. Nephritis occurred in 0.3% (9/2799) of patients receiving KEYTRUDA, including Grade 2 (0.1%), 3 (0.1%), and 4 (<0.1%) nephritis. Nephritis occurred in 1.7% (7/405) of patients receiving KEYTRUDA in combination with pemetrexed and platinum chemotherapy. Monitor patients for changes in renal function. Administer corticosteroids for Grade 2 or greater nephritis. Withhold KEYTRUDA for Grade 2; permanently discontinue for Grade 3 or 4 nephritis.

Immune-Mediated Skin Reactions

Immune-mediated rashes, including Stevens-Johnson syndrome (SJS), toxic epidermal necrolysis (TEN) (some cases with fatal outcome), exfoliative dermatitis, and bullous pemphigoid, can occur. Monitor patients for suspected severe skin reactions and based on the severity of the adverse reaction, withhold or permanently discontinue KEYTRUDA and administer corticosteroids. For signs or symptoms of SJS or TEN, withhold KEYTRUDA and refer the patient for specialized care for assessment and treatment. If SJS or TEN is confirmed, permanently discontinue KEYTRUDA.

Other Immune-Mediated Adverse Reactions

Immune-mediated adverse reactions, which may be severe or fatal, can occur in any organ system or tissue in patients receiving KEYTRUDA and may also occur after discontinuation of treatment. For suspected immune-mediated adverse reactions, ensure adequate evaluation to confirm etiology or exclude other causes. Based on the severity of the adverse reaction, withhold KEYTRUDA and administer corticosteroids. Upon improvement to Grade 1 or less, initiate corticosteroid taper and continue to taper over at least 1 month. Based on limited data from clinical studies in patients whose immune-related adverse reactions could not be controlled with corticosteroid use, administration of other systemic immunosuppressants can be considered. Resume KEYTRUDA when the adverse reaction remains at Grade 1 or less following corticosteroid taper. Permanently discontinue KEYTRUDA for any Grade 3 immune-mediated adverse reaction that recurs and for any life-threatening immune-mediated adverse reaction.

The following clinically significant immune-mediated adverse reactions occurred in less than 1% (unless otherwise indicated) of 2799 patients: arthritis (1.5%), uveitis, myositis, Guillain-Barr syndrome, myasthenia gravis, vasculitis, pancreatitis, hemolytic anemia, sarcoidosis, and encephalitis. In addition, myelitis and myocarditis were reported in other clinical trials, including classical Hodgkin lymphoma, and postmarketing use.

Treatment with KEYTRUDA may increase the risk of rejection in solid organ transplant recipients. Consider the benefit of treatment vs the risk of possible organ rejection in these patients.

Infusion-Related Reactions

KEYTRUDA can cause severe or life-threatening infusion-related reactions, including hypersensitivity and anaphylaxis, which have been reported in 0.2% (6/2799) of patients. Monitor patients for signs and symptoms of infusion-related reactions. For Grade 3 or 4 reactions, stop infusion and permanently discontinue KEYTRUDA.

Complications of Allogeneic Hematopoietic Stem Cell Transplantation (HSCT)

Immune-mediated complications, including fatal events, occurred in patients who underwent allogeneic HSCT after treatment with KEYTRUDA. Of 23 patients with cHL who proceeded to allogeneic HSCT after KEYTRUDA, 6 (26%) developed graft-versus-host disease (GVHD) (1 fatal case) and 2 (9%) developed severe hepatic veno-occlusive disease (VOD) after reduced-intensity conditioning (1 fatal case). Cases of fatal hyperacute GVHD after allogeneic HSCT have also been reported in patients with lymphoma who received a PD-1 receptor“blocking antibody before transplantation. Follow patients closely for early evidence of transplant-related complications such as hyperacute graft-versus-host disease (GVHD), Grade 3 to 4 acute GVHD, steroid-requiring febrile syndrome, hepatic veno-occlusive disease (VOD), and other immune-mediated adverse reactions.

In patients with a history of allogeneic HSCT, acute GVHD (including fatal GVHD) has been reported after treatment with KEYTRUDA. Patients who experienced GVHD after their transplant procedure may be at increased risk for GVHD after KEYTRUDA. Consider the benefit of KEYTRUDA vs the risk of GVHD in these patients.

Increased Mortality in Patients With Multiple Myeloma

In trials in patients with multiple myeloma, the addition of KEYTRUDA to a thalidomide analogue plus dexamethasone resulted in increased mortality. Treatment of these patients with a PD-1 or PD-L1 blocking antibody in this combination is not recommended outside of controlled trials.

Embryofetal Toxicity

Based on its mechanism of action, KEYTRUDA can cause fetal harm when administered to a pregnant woman. Advise women of this potential risk. In females of reproductive potential, verify pregnancy status prior to initiating KEYTRUDA and advise them to use effective contraception during treatment and for 4 months after the last dose.

Adverse Reactions

In KEYNOTE-006, KEYTRUDA was discontinued due to adverse reactions in 9% of 555 patients with advanced melanoma; adverse reactions leading to permanent discontinuation in more than one patient were colitis (1.4%), autoimmune hepatitis (0.7%), allergic reaction (0.4%), polyneuropathy (0.4%), and cardiac failure (0.4%). The most common adverse reactions (‰¥20%) with KEYTRUDA were fatigue (28%), diarrhea (26%), rash (24%), and nausea (21%).

In KEYNOTE-002, KEYTRUDA was permanently discontinued due to adverse reactions in 12% of 357 patients with advanced melanoma; the most common (‰¥1%) were general physical health deterioration (1%), asthenia (1%), dyspnea (1%), pneumonitis (1%), and generalized edema (1%). The most common adverse reactions were fatigue (43%), pruritus (28%), rash (24%), constipation (22%), nausea (22%), diarrhea (20%), and decreased appetite (20%).

In KEYNOTE-054, KEYTRUDA was permanently discontinued due to adverse reactions in 14% of 509 patients; the most common (‰¥1%) were pneumonitis (1.4%), colitis (1.2%), and diarrhea (1%). Serious adverse reactions occurred in 25% of patients receiving KEYTRUDA. The most common adverse reaction (‰¥20%) with KEYTRUDA was diarrhea (28%).

In KEYNOTE-189, when KEYTRUDA was administered with pemetrexed and platinum chemotherapy in metastatic nonsquamous NSCLC, KEYTRUDA was discontinued due to adverse reactions in 20% of 405 patients. The most common adverse reactions resulting in permanent discontinuation of KEYTRUDA were pneumonitis (3%) and acute kidney injury (2%). The most common adverse reactions (‰¥20%) with KEYTRUDA were nausea (56%), fatigue (56%), constipation (35%), diarrhea (31%), decreased appetite (28%), rash (25%), vomiting (24%), cough (21%), dyspnea (21%), and pyrexia (20%).

In KEYNOTE-407, when KEYTRUDA was administered with carboplatin and either paclitaxel or paclitaxel protein-bound in metastatic squamous NSCLC, KEYTRUDA was discontinued due to adverse reactions in 15% of 101 patients. The most frequent serious adverse reactions reported in at least 2% of patients were febrile neutropenia, pneumonia, and urinary tract infection. Adverse reactions observed in KEYNOTE-407 were similar to those observed in KEYNOTE-189 with the exception that increased incidences of alopecia (47% vs 36%) and peripheral neuropathy (31% vs 25%) were observed in the KEYTRUDA and chemotherapy arm compared to the placebo and chemotherapy arm in KEYNOTE-407.

In KEYNOTE-042, KEYTRUDA was discontinued due to adverse reactions in 19% of 636 patients with advanced NSCLC; the most common were pneumonitis (3%), death due to unknown cause (1.6%), and pneumonia (1.4%). The most frequent serious adverse reactions reported in at least 2% of patients were pneumonia (7%), pneumonitis (3.9%), pulmonary embolism (2.4%), and pleural effusion (2.2%). The most common adverse reaction (‰¥20%) was fatigue (25%).

In KEYNOTE-010, KEYTRUDA monotherapy was discontinued due to adverse reactions in 8% of 682 patients with metastatic NSCLC; the most common was pneumonitis (1.8%). The most common adverse reactions (‰¥20%) were decreased appetite (25%), fatigue (25%), dyspnea (23%), and nausea (20%).

Adverse reactions occurring in patients with SCLC were similar to those occurring in patients with other solid tumors who received KEYTRUDA as a single agent.

In KEYNOTE-048, KEYTRUDA monotherapy was discontinued due to adverse events in 12% of 300 patients with HNSCC; the most common adverse reactions leading to permanent discontinuation were sepsis (1.7%) and pneumonia (1.3%). The most common adverse reactions (‰¥20%) were fatigue (33%), constipation (20%), and rash (20%).

In KEYNOTE-048, when KEYTRUDA was administered in combination with platinum (cisplatin or carboplatin) and FU chemotherapy, KEYTRUDA was discontinued due to adverse reactions in 16% of 276 patients with HNSCC. The most common adverse reactions resulting in permanent discontinuation of KEYTRUDA were pneumonia (2.5%), pneumonitis (1.8%), and septic shock (1.4%). The most common adverse reactions (‰¥20%) were nausea (51%), fatigue (49%), constipation (37%), vomiting (32%), mucosal inflammation (31%), diarrhea (29%), decreased appetite (29%), stomatitis (26%), and cough (22%).

In KEYNOTE-012, KEYTRUDA was discontinued due to adverse reactions in 17% of 192 patients with HNSCC. Serious adverse reactions occurred in 45% of patients. The most frequent serious adverse reactions reported in at least 2% of patients were pneumonia, dyspnea, confusional state, vomiting, pleural effusion, and respiratory failure. The most common adverse reactions (‰¥20%) were fatigue, decreased appetite, and dyspnea. Adverse reactions occurring in patients with HNSCC were generally similar to those occurring in patients with melanoma or NSCLC who received KEYTRUDA as a monotherapy, with the exception of increased incidences of facial edema and new or worsening hypothyroidism.

In KEYNOTE-087, KEYTRUDA was discontinued due to adverse reactions in 5% of 210 patients with cHL. Serious adverse reactions occurred in 16% of patients; those ‰¥1% included pneumonia, pneumonitis, pyrexia, dyspnea, GVHD, and herpes zoster. Two patients died from causes other than disease progression; 1 from GVHD after subsequent allogeneic HSCT and 1 from septic shock. The most common adverse reactions (‰¥20%) were fatigue (26%), pyrexia (24%), cough (24%), musculoskeletal pain (21%), diarrhea (20%), and rash (20%).

In KEYNOTE-170, KEYTRUDA was discontinued due to adverse reactions in 8% of 53 patients with PMBCL. Serious adverse reactions occurred in 26% of patients and included arrhythmia (4%), cardiac tamponade (2%), myocardial infarction (2%), pericardial effusion (2%), and pericarditis (2%). Six (11%) patients died within 30 days of start of treatment. The most common adverse reactions (‰¥20%) were musculoskeletal pain (30%), upper respiratory tract infection and pyrexia (28% each), cough (26%), fatigue (23%), and dyspnea (21%).

In KEYNOTE-052, KEYTRUDA was discontinued due to adverse reactions in 11% of 370 patients with locally advanced or metastatic urothelial carcinoma. Serious adverse reactions occurred in 42% of patients; those ‰¥2% were urinary tract infection, hematuria, acute kidney injury, pneumonia, and urosepsis. The most common adverse reactions (‰¥20%) were fatigue (38%), musculoskeletal pain (24%), decreased appetite (22%), constipation (21%), rash (21%), and diarrhea (20%).

In KEYNOTE-045, KEYTRUDA was discontinued due to adverse reactions in 8% of 266 patients with locally advanced or metastatic urothelial carcinoma. The most common adverse reaction resulting in permanent discontinuation of KEYTRUDA was pneumonitis (1.9%). Serious adverse reactions occurred in 39% of KEYTRUDA-treated patients; those ‰¥2% were urinary tract infection, pneumonia, anemia, and pneumonitis. The most common adverse reactions (‰¥20%) in patients who received KEYTRUDA were fatigue (38%), musculoskeletal pain (32%), pruritus (23%), decreased appetite (21%), nausea (21%), and rash (20%).

In KEYNOTE-057, KEYTRUDA was discontinued due to adverse reactions in 11% of 148 patients with high-risk NMIBC. The most common adverse reaction resulting in permanent discontinuation of KEYTRUDA was pneumonitis (1.4%). Serious adverse reactions occurred in 28% of patients; those ‰¥2% were pneumonia (3%), cardiac ischemia (2%), colitis (2%), pulmonary embolism (2%), sepsis (2%), and urinary tract infection (2%). The most common adverse reactions (‰¥20%) were fatigue (29%), diarrhea (24%), and rash (24%).

Adverse reactions occurring in patients with MSI-H or dMMR CRC were similar to those occurring in patients with melanoma or NSCLC who received KEYTRUDA as a monotherapy.

Adverse reactions occurring in patients with gastric cancer were similar to those occurring in patients with melanoma or NSCLC who received KEYTRUDA as a monotherapy.

Adverse reactions occurring in patients with esophageal cancer were similar to those occurring in patients with melanoma or NSCLC who received KEYTRUDA as a monotherapy.

In KEYNOTE-158, KEYTRUDA was discontinued due to adverse reactions in 8% of 98 patients with recurrent or metastatic cervical cancer. Serious adverse reactions occurred in 39% of patients receiving KEYTRUDA; the most frequent included anemia (7%), fistula, hemorrhage, and infections [except urinary tract infections] (4.1% each). The most common adverse reactions (‰¥20%) were fatigue (43%), musculoskeletal pain (27%), diarrhea (23%), pain and abdominal pain (22% each), and decreased appetite (21%).

Adverse reactions occurring in patients with hepatocellular carcinoma (HCC) were generally similar to those in patients with melanoma or NSCLC who received KEYTRUDA as a monotherapy, with the exception of increased incidences of ascites (8% Grades 3-4) and immune-mediated hepatitis (2.9%). Laboratory abnormalities (Grades 3-4) that occurred at a higher incidence were elevated AST (20%), ALT (9%), and hyperbilirubinemia (10%).

Among the 50 patients with MCC enrolled in study KEYNOTE-017, adverse reactions occurring in patients with MCC were generally similar to those occurring in patients with melanoma or NSCLC who received KEYTRUDA as a monotherapy. Laboratory abnormalities (Grades 3-4) that occurred at a higher incidence were elevated AST (11%) and hyperglycemia (19%).

In KEYNOTE-426, when KEYTRUDA was administered in combination with axitinib, fatal adverse reactions occurred in 3.3% of 429 patients. Serious adverse reactions occurred in 40% of patients, the most frequent (‰¥1%) were hepatotoxicity (7%), diarrhea (4.2%), acute kidney injury (2.3%), dehydration (1%), and pneumonitis (1%). Permanent discontinuation due to an adverse reaction occurred in 31% of patients; KEYTRUDA only (13%), axitinib only (13%), and the combination (8%); the most common were hepatotoxicity (13%), diarrhea/colitis (1.9%), acute kidney injury (1.6%), and cerebrovascular accident (1.2%). The most common adverse reactions (‰¥20%) were diarrhea (56%), fatigue/asthenia (52%), hypertension (48%), hepatotoxicity (39%), hypothyroidism (35%), decreased appetite (30%), palmar-plantar erythrodysesthesia (28%), nausea (28%), stomatitis/mucosal inflammation (27%), dysphonia (25%), rash (25%), cough (21%), and constipation (21%).

In KEYNOTE-146, when KEYTRUDA was administered in combination with LENVIMA to patients with endometrial carcinoma (n=94), fatal adverse reactions occurred in 3% of patients. Serious adverse reactions occurred in 52% of patients, the most common (‰¥3%) were hypertension (9%), abdominal pain (6%), musculoskeletal pain (5%), hemorrhage, fatigue, nausea, confusional state, and pleural effusion (4% each), adrenal insufficiency, colitis, dyspnea, and pyrexia (3% each).

KEYTRUDA was discontinued for adverse reactions (Grade 1-4) in 19% of patients, regardless of action taken with LENVIMA; the most common (‰¥2%) leading to discontinuation of KEYTRUDA were adrenal insufficiency, colitis, pancreatitis, and muscular weakness (2% each).

The most common adverse reactions (‰¥20%) observed with KEYTRUDA in combination with LENVIMA were fatigue, musculoskeletal pain and hypertension (65% each), diarrhea (64%), decreased appetite (52%), hypothyroidism (51%), nausea (48%), stomatitis (43%), vomiting (39%), decreased weight (36%), abdominal pain and headache (33% each), constipation (32%), urinary tract infection (31%), dysphonia (29%), hemorrhagic events (28%), hypomagnesemia (27%), palmar-plantar erythrodysesthesia syndrome (26%), dyspnea (24%), and cough and rash (21% each).

Adverse reactions occurring in patients with TMB-H cancer were similar to those occurring in patients with other solid tumors who received KEYTRUDA as a single agent.

Adverse reactions occurring in patients with cSCC were similar to those occurring in patients with melanoma or NSCLC who received KEYTRUDA as a monotherapy.

Lactation

Because of the potential for serious adverse reactions in breastfed children, advise women not to breastfeed during treatment and for 4 months after the final dose.

Pediatric Use

There is limited experience in pediatric patients. In a trial, 40 pediatric patients (16 children aged 2 years to younger than 12 years and 24 adolescents aged 12 years to 18 years) with various cancers, including unapproved usages, were administered KEYTRUDA 2 mg/kg every 3 weeks. Patients received KEYTRUDA for a median of 3 doses (range 1“17 doses), with 34 patients (85%) receiving 2 doses or more. The safety profile in these pediatric patients was similar to that seen in adults; adverse reactions that occurred at a higher rate (‰¥15% difference) in these patients when compared to adults under 65 years of age were fatigue (45%), vomiting (38%), abdominal pain (28%), increased transaminases (28%), and hyponatremia (18%).

Please see Prescribing Information for KEYTRUDA (pembrolizumab) at http://www.merck.com/product/usa/pi_circulars/k/keytruda/keytruda_pi.pdf and Medication Guide for KEYTRUDA at http://www.merck.com/product/usa/pi_circulars/k/keytruda/keytruda_mg.pdf.

About LENVIMA (lenvatinib)

LENVIMA (lenvatinib) is a kinase inhibitor that is indicated:

  • For the treatment of patients with locally recurrent or metastatic, progressive, radioactive iodine-refractory differentiated thyroid cancer (RAI-refractory DTC)
  • In combination with everolimus, for the treatment of patients with advanced renal cell carcinoma (RCC) following one prior anti-angiogenic therapy
  • For the first-line treatment of patients with unresectable hepatocellular carcinoma (HCC)
  • In combination with KEYTRUDA, for the treatment of patients with advanced endometrial carcinoma that is not microsatellite instability-high (MSI-H) or mismatch repair deficient (dMMR), who have disease progression following prior systemic therapy, and are not candidates for curative surgery or radiation. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trial

LENVIMA, discovered and developed by Eisai, is a kinase inhibitor that inhibits the kinase activities of vascular endothelial growth factor (VEGF) receptors VEGFR1 (FLT1), VEGFR2 (KDR), and VEGFR3 (FLT4). LENVIMA inhibits other kinases that have been implicated in pathogenic angiogenesis, tumor growth, and cancer progression in addition to their normal cellular functions, including fibroblast growth factor (FGF) receptors FGFR1-4, the platelet derived growth factor receptor alpha (PDGFRα), KIT, and RET. In syngeneic mouse tumor models, lenvatinib decreased tumor-associated macrophages, increased activated cytotoxic T cells, and demonstrated greater antitumor activity in combination with an anti-PD-1 monoclonal antibody compared to either treatment alone.

Selected Safety Information

Warnings and Precautions

Hypertension. In DTC, hypertension occurred in 73% of patients on LENVIMA (44% grade 3-4). In RCC, hypertension occurred in 42% of patients on LENVIMA + everolimus (13% grade 3). Systolic blood pressure ‰¥160 mmHg occurred in 29% of patients, and 21% had diastolic blood pressure ‰¥100 mmHg. In HCC, hypertension occurred in 45% of LENVIMA-treated patients (24% grade 3). Grade 4 hypertension was not reported in HCC.

Serious complications of poorly controlled hypertension have been reported. Control blood pressure prior to initiation. Monitor blood pressure after 1 week, then every 2 weeks for the first 2 months, and then at least monthly thereafter during treatment. Withhold and resume at reduced dose when hypertension is controlled or permanently discontinue based on severity.

Cardiac Dysfunction. Serious and fatal cardiac dysfunction can occur with LENVIMA. Across clinical trials in 799 patients with DTC, RCC, and HCC, grade 3 or higher cardiac dysfunction occurred in 3% of LENVIMA treated patients. Monitor for clinical symptoms or signs of cardiac dysfunction. Withhold and resume at reduced dose upon recovery or permanently discontinue based on severity.

Arterial Thromboembolic Events. Among patients receiving LENVIMA or LENVIMA + everolimus, arterial thromboembolic events of any severity occurred in 2% of patients in RCC and HCC and 5% in DTC. Grade 3-5 arterial thromboembolic events ranged from 2% to 3% across all clinical trials. Permanently discontinue following an arterial thrombotic event. The safety of resuming after an arterial thromboembolic event has not been established and LENVIMA has not been studied in patients who have had an arterial thromboembolic event within the previous 6 months.

Hepatotoxicity. Across clinical studies enrolling 1,327 LENVIMA-treated patients with malignancies other than HCC, serious hepatic adverse reactions occurred in 1.4% of patients. Fatal events, including hepatic failure, acute hepatitis and hepatorenal syndrome, occurred in 0.5% of patients. In HCC, hepatic encephalopathy occurred in 8% of LENVIMA-treated patients (5% grade 3-5). Grade 3-5 hepatic failure occurred in 3% of LENVIMA-treated patients. 2% of patients discontinued LENVIMA due to hepatic encephalopathy and 1% discontinued due to hepatic failure.

Monitor liver function prior to initiation, then every 2 weeks for the first 2 months, and at least monthly thereafter during treatment. Monitor patients with HCC closely for signs of hepatic failure, including hepatic encephalopathy. Withhold and resume at reduced dose upon recovery or permanently discontinue based on severity.

Renal Failure or Impairment. Serious including fatal renal failure or impairment can occur with LENVIMA. Renal impairment was reported in 14% and 7% of LENVIMA-treated patients in DTC and HCC, respectively. Grade 3-5 renal failure or impairment occurred in 3% of patients with DTC and 2% of patients with HCC, including 1 fatal event in each study. In RCC, renal impairment or renal failure was reported in 18% of LENVIMA + everolimus“treated patients (10% grade 3).

Initiate prompt management of diarrhea or dehydration/hypovolemia. Withhold and resume at reduced dose upon recovery or permanently discontinue for renal failure or impairment based on severity.

Proteinuria. In DTC and HCC, proteinuria was reported in 34% and 26% of LENVIMA-treated patients, respectively. Grade 3 proteinuria occurred in 11% and 6% in DTC and HCC, respectively. In RCC, proteinuria occurred in 31% of patients receiving LENVIMA + everolimus (8% grade 3). Monitor for proteinuria prior to initiation and periodically during treatment. If urine dipstick proteinuria ‰¥2+ is detected, obtain a 24-hour urine protein. Withhold and resume at reduced dose upon recovery or permanently discontinue based on severity.

Diarrhea. Of the 737 LENVIMA-treated patients in DTC and HCC, diarrhea occurred in 49% (6% grade 3). In RCC, diarrhea occurred in 81% of LENVIMA + everolimus“treated patients (19% grade 3). Diarrhea was the most frequent cause of dose interruption/reduction, and diarrhea recurred despite dose reduction. Promptly initiate management of diarrhea. Withhold and resume at reduced dose upon recovery or permanently discontinue based on severity.

Fistula Formation and Gastrointestinal Perforation. Of the 799 patients treated with LENVIMA or LENVIMA + everolimus in DTC, RCC, and HCC, fistula or gastrointestinal perforation occurred in 2%. Permanently discontinue in patients who develop gastrointestinal perforation of any severity or grade 3-4 fistula.

QT Interval Prolongation. In DTC, QT/QTc interval prolongation occurred in 9% of LENVIMA-treated patients and QT interval prolongation of >500 ms occurred in 2%. In RCC, QTc interval increases of >60 ms occurred in 11% of patients receiving LENVIMA + everolimus and QTc interval >500 ms occurred in 6%. In HCC, QTc interval increases of >60 ms occurred in 8% of LENVIMA-treated patients and QTc interval >500 ms occurred in 2%.

Monitor and correct electrolyte abnormalities at baseline and periodically during treatment. Monitor electrocardiograms in patients with congenital long QT syndrome, congestive heart failure, bradyarrhythmias, or those who are taking drugs known to prolong the QT interval, including Class Ia and III antiarrhythmics. Withhold and resume at reduced dose upon recovery based on severity.

Hypocalcemia. In DTC, grade 3-4 hypocalcemia occurred in 9% of LENVIMA-treated patients. In 65% of cases, hypocalcemia improved or resolved following calcium supplementation with or without dose interruption or dose reduction. In RCC, grade 3-4 hypocalcemia occurred in 6% of LENVIMA + everolimus“ treated patients. In HCC, grade 3 hypocalcemia occurred in 0.8% of LENVIMA-treated patients. Monitor blood calcium levels at least monthly and replace calcium as necessary during treatment. Withhold and resume at reduced dose upon recovery or permanently discontinue depending on severity.

Reversible Posterior Leukoencephalopathy Syndrome. Across clinical studies of 1,823 patients who received LENVIMA as a single agent, RPLS occurred in 0.3%. Confirm diagnosis of RPLS with MRI. Withhold and resume at reduced dose upon recovery or permanently discontinue depending on severity and persistence of neurologic symptoms.

Hemorrhagic Events. Serious including fatal hemorrhagic events can occur with LENVIMA. In DTC, RCC, and HCC clinical trials, hemorrhagic events, of any grade, occurred in 29% of the 799 patients treated with LENVIMA as a single agent or in combination with everolimus. The most frequently reported hemorrhagic events (all grades and occurring in at least 5% of patients) were epistaxis and hematuria. In DTC, grade 3-5 hemorrhage occurred in 2% of LENVIMA-treated patients, including 1 fatal intracranial hemorrhage among 16 patients who received LENVIMA and had CNS metastases at baseline. In RCC, grade 3-5 hemorrhage occurred in 8% of LENVIMA + everolimus“treated patients, including 1 fatal cerebral hemorrhage. In HCC, grade 3-5 hemorrhage occurred in 5% of LENVIMA-treated patients, including 7 fatal hemorrhagic events. Serious tumor-related bleeds, including fatal hemorrhagic events, occurred in LENVIMA-treated patients in clinical trials and in the postmarketing setting. In postmarketing surveillance, serious and fatal carotid artery hemorrhages were seen more frequently in patients with anaplastic thyroid carcinoma (ATC) than other tumors. Safety and effectiveness of LENVIMA in patients with ATC have not been demonstrated in clinical trials.

Consider the risk of severe or fatal hemorrhage associated with tumor invasion or infiltration of major blood vessels (e.g., carotid artery). Withhold and resume at reduced dose upon recovery or permanently discontinue based on severity.

Impairment of Thyroid Stimulating Hormone Suppression/Thyroid Dysfunction. LENVIMA impairs exogenous thyroid suppression. In DTC, 88% of patients had baseline thyroid stimulating hormone (TSH) level ‰¤0.5 mU/L. In patients with normal TSH at baseline, elevation of TSH level >0.5 mU/L was observed post baseline in 57% of LENVIMA-treated patients. In RCC and HCC, grade 1 or 2 hypothyroidism occurred in 24% of LENVIMA + everolimus“treated patients and 21% of LENVIMA-treated patients, respectively. In patients with normal or low TSH at baseline, elevation of TSH was observed post baseline in 70% of LENVIMA-treated patients in HCC and 60% of LENVIMA + everolimus“treated patients in RCC.

Monitor thyroid function prior to initiation and at least monthly during treatment. Treat hypothyroidism according to standard medical practice.

Impaired Wound Healing. Impaired wound healing has been reported in patients who received LENVIMA. Withhold LENVIMA for at least 1 week prior to elective surgery. Do not administer for at least 2 weeks following major surgery and until adequate wound healing. The safety of resumption of LENVIMA after resolution of wound healing complications has not been established.

Embryo-fetal Toxicity. Based on its mechanism of action and data from animal reproduction studies, LENVIMA can cause fetal harm when administered to pregnant women. In animal reproduction studies, oral administration of lenvatinib during organogenesis at doses below the recommended clinical doses resulted in embryotoxicity, fetotoxicity, and teratogenicity in rats and rabbits. Advise pregnant women of the potential risk to a fetus; and advise females of reproductive potential to use effective contraception during treatment with LENVIMA and for at least 30 days after the last dose.

Adverse Reactions

In DTC, the most common adverse reactions (‰¥30%) observed in LENVIMA-treated patients were hypertension (73%), fatigue (67%), diarrhea (67%), arthralgia/myalgia (62%), decreased appetite (54%), decreased weight (51%), nausea (47%), stomatitis (41%), headache (38%), vomiting (36%), proteinuria (34%), palmar-plantar erythrodysesthesia syndrome (32%), abdominal pain (31%), and dysphonia (31%). The most common serious adverse reactions (‰¥2%) were pneumonia (4%), hypertension (3%), and dehydration (3%). Adverse reactions led to dose reductions in 68% of LENVIMA-treated patients; 18% discontinued LENVIMA. The most common adverse reactions (‰¥10%) resulting in dose reductions were hypertension (13%), proteinuria (11%), decreased appetite (10%), and diarrhea (10%); the most common adverse reactions (‰¥1%) resulting in discontinuation of LENVIMA were hypertension (1%) and asthenia (1%).

In RCC, the most common adverse reactions (‰¥30%) observed in LENVIMA + everolimus“treated patients were diarrhea (81%), fatigue (73%), arthralgia/myalgia (55%), decreased appetite (53%), vomiting (48%), nausea (45%), stomatitis (44%), hypertension (42%), peripheral edema (42%), cough (37%), abdominal pain (37%), dyspnea (35%), rash (35%), decreased weight (34%), hemorrhagic events (32%), and proteinuria (31%). The most common serious adverse reactions (‰¥5%) were renal failure (11%), dehydration (10%), anemia (6%), thrombocytopenia (5%), diarrhea (5%), vomiting (5%), and dyspnea (5%). Adverse reactions led to dose reductions or interruption in 89% of patients. The most common adverse reactions (‰¥5%) resulting in dose reductions were diarrhea (21%), fatigue (8%), thrombocytopenia (6%), vomiting (6%), nausea (5%), and proteinuria (5%). Treatment discontinuation due to an adverse reaction occurred in 29% of patients.

In HCC, the most common adverse reactions (‰¥20%) observed in LENVIMA-treated patients were hypertension (45%), fatigue (44%), diarrhea (39%), decreased appetite (34%), arthralgia/myalgia (31%), decreased weight (31%), abdominal pain (30%), palmar-plantar erythrodysesthesia syndrome (27%), proteinuria (26%), dysphonia (24%), hemorrhagic events (23%), hypothyroidism (21%), and nausea (20%). The most common serious adverse reactions (‰¥2%) were hepatic encephalopathy (5%), hepatic failure (3%), ascites (3%), and decreased appetite (2%). Adverse reactions led to dose reductions or interruption in 62% of patients. The most common adverse reactions (‰¥5%) resulting in dose reductions were fatigue (9%), decreased appetite (8%), diarrhea (8%), proteinuria (7%), hypertension (6%), and palmar-plantar erythrodysesthesia syndrome (5%). Treatment discontinuation due to an adverse reaction occurred in 20% of patients. The most common adverse reactions (‰¥1%) resulting in discontinuation of LENVIMA were fatigue (1%), hepatic encephalopathy (2%), hyperbilirubinemia (1%), and hepatic failure (1%).

In EC, the most common adverse reactions (‰¥20%) observed in LENVIMA + pembrolizumab – treated patients were fatigue (65%), hypertension (65%), musculoskeletal pain (65%), diarrhea (64%), decreased appetite (52%), hypothyroidism (51%), nausea (48%), stomatitis (43%), vomiting (39%), decreased weight (36%), abdominal pain (33%), headache (33%), constipation (32%), urinary tract infection (31%), dysphonia (29%), hemorrhagic events (28%), hypomagnesemia (27%), palmar-plantar erythrodysesthesia (26%), dyspnea (24%), cough (21%) and rash (21%).

Adverse reactions led to dose reduction or interruption in 88% of patients receiving LENVIMA. The most common adverse reactions (‰¥5%) resulting in dose reduction or interruption of LENVIMA were fatigue (32%), hypertension (26%), diarrhea (18%), nausea (13%), palmar-plantar erythrodysesthesia (13%), vomiting (13%), decreased appetite (12%), musculoskeletal pain (11%), stomatitis (9%), abdominal pain (7%), hemorrhages (7%), renal impairment (6%), decreased weight (6%), rash (5%), headache (5%), increased lipase (5%) and proteinuria (5%).

Fatal adverse reactions occurred in 3% of patients receiving LENVIMA + pembrolizumab, including gastrointestinal perforation, RPLS with intraventricular hemorrhage, and intracranial hemorrhage.

Serious adverse reactions occurred in 52% of patients receiving LENVIMA + pembrolizumab. Serious adverse reactions in ‰¥3% of patients were hypertension (9%), abdominal pain (6%), musculoskeletal pain (5%), hemorrhage (4%), fatigue (4%), nausea (4%), confusional state (4%), pleural effusion (4%), adrenal insufficiency (3%), colitis (3%), dyspnea (3%), and pyrexia (3%).

Permanent discontinuation due to adverse reaction (Grade 1-4) occurred in 21% of patients who received LENVIMA + pembrolizumab. The most common adverse reactions (>2%) resulting in discontinuation of LENVIMA were gastrointestinal perforation or fistula (2%), muscular weakness (2%), and pancreatitis (2%).

Use in Specific Populations

Because of the potential for serious adverse reactions in breastfed infants, advise women to discontinue breastfeeding during treatment and for at least 1 week after last dose. LENVIMA may impair fertility in males and females of reproductive potential.

No dose adjustment is recommended for patients with mild (CLcr 60-89 mL/min) or moderate (CLcr 30-59 mL/min) renal impairment. LENVIMA concentrations may increase in patients with DTC, RCC or EC and severe (CLcr 15-29 mL/min) renal impairment. Reduce the dose for patients with DTC, RCC, or EC and severe renal impairment. There is no recommended dose for patients with HCC and severe renal impairment. LENVIMA has not been studied in patients with end stage renal disease. No dose adjustment is recommended for patients with HCC and mild hepatic impairment (Child-Pugh A). There is no recommended dose for patients with HCC with moderate (Child-Pugh B) or severe (Child-Pugh C) hepatic impairment.

No dose adjustment is recommended for patients with DTC, RCC, or EC and mild or moderate hepatic impairment. LENVIMA concentrations may increase in patients with DTC, RCC, or EC and severe hepatic impairment. Reduce the dose for patients with DTC, RCC, or EC and severe hepatic impairment.

LENVIMA (lenvatinib) is available as 10 mg and 4 mg capsules.

Please see Prescribing Information for LENVIMA (lenvatinib) at http://www.lenvima.com/pdfs/prescribing-information.pdf.

About the Eisai and Merck Strategic Collaboration

In March 2018, Eisai and Merck, known as MSD outside the United States and Canada, through an affiliate, entered into a strategic collaboration for the worldwide co-development and co-commercialization of LENVIMA. Under the agreement, the companies will jointly develop, manufacture and commercialize LENVIMA, both as monotherapy and in combination with Mercks anti-PD-1 therapy KEYTRUDA.

In addition to ongoing clinical studies evaluating the KEYTRUDA plus LENVIMA combination across several different tumor types, the companies have jointly initiated new clinical studies through the LEAP (LEnvatinib And Pembrolizumab) clinical program and are evaluating the combination in 13 different tumor types (endometrial carcinoma, hepatocellular carcinoma, melanoma, non-small cell lung cancer, renal cell carcinoma, squamous cell carcinoma of the head and neck, urothelial cancer, biliary tract cancer, colorectal cancer, gastric cancer, glioblastoma, ovarian cancer and triple-negative breast cancer) across 19 clinical trials.

Mercks Focus on Cancer

Our goal is to translate breakthrough science into innovative oncology medicines to help people with cancer worldwide. At Merck, the potential to bring new hope to people with cancer drives our purpose and supporting accessibility to our cancer medicines is our commitment. As part of our focus on cancer, Merck is committed to exploring the potential of immuno-oncology with one of the largest development programs in the industry across more than 30 tumor types. We also continue to strengthen our portfolio through strategic acquisitions and are prioritizing the development of several promising oncology candidates with the potential to improve the treatment of advanced cancers. For more information about our oncology clinical trials, visit www.merck.com/clinicaltrials.

About Merck

For more than 125 years, Merck, known as MSD outside of the United States and Canada, has been inventing for life, bringing forward medicines and vaccines for many of the worlds most challenging diseases in pursuit of our mission to save and improve lives. We demonstrate our commitment to patients and population health by increasing access to health care through far-reaching policies, programs and partnerships. Today, Merck continues to be at the forefront of research to prevent and treat diseases that threaten people and animals “ including cancer, infectious diseases such as HIV and Ebola, and emerging animal diseases “ as we aspire to be the premier research-intensive biopharmaceutical company in the world. For more information, visit www.merck.com and connect with us on Twitter, Facebook, Instagram, YouTube and LinkedIn.

Eisais Focus on Cancer

Eisai focuses on the development of anticancer drugs, targeting the tumor microenvironment (with experience and knowledge from existing in-house discovered compounds) and the driver gene mutation and aberrant splicing (leveraging RNA Splicing Platform) as areas (Ricchi) where real patient needs are still unmet, and where Eisai can aim to become a frontrunner in oncology. Eisai aspires to discover innovative new drugs with new targets and mechanisms of action from these Ricchi, with the aim of contributing to the cure of cancers.

About Eisai

Eisai is a leading global research and development-based pharmaceutical company headquartered in Japan, with approximately 10,000 employees worldwide. We define our corporate mission as giving first thought to patients and their families and to increasing the benefits health care provides, which we call our human health care (hhc) philosophy. We strive to realize our hhc philosophy by delivering innovative products in therapeutic areas with high unmet medical needs, including Oncology and Neurology. In the spirit of hhc, we take that commitment even further by applying our scientific expertise, clinical capabilities and patient insights to discover and develop innovative solutions that help address societys toughest unmet needs, including neglected tropical diseases and the Sustainable Development Goals.

For more information about Eisai, please visit www.eisai.com (for global), us.eisai.com (for U.S.) or www.eisai.eu (for Europe, Middle East, Africa), and connect with us on Twitter (U.S. and global) and LinkedIn (for U.S.).

Forward-Looking Statement of Merck & Co., Inc., Kenilworth, N.J., USA

This news release of Merck & Co., Inc., Kenilworth, N.J., USA (the company) includes forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of the companys management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline products that the products will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.

Risks and uncertainties include but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of the global outbreak of novel coronavirus disease (COVID-19); the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the companys ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the companys patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.

The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the companys 2019 Annual Report on Form 10-K and the companys other filings with the Securities and Exchange Commission (SEC) available at the SECs Internet site (www.sec.gov).

Merck Media Relations

Pamela Eisele: (267) 305-3558

Rebecca Newberry: (484) 678-2952

Merck Investor Relations

Peter Dannenbaum: (908) 740-1037

Courtney Ronaldo: (908) 740-6132

Eisai Inc. Media Relations

Michele Randazzo: (551) 579-4465

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