On November 3, 2023 Cardinal Health (NYSE: CAH) reported first quarter fiscal 2024 revenue of $54.8 billion, an increase of 10% from the first quarter of last year (Press release, Cardinal Health, NOV 3, 2023, View Source [SID1234636879]). First quarter GAAP operating loss was $14 million due to a non-cash, pre-tax goodwill impairment of $581 million related to the Medical segment, due to an increase in the discount rate.² GAAP diluted earnings per share (EPS) were $0.02, primarily due to this impairment, net of tax effects. Non-GAAP operating earnings increased 35% to $571 million in the quarter, driven by significant increases in both Pharmaceutical segment profit and Medical segment profit. Non-GAAP diluted EPS increased 44% to $1.73, reflecting the increase in non-GAAP operating earnings, a lower share count and lower interest and other expense, partially offset by a higher non-GAAP effective tax rate.

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"With strong first quarter results and an improved outlook for the year, we are continuing our operating momentum into fiscal 2024," said Jason Hollar, CEO of Cardinal Health. "In Q1, we delivered significant profit growth in both the Pharmaceutical and Medical segments, which along with our favorable capital structure and opportunistic capital deployment, gives us confidence to raise fiscal 2024 non-GAAP EPS guidance. Across the enterprise, we continue to prioritize focused execution to best serve our customers and create value for our shareholders."

Q1 FY24 summary

Q1 FY24

Q1 FY23

Y/Y

Revenue

$54.8 billion

$49.6 billion

10 %

Operating earnings/(loss)

$(14) million

$137 million

N.M.

Non-GAAP operating earnings

$571 million

$423 million

35 %

Net earnings attributable to Cardinal Health, Inc.

$5 million

$110 million

N.M.

Non-GAAP net earnings attributable to Cardinal Health, Inc.

$433 million

$328 million

32 %

Effective Tax Rate3

122.5 %

(0.7) %

Non-GAAP Effective Tax Rate

22.5 %

16.9 %

Diluted EPS attributable to Cardinal Health, Inc.

$0.02

$0.40

N.M.

Non-GAAP diluted EPS attributable to Cardinal Health, Inc.

$1.73

$1.20

44 %

Segment results

Pharmaceutical segment

Q1 FY24

Q1 FY23

Y/Y

Revenue

$51.0 billion

$45.8 billion

11 %

Segment profit

$507 million

$431 million

18 %

First quarter revenue for the Pharmaceutical segment increased 11% to $51.0 billion, driven by brand and specialty pharmaceutical sales growth from existing customers.

Pharmaceutical segment profit increased 18% to $507 million in the first quarter, driven by a higher contribution from brand and specialty products, including distribution of COVID-19 vaccines, and positive generics program performance.

Medical segment

Q1 FY24

Q1 FY23

Y/Y

Revenue

$3.8 billion

$3.8 billion

— %

Segment profit

$71 million

$(8) million

N.M.

First quarter revenue for the Medical segment was flat at $3.8 billion. This reflects lower PPE volumes and pricing, offset by growth in at-Home Solutions and inflationary impacts, including mitigation initiatives. PPE volumes and pricing includes the impact from the prior year exit of our non-healthcare gloves portfolio in connection with our simplification strategy.

Medical segment profit increased to $71 million in the first quarter, driven by an improvement in net inflationary impacts, including mitigation initiatives.

Fiscal year 2024 outlook1

The company raised its fiscal 2024 guidance range for non-GAAP diluted earnings per share attributable to Cardinal Health, Inc. to $6.75 to $7.00, from $6.50 to $6.75.

This guidance includes an update to the company’s Pharmaceutical segment profit outlook for fiscal 2024 to 7% to 9% growth, from 4% to 6% growth. Additionally, the company updated expectations for interest and other to $100 million to $120 million, from $110 million to $130 million, and for diluted weighted average shares outstanding of approximately 249 million, from 250 million to 253 million.

The company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. See "Use of Non-GAAP Measures" following the attached schedules for additional explanation.

Recent highlights

Cardinal Health initiated a $500M accelerated share repurchase program in the first quarter, which was completed in October.
Cardinal Health began distributing the recently commercialized COVID-19 vaccines to customers following FDA approval in September.
Cardinal Health launched its Kangaroo OMNI Enteral Feeding Pump in the U.S., designed to help provide enteral feeding patients with more options to meet their personalized needs throughout their enteral feeding journey.
Cardinal Health was named to the 100 Best Corporate Citizens ranking by 3BL Media based on an assessment of environmental, social and governance (ESG) transparency and performance of the 1,000 largest public companies in the U.S.
Cardinal Health was named to Seramount’s 2023 lists of 100 Best Companies, Top Companies for Executive Women, and Best Companies for Multicultural Women.
Upcoming webcasted investor events

Evercore ISI Healthcare Conference at 10:00 a.m. EST, November 29, 2023
J.P. Morgan Healthcare Conference, January 8-11, 2024
Webcast
Cardinal Health will host a webcast today at 8:30 a.m. EST to discuss first quarter results. To access the webcast and corresponding slide presentation, go to the Investor Relations page at ir.cardinalhealth.com. No access code is required.

Presentation slides and a webcast replay will be available on the Investor Relations page for 12 months.

On November 3, 2023 Aulos Bioscience, an immuno-oncology company working to revolutionize cancer care through the development of best-in-class IL-2 therapeutics, reported new data from its Phase 1/2 clinical trial of AU-007 at the 38th Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) Annual Meeting in San Diego, California (Press release, Aulos Bioscience, NOV 3, 2023, View Source [SID1234636878]). The data, from Phase 1 dose escalation cohorts, continue to indicate that AU-007 is well tolerated as a monotherapy treatment or in a combination therapy regimen with low-dose, subcutaneous aldesleukin (recombinant human IL-2). The data also demonstrate early evidence of anti-tumor activity in patients with several solid tumor cancer types.

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"These encouraging new data support AU-007’s distinct advantages in the IL-2 class," said Aron Knickerbocker, Aulos Bioscience’s chief executive officer. "AU-007 continues to be well tolerated by patients, with no pulmonary or generalized edema, no vasculature leakage, and no dose-limiting toxicity to date. We are particularly encouraged by the initial signs of clinical efficacy that have been seen even during dose escalation, which show that heavily pre-treated patients are benefiting from a treatment regimen of AU-007 dosed in combination with low doses of aldesleukin. At this point, we are observing the greatest anti-tumor activity in patients with tumors known to be sensitive to immune-modulating drugs. Tumor shrinkage has been observed in patients with melanoma, bladder, kidney and lung cancers. These data support our decision to focus our Phase 2 expansion cohorts in melanoma, renal cell carcinoma and non-small cell lung cancer. We look forward to presenting clinical data from the Phase 2 expansion cohorts next year."

Created by Biolojic Design, AU-007 is the first human IgG1 monoclonal antibody designed using artificial intelligence to be tested in a clinical trial. Unique among interleukin-2 (IL-2) therapeutics in development, the antibody’s computational design allows it to bind precisely to the portion of IL-2 that binds to CD25. Consequently, AU-007 prevents IL-2 from binding to high-affinity IL-2 receptors on regulatory T cells (Tregs), vasculature, pulmonary tissue and eosinophils, and redirects IL-2 to medium-affinity receptors on effector T cells (Teffs) and natural killer (NK) cells. This novel mechanism of action allows Teffs and NK cells to expand and kill tumor cells.

The Phase 1 data presented at SITC (Free SITC Whitepaper) is based on 42 patients who received study treatment as of October 13, 2023. AU-007 alone or in combination with aldesleukin was generally well tolerated as administered in the following cohorts:

Arm 1A as a monotherapy treatment up to 12 mg/kg
Arm 1B with 4.5 mg/kg of AU-007 and escalating aldesleukin (up to 270K IU/kg) given only once on Day 1
Arm 1C with 4.5 mg/kg of AU-007 in combination with aldesleukin (up to 135K IU/kg) also given every two weeks
All drug-related adverse events were Grade 1 or 2, with the exception of three transient Grade 3 or 4 lymphopenias that were not associated with adverse outcomes in patients receiving AU-007 and aldesleukin. Transient lymphopenia is a known effect of IL-2 treatment. No patients were discontinued for a drug-related adverse event and no dose-limiting toxicities were observed.

Additionally, preliminary evidence of anti-tumor activity was observed in heavily pre-treated patients, including in patients with melanoma, renal cell carcinoma (RCC) and non-small cell lung cancer (NSCLC) whose tumors had progressed through checkpoint inhibitors. Of note, CT scans of a patient with melanoma, who had progressed on anti-CTLA-4 and anti-PD-1 therapy without a response, show a 40% decrease in target tumor lesions, with shrinkage beginning at eight weeks and shrinking further at weeks 16 and 24. The patient continues on the study. Scans of a second patient with RCC, whose tumors had progressed through prior anti-PD-1 therapy, show 20% shrinkage in target tumor lesions beginning at eight weeks, and the patient continues on the study. Across the Phase 1 dose escalation cohorts, nine of 33 (27%) tumor evaluable patients had a best response of stable disease, and 16 patients continue treatment as of the data cutoff date.

As previously reported in October, new pharmacodynamic data from the Phase 1 dose escalation study show favorable trends toward decreasing Tregs with concordant increases in the CD8 Teff:Treg ratio, initial interferon-gamma increases, and absolute eosinophil decreases. These findings are consistent with the novel mechanism of action of AU-007 redirecting IL-2 away from the cells that express high-affinity IL-2 receptors that contain CD25, which include Tregs, vascular endothelial cells and eosinophils, and toward CD8 Teff cells and NK cells that can elicit anti-tumor immune effects.

The Phase 1/2 clinical trial of AU-007 is a two-part, open label, first-in-human study evaluating the safety, tolerability, immunogenicity and clinical activity of AU-007 in patients with unresectable locally advanced or metastatic cancer. The trial is currently enrolling patients at multiple locations in the United States and Australia. The company anticipates transitioning to the Phase 2 portion of the AU-007 study by late 2023 or early 2024, with Phase 2 dose expansion cohorts planned in melanoma, RCC and NSCLC.

The poster presentation is available on the Aulos Bioscience website in the Abstracts and Publications section.

To learn more about the AU-007 clinical trial program, please visit ClinicalTrials.gov (identifier: NCT05267626). For patients and providers in the U.S., please visit www.solidtumorstudy.com. For patients and health professionals in Australia, please visit www.solidtumourstudy.com.

About AU-007
AU-007 is a computationally designed, human IgG1 monoclonal antibody that is highly selective to the CD25-binding portion of IL-2. With a mechanism of action unlike any other IL-2 therapeutic in development, AU-007 leverages IL-2 to reinforce anti-tumor immune effects. This is achieved by preventing IL-2, either exogenous or secreted by effector T cells, from binding to trimeric receptors on regulatory T cells while still allowing IL-2 to bind and expand effector T cells and NK cells. This prevents the negative feedback loop caused by other IL-2-based treatments and biases the immune system toward activation over suppression. AU-007 also prevents IL-2 from binding to CD25-containing receptors on eosinophils, as well as vasculature and pulmonary endothelium, which may significantly reduce the vascular leak syndrome and pulmonary edema associated with high-dose IL-2 therapy.

On November 3, 2023 Allogene Therapeutics, Inc. (Nasdaq: ALLO), a clinical-stage biotechnology company pioneering the development of allogeneic CAR T (AlloCAR T) products for cancer, reported data highlighting the Company’s next generation Cloak and Dagger technologies designed to help enhance engraftment, expansion and the persistence of AlloCAR T cell candidates, at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) Annual Meeting November 1-5, 2023, in San Diego, CA (Press release, Allogene, NOV 3, 2023, View Source [SID1234636877]).

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The development of "off-the-shelf" CAR T products that utilize cells from healthy donors has the potential to make CAR T therapies scalable and accessible to more patients. However, the effectiveness of allogeneic CAR T cells requires controlling rejection of the allogeneic CAR T cells by the patient’s immune system. Allogene’s proprietary Cloak and Dagger technologies are two novel strategies the Company is investigating to help control immune rejection and enhance expansion, persistence, and performance of AlloCAR T cells with the use of standard lymphodepletion regimens.

"These promising data show that both our Cloak and Dagger technology platforms can engineer AlloCAR T cells to minimize the potential of rejection by host immune cells, without impacting performance and in some cases, enhancing efficacy," said Zachary Roberts, M.D., Ph.D., Executive Vice President, Research & Development and Chief Medical Officer of Allogene. "These innovative approaches are intended to simplify the lymphodepletion requirement for allogeneic CAR T products, and may provide a path to further expand the potential of off-the-shelf CAR T products beyond current targets and indications."

The Cloak platform technology is designed to prevent AlloCAR T cells from being recognized by host T cells without triggering substantial natural killer (NK) cell rejection while preserving CAR T cell function. Data shown previously demonstrated that knockout of RFX5, a transcriptional regulator that controls expression of HLA molecules, enhanced survival of allogeneic CAR T cells in the presence of host T cells and elicited only minor NK cell reactivity, thereby effectively mitigating rejection.

This preclinical study evaluated an additional anti-rejection approach to immune evasion by inactivating CD58 and ICAM-1, key components of the immune synapse required for effective recognition and lysis by alloreactive T/NK cells. In the study, the survival of "cloaked" cells was assessed in mixed lymphocyte reaction assays with T cells and NK cells. The knockout of CD58 and ICAM-1 effectively reduced T cell rejection of allogeneic CAR T cells without triggering NK cell rejection or impacting effector function and worked additively with the knockout of RFX5.

The Dagger platform technology arms AlloCAR T cells with a CD70 CAR designed to recognize and deplete CD70-positive host immune cells while enabling tumor-targeting anti-CD19 AlloCAR T cells to resist rejection from the host immune cells. This endows the CAR-expressing T cells with dual specificity against tumors that co-express CD19 and CD70, which includes approximately 70% of patients with large B-cell lymphoma (LBCL). As a result, this potential advance provides both a prolonged window of persistence during which AlloCAR T cells can expand and actively target and destroy cancer cells as well as insure against CD19 loss-mediated tumor escape, a known mechanism of resistance to CD19 CAR T therapy.

The Dagger technology, a feature of our ALLO-316 candidate, has clinically demonstrated its unique immunomodulatory effect, contributing to robust AlloCAR T cell expansion and persistence even with relatively lower doses of CAR T cells and lymphodepletion than in other AlloCAR T programs. The ongoing Phase 1 dose escalation TRAVERSE study using investigational ALLO-316 in patients with advanced or metastatic renal cell carcinoma (RCC) who have progressed on standard therapies including an immune checkpoint inhibitor and a VEGF-targeting therapy.

On November 3, 2023 Allogene Therapeutics, Inc. (Nasdaq: ALLO), a clinical-stage biotechnology company pioneering the development of allogeneic CAR T (AlloCAR T) products for cancer, reported preclinical data on a novel off-the-shelf AlloCAR T product candidate targeting Claudin18.2 (CLDN18.2)-positive gastric and pancreatic tumors, at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) Annual Meeting November 1-5, 2023, in San Diego, CA (Press release, Allogene, NOV 3, 2023, View Source [SID1234636876]).

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Data presented at SITC (Free SITC Whitepaper) describes preclinical development of Allogene’s novel allogeneic CLDN18.2 CAR T product candidate with the potential to provide clinical benefit to patients with a single, off-the-shelf infusion. CLDN18.2 has emerged as a promising therapeutic target, with high expression in many types of epithelial tumors including gastric, esophageal, pancreatic and ovarian cancers.

"Proof of concept for a CAR T targeting Claudin18.2 has been established, but limitations of autologous therapies, including the need for leukapheresis, long manufacturing wait times in patients with recent chemotherapy exposure, and high tumor and comorbidity burdens, would likely restrict availability to patients," said Zachary Roberts, M.D., Ph.D., Executive Vice President of Research & Development and Chief Medical Officer of Allogene. "An allogeneic product, derived from healthy donors and readily available to patients at the time of progression has the potential to overcome such challenges. We believe these preclinical data support a pathway to targeting CLDN18.2-positive solid tumors with an AlloCAR T product. This preclinical research further elucidates the depth of opportunity for our solid tumor program, and the potential to bring one of the most exciting modalities in modern times to patients in need."

The preclinical evaluation identified candidates with potent activity in both short-term and repeat stimulation in vitro cytotoxicity assays. The lead IND candidates researched displayed robust antitumor activity at low cell doses in vivo against both subcutaneous and intraperitoneal gastric cancer models. Data suggest the existence of a therapeutic window and the potential to target CLDN18.2 with allogeneic off-the-shelf CAR T cells without significant off tumor toxicity. These data were the foundation for ALLO-182, currently in the IND-enabling phase of development. ALLO-182 together with ALLO-213, an allogeneic CAR T targeting DLL3, represent the company’s early-stage solid tumor product candidates.

On November 3, 2023 Alligator Bioscience (Nasdaq Stockholm: ATORX) reported a poster presentation on ATOR-4066, a Neo-X-Prime bispecific antibody targeting CD40 and CEACAM5, at the 2023 SITC (Free SITC Whitepaper) (Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper)) Annual Meeting, being held in San Diego November 1-5, 2023 (Press release, Alligator Bioscience, NOV 3, 2023, View Source [SID1234636874]).

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The presentation, entitled "Combination treatment with ATOR-4066, a Neo-X-Prime bispecific antibody targeting CD40 and CEACAM5, and anti-PD-1 reverses T cell exhaustion in vitro", outlines the use of CEACAM5 expressing tumor models to study the anti-tumor efficacy of ATOR-4066 and to analyze induction of immunological memory in vivo.

The presentation highlights that:

ATOR-4066 has a superior anti-tumor effect compared to a CD40 monospecific antibody
ATOR-4066 activation of CD40 expressing cells is CEACAM5-conditional with no activation in absence of CEACAM5 indicating a potential for a wide therapeutic window
ATOR-4066 is well positioned, with distinct advantages compared to other CD40 or CEACAM5 targeting therapies, such as strong anti-tumor effect in vivo also in larger tumors with heterogenous CEACAM5 expression
ATOR-4066 induces immunological memory in vivo and were able to clear homologous tumors upon re-challenge
Combining ATOR-4066 with anti-PD-1 in vitro in a mixed lymphocyte reaction assay[1] produces a clear synergistic effect observed on reactivation of exhausted T cells as measured by an increase in interferon gamma production
Using dissociated tumor cells from gastric cancer patients, ATOR-4066 induced activation of multiple tumor infiltrating immune cell populations (i.e. B cells, macrophages and T cells)
"To have this abstract accepted for presentation at this year’s prestigious SITC (Free SITC Whitepaper) annual meeting is a testament both to the promise of ATOR-4066 and to the diligent work of the Alligator scientific team," said Søren Bregenholt, CEO of Alligator Bioscience. "These data emphasize the potential of ATOR-4066 both as a monotherapy and as a combination partner for checkpoint inhibitors to further enhance the immune response in tumors and we continue to advance ATOR-4066 towards the clinic."

Poster Presentation Details
Abstract Number: 837
Title: Combination treatment with ATOR-4066, a Neo-X-Prime bispecific antibody targeting CD40 and CEACAM5, and anti-PD-1 reverses T cell exhaustion in vitro
Date/Time: Friday 3 November, 2023, 9.00 am – 7.00 pm PDT
Presenter: Ida Uddbäck, Scientist, Alligator Bioscience
Location: Exhibit Halls A and B1, San Diego Convention Center

[1] Mixed lymphocyte reaction (MLR) – a common method for assessing the cellular immune response.