FDA approves new treatment for a certain type of prostate cancer using novel clinical trial endpoint

On February 14, 2018 The U.S. Food and Drug Administration reported the approval of Erleada (apalutamide) for the treatment of patients with prostate cancer that has not spread (non-metastatic), but that continues to grow despite treatment with hormone therapy (castration-resistant) (Press release, US FDA, FEB 14, 2018, View Source [SID1234523990]). This is the first FDA-approved treatment for non-metastatic, castration-resistant prostate cancer.

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"The FDA evaluates a variety of methods that measure a drug’s effect, called endpoints, in the approval of oncology drugs. This approval is the first to use the endpoint of metastasis-free survival, measuring the length of time that tumors did not spread to other parts of the body or that death occurred after starting treatment," said Richard Pazdur, M.D., director of the FDA’s Oncology Center of Excellence and acting director of the Office of Hematology and Oncology Products in the FDA’s Center for Drug Evaluation and Research. "In the trial supporting approval, Erleada had a robust effect on this endpoint. This demonstrates the agency’s commitment to using novel endpoints to expedite important therapies to the American public."

According to the National Cancer Institute (NCI) at the National Institutes of Health, prostate cancer is the second most common form of cancer in men in the U.S.. The NCI estimates approximately 161,360 men were diagnosed with prostate cancer in 2017, and 26,730 were expected to die of the disease. Approximately 10 to 20 percent of prostate cancer cases are castration-resistant, and up to 16 percent of these patients show no evidence that the cancer has spread at the time of the castration-resistant diagnosis.

Erleada works by blocking the effect of androgens, a type of hormone, on the tumor. These androgens, such as testosterone, can promote tumor growth.

The safety and efficacy of Erleada was based on a randomized clinical trial of 1,207 patients with non-metastatic, castration-resistant prostate cancer. Patients in the trial either received Erleada or a placebo. All patients were also treated with hormone therapy, either with gonadotropin-releasing hormone (GnRH) analog therapy or with surgery to lower the amount of testosterone in their body (surgical castration). The median metastasis-free survival for patients taking Erleada was 40.5 months compared to 16.2 months for patients taking a placebo.

Common side effects of Erleada include fatigue, high blood pressure (hypertension), rash, diarrhea, nausea, weight loss, joint pain (arthralgia), falls, hot flush, decreased appetite, fractures and swelling in the limbs (peripheral edema).

Severe side effects of Erleada include falls, fractures and seizures.

This application was granted Priority Review, under which the FDA’s goal is to take action on an application within 6 months where the agency determines that the drug, if approved, would significantly improve the safety or effectiveness of treating, diagnosing or preventing a serious condition.

The sponsor for Erleada is the first participant in the FDA’s recently-announced Clinical Data Summary Pilot Program, an effort to provide stakeholders with more usable information on the clinical evidence supporting drug product approvals and more transparency into the FDA’s decision-making process. Soon after approval, certain information from the clinical summary report will post with the Erleada entry on Drugs@FDA and on the new pilot program landing page.

The FDA granted the approval of Erleada to Janssen Pharmaceutical Companies.

The FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency also is responsible for the safety and security of our nation’s food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.

ERLEADA&#8482 (apalutamide), a Next-Generation Androgen Receptor Inhibitor, Granted U.S. FDA Approval for the Treatment of Patients with Non-Metastatic Castration-Resistant Prostate Cancer

On February 14, 2018 The Janssen Pharmaceutical Companies of Johnson & Johnson reported that the U.S. Food and Drug Administration (FDA) has approved ERLEADA (apalutamide), a next-generation androgen receptor inhibitor,1 for the treatment of patients with non-metastatic castration-resistant prostate cancer (NM-CRPC) (Press release, Johnson & Johnson, FEB 14, 2018, View Source [SID1234523973]). ERLEADA is the first FDA-approved treatment for these patients. Today’s approval follows an FDA Priority Review designation based upon data from the Phase 3 SPARTAN study, which demonstrated a 72 percent reduction in risk of distant metastasis or death, and an increase in median metastasis-free survival (MFS) by more than two years (difference of 24.31 months) in patients with NM-CRPC.

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"The need to delay metastasis is critical to the treatment of prostate cancer. Nearly 90 percent of patients with castration-resistant prostate cancer will eventually develop bone metastases, at which point the prognosis sharply worsens," said Mathai Mammen, M.D., Ph.D., Global Head, Janssen Research & Development, LLC. "We are excited about what this approval means for patients living with prostate cancer, and that physicians now have an important and much-needed treatment option that has been shown to delay the progression of castration-resistant prostate cancer."

ERLEADA received FDA approval based on the Phase 3 data from the SPARTAN clinical trial, which assessed the efficacy and safety of ERLEADA versus placebo in patients with NM-CRPC who had a rapidly rising PSA while receiving continuous androgen deprivation therapy.2 The study was recently presented at the 2018 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Genitourinary Cancers Symposium (ASCO GU) on Thursday, February 8, 2018 in San Francisco and published in The New England Journal of Medicine.2,3

"The SPARTAN trial results demonstrated impressive clinical benefits in patients with non-metastatic castration-resistant prostate cancer," said Matthew Smith, M.D., Ph.D., Director of the Genitourinary Malignancies Program at the Massachusetts General Hospital Cancer Center, Professor of Medicine at Harvard Medical School, and co-principal investigator of the SPARTAN study. "As an oncologist and clinical investigator, I know how devastating it can be for patients and their families to hear that the cancer has spread. With this approval, doctors now have the chance to offer hope for delaying metastases in patients with castration-resistant prostate cancer."

"As the impact of prostate cancer continues to grow, we are reminded every day of the critical need for therapeutic options that offer patients with prostate cancer more time with their loved ones," Mark Scholz, M.D., Executive Director of the Prostate Cancer Research Institute. "Today’s approval is significant, as it means that patients with non-metastatic castration-resistant prostate cancer now have a treatment option that offers renewed hope."

SPARTAN, a Phase 3, randomized, double-blind, placebo-controlled, multi-center study, enrolled 1,207 patients with non-metastatic castration-resistant prostate cancer.4 Patients were randomized 2:1 to receive either ERLEADA orally at a dose of 240 mg once daily (n=806), or placebo once daily (n=401).4 All patients in the SPARTAN trial received a concomitant gonadotropin-releasing hormone (GnRH) analog or had a bilateral orchiectomy.4

ERLEADA decreased the risk of distant metastasis or death by 72 percent compared to placebo (HR = 0.28; 95% CI, 0.23-0.35; P<0.0001).4 The median MFS was 40.51 months for ERLEADA compared to 16.20 months for placebo, prolonging MFS by more than two years (difference of 24.31 months).4 MFS benefit was consistently seen across patient subgroups including prostate specific antigen doubling time (PSADT) (≤6 months or >6 months), use of a prior bone-sparing agent (yes or no), and locoregional disease (N0 or N1).4

The major efficacy outcome was supported by statistically significant improvements for the following secondary endpoints: time to metastasis (TTM), progression-free survival (PFS) and time to symptomatic progression.4 The median TTM was 40.51 months for ERLEADA compared to 16.59 months for placebo (HR=0.27; 95% CI, 0.22-0.34; P<0.0001) and the median PFS was 40.51 months compared to 14.72 months for placebo (HR=0.29; 95% CI, 0.24-0.36; P<0.0001).4 Overall survival data were not mature at the time of final MFS analysis (24% of the required number of events).4

Warnings and Precautions include seizure, falls and fractures.4 In the SPARTAN trial, the most common adverse reactions (≥10%) were fatigue, hypertension, rash, diarrhea, nausea, weight decreased, arthralgia, fall, hot flush, decreased appetite, fracture, and peripheral edema.4

About Non-Metastatic Castration-Resistant Prostate Cancer
Non-metastatic castration-resistant prostate cancer (NM-CRPC) refers to a disease state when the cancer no longer responds to medical or surgical treatments that lower testosterone, but has not yet been discovered in other parts of the body using a total body bone scan or CT scan.5 Features include: lack of detectable metastatic disease;5 rapidly rising prostate-specific antigen while on androgen deprivation therapy (ADT) and serum testosterone level below 50 ng/dL.6,7 Ninety percent of patients with CRPC will eventually develop bone metastases, which can lead to pain, fractures and spinal cord compression.8 The relative 5-year survival rate for patients with distant stage prostate cancer is 30 percent.9 It is critical to delay the onset of metastasis in patients with NM-CRPC.

About ERLEADA
ERLEADA (apalutamide) is an androgen receptor (AR) inhibitor indicated for the treatment of patients with non-metastatic castration-resistant prostate cancer.4

ERLEADA is an AR inhibitor that binds directly to the ligand-binding domain of the AR. ERLEADA inhibits AR nuclear translocation, inhibits DNA binding, and impedes AR-mediated transcription.4 A major metabolite, N-desmethyl apalutamide, is a less potent inhibitor of AR, and exhibited one-third the activity of ERLEADA in an in vitro transcriptional reporter assay.4 ERLEADA administration caused decreased tumor cell proliferation and increased apoptosis leading to decreased tumor volume in mouse xenograft models of prostate cancer.4

Full prescribing information will be available soon at www.ERLEADA.com.

Important Safety Information4

CONTRAINDICATIONS

Pregnancy – ERLEADA can cause fetal harm and potential loss of pregnancy.

WARNINGS AND PRECAUTIONS

Falls and Fractures – In the SPARTAN study, falls and fractures occurred in 16% and 12% of patients treated with ERLEADA compared to 9% and 7% treated with placebo respectively. Falls were not associated with loss of consciousness or seizure. Evaluate patients for fracture and fall risk. Monitor and manage patients at risk for fractures according to established treatment guidelines and consider use of bone targeted agents.

Seizure – In a randomized study (SPARTAN), two patients (0.2%) treated with ERLEADA experienced a seizure. Permanently discontinue ERLEADA in patients who develop a seizure during treatment. It is unknown whether anti-epileptic medications will prevent seizures with ERLEADA. Advise patients of the risk of developing a seizure while receiving ERLEADA and of engaging in any activity where sudden loss of consciousness could cause harm to themselves or others.

ADVERSE REACTIONS

Adverse Reactions – The most common adverse reactions (≥10%) were fatigue, hypertension, rash, diarrhea, nausea, weight decreased, arthralgia, fall, hot flush, decreased appetite, fracture, and peripheral edema.

Laboratory Abnormalities

Hematology: anemia ERLEADA 70% (Grade 3-4 0.4%) placebo 64% (Grade 3-4 0.5%) leukopenia ERLEADA 47% (Grade 3-4 0.3%) for, placebo 29% (Grades 3-4 0%), lymphopenia ERLEADA 41% (Grade 3-4 2%), placebo 21% (Grade 3-4 2%);
Chemistry – hypercholesterolemia ERLEADA 76%(Grade3-4 0.1%), placebo 46% (Grade 3-4 0%); hypertriglycemia ERLEADA 70%(Grade 3-4 2%) Placebo 59% (0.8%); hypertriglyceridemia ERLEADA 67%(Grade 3-4 2%) placebo 49%(Grade 3-4 0.8%); Hyperkalemia ERLEADA 32%(Grade 3-4 2%) Placebo 22%(Grade 3-4 0.5%)
Rash – Rash was most commonly described as macular or maculo-papular. Adverse reactions were 24% with ERLEADA versus 6% with placebo. Grade 3 rashes (defined as covering > 30% body surface area [BSA]) were reported with ERLEADA treatment (5%) versus placebo (0.3%).

The onset of rash occurred at a median of 82 days. Rash resolved in 81% of patients within a median of 60 days (range: 2 to 709 days) from onset of rash. Four (4%) of patients treated with ERLEADA received systemic corticosteroids. Rash recurred in approximately half of patients who were re-challenged with ERLEADA.

Hypothyroidism – Hypothyroidism was reported for 8% of patients treated with ERLEADA and 2% of patients treated with placebo based on assessments of thyroid-stimulating hormone (TSH) every 4 months. Elevated TSH occurred in 25% of patients treated with ERLEADA and 7% of patients treated with placebo. The median onset was Day 113. There were no Grade 3 or 4 adverse reactions. Thyroid replacement therapy, when clinically indicated, should be initiated or dose-adjusted.

Effect of Other Drugs on ERLEADA – Co-administration of a strong CYP2C8 or CYP3A4 inhibitor is predicted to increase the steady-state exposure of the active moieties. No initial dose adjustment is necessary however, reduce the ERLEADA dose based on tolerability [see Dosage and Administration (2.2)].

DRUG INTERACTIONS

Effect of ERLEADA on Other Drugs – ERLEADA is a strong inducer of CYP3A4 and CYP2C19, and a weak inducer of CYP2C9 in humans. Concomitant use of ERLEADA with medications that are primarily metabolized by CYP3A4, CYP2C19, or CYP2C9 can result in lower exposure to these medications. Substitution for these medications is recommended when possible or evaluate for loss of activity if medication is continued. Concomitant administration of ERLEADA with medications that are substrates of UDP-glucuronosyl transferase (UGT) can result in decreased exposure. Use caution if substrates of UGT must be co-administered with ERLEADA and evaluate for loss of activity.

P-gp, BCRP or OATP1B1 substrates – Apalutamide is a weak inducer of P-glycoprotein (P-gp), breast cancer resistance protein (BCRP), and organic anion transporting polypeptide 1B1 (OATP1B1) clinically. Concomitant use of ERLEADA with medications that are substrates of P-gp, BCRP, or OATP1B1 can result in lower exposure of these medications. Use caution if substrates of P-gp, BCRP or OATP1B1 must be co-administered with ERLEADA and evaluate for loss of activity if medication is continued.

Agilent Technologies Reports First-Quarter Fiscal Year 2018 Financial Results

On February 14, 2018 Agilent Technologies, Inc. (NYSE: A) today reported revenue of $1.21 billion for the first-quarter ended January 31, 2018, up 14 percent year over year (up 10 percent on a core basis(2)) (Press release, Agilent, FEB 14, 2018, http://www.agilent.com/about/newsroom/presrel/2018/14feb-gp18028.html [SID1234524147]).

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On a GAAP basis, including the $533 million charge related to U.S. Tax Reform legislation, first-quarter net loss was $320 million, or $0.99 net loss per share. Last year’s first-quarter GAAP net income was $168 million, or $0.52 per share.

During the first quarter, Agilent had an adjustment related to U.S. Tax Reform of $533 million, intangible amortization of $25 million, a pension settlement gain of $5 million, transformation costs of $5 million, acquisition and integration costs of $3 million, and $3 million in other costs. Excluding these items and a tax benefit of $28 million, Agilent reported first-quarter non-GAAP net income of $216 million, or $0.66 per share(1).

"We are very pleased with our strong start to the year," said Mike McMullen, Agilent CEO and President. "The Agilent team continued our positive momentum and delivered another excellent quarter of operating results."

"Looking forward, we will keep our focus on driving sustainable above-market growth and delivering value to shareholders through the execution of our proven strategy," continued McMullen. "Overall, we are well-positioned to continue delivering excellent operating results."

First-quarter revenue of $618 million from Agilent’s Life Sciences and Applied Markets Group (LSAG) grew 14 percent year over year (up 11 percent on a core basis(2)), with broad strength across all major end markets. LSAG’s operating margin for the quarter was 25.8 percent.

First-quarter revenue of $408 million from Agilent CrossLab Group (ACG) grew 12 percent year over year (up 9 percent on a core basis(2)). Growth was strong across services and consumables. ACG’s operating margin for the quarter was 21.6 percent.

First-quarter revenue of $185 million from Agilent’s Diagnostics and Genomics Group (DGG) grew 13 percent year over year (up 8 percent on a core basis(2)) led by strong demand for pathology products and companion diagnostics services. DGG’s operating margin for the quarter was 11.7 percent.

Agilent expects second-quarter 2018 revenue in the range of $1.20 billion to $1.22 billion. Second-quarter 2018 non-GAAP earnings are expected to be in the range of $0.61 to $0.63 per share(3).

For fiscal year 2018, Agilent expects revenue of $4.885 billion to $4.905 billion and non-GAAP earnings of $2.62 to $2.68 per share(3). The guidance is based on January 31, 2018 currency exchange rates.

Conference Call

Agilent’s management will present more details about its first-quarter fiscal 2018 financial results on a conference call with investors today at 1:30 p.m. (Pacific Time). This event will be webcast live in listen-only mode. Listeners may log on at www.investor.agilent.com and select "Q1 2018 Agilent Technologies Inc. Earnings Conference Call" in the "News & Events — Calendar of Events" section. The webcast will remain available on the company’s website for 90 days.

Additional information regarding financial results can be found at www.investor.agilent.com by selecting "Financial Results" in the "Financial Information" section.

A telephone replay of the conference call will be available at approximately February 14, 2018 at 4:30 p.m. (Pacific Time) after the call and through February 21 by dialing +1 855-859-2056 (or +1 404-537-3406 from outside the United States) and entering pass code 1482568.

# # #

Financial Statements for First-Quarter Fiscal 2018

AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
PRELIMINARY

Three Months Ended
January 31, Percent
2018 2017 Inc/(Dec)

Net revenue $ 1,211 $ 1,067 14 %

Costs and expenses:
Cost of products and services 538 493 9 %
Research and development 93 79 18 %
Selling, general and administrative 341 289 18 %
Total costs and expenses 972 861 13 %

Income from operations 239 206 16 %

Interest income 9 4 125 %
Interest expense (20 ) (20 ) —
Other income (expense), net 5 3 67 %

Income before taxes 233 193 21 %

Provision for income taxes 553 25 —

Net income (loss) $ (320 ) $ 168 —

Net income (loss) per share:
Basic $ (0.99 ) $ 0.52
Diluted $ (0.99 ) $ 0.52

Weighted average shares used in computing net income (loss) per share:
Basic 323 322
Diluted 323 326

Cash dividends declared per common share $ 0.149 $ 0.132

The preliminary income statement is estimated based on our current information.

Page 1

AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(In millions)
(Unaudited)
PRELIMINARY

Three Months Ended
January 31,
2018 2017

Net income (loss) $ (320 ) $ 168

Other comprehensive income (loss), net of tax:

Unrealized gain (loss) on derivative instruments (7 ) 1
Foreign currency translation 79 (3 )
Net defined benefit pension cost and post retirement plan costs:
Change in actuarial net loss 6 17
Change in net prior service benefit (1 ) (1 )
Other comprehensive income 77 14

Total comprehensive income (loss) $ (243 ) $ 182

The preliminary statement of comprehensive income is estimated based on our current information.

Page 2

AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions, except par value and share amounts)
(Unaudited)
PRELIMINARY

January 31, October 31,
2018 2017
ASSETS

Current assets:
Cash and cash equivalents $ 2,887 $ 2,678
Accounts receivable, net 751 724
Inventory 608 575
Other current assets 151 192
Total current assets 4,397 4,169

Property, plant and equipment, net 792 757
Goodwill 2,633 2,607
Other intangible assets, net 341 361
Long-term investments 140 138
Other assets 395 394
Total assets $ 8,698 $ 8,426

LIABILITIES AND EQUITY

Current liabilities:
Accounts payable $ 292 $ 305
Employee compensation and benefits 221 276
Deferred revenue 321 291
Short-term debt 345 210
Other accrued liabilities 182 181
Total current liabilities 1,361 1,263

Long-term debt 1,800 1,801
Retirement and post-retirement benefits 241 234
Other long-term liabilities 770 293
Total liabilities 4,172 3,591

Total Equity:
Stockholders’ equity:
Preferred stock; $0.01 par value; 125 million shares authorized; none issued and outstanding

— —
Common stock; $0.01 par value, 2 billion shares authorized; 323 million shares at January 31, 2018 and 322 million shares at October 31, 2017, issued

3 3
Treasury stock at cost; 37 thousand shares at January 31, 2018 and zero shares at October 31, 2017

(3 ) —
Additional paid-in-capital 5,320 5,300
Accumulated deficit (529 ) (126 )
Accumulated other comprehensive loss (269 ) (346 )
Total stockholders’ equity 4,522 4,831
Non-controlling interest 4 4
Total equity 4,526 4,835
Total liabilities and equity $ 8,698 $ 8,426

The preliminary balance sheet is estimated based on our current information.

Page 3


AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)
PRELIMINARY

Three Months Ended
January 31, January 31,
2018 2017
Cash flows from operating activities:
Net income (loss) $ (320 ) $ 168

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization 51 55
Share-based compensation 31 20
Excess and obsolete inventory related charges 5 7
Other non-cash expenses, net 1 2
Changes in assets and liabilities:
Accounts receivable, net (5 ) (31 )
Inventory (34 ) (26 )
Accounts payable (3 ) 9
Employee compensation and benefits (62 ) (43 )
Change in assets and liabilities due to Tax Reform 533 —
Other assets and liabilities 18 (45 )
Net cash provided by operating activities (a) 215 116

Cash flows from investing activities:
Investments in property, plant and equipment (60 ) (32 )
Payment to acquire cost method investments (1 ) —
Proceeds from divestitures — 1
Acquisition of businesses and intangible assets, net of cash acquired (6 ) (70 )
Net cash used in investing activities (67 ) (101 )

Cash flows from financing activities:
Issuance of common stock under employee stock plans 25 18
Payment of taxes related to net share settlement of equity awards (28 ) (12 )
Payment of dividends (48 ) (42 )
Proceeds from debt and revolving credit facility 274 131
Repayment of debt and revolving credit facility (139 ) (42 )
Treasury stock repurchases (47 ) (111 )
Net cash provided by (used in) financing activities 37 (58 )

Effect of exchange rate movements 24 (5 )

Net increase (decrease) in cash and cash equivalents 209 (48 )

Cash and cash equivalents at beginning of period 2,678 2,289

Cash and cash equivalents at end of period $ 2,887 $ 2,241

(a) Cash payments included in operating activities:
Income tax payments, net $ 32 $ 27
Interest payments $ 29 $ 29

The preliminary cash flow is estimated based on our current information.

Page 4

AGILENT TECHNOLOGIES, INC.
NON-GAAP NET INCOME AND DILUTED EPS RECONCILIATIONS
(In millions, except per share amounts)
(Unaudited)
PRELIMINARY

Three Months Ended
January 31,
2018
Diluted
EPS

2017
Diluted
EPS

GAAP net (loss) income $ (320 ) $ (0.99 ) (b) $ 168 $ 0.52
Non-GAAP adjustments:
Intangible amortization 25 0.08 31 0.10
Transformational initiatives 5 0.02 2 0.01
Acquisition and integration costs 3 0.01 16 0.05
Pension settlement gain (5 ) (0.02 ) (32 ) (0.11 )
NASD site costs 2 0.01 — —
Special compliance costs 1 — — —
Other — — 2 0.01
Adjustment for Tax Reform

533 1.63 — —
Adjustment for taxes (a) (28 ) (0.08 ) (15 ) (0.05 )
Non-GAAP net income $ 216 $ 0.66 (c) $ 172 $ 0.53

(a) The adjustment for taxes excludes tax benefits that management believes are not directly related to on-going operations and which are either isolated or cannot be expected to occur again with any regularity or predictability. For the three months ended January 31, 2018, management uses a non-GAAP effective tax rate of 18.0%. In the same periods last year, management used a non-GAAP effective tax rate of 19.0%.

(b) GAAP diluted net loss per share was computed using 323 million weighted average diluted shares which excludes from consideration the anti-dilutive effects of all potential common shares outstanding.

(c) Non-GAAP diluted net income per share was computed using 327 million weighted average diluted shares which includes the dilutive effects of potential common shares outstanding.

We provide non-GAAP net income and non-GAAP net income per share amounts in order to provide meaningful supplemental information regarding our operational performance and our prospects for the future. These supplemental measures exclude, among other things, charges related to amortization of intangibles, transformational initiatives, acquisition and integration costs, pension settlement gain, NASD site costs, special compliance costs, and adjustment for Tax Reform.

Transformational initiatives include expenses associated with targeted cost reduction activities such as manufacturing transfers, small site consolidations, legal entity and other business reorganizations, insourcing or outsourcing of activities. Such costs may include move and relocation costs, one-time termination benefits and other one-time reorganization costs. Included in this category are also expenses associated with the post-separation resizing of the IT infrastructure and streamlining of IT system as well as company programs to transform our product lifecycle management (PLM) system and financial systems.

Acquisition and Integration costs include all incremental expenses incurred to effect a business combination. Such acquisition costs may include advisory, legal, accounting, valuation, and other professional or consulting fees. Such integration costs may include expenses directly related to integration of business and facility operations, the transfer of assets and intellectual property, information technology systems and infrastructure and other employee-related costs.

Pension settlement gain resulted from transfer of the substitutional portion of our Japanese pension plan to the government.

NASD site costs include all the costs related to the expansion of our manufacturing of nucleic acid active pharmaceutical ingredients incurred prior to the commencement of commercial manufacturing.

Special compliance costs include costs associated with transforming our processes to implement new regulations such as the EU’s General Data Protection Regulation (GDPR), revenue recognition and certain tax reporting requirements.

Other includes certain legal costs and settlements in addition to other miscellaneous adjustments.

Adjustment for Tax Reform primarily consists of an estimated provision of $480 million for U.S. transition tax and correlative items on deemed repatriated earnings of non-U.S. subsidiaries and an estimated provision of $53 million associated with the decrease in the U.S. corporate tax rate from 35% to 21% and its impact on our U.S. deferred tax assets and liabilities. The taxes payable associated with the transition tax, net of tax attributes, on deemed repatriation of foreign earnings is approximately $440 million, payable over 8 years. The final impact of Tax Reform may differ materially from these estimates, due to, among other things, changes in interpretations, analysis and assumptions made, additional guidance that may be issued, and actions that we may undertake.

Our management uses non-GAAP measures to evaluate the performance of our core businesses, to estimate future core performance and to compensate employees. Since management finds this measure to be useful, we believe that our investors benefit from seeing our results "through the eyes" of management in addition to seeing our GAAP results. This information facilitates our management’s internal comparisons to our historical operating results as well as to the operating results of our competitors.

Our management recognizes that items such as amortization of intangibles can have a material impact on our cash flows and/or our net income. Our GAAP financial statements including our statement of cash flows portray those effects. Although we believe it is useful for investors to see core performance free of special items, investors should understand that the excluded items are actual expenses that may impact the cash available to us for other uses. To gain a complete picture of all effects on the company’s profit and loss from any and all events, management does (and investors should) rely upon the GAAP income statement. The non-GAAP numbers focus instead upon the core business of the company, which is only a subset, albeit a critical one, of the company’s performance.

Readers are reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. They should be read in conjunction with the GAAP financial measures. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies.

The preliminary non-GAAP net income and diluted EPS reconciliation is estimated based on our current information.

Page 5

AGILENT TECHNOLOGIES, INC.
SEGMENT INFORMATION
(In millions, except where noted)
(Unaudited)

PRELIMINARY


Life Sciences and Applied Markets Group
Q1’18 Q1’17
Revenue $ 618 $ 540
Gross Margin, % 61.8 % 59.6 %
Income from Operations $ 159 $ 126
Operating margin, % 25.8 % 23.4 %

Diagnostics and Genomics Group
Q1’18 Q1’17
Revenue $ 185 $ 164
Gross Margin, % 54.4 % 54.8 %
Income from Operations $ 22 $ 23
Operating margin, % 11.7 % 14.3 %

Agilent CrossLab Group
Q1’18 Q1’17
Revenue $ 408 $ 363
Gross Margin, % 50.6 % 48.5 %
Income from Operations $ 88 $ 74
Operating margin, % 21.6 % 20.3 %

Income from operations reflect the results of our reportable segments under Agilent’s management reporting system which are not necessarily in conformity with GAAP financial measures. Income from operations of our reporting segments exclude, among other things, charges related to amortization of intangibles, business exit and divestiture costs, transformational initiatives, acquisition and integration costs, pension settlement gain, NASD site costs, and special compliance costs.

Readers are reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. They should be read in conjunction with the GAAP financial measures. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies.

The preliminary segment information is estimated based on our current information.


AGILENT TECHNOLOGIES, INC.
RECONCILIATIONS OF REVENUE BY SEGMENT EXCLUDING
ACQUISITIONS, DIVESTITURES AND THE IMPACT OF CURRENCY ADJUSTMENTS (CORE)
(in millions)
(Unaudited)
PRELIMINARY

Year-over-Year

GAAP
Year-over-Year
GAAP Revenue by Segment

Q1’18 Q1’17 % Change

Life Sciences and Applied Markets Group $ 618 $ 540 14 %

Diagnostics and Genomics Group 185 164 13 %

Agilent CrossLab Group 408 363 12 %

Agilent $ 1,211 $ 1,067 14 %

Non-GAAP
(excluding Acquisitions & Divestitures)


Currency
Adjustments

Currency
Adjustments

Currency-Adjusted (a)
Year-over-Year Year-over-Year
Non GAAP Revenue by Segment

Q1’18 Q1’17 % Change Q1’18 Q1’17 Q1’18 Q1’17 % Change

Life Sciences and Applied Markets Group $ 616 $ 539 14 % $ (3 ) $ (17 ) $ 619 $ 556 11 %

Diagnostics and Genomics Group 182 163 12 % (1 ) (7 ) 183 170 8 %

Agilent CrossLab Group 408 363 12 % (3 ) (15 ) 411 378 9 %

Agilent (Core) $ 1,206 $ 1,065 13 % $ (7 ) $ (39 ) $ 1,213 $ 1,104 10 %

(a) We compare the year-over-year change in revenue excluding the effect of recent acquisitions and divestitures and foreign currency rate fluctuations to assess the performance of our underlying business. To determine the impact of currency fluctuations, current and prior year period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rate in effect during the last month of the current period.

The preliminary reconciliation of GAAP revenue adjusted for recent acquisitions and divestitures and impact of currency is estimated based on our current information.

DermWire: NanOlogy Enrolls First Patient in Clinical Trial for Cutaneous Metastases

On February 14, 2018 NanOlogy, a clinical-stage pharmaceutical development company and affiliate of DFB Pharmaceuticals, reported the first patient in a Phase 1/2 clinical trial of a submicron particle paclitaxel topical anhydrous ointment for the treatment of cutaneous metastases (Press release, NanOlogy, FEB 14, 2018, View Source [SID1234523975]). The open label dose escalating trial of three different strengths of the product will be followed by dose confirmation to evaluate safety. NanOlogy has licensed the topical formulation for use in oncology from DFB Soria, which is owned and operated by DFB.

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Because no other topical treatment options exist for many patients suffering from cutaneous metastases, the company says it will seek to gain FDA fast track status if the results of this trial are successful.

Separately, Soria has completed enrollment in a Phase 2 actinic keratosis clinical trial that is evaluating different strengths of the topical formulation for safety and efficacy. Results from the randomized, double-blind, placebo-controlled trial are expected in April; preliminary blinded observations are promising.

Heat Biologics Announces Poster Presentation of Interim Phase 2 Lung Cancer Clinical Data for HS-110 and Nivolumab at the 2018 Keystone Symposia Conference XI: Immunological Memory: Innate, Adaptive and Beyond

On February 14, 2018 Heat Biologics, Inc. ("Heat") (NASDAQ: HTBX), a biopharmaceutical company developing drugs designed to activate a patient’s immune system against cancer, reported that its abstract highlighting interim results of its Phase 2 study on HS-110 (viagenpumatucel-L) and nivolumab (Opdivo) combination therapy in the treatment of advanced non-small cell lung cancer (NSCLC), has been accepted as a scientific poster presentation during the 2018 Keystone Symposia Conference XI: Immunological Memory: Innate, Adaptive and Beyond, February 25 – March 1, 2018 in Austin (Press release, Heat Biologics, FEB 14, 2018, View Source [SID1234523971]).

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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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The poster presentation details are as follows:

Title: "Correlation of Adaptive Immune Response with Clinical Response after Treatment with Viagenpumatucel-L and Nivolumab in Previously Treated Non-Small Cell Lung Cancer (NSCLC) Patients"
Session Date/Time: February 27, 2018, 7:30 p.m. – 10 p.m. CT
Authors: Lori McDermott, MSc; Vamsidhar Velcheti, MD; Roger B. Cohen, MD; Jeff Hutchins, PhD; Daniel Morgensztern, MD
In addition, Heat will be hosting an analyst and investor event in New York City on February 28, 2018, at 8 a.m. ET, to discuss these results. Event details and webcast information to be provided prior to the event.