On October 31, 2018 PRA Health Sciences, Inc. ("PRA," "we," "us" or the "Company") (NASDAQ: PRAH) reported financial results for the quarter ended September 30, 2018 (Press release, PRA Health Sciences, OCT 31, 2018, View Source;p=RssLanding&cat=news&id=2374565 [SID1234530527]).

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For the three months ended September 30, 2018, revenue was $717.6 million, which represents growth of 23.3%, or $135.6 million, compared to the third quarter of 2017 at actual foreign exchange rates. On a constant currency basis, revenue grew $139.7 million, an increase of 24.0% compared to the third quarter of 2017. On January 1, 2018, the Company adopted Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers," or ASC 606, using the modified retrospective method for all contracts that were not completed as of January 1, 2018. Prior periods have not been restated under this guidance and remain as previously reported. The primary impact of applying this new guidance on our statement of operations is that (i) we now recognize reimbursements from our customers for payments to investigators as revenue, whereas these payments and costs were previously recorded on a net basis, and (ii) we include all reimbursed costs in the total project costs when measuring our progress under our research contracts instead of recording these amounts on a separate basis.

Excluding the impact of the adoption of ASC 606 and reimbursement revenue, revenue increased $78.4 million, which represents growth of 15.8% at actual foreign exchange rates and 16.3% on a constant currency basis. Organic revenue growth, excluding the adoption of ASC 606, reimbursement revenue and revenue attributable to our Data Solutions segment, was 7.7% at actual foreign exchange rates and 8.2% on a constant currency basis.

Net new business for our Clinical Research segment for the quarter ended September 30, 2018 was $657.2 million, representing a net book-to-bill ratio of 1.28 for the period. Our calculation of the net book-to-bill ratio excludes the revenue impact of adopting ASC 606, excludes reimbursement revenue and excludes $60.6 million of revenue from our Data Solutions segment. Net new business during the quarter contributed to an ending backlog of $4.1 billion at September 30, 2018.

"We are delighted to have delivered another quarter with strong financial results on many fronts" said Colin Shannon, PRA’s Chief Executive Officer. "Our key financial metrics continue to improve, as highlighted by our new business wins, our strong revenue growth and our expanding margins. Our financial performance reflects our commitment to client delivery and the efforts of our employees."

Direct costs were $371.4 million during the three months ended September 30, 2018 compared to $326.9 million for the third quarter of 2017. The increase in direct costs was primarily due to an increase in labor-related costs of $11.1 million in our Clinical Research segment as we continue to hire billable staff to ensure appropriate staffing levels. In addition, our Data Solutions segment resulted in $29.4 million of incremental direct costs when compared to the third quarter of 2017. We also had a favorable impact of $6.1 million from fluctuation in foreign currency exchange rates during the three months ended September 30, 2018. Excluding the impact of the adoption of ASC 606 and reimbursement revenue, direct costs were 64.8% of revenue during the third quarter of 2018 compared to 66.1% of revenue during the third quarter of 2017.

Selling, general and administrative expenses were $92.6 million during the three months ended September 30, 2018 compared to $79.3 million for the third quarter of 2017. Excluding the impact of the adoption of ASC 606 and reimbursement revenue, selling, general and administrative costs were 16.2% of revenue during the third quarter of 2018 compared to 16.0% of revenue during the third quarter of 2017.

GAAP net income was $1.5 million for the three months ended September 30, 2018, or $0.02 per share on a diluted basis, compared to GAAP net income of $48.2 million for the three months ended September 30, 2017, or $0.73 per share on a diluted basis.

EBITDA was $64.4 million for the three months ended September 30, 2018, representing an increase of 6.7% compared to the third quarter of 2017. Adjusted EBITDA was $120.9 million for the three months ended September 30, 2018, representing growth of 29.6% compared to the third quarter of 2017.

Adjusted net income was $74.8 million for the three months ended September 30, 2018, representing growth of 29.3% compared to the third quarter of 2017. Adjusted net income per diluted share was $1.13 for the three months ended September 30, 2018, representing growth of 28.4% compared to the third quarter of 2017.

A reconciliation of our non-GAAP measures, including EBITDA, adjusted EBITDA, adjusted net income, adjusted net income per diluted share and our 2018 guidance, to the corresponding GAAP measures is included in this press release.

Nine Months Ended September 30, 2018 Financial Highlights

For the nine months ended September 30, 2018, revenue was $2,142.3 million, which represents growth of 33.6%, or $538.8 million, compared to the nine months ended September 30, 2017 at actual foreign exchange rates. On a constant currency basis, revenue grew $520.3 million, representing growth of 32.4% compared to the nine months ended September 30, 2017.

Excluding the impact of the adoption of ASC 606 and reimbursement revenue, revenue increased $328.3 million, which represents growth of 23.8% at actual foreign exchange rates and 22.8% on a constant currency basis. Organic revenue growth, excluding the adoption of ASC 606, reimbursement revenue and revenue attributable to our Data Solutions segment, was 12.6% at actual foreign exchange rates and 11.6% on a constant currency basis.

Reported GAAP income from operations was $184.6 million, reported GAAP net income was $82.5 million and reported GAAP net income per diluted share was $1.24 for the nine months ended September 30, 2018.

Adjusted Net Income was $197.2 million for the nine months ended September 30, 2018, an improvement of 31.4% compared to the same period in 2017. Adjusted Net Income per diluted share was $2.98 for the nine months ended September 30, 2018, up 30.7% compared to the same period in 2017.

Guidance

The Company is maintaining its 2018 revenue guidance of between $2.87 billion and $2.92 billion, representing as reported growth of 47% to 50%, constant currency growth of 18% to 20% excluding the impact of adopting ASC 606 and reimbursement revenue, and constant currency organic growth of 10% to 12% excluding the impact of adopting ASC 606 and reimbursement revenue. We are updating our GAAP net income per diluted share to between $2.21 and $2.26 and Adjusted Net Income per diluted share to between $4.22 and $4.27. We continue to estimate our annual effective income tax rate at approximately 24%, which includes the expected impact of the U.S. Tax Cuts and Jobs Act. Our effective tax rate may differ from this estimate, due to, among other things, changes to estimates of the geographic allocation of our pre-tax income as well as changes in guidance from regulatory agencies related to interpretation, analysis and guidance of the U.S. Tax Cuts and Jobs Act.

Our guidance assumes a EURO rate of 1.17 and a GBP rate of 1.33. All other foreign currency exchange rates are as of September 30, 2018.

Conference Call Details

PRA will host a conference call at 9:00 a.m. ET on November 1, 2018, to discuss the contents of this release and other relevant topics. To participate, please dial (877) 930-8062 within the United States or (253) 336-7647 outside the United States approximately 10 minutes before the scheduled start of the call. The conference ID for the call is 9668676. The conference call will also be accessible, live via audio broadcast, on the Investor Relations section of the PRA website at investors.prahs.com. A replay of the conference call will be available online at investors.prahs.com. In addition, an audio replay of the call will be available for one week following the call and can be accessed by dialing (855) 859-2056 within the United States or (404) 537-3406 outside the United States. The replay ID is 9668676.

Additional Information

A financial supplement with third quarter 2018 results, which should be read in conjunction with this press release, may be found in the Investor Relations section of our website at investors.prahs.com in a document titled "Q3 2018 Earnings Presentation."

On October 31, 2018 Epigenomics AG (FSE: ECX, OTCQX: EPGNY) reported the Veterans Administration New York Harbor Healthcare System (VA-Manhattan) is commencing a study to assess the adherence impact of offering a blood-based colorectal cancer screening test and colonoscopy completion in patients who have refused colonoscopy and fecal immunochemical test (FIT) (Press release, Epigenomics, OCT 31, 2018, View Source [SID1234530405]).

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The VA-Manhattan has received grants from the American Society for Gastrointestinal Endoscopy (ASGE) and New York Society for Gastrointestinal Endoscopy (NYSGE) to assist in the performance of this study. The study will be managed through The Narrows Institute. Epigenomics will provide testing and budgetary support for testing.

Colorectal cancer (CRC) is the fourth most common cancer and the second deadliest cancer in the US. However, CRC is a preventable condition with screening being one of the most impactful public health contributions to prevention. Screening rates are suboptimal due to patient barriers to colonoscopy or stool-based testing. Unscreened patients contribute to approximately 43% of new CRC cases, 70% of CRC deaths, and 76% of CRC treatment expenditures.

The goal of the VA-Manhattan study is to assess the potential of a blood-based test as an acceptable alternative for these screen-resistant individuals. If the proposed study shows high acceptance of the blood test as well as reliable colonoscopy follow up for positive tests, then the blood test could play an important adjunctive role in improving overall screening rates.

"Some people simply don’t want colonoscopy or stool-based colorectal cancer screening, so we need to understand how effective alternative methods such as a blood-based test are at engaging these individuals," said Dr. Peter Liang, the study principal investigator and a gastroenterologist at the VA-Manhattan.

"Unscreened patients contribute significantly to new CRC cases, deaths, and treatment costs," said Greg Hamilton, CEO of Epigenomics AG. "Addressing the unscreened challenge with a blood test could unquestionably have an impact to colorectal cancer management. We look forward to the study outcomes as they have the potential to support the use of a blood test on screening-resistant patients."

On October 31, 2018 Aeterna Zentaris Inc. (NASDAQ:AEZS) (TSX: AEZS) reported that it will announce its third quarter 2018 financial and operating results after market close on Tuesday, November 6, 2018 (Press release, AEterna Zentaris, OCT 31, 2018, View Source [SID1234530472]). The Company will host a conference call to discuss these results on Wednesday, November 7, 2018 at 8:30 a.m. Eastern Time.

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Participants may access the conference call by telephone using the following numbers:

Toll-Free: 877-407-8029, Confirmation #13684540
Toll: 201-689-8029, Confirmation # 13684540
A replay will also be available on the Company’s website for a period of 30 days.

On October 31, 2018 Pieris Pharmaceuticals, Inc. (NASDAQ: PIRS), a biotechnology company advancing novel biotherapeutics through its proprietary Anticalin technology platform for cancer, respiratory and other diseases, reported that it will host a third quarter 2018 investor call on Wednesday, November 7, 2018 at 8:00 AM (EDT) to discuss financial results and provide a corporate update (Press release, Pieris Pharmaceuticals, OCT 31, 2018, View Source [SID1234530393]).

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To access the call, participants may dial 877-407-8920 (US & Canada) or 412-902-1010 (International) at least 10 minutes prior to the start of the call.

An archived replay of the call will be available for 30 days by dialing 877-660-6853 (Toll Free US & Canada) or 201-612-7415 (International) and providing the Conference ID #13661472.

On October 31, 2018 United Therapeutics Corporation (NASDAQ: UTHR) reported its financial results for the quarter ended September 30, 2018 (Press release, United Therapeutics, OCT 31, 2018, View Source [SID1234530448]).

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Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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"We are pleased to see continued growth in the number of U.S. patients treated with our prostacyclin product franchise during the quarter," said Martine Rothblatt, Ph.D., Chairman and Chief Executive Officer of United Therapeutics. "We’ve been busy bringing in exceptional new pipeline opportunities and advancing our six Phase III clinical trials."

Third Quarter Highlights

Announced that our FREEDOM-EV study of Orenitram met its primary endpoint.
Settled patent litigation with Watson Laboratories, Inc. (Watson), relating to Tyvaso. Under the terms of the settlement, Watson is permitted to launch a generic version of Tyvaso in the U.S. beginning on January 1, 2026 (or earlier under certain circumstances).
Completed the acquisition of SteadyMed Ltd. and its drug product candidate Trevyent, which is a development-stage drug-device combination product that combines SteadyMed’s PatchPump technology with treprostinil to treat pulmonary arterial hypertension (PAH). We anticipate resubmitting the Trevyent NDA to the FDA during the first half of 2019.
In-licensed MannKind Corp.’s Treprostinil Technosphere, a phase III-ready development-stage drug-device combination product that combines MannKind’s dry inhalation technology with treprostinil for the treatment of PAH.
In-licensed the U.S. and Canadian rights to Samumed LLC’s SM04646, a phase I development-stage oral Wnt pathway inhibitor, to treat idiopathic pulmonary fibrosis.
Completed enrollment of the DISTINCT study of dinutuximab in patients with small cell lung cancer (n=472).
Financial Results for the Three Months Ended September 30, 2018 compared to the Three Months Ended September 30, 2017

Revenues for the three months ended September 30, 2018 decreased by $32.8 million as compared to the same period in 2017. Remodulin net product sales decreased by $33.7 million due to a $36.5 million decrease in international net product sales, partially offset by a $2.8 million increase in U.S. net product sales. International Remodulin net product sales are lower relative to 2017 due to $23.7 million of net product sales recognized in the third quarter of 2017 related to a one-time purchase of Remodulin by an international distributor, in connection with the transfer of additional regulatory and commercial responsibilities to that distributor. In addition, our international net product sales decreased due to lower quantities shipped to the aforementioned distributor, after taking the one-time purchase into account. Tyvaso net product sales increased by $18.9 million due to the comparative impact of an additional one-time $12.2 million liability for estimated Medicaid rebates recorded in the third quarter of 2017 and a price increase implemented in January 2018. Adcirca net product sales decreased by $25.2 million due to a decrease in bottles sold, due in large part to the launch of a generic version of Adcirca in August 2018, and an approximate $16.4 million increase in our estimated allowance for product returns, partially offset by a price increase implemented by Lilly. Unituxin net product sales increased by $5.9 million due to an increase in the number of vials sold and a price increase implemented in December 2017.

Cost of product sales, excluding share-based compensation. The increase in cost of product sales of $28.2 million for the three months ended September 30, 2018, as compared to the same period in 2017, was primarily due to a $26.8 million increase in the royalty expense for Adcirca. As a result of an amendment to our license agreement with Lilly, effective December 1, 2017, our royalty rate on net product sales of Adcirca increased from five percent to an effective rate of approximately 42.5 percent.

Research and development expense, excluding share-based compensation. The increase in research and development expense of $30.8 million for the three months ended September 30, 2018, as compared to the same period in 2017, was driven by the continued investment in our product pipeline to treat cardiopulmonary diseases and cancer as well as our programs in regenerative medicine and organ manufacturing.

The increase in share-based compensation expense of $75.4 million for the three months ended September 30, 2018, as compared to the same period in 2017, was primarily due to: (1) a $70.2 million increase in STAP expense related to an increase in our stock price during the three months ended September 30, 2018, as compared to a decrease in our stock price during the same period in 2017; and (2) a $3.5 million increase in stock option expense due to additional awards granted and outstanding in 2018.

Impairment of Investment in a Privately-Held Company

During the quarter ended September 30, 2018, one of the privately-held companies in which we have invested experienced an event triggering an impairment analysis to evaluate the recoverability of our investment. We determined that the current fair value of our investment was lower than its carrying value, resulting in an impairment charge of $12.4 million. As of September 30, 2018, the adjusted carrying value of our investment in this company is $41.1 million. During the three-and nine-month periods ended September 30, 2018, we recorded $12.4 million of impairment charges related to our investments in privately-held companies. During the three-and nine-month periods ended September 30, 2017, we recorded $3.1 million and $49.6 million, respectively, of impairment charges related to our investments in privately-held companies.

Income Tax Expense

The provision for income taxes was $33.6 million for the three months ended September 30, 2018, as compared to $44.4 million for the same period in 2017. The provision for income taxes is based on an estimated annual effective tax rate (ETR) for the entire year. The estimated annual ETR is subject to adjustment in subsequent quarterly periods if components used to calculate the estimated annual ETR are updated or revised. Our actual ETR as of September 30, 2018 and September 30, 2017 was approximately 21 percent and approximately 37 percent, respectively. Our actual ETR for the nine months ended September 30, 2018 decreased as compared to the same period in 2017 due to the impacts of The Tax Cuts and Jobs Act (Tax Reform), the nondeductible portion of an accrual in the second quarter of 2017 in connection with a civil settlement with the Department of Justice, and a decrease in impairment charges not currently meeting the criteria for tax deductibility.

Non-GAAP Earnings

Non-GAAP earnings is defined as net income, adjusted for: (1) share-based compensation expense (including expenses relating to stock options, restricted stock units, share tracking awards, and our employee stock purchase plan); (2) loss contingency; (3) impairment of investment in privately-held company; (4) license fees; and (5) tax impact on non-GAAP earnings adjustments.

We calculated the total tax impact of non-discrete quarterly non-GAAP earnings adjustments based on our estimated annual effective tax rates, before considering discrete items, of approximately 22 percent and approximately 33 percent for the quarters ended September 30, 2018 and September 30, 2017, respectively.

As of September 30, 2018, these non-GAAP earnings adjustments did not meet the criteria for tax deductibility.

The tax benefit for the three months ended September 30, 2017 includes $57.0 million of benefit for the estimated loss contingency recognized during the second quarter of 2017 relating to the DOJ investigation of our support of 501(c)(3) organizations that provide financial assistance to patients.

Conference Call

We will host a half-hour teleconference on Wednesday, October 31, 2018, at 9:00 a.m. Eastern Time. The teleconference is accessible by dialing 1-877-351-5881, with international callers dialing 1-970-315-0533. A rebroadcast of the teleconference will be available for one week by dialing 1-855-859-2056, with international callers dialing 1-404-537-3406, and using access code: 4179147.

This teleconference will also be webcast and can be accessed via our website at View Source