On October 29, 2018 Thermo Fisher Scientific, the world leader in serving science, and Symphogen, a clinical-stage antibody oncology-focused company, reported that have entered into a two-year collaborative partnership to deliver validated, platform workflows for simplified characterization and quality monitoring of complex therapeutic proteins (Press release, Thermo Fisher Scientific, OCT 29, 2018, View Source [SID1234530443]).

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Building on a decade-long relationship, the new collaboration will develop protein analysis workflows to accelerate drug development for biopharmaceutical innovators, biosimilar manufacturers, contract research organizations, and contract development and manufacturing organizations.

Symphogen will use the Thermo Scientific Q Exactive Plus Orbitrap liquid chromatography-tandem mass spectrometry (LC-MS/MS) system with BioPharma Option to create, test and validate platform workflows for intact and native mass analysis of therapeutic monoclonal antibody (mAb) mixtures. Additional focus will be placed on the development of automated multi-attribute method (MAM) workflows for monitoring critical quality attributes of proteins using high-resolution accurate-mass mass spectrometry in a quality control environment.

"The growing demand for more targeted and personalized treatment modalities results in the development of increasingly complex drug products, requiring research and development of advanced workflows to monitor their structure, manufacturing variation and quality," said John Rontree, senior director pharma & biopharma, chromatography and mass spectrometry, Thermo Fisher Scientific. "The collaboration with Symphogen, in addition to our commitment to the opening of Global Customer Solution Centers, will enable us to jointly leverage our established mass spectrometry technology, along with the expertise of our customers, to develop and implement novel, easy-to-use analytical strategies for complex mAb mixtures needed by drug manufacturers to drive the development of new therapies for cancer patients."

"Through this collaboration, we can leverage the knowledge and world-class technology provided by Thermo Fisher to effectively address our needs," said Dan Bach Kristensen, Ph.D., principal scientist, Symphogen. "The exceptional spectral resolution enabled by the Q Exactive BioPharma mass spectrometry platform means we now have a highly powerful tool for simple, reliable characterization and quality monitoring of complex biopharmaceutical products."

The Q Exactive Plus Orbitrap LC-MS/MS system is the latest addition to the Thermo Fisher portfolio of products used by Symphogen, which includes Thermo Scientific ultra high-performance liquid chromatography (UHPLC) systems and Thermo Scientific Chromeleon Chromatography Data Systems (CDS).

For more information about Thermo Fisher’s chromatography and mass spectrometry workflows for biopharmaceutical characterization, please visit www.thermofisher.com/contactmebiopharma.

On October 29, 2018 Epic Sciences, Inc. (Epic) and Genomic Health, Inc. (Nasdaq: GHDX) reported that Palmetto GBA, a Medicare Administrative Contractor that assesses molecular diagnostic technologies, has issued a positive final local coverage determination (LCD) for the Oncotype DX AR-V7 Nucleus Detect test (Press release, Genomic Health, OCT 29, 2018, View Source [SID1234530442]). The final LCD recommends Medicare coverage for use of the test effective December 10, 2018, throughout the United States to help determine which patients with metastatic castrate resistant prostate cancer (mCRPC) may benefit from continued androgen receptor signaling inhibitor (ARSi) therapy, such as enzalutamide, abiraterone and apalutamide, as well as those who are resistant who may benefit from chemotherapy.

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An estimated 50,000 men in the United States with advanced prostate cancer, of which approximately 25,000 have Medicare coverage, could benefit from knowing their AR-V7 status prior to selecting further treatment. The Oncotype DX AR-V7 Nucleus Detect test is a circulating tumor cell-based liquid biopsy test that is commercially available in the United States through Epic’s partnership with Genomic Health. The final LCD is posted to the Medicare Coverage Database on the Centers for Medicare and Medicaid Services (CMS) website.

The test, commercially launched by Genomic Health on February 28, 2018, is supported by three clinical utility studies including two multicenter validation studies. Results from a Memorial Sloan Kettering Cancer Center-led validation study were published online on June 28, 2018, in JAMA Oncology, establishing the predictive benefit of the test. Additionally, new validation data from the PROPHECY study were presented on June 4, 2018, at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting.

"For men with advanced prostate cancer, these independent, blinded, multicenter studies demonstrated that the Oncotype DX AR-V7 Nucleus Detect test is a clinically validated and useful test that can predict therapeutic response and, through its use, extend life. Importantly, with this final Medicare LCD, approximately 50 percent of addressable patients in the United States can gain access to the test," said Murali Prahalad, Ph.D., President and CEO of Epic Sciences. "Receiving a positive, final LCD for the test less than a year after commercial launch speaks to the importance and impact that this test has in improving patient survival."

Prior to the Oncotype DX AR-V7 Nucleus Detect test, there was no clear consensus on the therapeutic sequencing after initial exposure to an ARSi therapy. The most challenging clinical decision in mCRPC is whether to start a second ARSi therapy or taxane chemotherapy. Detection of nuclear-specific AR-V7-positive circulating tumor cells as measured by the Epic Sciences approach indicates which patients are resistant to AR-targeted therapies, such as enzalutamide, abiraterone and apalutamide, as well as those who are likely to live longer when placed on chemotherapy rather than on ARSi therapy. Conversely, patients negative for nuclear-localized AR-V7 are likely to live longer with ARSi therapy than with chemotherapy.

The Oncotype DX AR-V7 Nucleus Detect test was developed using Epic’s proprietary No Cell Left Behind technology. Epic is delivering a portfolio of blood-based tests that are predictive of drug response in cancer and are clinically proven, personalized and focused on improving patient survival and healthcare economics worldwide.

About the Oncotype DX AR-V7 Nucleus Detect Test
Designed by Epic Sciences and based on results from multiple studies led by Memorial Sloan Kettering Cancer Center, the Oncotype DX AR-V7 Nucleus Detect test is the first and only liquid biopsy test of its kind that can potentially prolong the lives of men with metastatic castration-resistant prostate cancer (mCRPC) by helping their physician identify the most effective treatment. Through a blood draw, the test detects AR-V7 protein in the nucleus of circulating tumor cells utilizing Epic Sciences’ No Cell Left Behind platform to accurately identify patients who are resistant to androgen receptor (AR)-targeted therapies and who should instead switch to chemotherapy. The Oncotype DX AR-V7 Nucleus Detect test is performed by Epic Sciences at its centralized, CLIA-certified laboratory in San Diego and is offered exclusively by Genomic Health. To learn more about the Oncotype DX AR-V7 Nucleus Detest test, visit www.OncotypeIQ.com and watch this video.

On October 29, 2018 Novartis reported it was awarded the 2018 Prix Galien USA Award for Best Biotechnology Product for Kymriah (tisagenlecleucel) following its first-in-class approval by the US Food and Drug Administration (FDA) for the treatment of children and young adults with relapsed or refractory (r/r) B-cell precursor acute lymphoblastic leukemia (ALL) (Press release, Novartis, OCT 29, 2018, View Source [SID1234530441]). Kymriah is a ground-breaking one-time treatment that uses a patient’s own T cells to fight cancer, and the only chimeric antigen receptor T cell (CAR-T) therapy approved for two distinct B-cell malignancies1. The award, which recognizes excellence in scientific innovation that improves the state of human health, was presented at a ceremony in New York City.

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"It is a great honor to receive this prestigious award for Kymriah," said Liz Barrett, CEO, Novartis Oncology. "The impact for patients with aggressive blood cancers who previously had limited treatment options is our greatest reward and drives us to continue pioneering efforts to reimagine the way cancer is treated."

The historic approval of Kymriah was a result of collaboration with researchers at University of Pennsylvania (Penn) who demonstrated the first successful use of gene transfer therapy to use the body’s immune cells to fight cancer. Novartis further researched this emerging class of drug, initiating the first global CAR-T trials and in August 2017, became the first company to gain a regulatory approval of a CAR-T cell therapy. This year, Kymriah has also been approved in the United States for the treatment of adult patients with r/r diffuse large B-cell lymphoma (DLBCL); and for the treatment of pediatric and young adult patients with r/r ALL and adults with r/r DLBCL in the European Union, Canada and Switzerland. Of note, Kymriah is not approved for the treatment of patients with primary central nervous system lymphoma1.

Both B-cell ALL and DLBCL are aggressive malignancies, and for patients who relapse or don’t respond to therapy, there are limited treatment options2,3.

Novartis Prix Galien Awards
Considered "the pharmaceutical industry’s Nobel Prize," the Prix Galien recognizes excellence in scientific innovation that improves the state of human health, and acknowledges the technical, scientific and clinical research skills necessary to develop such innovative medicines. As a true testament to the company’s commitment to reimagine medicine, since 1970, Novartis has received more than 40 national Prix Galien awards in 15 countries for innovative therapies including Gleevec (imatinib mesylate), Kymriah (tisagenlecleucel), Parlodel (bromocriptine mesylate), Rimactane (rifampin), Sandimmune (cyclosporine), Sandostatin (octreotide acetate), Simulect (basiliximab) and Visudyne (verteporfin)4.

About Kymriah (tisagenlecleucel)
Kymriah is an innovative immunocellular therapy, manufactured individually for each patient by reprogramming the patient’s own immune system cells. Kymriah is the only approved CAR-T cell therapy manufactured using the 4-1BB costimulatory domain, which is critical for full activation of the therapy, enhancement of cellular expansion and durable persistence of the cancer-fighting cells. In 2012, Novartis and Penn entered into a global collaboration to further research, develop and commercialize CAR-T cell therapies, including Kymriah, for the investigational treatment of cancers.

Kymriah (tisagenlecleucel) US Important Safety information
Kymriah may cause side effects that are severe or life-threatening, such as Cytokine Release Syndrome (CRS) or Neurological Toxicities. Patients with CRS may experience symptoms including difficulty breathing, fever (100.4◦F/38◦C or higher), chills/shaking chills, severe nausea, vomiting and diarrhea, severe muscle or joint pain, very low blood pressure, or dizziness/lightheadedness. Patients may be admitted to the hospital for CRS and treated with other medications.

Patients with neurological toxicities may experience symptoms such as altered or decreased consciousness, headaches, delirium, confusion, agitation, anxiety, seizures, difficulty speaking and understanding, or loss of balance. Patients should be advised to call their healthcare provider or get emergency help right away if they experience any of these signs and symptoms of CRS or neurological toxicities.

Because of the risk of CRS and neurological toxicities, Kymriah is only available through a restricted program under a Risk Evaluation and Mitigation Strategy (REMS) called Kymriah REMS.

Serious allergic reactions, including anaphylaxis, may occur after Kymriah infusion.

Kymriah can increase the risk of life-threatening infections that may lead to death. Patients should be advised to tell their healthcare provider right away if they develop fever, chills, or any signs or symptoms of an infection.

Patients may experience prolonged low blood cell counts (cytopenia), where one or more types of blood cells (red blood cells, white blood cells, or platelets) are decreased. The patient’s healthcare provider will do blood tests to check all of their blood cell counts after treatment with Kymriah. Patients should be advised to tell their healthcare provider right away if they get a fever, are feeling tired, or have bruising or bleeding.

Patients may experience hypogammaglobulinemia, a condition in which the level of immunoglobulins (antibodies) in the blood is low and the risk of infection is increased. It is expected that patients may develop hypogammaglobulinemia with Kymriah, and may need to receive immunoglobulin replacement for an indefinite amount of time following treatment with Kymriah. Patients should tell their healthcare provider about their treatment with Kymriah before receiving a live virus vaccine.

After treatment with Kymriah, patients will be monitored lifelong by their healthcare provider, as they may develop secondary cancers or recurrence of their cancer.

Patients should not drive, operate heavy machinery, or do other dangerous activities for eight weeks after receiving Kymriah because the treatment can cause temporary memory and coordination problems, including sleepiness, confusion, weakness, dizziness, and seizures.

Some of the most common side effects of Kymriah are difficulty breathing, fever (100.4°F/38°C or higher), chills/shaking chills, confusion, severe nausea, vomiting and diarrhea, severe muscle or joint pain, very low blood pressure, dizziness/lightheadedness, and headache. However, these are not all of the possible side effects of Kymriah. Patients should talk to their healthcare provider for medical advice about side effects.

Prior to a female patient starting treatment with Kymriah, their healthcare provider may do a pregnancy test. There is no information available for Kymriah use in pregnant or breast-feeding women. Therefore, Kymriah is not recommended for women who are pregnant or breast feeding. Patients should talk to their healthcare provider about birth control and pregnancy.

Patients should tell their healthcare provider about all the medicines they take, including prescription and over-the-counter medicines, vitamins, and herbal supplements.

After receiving Kymriah, patients should be advised that some commercial HIV tests may cause a false-positive test result. Patients should also be advised not to donate blood, organs, or tissues and cells for transplantation after receiving Kymriah.

On October 29, 2018 Kazia Therapeutics Limited (ASX: KZA;NASDAQ: KZIA), an Australian oncology-focused biotechnology company, is reported to shareholders regarding progress with GDC-0084, which is currently in human trials for glioblastoma and several other forms of brain cancer (Press release, Kazia Therapeutics, OCT 29, 2018, View Source [SID1234530440]).

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Key Points

Phase II clinical trial of GDC-0084 in glioblastoma is progressing well, with all sites open to recruitment and the first cohort of patients fully enrolled and undergoing treatment
Investigator-initiated clinical collaborations launched with St Jude Children’s Research Hospital in diffuse intrinsic pontine glioma (DIPG), and with Dana-Farber Cancer Institute in breast cancer brain metastases (BCBM)
Poster on the Kazia glioblastoma study to be presented at upcoming Society for Neuro-Oncology meeting in New Orleans, LA on 16 November 2018
Manufacture of an additional batch of GDC-0084 capsules for clinical trial use has commenced
Kazia CEO, Dr James Garner, commented, "We are delighted with progress across the GDC-0084 program. Our own study in glioblastoma is off to an excellent start, and we are very pleased to now also be working with two top-tier research hospitals to explore additional uses of the drug in other forms of brain cancer. The hard work that has been undertaken over the past twelve to eighteen months is now paying off, which sets the company up for several important and value-driving data read-outs from the GDC-0084 program during calendar 2019."

He added, "The PI3K inhibitor class has seen some dramatic developments in the past six months. We were excited to see FDA approve Copiktra (duvelisib) from Verastem in October 2018, bringing the number of FDA-approved PI3K inhibitors to three. The recent European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) meeting also saw promising data presented from Novartis for their PI3K inhibitor, alpelisib, in certain forms of breast cancer. It is clear that this class of drugs is well-established and well-proven. However, GDC-0084 remains the only PI3K inhibitor in mainstream development that is able to cross the blood-brain barrier, and this gives it a unique advantage in brain cancer."

Phase II Clinical Trial in Glioblastoma

All seven participating centres are fully open to recruitment. To date, the first cohort of three patients has been enrolled and are currently receiving treatment. If the first cohort is able to complete treatment without experiencing significant toxicity, a second cohort will be enrolled at a higher dose. A number of potential patients have already been identified for the second cohort and are undergoing pre-screening. Once the maximum tolerated dose (MTD) has been established in this first part of the trial, the remainder of the study will proceed at that dose.

Recruitment to date has exceeded expectations, and the study remains on track to report initial data early in calendar 2019. It is listed on clinicaltrials.gov as NCT03522298. The study is also listed in the clinical trial finder section of the US National Brain Tumor Society website.

Investigator-Initiated Collaborations

As previously announced, Kazia is supporting two leading US hospitals to explore the potential use of GDC-0084 in other forms of brain cancer.

St Jude Children’s Research Hospital in Memphis, TN has commenced a phase I human trial of GDC-0084 in children with diffuse intrinsic pontine glioma (DIPG) and other diffuse midline gliomas. This study is currently recruiting and is listed on clinicaltrials.gov as NCT03696355.

Dana-Farber Cancer Institute (DFCI) in Boston, MA is establishing a phase II human trial of GDC-0084 in women with breast cancer brain metastases (BCBM), which is breast cancer that has spread to the brain. This study is expected to commence recruitment in early calendar 2019, pending approval by the Institutional Review Board at DFCI, and is not yet listed on clinicaltrials.gov.

Kazia has been pleased to observe very strong interest from clinicians and scientists in a range of other potential exploratory studies of GDC-0084 and remains in discussion regarding several other potential clinical collaborations.

Publications

Kazia is gratified to have been accepted for a ‘trials in progress’ poster presentation at the upcoming 23rd Annual Scientific Meeting of the Society for Neuro-Oncology (SNO), which will be held in New Orleans, LA on 16-18 November 2018.

The Company will make the poster presentation available to all shareholders at approximately the same time it is presented at conference. The poster is expected to focus primarily on the design of the company-sponsored ongoing phase II study in glioblastoma, and the rationale for GDC-0084 in this group of patients, and it is not anticipated that meaningful clinical data will be available at this early stage.

Other presentations and publications of GDC-0084 data are anticipated in the next six to twelve months, and the Kazia team will be discussing appropriate opportunities with investigators at the upcoming SNO meeting.

Manufacturing

Work has begun to manufacture a second batch of capsules for use across the GDC-0084 clinical program, under international Good Manufacturing Practice (GMP) conditions. The company obtained approximately 48kg of drug substance as part of its transaction with Genentech in October 2016, and this remains highly stable. Kazia has planned to periodically formulate a portion of this material into capsules for clinical trial use, according to progress with the studies. Given the pace of recruitment to date, it has been considered appropriate to accelerate manufacture of a second batch of capsules to ensure continuity of supply. Production of a second batch will also strengthen the data available regarding GDC-0084 manufacture for regulatory purposes, and will ultimately help to inform commercial supply.

Regulatory Affairs

In accordance with FDA requirements, Kazia has been undertaking a 13-week toxicology study of GDC-0084 in two animal species. This is a routine requirement to support long-term use of the drug in human patients. The study is progressing well according to plans, and is on track to conclude before the end of calendar 2018.

Kazia has applied to the World Health Organisation (WHO) for an International Non-proprietary Name (INN) for GDC-0084. It is common for drugs to be referred to by a code number during early development, but companies typically seek allocation of an INN around the initiation of phase II development. INNs are a necessary step for eventual regulatory approval and are determined centrally by WHO. Kazia expects to receive the INN for GDC-0084 in late calendar 2019.

Intellectual Property

Since assuming responsibility for GDC-0084 from Genentech in October 2016, Kazia has continued to pursue robust protection for the intellectual property associated with the drug. Of note, patents have been granted in Australia (July 2017), the People’s Republic of China (March 2018), Hong Kong SAR (March 2017), and the United States (January 2017), as well as in a number of other jurisdictions. In general, the patents relating to GDC-0084 provide comprehensive protection until at least 2031

On October 29, 2018 QIAGEN N.V. (NYSE: QGEN; Frankfurt Prime Standard: QIA) reported results of operations for the third quarter and first nine months of 2018, making progress on goals set for 2018 while driving global expansion of its Sample to Insight portfolio of molecular testing solutions covering the continuum from basic research to clinical healthcare (Press release, Qiagen, OCT 29, 2018, View Source [SID1234530426]).

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"QIAGEN’s results for the third quarter of 2018 affirm the solid performance our teams are delivering in an exciting year of growth. We are making great progress on building a unique and differentiated portfolio of Sample to Insight molecular testing solutions across the continuum of customer needs from basic research to clinical healthcare. QIAGEN is well-positioned to achieve the goals set for 2018 and to continue our progress toward the mid-term targets set for 2020," said Peer M. Schatz, Chief Executive Officer of QIAGEN N.V. "

All customer classes and regions supported growth in the third quarter, including 9% growth at constant exchange rates in the Americas region and also 9% CER growth in Molecular Diagnostics. Our QuantiFERON latent TB test grew as planned at a 14% CER pace, and we are on track for our goal of about 20% CER growth for the full year. Growth in revenues from companion diagnostic co-development projects with pharmaceutical companies also supported gains in Molecular Diagnostics, along with high-single-digit CER growth in consumables for our QIAsymphony automation platform. We were also pleased with the Academia and Pharma customer classes maintaining good momentum, supported by the expansion of our offering for customers using next-generation sequencing (NGS) technologies. The distribution agreement with NeuMoDx, announced in September, adds two fully integrated testing platforms that offer the ease of clinical chemistry testing automation to molecular diagnostics laboratories. This agreement for outside the United States is highly synergistic with our portfolio and commercial channels. We are also excited about the footprint we are establishing for the QIAstat-Dx platform in Europe, and the potential of the syndromic testing market, and look forward to expanding the test menu and entering the U.S. in 2019. QIAGEN is emerging with the leading portfolio of new molecular diagnostic platform technologies addressing very large market opportunities: QuantiFERON, QIAstat-Dx, NeuMoDx and GeneReader. We continue to execute on QIAGEN’s strategy as a global leader in the emergence of molecular testing and diagnostics for a new era of breakthroughs driven by genomic insights."

(1) Adjusted figures exclude certain charges as detailed in accompanying reconciliation tables.
(2) Weighted number of diluted shares (Q3 2018: 235.2 m, Q3 2017: 232.7 m) (9M 2018: 233.8 m, 9M 2017: 233.4 m)
(3) Net cash provided by operating activities for 9M 2018 includes $30 million payment for pre-paid royalties for Natera partnership.
CER – Constant exchange rates (Q3 2018 CER sales: $387.7 m) (9M 2018 CER sales: $1,085.5 m) Tables may have rounding differences.
Net sales by product category and customer class

(1) Includes companion diagnostic co-development revenues (Q3 2018: $17 m, +49% CER and 9M 2018: $39 m, +54% CER) and U.S. HPV sales (Q3 2018: $6 m vs. Q3 2017: $8 m and 9M 2018: $15 m vs. 9M 2017: $19 m)
Growth rates at constant exchange rates (CER), sales and sales contributions at actual FX rates. Tables may have rounding differences.
Net sales by geographic region

Growth rates at constant exchange rates (CER), sales and sales contributions at actual FX rates. Tables may have rounding differences.
Third quarter 2018 results

Total net sales grew 3.8% at actual rates to $377.9 million in the third quarter of 2018 over the year-ago period, representing 6.5% growth at constant exchange rates that was reduced by 2.7 percentage points of adverse currency movements against the U.S. dollar. As expected, sales of the QIAstat-Dx system, acquired with STAT-Dx (in April 2018), provided less than one percentage point of incremental CER growth, while the rest of the portfolio provided a solid organic performance, also considering the adverse impact of sales associated with business changes announced in the fourth quarter of 2017 (China portfolio) and the first quarter of 2018 (veterinary assays).

Both consumables and related revenues (+6% CER / 88% of sales) and instruments (+11% CER / 12% of sales) advanced at robust rates. Molecular Diagnostics (+9% CER / 50% of sales) led the performance among the customer classes, supported by ongoing double-digit CER growth for the QuantiFERON-TB test, further expansion in Personalized Healthcare and companion diagnostic co-development agreements, and high-single-digit CER growth in consumables for use on QIAsymphony automation system. The Pharma (+5% CER / 19% of sales) and Academia (+5% CER / 22% of sales) customer classes maintained solid growth rates in light of improving trends in customer funding. Applied Testing (+1% CER / 9% of sales) grew at a mid-single-digit CER pace excluding the impact of the veterinary assays divestment.

Operating income rose to $77.0 million in the third quarter of 2018 from $63.9 million in the same period of 2017. Adjusted operating income – which excludes restructuring and other items such as business integration, acquisition-related costs, litigation costs and the amortization of intangible assets acquired in business combinations – rose 8% to $105.6 million from $97.9 million in the year-ago period. The adjusted operating income margin rose to 27.9% of sales in the quarter compared to 26.9% in the same period of 2017, with results in 2018 helped by an adjusted gross margin of 71.5% and the benefits of recent efficiency initiatives, which offset significant investments in the launch of the QIAstat-Dx system.

Net income was $60.3 million, or $0.26 per diluted share (based on 235.2 million diluted shares) compared to $48.5 million, or $0.21 per diluted share (based on 232.7 million diluted shares) in the third quarter of 2017. Adjusted net income was $81.5 million, or $0.35 per diluted share ($0.36 CER), compared to $75.5 million, or $0.32 per diluted share, in the year-ago period, with an adjusted tax rate of 19.1% in the third quarter of 2018 compared to 19.4% in the same period of 2017.

First nine months 2018 results

Total net sales grew 7.6% at actual rates to $1.1 billion in the first nine months of 2018 over the year-ago period, representing 6.4% growth at constant exchange rates, with 1.2 percentage points of positive currency movements against the U.S. dollar.

Operating income rose to $178.3 million in the first nine months of 2018 from $110.0 million in the same period of 2017. Adjusted operating income – which excludes restructuring and other items such as business integration, acquisition-related costs, litigation settlements and the amortization of intangible assets acquired in business combinations – grew 14% to $283.9 million from $249.7 million in the year-ago period. The adjusted operating income margin improved 1.4 percentage points to 25.8% of sales in the first nine months of 2018 compared to 24.4% in the same period of 2017, with an adjusted gross margin of 71.1% in the 2018 period compared to 70.7% in the year-earlier period.

Net income was $129.4 million, or $0.55 per diluted share (based on 233.8 million diluted shares) compared to $80.1 million, or $0.34 per diluted share (based on 233.4 million diluted shares) in the first nine months of 2017. Adjusted net income was $218.2 million, or $0.93 per diluted share ($0.94 CER), compared to $195.0 million, or $0.84 per diluted share, in the year-ago period, with an adjusted tax rate of 19.5% in the first nine months of 2018 compared to 18.1% in the year-ago period.

Balance sheet and cash flows

At September 30, 2018, cash and cash equivalents were $599.8 million, down from $657.7 million at December 31, 2017. Net cash provided by operating activities was $249.0 million in the first nine months of 2018 compared to $210.7 million in the same period of 2017, reflecting the improving business performance and including $30.0 million of prepaid royalties in 2018 for the Natera partnership to develop genetic assays for the GeneReader NGS System. Free cash flow was $176.7 million, up 21% from $146.1 million in the first nine months of 2017 and more than offset an increase in purchases of Property, Plant and Equipment to $72.3 million in the 2018 period compared to $64.6 million in the same period of 2017. Net cash used in investing activities was $232.6 million in the first nine months of 2018 compared to $371.9 million in the year-ago period. Net cash used in financing activities was $67.5 million compared to net cash provided by financing activities of $386.0 million in the same period of 2017, which included $726.3 million from debt issuances during 2017 that was partially offset by $304.9 million of payments in connection with the capital repayment to shareholders and share repurchase programs.

"Based on the strong sales and earnings growth to date this year, we have reaffirmed our target for about 6-7% CER sales growth and raised our guidance for adjusted EPS on a full-year basis to about $1.33-1.34 per share," said Roland Sackers, Chief Financial Officer of QIAGEN N.V. "The improving profitability comes from the solid business expansion coupled with benefits from efficiency initiatives launched in 2017, which have strengthened our competitive position, especially as we make significant investments in the launch of QIAstat-Dx and the European rollout of the fully integrated NeuMoDx platforms for molecular diagnostic testing. We continue to use our healthy financial position to strengthen our business through targeted operational investments, as well as improving returns to shareholders through our current $200 million repurchase commitment."

Highlights from our Sample to Insight portfolio

QIAGEN is focused on growth opportunities for its Sample to Insight portfolio across the continuum of molecular testing from basic research to clinical healthcare. Among recent developments:

NeuMoDx has granted QIAGEN rights to a novel, disruptive and scalable platform technology for molecular testing. This technology has been applied to next-generation automation systems for PCR (polymerase chain reaction) testing which open the important fully integrated segment of molecular diagnostics to QIAGEN. In September, QIAGEN began commercialization of the NeuMoDx 288 (high-throughput) and NeuMoDx 96 (mid-throughput) in Europe and other major markets outside the United States. QIAGEN is introducing these first two platforms, which are based on the same scalable core technology along with the first two CE-IVD marked diagnostic tests in a strategic partnership with NeuMoDx Molecular, Inc. The two companies have also entered into an agreement under which QIAGEN can acquire all remaining shares of NeuMoDx for $234 million between mid-2019 and mid-2020, subject to regulatory and operational milestones. An extensive menu of tests is in development to expand the diagnostic insights offered by the NeuMoDx systems.
QuantiFERON-TB, the gold-standard blood test for latent tuberculosis (TB) infection detection, continued to grow as authorities increasingly add screening with modern, accurate blood tests such as QuantiFERON-TB Gold Plus (QFT-Plus) to strategies for fighting TB. In September, at a United Nations meeting on tuberculosis, world leaders committed to invest $13 billion a year by 2022 for TB prevention and care. Also in September, QIAGEN and DiaSorin launched an automated, CE-marked workflow for processing QFT-Plus on DiaSorin’s widely used LIAISON immunodiagnostic instruments. Co-marketing has begun in Europe. Availability is planned for the United States in 2019 and China in 2020. Together with the previously announced Hamilton collaboration for pre-analytical sample processing, the enhanced level of workflow automation makes QFT-Plus even more unique, efficient and scalable for all settings from low-throughput laboratories to very large screening programs.
QIAstat-Dx, the powerful yet simple and highly flexible, one-step automation system for multiplex PCR analysis, is rapidly establishing a footprint in the growing market for syndromic testing. QIAGEN has launched the next-generation solution for diagnosis of complex syndromes in Europe and other markets, with the first two CE-IVD marked tests offering differential diagnosis of respiratory and gastrointestinal (GI) infections. A second GI panel was recently launched which includes comprehensive viral, bacterial and parasitic coverage. QIAstat-Dx benefits patients and saves money in healthcare with easy-to-use tests that can be analyzed rapidly, delivering results in about one hour to enable quick, accurate treatment decisions in hospitals, clinics or laboratories. QIAGEN plans to complete the FDA regulatory submission by the end of 2018 as part of plans for a U.S. launch in mid-2019.
Next-generation sequencing (NGS) continues to gain momentum from QIAGEN’s universal solutions for DNA and RNA sequencing on any platform, as well as from expanding market share of the GeneReader NGS System, the world’s first truly Sample to Insight benchtop NGS automation system. QIAGEN recently launched QIAseq FastSelect RNA Removal Kits, a breakthrough technology enabling much faster, simpler library preparation to address a bottleneck in RNA sequencing on any platform. The GeneReader NGS System is growing in placements and consumable sales, while the menu has been expanded with two new QIAact panels. One panel covers a broad range of cancer-causing variants and the other panel focuses on genes tied to breast and ovarian cancers.
In Personalized Healthcare, QIAGEN expanded its presence in developing molecular tests to support immuno-oncology (I-O), launching the NGS open-platform QIAseq TMB Panel to assess biomarkers for tumor mutation burden (TMB) that influence patient response to various immunotherapy drugs. QIAGEN Clinical Insight bioinformatics software has been expanded to interpret key I-O biomarkers. QIAGEN is the leader in co-development programs with pharmaceutical companies for personalized medicine approaches to I-O therapies. Separately, QIAGEN received FDA approval in September for the therascreen EGFR RGQ PCR Kit as a companion diagnostic to help guide the use of Pfizer’s VIZIMPRO (dacomitinib) as a first-line treatment of patients with non-small cell lung cancer (NSCLC). This is QIAGEN’s first approved companion diagnostic with Pfizer.
Update on share repurchase program

As part of a commitment to return $200 million to shareholders that was announced in January 2018, a total of 2.7 million shares have been repurchased through October 2018 on the Frankfurt Stock Exchange at a volume-weighted average price of EUR 31.43 per share for EUR 85.0 million (approximately $97 million at current exchange rates). Further information is available on the QIAGEN website (www.qiagen.com).

Outlook

QIAGEN has updated its outlook for full-year 2018, raising the target for adjusted EPS to $1.33-1.34 CER per share (previously $1.31-1.33 CER), while reaffirming expectations for sales growth of about 6-7% CER. This sales outlook includes anticipated sales of about $7 million during the second half of 2018 from the acquisition of STAT-Dx (on April 27, 2018), as well as about one percentage point of headwind from reduced U.S. HPV test sales compared to 2017. These expectations do not consider any further acquisitions that could be completed in 2018.

Based on exchange rates as of October 26, 2018, currency movements for full-year 2018 against the U.S. dollar are expected to have a negative impact of about one percentage point on 2018 net sales at actual rates, and a negative impact of about $0.02 per share on adjusted diluted EPS.

For the fourth quarter of 2018, total net sales are expected to rise about 6-7% CER, which includes about $5 million of sales from the QIAstat-Dx acquisition. Adjusted diluted EPS are expected to be about $0.39-0.40 CER.

Based on exchange rates as of October 26, 2018, currency movements against the U.S. dollar are expected to have a negative impact on net sales of about four percentage points, and a negative impact of about $0.01 per share on adjusted diluted EPS.

Quarterly results presentation, conference call and webcast details

A presentation with additional information can be downloaded at View Source A conference call will be held on Tuesday October 30, 2018, at 14:00 Central European Time (CET) / 13:00 GMT / 9:00 Eastern Standard Time (EST). (Note earlier European times due to the end of European Daylight Savings Time.) A live webcast will be made available at this website, and a replay will also be made available after the event.

Use of adjusted results

QIAGEN reports adjusted results, as well as results on a constant exchange rate (CER) basis, and other non-U.S. GAAP figures (generally accepted accounting principles), to provide additional insight into its performance. These results include adjusted gross margin, adjusted operating income, adjusted operating income margin, adjusted net income, adjusted diluted EPS, adjusted tax rates and free cash flow. Adjusted results are non-GAAP financial measures that QIAGEN believes should be considered in addition to reported results prepared in accordance with GAAP, but should not be considered as a substitute. Free cash flow is calculated by deducting capital expenditures for Property, Plant and Equipment from cash flow from operating activities. QIAGEN believes certain items should be excluded from adjusted results when they are outside of ongoing core operations, vary significantly from period to period, or affect the comparability of results with competitors and its own prior periods. Furthermore, QIAGEN uses non-GAAP and constant currency financial measures internally in planning, forecasting and reporting, as well as to measure and compensate employees. QIAGEN also uses adjusted results when comparing current performance to historical operating results, which have consistently been presented on an adjusted basis. Reconciliations are included in the tables accompanying this report.