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Novocure Reports Second Quarter 2016 Financial Results and Provides Company Update

On July 28, 2016 Novocure (NASDAQ:NVCR), a commercial stage oncology company pioneering a novel therapy for solid tumors, reported financial results for the quarter ended June 30, 2016, highlighting year-over-year growth in prescriptions, active patients and reported revenues (Press release, NovoCure, JUL 28, 2016, View Source [SID:1234514114]). Second quarter 2016 highlights include:

Three months ended June 30,
2016 2015 % change
Non-financial
Prescriptions received in period(1) 657 428 54 %
Active patients at period end(2) 891 425 110 %

Financial, in millions (unaudited)
Revenues(3) $ 17.9 $ 6.5 174 %
Net loss $ (40.6 ) $ (29.4 )

Cash and cash equivalents at the end of period $ 80.9 $ 106.5
Short-term investments at the end of period $ 120.0 $ 57.0

(1) A "prescription received" is a commercial order for Optune that is received from a physician certified to treat patients with Tumor Treating Fields (TTFields) therapy for a patient not previously on TTFields therapy. Orders to renew or extend treatment are not included in this total. In the future, we may have regulatory approvals and commercial programs for multiple clinical indications, at which time we will recognize a commercial order as a prescription for the same patient for each clinical indication treated. For example, in the future, a patient may have a prescription for the treatment of lung cancer and a prescription for the treatment of brain metastases from the lung cancer. (2) An "active patient" is a patient who is on TTFields therapy under a commercial prescription order as of the measurement date, including patients who may be on a temporary break from treatment and who plan to resume treatment in less than 60 days. (3) For the reported periods, all revenues were recognized when cash was collected and all other revenue recognition criteria had been met. "Year-over-year prescription, active patient and revenue growth continues and I am proud of the progress we have made since the FDA approval of Optune for newly diagnosed GBM in October 2015. We finished the quarter with 547 prescriptions in the United States and 110 in our ex-U.S. markets," said Asaf Danziger, Chief Executive Officer. "While barriers to full adoption remain, I am optimistic we will overcome the challenges inherent in bringing a completely new therapy into widespread clinical use." "Earlier this week, the National Comprehensive Cancer Network, or NCCN, updated its clinical practice guidelines to add Optune plus temozolomide as a Category 2A treatment option for newly diagnosed GBM. Optune is transforming the standard of care for glioblastoma," continued Mr. Danziger. "Also this month, we received FDA approval for the smaller, lighter second generation Optune System which aims to make Optune therapy even easier for patients. And, later this year, we will publish additional clinical trial data further demonstrating the benefits of Optune therapy for GBM patients." "Optune is the first therapy to demonstrate an improvement in overall survival for newly diagnosed GBM patients in more than a decade and we are committed to bringing this therapy to patients who have such a vital need for improved treatment options," concluded Mr. Danziger. "Scientific evidence suggests TTFields therapy is broadly applicable to solid tumors; and our R&D team continues to make progress toward developing TTFields for additional tumor types," said William Doyle, Executive Chairman. "In the past three months, we enrolled the last patients in our PANOVA and INNOVATE phase 2 pilot trials in advanced pancreatic cancer and recurrent ovarian cancer, respectively, and received FDA approval of our IDE application to initiate our METIS phase 3 pivotal trial in brain metastases." "Recent findings strengthen our belief that treatment with TTFields is compatible with both current standards of care and emerging novel therapies for a variety of solid tumors and we are excited to share data from multiple indications at our R&D day in December," continued Mr. Doyle. "We believe that TTFields, with the potential of superior outcomes and no systemic toxicity, will play a valuable role in the solid tumor treatment paradigm." 2016 Second Quarter Operating Statistics and Financial Update Prescriptions in the quarter ended June 30, 2016, increased by 229 prescriptions, or 54 percent, compared to the same period in 2015. The increase in prescriptions was driven primarily by commercial activities in the United States after the October 2015 U.S. Food and Drug Administration (FDA) approval of Optune for the treatment of newly diagnosed glioblastoma (GBM), increased commercial activities in Germany, and enhanced awareness of Optune following the December 2015 publication of EF-14 phase 3 pivotal trial results in the Journal of the American Medical Association.
In the United States, 547 prescriptions were received in the quarter ended June 30, 2016, an increase of 157 prescriptions, or 40 percent, compared to the same period in 2015.

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In Germany and other EMEA markets, 110 prescriptions were received in the quarter ended June 30, 2016, an increase of 72 prescriptions, or 189 percent, compared to the same period in 2015.

There were 891 active patients on Optune therapy at June 30, 2016, an increase of 466 active patients, or 110 percent, compared to June 30, 2015. The increase in active patients was driven both by prescription growth and by an increase in the percentage of newly diagnosed GBM patients who started Optune in prior periods. The portion of Optune prescriptions for newly diagnosed GBM was more than 50 percent in the second quarter of 2016.

In the United States, there were 736 active patients on Optune therapy at June 30, 2016, an increase of 345 active patients, or 88 percent, compared to June 30, 2015.

In Germany and other EMEA markets, there were 155 active patients on Optune therapy at June 30, 2016, an increase of 121 active patients, or 356 percent, compared to June 30, 2015.

We continued to expand coverage of Optune for the treatment of newly diagnosed and/or recurrent GBM in the second quarter of 2016 to include more than 10 million additional lives through new policies with Blue Cross Blue Shield of Michigan, Emblem Health, Blue Cross Blue Shield of Minnesota, and Group Health Cooperative Washington and Idaho. This brought the total number of covered lives to approximately 116 million in the United States as of June 30, 2016. For the three months ended June 30, 2016, revenues increased to $17.9 million compared to $6.5 million for the same period in 2015, representing 174 percent growth.

This growth was primarily driven by increased Optune adoption. For the three months ended June 30, 2016, cost of revenues, excluding impairment of field equipment, increased to $9.8 million compared to $4.8 million for the same period in 2015, representing 106 percent growth. This was primarily driven by an increase in active Optune patients, resulting in increased transducer array shipment costs and increased field equipment depreciation expenses, as well as increased personnel costs to establish infrastructure necessary to support an increasing volume of shipments to patients. We received FDA approval to market our second generation Optune System in the United States on July 13, 2016 and are in the process of converting all patients from the first generation to the second generation Optune System. We are no longer manufacturing the first generation Optune System. For the three months ended June 30, 2016, we recorded a non-cash impairment loss of $6.4 million for the write-off of first generation Optune System field equipment. We plan to convert all patients in the United States from the first generation to the second generation Optune System over the next three months and do not expect an additional material impairment charge in the future. Research, development and clinical trials expenses for the three months ended June 30, 2016, were $11.3 million compared to $12.8 million for the same period in 2015, representing a decrease of 11 percent. This decrease was primarily due to the conclusion of our EF-14 phase 3 pivotal trial in newly diagnosed GBM and reduced expenses related to clinical education and investigator-sponsored trials, partially offset by an increase in personnel costs. Sales and marketing expenses for the three months ended June 30, 2016, were $14.6 million compared to $8.9 million for the same period in 2015, representing growth of 65 percent. This growth was primarily due to increased personnel costs as well as increased marketing expenses to expand commercial operations in the United States and Germany and to establish commercial operations in Switzerland and Japan. General and administrative expenses for the three months ended June 30, 2016, were $13.0 million compared to $7.4 million for the same period in 2015, representing growth of 77 percent. This growth was primarily due to increased personnel costs as well as increased expenses related to professional services and activities associated with being a public company. Personnel costs for the three months ended June 30, 2016, included $5.6 million in non-cash share-based compensation expenses, comprised of $0.2 million in cost of revenues; $0.8 million in research, development and clinical trials; $1.3 million in sales and marketing; and $3.3 million in general and administrative expenses. Total non-cash share-based compensation expenses for second quarter 2015 were $2.6 million. Net losses for the three months ended June 30, 2016, were $40.6 million compared to net losses of $29.4 million for the same period in 2015. As of June 30, 2016, we had $80.9 million in cash and cash equivalents and $120.0 million in short-term investments, for a total balance of $200.9 million in cash, cash equivalents and short-term investments. On June 30, 2016 we provided a drawdown notice for the remaining $75.0 million available under our existing term loan agreement with an investment fund managed by Pharmakon Advisors LP and we received funds from the draw in July 2016. Other recent corporate achievements
NCCN guidelines update: In July 2016, Optune was added to the National Comprehensive Cancer Network (NCCN) Clinical Practice Guidelines in Oncology for Central Nervous Systems Cancers for newly diagnosed GBM. Optune plus temozolomide is now a Category 2A recommendation following standard brain radiation therapy with concurrent temozolomide, and is now a standard treatment option for newly diagnosed patients with GBM.

FDA approval for the second generation Optune system: In July 2016, the U.S. FDA approved our premarket approval (PMA) supplement application for the second generation Optune System. The second generation Optune system is less than half the weight and size of the first generation Optune System and aims to make treatment with Optune even easier for GBM patients.
METIS phase 3 pivotal trial IDE approval: In May 2016, we received FDA approval of our investigational device exemption (IDE) application to initiate our METIS trial. The multi-center, open-label randomized study will test the effectiveness of TTFields following stereotactic radiosurgery (SRS) compared with watchful waiting alone in 270 patients with brain metastases stemming from non-small cell lung cancer.

PANOVA phase 2 pilot data first cohort subgroup analysis: Data from the first cohort of PANOVA, a phase 2 pilot trial in advanced pancreatic cancer, demonstrate that progression free survival and overall survival of patients treated with TTFields combined with gemcitabine were more than double those of gemcitabine-treated historical controls. Subgroup analysis of the first cohort of the PANOVA trial were presented at ASCO (Free ASCO Whitepaper) in June 2016 demonstrating an overall survival benefit of TTFields plus gemcitabine in advanced pancreatic patients. Median overall survival exceeded 15 months in patients with locally advanced pancreatic cancer treated with TTFields therapy combined with gemcitabine.

PANOVA phase 2 pilot trial last patient in: Following the approval of nab-paclitaxel, a taxane-based chemotherapy, for the treatment of advanced pancreatic cancer, we expanded the PANOVA study to include 20 additional patients treated with TTFields in combination with nab-paclitaxel and gemcitabine. We finished enrollment of the second patient cohort in May 2016 and, with six months follow-up, phase 2 pilot data for all 40 patients enrolled in the PANOVA trial is expected to be available for presentation in late 2016.

INNOVATE phase 2 pilot trial last patient in: In October 2014, the INNOVATE trial opened to study TTFields in combination with weekly paclitaxel for patients with recurrent ovarian cancer. We finished enrollment in May 2016 and, with six months follow-up, phase 2 pilot data for all 30 patients is expected to be available for presentation in late 2016.

Preclinical data show additive efficacy of TTFields and PD-1 inhibitors: Results presented at the American Association of Immunologists’ Annual Meeting 2016 demonstrate that TTFields enhance immunogenic cell death in non-small cell lung cancer cells in vivo. Preclinical mouse data suggest combining TTFields with anti-PD-1 may achieve tumor control by further enhancing antitumor immunity.

Research and development day scheduled for December 12, 2016 We will hold a research and development day for analysts and investors on Monday, December 12, 2016, from 1:00 to 4:00 p.m. Eastern Time in New York City. The event will provide analyses from completed clinical trials, including the full 695 patient dataset from the EF-14 trial in newly diagnosed GBM, data from the PANOVA phase 2 pilot trial in advanced pancreatic cancer, and data from the INNOVATE phase 2 pilot trial in recurrent ovarian cancer. In addition, we will provide an update of recent preclinical findings related to TTFields and a review of our ongoing clinical pipeline.

Cytokinetics, Inc. Reports Second Quarter 2016 Financial Results

On July 28, 2016 Cytokinetics, Inc. (Nasdaq:CYTK) reported total revenues for the second quarter of 2016 were $5.8 million, compared to $6.5 million, during the same period in 2015 (Press release, Cytokinetics, JUL 28, 2016, View Source;p=RssLanding&cat=news&id=2189723 [SID:1234514112]). The net loss for the second quarter was $11.6 million, or $0.29 per basic and diluted share. This is compared to the net loss for the same period in 2015 of $10.6 million, or $0.27 per basic and diluted share. As of June 30, 2016, cash, cash equivalents and investments totaled $98.0 million.

"We had a productive quarter advancing key clinical, regulatory and commercial planning initiatives across our portfolio of muscle-biology directed drug candidates," said Robert I. Blum, Cytokinetics’ President and Chief Executive Officer. "Our recently expanded collaboration with Astellas aligns our interests with regard to tirasemtiv and ALS and provides a path forward for our two skeletal muscle activators as potential treatments for ALS. Toward that objective, we expect that VITALITY-ALS will soon conclude patient enrollment, a major milestone for our Phase 3 clinical trial of tirasemtiv in patients with ALS. We also continue to prepare for the start of a potential Phase 3 development program for omecamtiv mecarbil in collaboration with Amgen. These are especially promising and hopeful times at Cytokinetics as our programs advance towards late-stage milestones."

Recent Highlights and Upcoming Milestones

Cardiac Muscle Program

omecamtiv mecarbil

Announced the start of a double-blind, randomized, placebo-controlled, multi-center Phase 2 clinical trial to evaluate the safety, pharmacokinetics and efficacy of omecamtiv mecarbil in Japanese subjects with heart failure and reduced ejection fraction.
Presented a poster titled "COSMIC-HF: Improved Contractility and Evolution of Ventricular Remodeling through Time" at Heart Failure 2016, the annual congress of the Heart Failure Association of the European Society of Cardiology. The results indicated that omecamtiv mecarbil improved left ventricular (LV) systolic function, LV end-diastolic volume and NT-proBNP over time, suggesting potentially favorable ventricular remodeling and progressive reduction in myocardial wall stress.
Participated with Amgen in additional regulatory interactions with the FDA, EMA and Health Canada to inform the design and conduct of a potential Phase 3 development program for omecamtiv mecarbil.
Conducted clinical, regulatory, non-clinical and commercial planning activities in collaboration with Amgen to support the potential advancement of omecamtiv mecarbil to a Phase 3 development program.
Expect to make a decision regarding the advancement of omecamtiv mecarbil to Phase 3 in the third quarter of 2016.
Skeletal Muscle Program

tirasemtiv

Recently announced that we have granted Astellas an option right for the development and commercialization of tirasemtiv outside of North America, Europe and other select countries.*
Completing screening of patients in VITALITY-ALS (Ventilatory Investigation of Tirasemtiv and Assessment of Longitudinal Indices after Treatment for a Year in ALS), an ongoing, international Phase 3 clinical trial designed to assess the effects of tirasemtiv versus placebo on slow vital capacity (SVC) and other measures of skeletal muscle strength in patients with ALS.
Expect to complete enrollment of VITALITY-ALS in August 2016. Expect data from VITALITY–ALS in the second half of 2017.
Conducted regulatory interactions with each of FDA and EMA to inform the design and conduct of an open-label extension clinical trial for patients who complete VITALITY-ALS.

Expect to begin an open-label extension trial for patients who complete VITALITY-ALS in the fourth quarter of 2016.
CK-2127107

Recently announced that we have amended our collaboration agreement with Astellas to enable the development of CK-2127107 for the potential treatment of ALS.*

Continued enrollment of the ongoing Phase 2 clinical trial of CK-2127107 in patients with spinal muscular atrophy (SMA) in collaboration with Astellas.

Expect to complete enrollment of Cohort 1 in the Phase 2 clinical trial of CK-2127107 in patients with SMA in the second half of 2016. Expect data from this clinical trial in first half of 2017.
Announced the start of a Phase 2 clinical trial of CK-2127017 in patients with COPD. Expect to complete enrollment and to analyze data from this clinical trial in 2017.
Pre-Clinical Research

Continued research activities under our joint research program with Amgen directed to the discovery of next-generation cardiac muscle activators and under our joint research program with Astellas directed to the discovery of next-generation skeletal muscle activators. In addition, company scientists continued independent research activities directed to our other muscle biology programs.

Recently announced that we have extended our joint research program with Astellas focused on the discovery of next-generation skeletal muscle activators through 2017.*

Anticipate potential advancement of one next-generation compound from a joint research program into pre-clinical development during 2016.
Corporate

Expect to receive $65 million in committed capital from Astellas which includes upfront payments for Astellas’ option right exercisable for tirasemtiv and amended terms of the companies’ collaboration agreement to include ALS for CK-2127107. In addition, Cytokinetics expects to receive approximately $30 million in additional sponsored research and development funding through 2017 from Astellas.*
Received 2016 Essey Commitment to a Cure Award from the ALS Association Golden West Chapter.
Announced appointment of Edward M. Kaye, M.D. to Cytokinetics Board of Directors.

Appointed Caryn McDowell, Cytokinetics’ General Counsel as Chief Compliance Officer.

Rang the closing bell at NASDAQ accompanied by leaders of the ALS Association in recognition of ALS Awareness month and the company’s commitment to education, awareness, research and development activities focused to amyotrophic lateral sclerosis (ALS).
* The effectiveness of the amended agreement with Astellas is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act.

Financials

Revenues for the second quarter of 2016 were $5.8 million, compared to $6.5 million during the same period in 2015. Revenues for the second quarter of 2016 included $2.9 million of research and development revenues and $1.9 million of license revenues from our collaboration with Astellas, $0.6 million in research and development revenues from our collaboration with Amgen and $0.3 million in research and development revenues from our collaboration with ALSA. Revenues for the same period in 2015 were comprised of $3.0 million of license revenues and $2.9 million of research and development revenues from our collaboration with Astellas, and $0.6 million of research and development revenues from our collaboration with Amgen. The decrease in revenues for the second quarter of 2016, compared with the same period in 2015, was mainly due to timing of license revenue recorded under the Astellas collaboration agreement, due to the extension of the timeframe of development services.

Total research and development (R&D) expenses for the second quarter of 2016 were $9.7 million, compared to $12.6 million for the same period in 2015. The $2.9 million decrease in R&D expenses for the second quarter of 2016, compared with the same period in 2015, was primarily due to a decrease of $2.3 million in outsourced preclinical costs associated with clinical manufacturing activities, and a decrease of $1.7 million in outsourced clinical costs, partially offset by an increase of $1.3 million in personnel related expenses due to increased headcount costs. The decrease in outsourced clinical costs was comprised of an increase of $2.8 million in outsourced clinical costs mainly associated with the ongoing VITALITY-ALS trial, offset by a $4.5 million litigation settlement in June 2016 from a contract research organization for our Phase 2 BENEFIT-ALS clinical trial which was concluded in 2014.

Total general and administrative (G&A) expenses for the second quarter of 2016 were $7.1 million compared to $4.5 million for the same period in 2015. The $2.6 million increase in G&A expenses for the second quarter of 2016, compared to the same period in 2015, was primarily due to an increase of $1.1 million in personnel related expenses due to increased non-cash stock compensation expense and increased headcount, an increase of $0.7 million in outsourced costs related to accounting and finance and commercial development, and an increase of $0.8 million in corporate and patent legal fees.

Revenues for the six months ended June 30, 2016 were $14.2 million, compared to $11.0 million for the same period in 2015. Revenues for the first six months of 2016 included $6.6 million of research and development revenues and $5.9 million of license revenues from our collaboration with Astellas, $1.2 million of research and development revenues from our collaboration with Amgen, and $0.5 million in research and development revenues from our collaboration with ALSA. Revenues for the same period in 2015 included $5.0 million of research and development revenues and $4.7 million of license revenues from our collaboration with Astellas, and $1.3 million of research and development revenues from our collaboration with Amgen.

Total R&D expenses for the six months ended June 30, 2016 were $23.3 million, compared to $21.6 million for the same period in 2015. The $1.7 million increase in R&D expenses in the first six months of 2016, over the same period in 2015, was primarily due to an increase of $2.4 million in outsourced clinical costs and an increase of $2.3 million in personnel related expenses due to increased headcount, partially offset by a decrease of $2.9 million in outsourced preclinical costs associated with clinical manufacturing activities. The increase in outsourced clinical costs was comprised of an increase of $6.9 million in outsourced clinical costs mainly associated with the ongoing VITALITY-ALS trial, offset by a $4.5 million settlement in June 2016 with a contract research organization for our Phase 2 BENEFIT-ALS clinical trial which was concluded in 2014.

Total G&A expenses for the six months ended June 30, 2016 were $13.9 million, compared to $8.9 million for the same period in 2015. The $5.0 million increase in G&A spending in the first six months of 2016 compared to the same period in 2015, was primarily due to an increase of $2.1 million in personnel related expenses due to increased non-cash stock compensation expense and increased headcount, an increase of $1.3 million in outsourced costs related to accounting and finance and commercial development, and an increase of $1.4 million in corporate and patent legal fees.

The net loss for the six months ended June 30, 2016, was $24.1 million, or $0.61 per basic and diluted share, compared to a net loss of $19.4 million, or $0.50 per basic and diluted share, for the same period in 2015.

Financial Guidance

We will not update our financial guidance until our Q3 Earnings due to the recent expansion of our collaboration with Astellas; at that time we expect to provide updated 2016 financial guidance on both a cash and GAAP basis.

Thermo Fisher Scientific Reports Second Quarter 2016 Results

On July 28, 2016 Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, reported its financial results for the second quarter of 2016, ended July 2, 2016 (Press release, Thermo Fisher Scientific, JUL 28, 2016, View Source [SID:1234514102]).

Second Quarter 2016 Highlights

Revenue increased 6% to $4.54 billion.
GAAP diluted earnings per share (EPS) increased 2% to $1.30.
Adjusted EPS grew 10% to $2.03.
Strengthened leadership in analytical instruments by launching a suite of software and Cloud-based solutions for research and applied markets, and introducing new products to accelerate drug discovery, including our flagship Q Exactive BioPharma mass spectrometer.
Delivered strong performance in emerging markets, led by China, South Korea and India.
Announced agreement to acquire FEI Company for $4.2 billion, adding leading electron microscopy technologies to significantly increase capabilities for structural biology applications and create new growth opportunities in attractive materials science markets.
Adjusted EPS, adjusted operating income, adjusted operating margin and free cash flow are non-GAAP measures that exclude certain items detailed later in this press release under the heading "Use of Non-GAAP Financial Measures."

"We’re pleased to announce another quarter of strong financial results," said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. "Our team executed well in the second quarter, contributing to an outstanding first half.

"We continued to build on our leadership position by executing our proven growth strategy. During the quarter, we launched new products that raise the bar on performance and productivity, delivered strong growth in emerging markets and enhanced our unique customer value proposition. We’re continuing to effectively deploy capital to strengthen our competitive position and drive growth. We’re excited about our pending acquisition of FEI, which will add leading capabilities in electron microscopy that complement our analytical instruments portfolio. We plan to leverage our industry leadership to expand the use of these technologies in life sciences and applied markets, creating significant value for our customers and our shareholders.

"In summary, we’re in a great position at the halfway point of the year and on track to deliver an excellent 2016."

Second Quarter 2016

For the second quarter of 2016, revenue grew 6% to $4.54 billion, versus $4.27 billion in the second quarter of 2015. Organic revenue growth was 4%; acquisitions increased revenue by 3% and currency translation decreased revenue slightly.

GAAP Earnings Results

GAAP diluted EPS increased to $1.30, versus $1.27 in the same quarter last year. GAAP operating income for the second quarter of 2016 increased 7% to $638 million, compared with $596 million in the second quarter of 2015. GAAP operating margin was 14.1%, compared with 14.0% in the second quarter of 2015.

Non-GAAP Earnings Results

Adjusted EPS in the second quarter of 2016 grew 10% to $2.03, versus $1.84 in the second quarter of 2015. Adjusted operating income for the second quarter of 2016 increased 9% compared with the year-ago quarter. Adjusted operating margin was 22.8%, compared with 22.3% in the second quarter of 2015.

2016 Guidance Update

Thermo Fisher is updating its revenue and adjusted EPS guidance for 2016 to reflect strong operating performance in the first half of the year, as well as a more unfavorable foreign exchange environment. The company now expects revenue to be in the range of $17.84 to $18.00 billion versus its guidance of $17.86 to $18.04 billion announced on April 28, 2016. This would continue to result in 5 to 6% revenue growth over the previous year. The company is raising its adjusted EPS guidance to a new range of $8.07 to $8.20 versus $8.05 to $8.19, for 9 to 11% growth year over year as previously announced.

Segment Results

Management uses adjusted operating results to monitor and evaluate performance of the company’s four business segments, as highlighted below. Since these results are used for this purpose, they are also considered to be prepared in accordance with GAAP.

Life Sciences Solutions Segment

In the second quarter of 2016, Life Sciences Solutions Segment revenue grew 13% to $1.28 billion, compared with revenue of $1.13 billion in the second quarter of 2015. Segment operating margin was 28.9% versus 28.6% in 2015.

Analytical Instruments Segment

Analytical Instruments Segment revenue increased 2% to $794 million in the second quarter of 2016, compared with revenue of $777 million in the second quarter of 2015. Segment operating margin was 18.3% versus 18.0% in the 2015 quarter.

Specialty Diagnostics Segment

Specialty Diagnostics Segment revenue in the second quarter increased 4% to $851 million in 2016, compared with revenue of $817 million in the second quarter of 2015. Segment operating margin was 27.9% versus 27.8% in the 2015 quarter.

Laboratory Products and Services Segment

In the second quarter of 2016, Laboratory Products and Services Segment revenue grew 6% to $1.80 billion, compared with revenue of $1.69 billion in the second quarter of 2015. Segment operating margin was 15.5% versus 15.4% in the 2015 quarter.

Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including adjusted EPS, adjusted operating income and adjusted operating margin, which exclude certain acquisition-related costs, including charges for the sale of inventories revalued at the date of acquisition and significant transaction costs; restructuring and other costs/income; and amortization of acquisition-related intangible assets. Adjusted EPS also excludes certain other gains and losses that are either isolated or cannot be expected to occur again with any regularity or predictability, tax provisions/benefits related to the previous items, benefits from tax credit carryforwards, the impact of significant tax audits or events and the results of discontinued operations. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods. We also use a non-GAAP measure, free cash flow, which is operating cash flow, net of capital expenditures, and also excludes operating cash flows from discontinued operations to provide a view of the continuing operations’ ability to generate cash for use in acquisitions and other investing and financing activities. We believe that the use of non-GAAP measures helps investors to gain a better understanding of our core operating results and future prospects, consistent with how management measures and forecasts the company’s performance, especially when comparing such results to previous periods or forecasts.

For example:

We exclude costs and tax effects associated with restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to these restructuring activities are not indicative of our normal operating costs.

We exclude certain acquisition-related costs, including charges for the sale of inventories revalued at the date of acquisition and significant transaction costs. We exclude these costs because we do not believe they are indicative of our normal operating costs.

We exclude the expense and tax effects associated with the amortization of acquisition-related intangible assets because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives of 5 to 20 years. In 2016, based on acquisitions closed through the end of the second quarter, our adjusted EPS will exclude approximately $2.29 of expense for the amortization of acquisition-related intangible assets. Exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies.

We also exclude certain gains/losses and related tax effects, benefits from tax credit carryforwards and the impact of significant tax audits or events (such as the effect on deferred tax balances of enacted changes in tax rates), which are either isolated or cannot be expected to occur again with any predictability and that we believe are not indicative of our normal operating gains and losses. For example, we exclude gains/losses from items such as the sale of a business or real estate, gains or losses on significant litigation-related matters, gains on curtailments of pension plans, the early retirement of debt and discontinued operations.

We also report free cash flow, which is operating cash flow, net of capital expenditures, and also excludes operating cash flows from discontinued operations to provide a view of the continuing operations’ ability to generate cash for use in acquisitions and other investing and financing activities.

Thermo Fisher’s management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring the company’s core operating performance and comparing such performance to that of prior periods and to the performance of our competitors. Such measures are also used by management in their financial and operating decision-making and for compensation purposes.

The non-GAAP financial measures of Thermo Fisher’s results of operations and cash flows included in this press release are not meant to be considered superior to or a substitute for Thermo Fisher’s results of operations prepared in accordance with GAAP. Reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in the accompanying tables. Thermo Fisher’s earnings guidance, however, is only provided on an adjusted basis. It is not feasible to provide GAAP EPS guidance because the items excluded, other than the amortization expense, are difficult to predict and estimate and are primarily dependent on future events, such as acquisitions and decisions concerning the location and timing of facility consolidations.

Alkermes plc Reports Second Quarter 2016 Financial Results

On July 28, 2016 Alkermes plc (NASDAQ: ALKS) reported financial results for the second quarter of 2016 (Press release, Alkermes, JUL 28, 2016, View Source;p=RssLanding&cat=news&id=2189393 [SID:1234514098]).

"Our second quarter results demonstrate the power of our business model to efficiently capture operating leverage as our topline grows. These results reflect the growth of VIVITROL and launch of ARISTADA as well as the continued strength of our royalty and manufacturing business. VIVITROL’s robust growth continued as we expand access and utilization in the large Medicaid patient population. We are also encouraged by our progress with the launch of ARISTADA, for which our second quarter results were slightly ahead of expectations," commented James Frates, Chief Financial Officer of Alkermes. "Today we are improving our financial expectations for 2016 to reflect the accelerating growth in VIVITROL net sales. With our highly diversified portfolio and strong financial position, we have the resources to advance our innovative pipeline and invest in the ongoing launch of ARISTADA and growth of VIVITROL."

"Our proprietary commercial products, VIVITROL and ARISTADA, represent important growth opportunities at a time when substance abuse and mental illness are significant public health priorities," said Richard Pops, Chief Executive Officer of Alkermes. "Against this backdrop, we continue to make important advances for VIVITROL and are just beginning to see what its ultimate potential may be. The launch of ARISTADA in the rapidly growing, long-acting antipsychotic market continues to progress well, with reimbursement and access initiatives advancing across the country. We are also making headway on our late-stage pipeline of product candidates: the phase 3 studies for ALKS 3831 for schizophrenia and ALKS 8700 for multiple sclerosis will enroll throughout the remainder of 2016, and we expect to report topline data from the FORWARD-5 study of ALKS 5461 for major depressive disorder by year-end."

Quarter Ended June 30, 2016 Highlights

Total revenues for the quarter were $195.2 million. This compared to $151.4 million for the same period in the prior year.
Net loss according to generally accepted accounting principles in the U.S. (GAAP) was $47.2 million, or a basic and diluted GAAP loss per share of $0.31, for the quarter, which reflected increased investment in the company’s advancing late-stage pipeline and commercial infrastructure. This compared to GAAP net loss of $46.1 million, or a basic and diluted GAAP loss per share of $0.31, for the same period in the prior year.
Non-GAAP net loss was $1.6 million, or a non-GAAP basic and diluted loss per share of $0.01, for the quarter. This compared to non-GAAP net loss of $18.7 million, or a non-GAAP basic and diluted loss per share of $0.13, for the same period in the prior year.
Quarter Ended June 30, 2016 Financial Results

Revenues

Net sales of VIVITROL were $47.2 million, compared to $37.2 million for the same period in the prior year.
Net sales of ARISTADA were $10.3 million, up from $5.5 million in the first quarter of 2016.
Manufacturing and royalty revenues from RISPERDAL CONSTA, INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA were $69.6 million, compared to $60.8 million for the same period in the prior year.
Manufacturing and royalty revenues from AMPYRA/FAMPYRA1 were $40.8 million, compared to $26.9 million for the same period in the prior year, reflecting the timing of shipments.
Royalty revenue from BYDUREON was $12.3 million, compared to $11.1 million for the same period in the prior year.
Costs and Expenses

Operating expenses were $242.3 million, reflecting increased investment in the company’s development pipeline and the continued launch of ARISTADA. Operating expenses for the quarter ended June 30, 2015 were $203.9 million.
Balance Sheet

At June 30, 2016, Alkermes had cash and total investments of $677.7 million, compared to $798.8 million at Dec. 31, 2015. At June 30, 2016, the company’s total debt outstanding was $347.0 million. Alkermes expects to pay down $60.0 million of term loan upon maturity in September 2016. The remainder of the debt is due in September 2019.

Financial Expectations

Alkermes is updating its financial expectations for 2016 as a result of accelerating growth trends for VIVITROL, which are driving a $10 million increase in expected revenues and a corresponding $10 million improvement in GAAP net loss. This, in addition to certain changes to the calculation of non-GAAP measures, pursuant to guidelines issued by the Securities and Exchange Commission ("SEC"), results in a $20 million improvement to non-GAAP net loss. The following outlines Alkermes’ updated financial expectations for 2016.

Revenues: The company now expects total revenues to range from $710 million to $760 million, up from the previous range of $700 million to $750 million.

The company now expects VIVITROL net sales to range from $190 million to $210 million, up from a previous range of $180 million to $200 million.

Cost of Goods Manufactured and Sold: The company continues to expect cost of goods manufactured and sold to range from $125 million to $135 million.

Research and Development (R&D) Expenses: The company continues to expect R&D expenses to range from $370 million to $400 million.

Selling, General and Administrative (SG&A) Expenses: The company continues to expect SG&A expenses to range from $360 million to $390 million.

Amortization of Intangible Assets: The company continues to expect amortization of intangible assets of approximately $60 million.
Net Interest Expense: The company continues to expect net interest expense of approximately $10 million.

Net Income Tax Expense: The company continues to expect net income tax expense to range from $0 million to $10 million.
GAAP Net Loss: The company now expects GAAP net loss to range from $215 million to $245 million, or a basic and diluted loss per share of $1.41 to $1.61, based on weighted average basic and diluted share counts of approximately 152 million shares outstanding. This compares to previous expectations of GAAP net loss in the range of $225 million to $255 million, or a basic and diluted loss per share of approximately $1.48 to $1.68, based on weighted average basic and diluted share counts of approximately 152 million shares outstanding.

Non-GAAP Net Loss: The company now expects non-GAAP net loss to range from $5 million to $35 million, or a basic and diluted loss per share of $0.03 to $0.23, based on weighted average basic and diluted share counts of approximately 152 million shares outstanding. This compares to previous expectations of non-GAAP net loss in the range of $25 million to $55 million, or a non-GAAP diluted loss per share of $0.16 to $0.36, based on weighted average diluted share counts of approximately 152 million shares outstanding.

Capital Expenditures: The company continues to expect capital expenditures to be approximately $45 million.

Agenus Reports Second Quarter 2016 Financial Results and Operational Progress

On July 28, 2016 Agenus Inc. (NASDAQ: AGEN), an immuno-oncology (I-O) company developing antibodies, including checkpoint inhibitors and other checkpoint modulators, and cancer vaccines, reported a corporate update and reported financial results for the second quarter ended June 30, 2016 (Press release, Agenus, JUL 28, 2016, View Source [SID:1234514097]).

"In the second quarter, we made important advances in the clinic, saw external validation of our immuno-oncology agents and strategy and further integrated our capabilities to improve speed, cost and quality of product development efforts," said Garo H. Armen, Ph.D., Chairman and CEO of Agenus. "We also strengthened our management team with the addition of a new Board member, Ulf Wiinberg, and Global Head of Clinical Development, Dr. Jean-Marie Cuillerot."

Second Quarter 2016 and Recent Corporate Highlights

July: Completed enrollment of the first cohort of patients in the Phase 1 study of AGEN1884, an anti-CTLA-4 antibody, which was launched earlier in 2016. Agenus plans to initiate clinical studies for a second anti-CTLA-4 antibody, AGEN2041, in 2017 and start combination trials with AGEN1884 in the first half of 2017.

July: Appointed Jean-Marie Cuillerot, M.D. as Vice President and Global Head of Clinical Development, bringing extensive immuno-oncology clinical development expertise to the Company’s I-O portfolio. In Dr. Cuillerot’s previous role at a Merck Serono affiliate, he advanced the PD-L1 antibody avelumab from pre-IND to regulatory filing and delivered the dataset leading to the $880 million co-development deal with Pfizer. At Bristol-Myers Squibb, he developed clinical strategies for the anti-CTLA-4 antibody ipilimumab as a treatment for lung cancer, castrate resistant prostate cancer, ovarian cancer, gastric cancer and glioblastoma, and supported the filing activities of ipilimumab for first-line treatment of melanoma.

June: Initiated Phase 1/2 clinical trial of anti-GITR checkpoint antibody INCAGN1876 in solid tumors in collaboration with Incyte. INCAGN1876 is the second product candidate from the Company’s antibody program to advance into clinical trials this year.
June: Merck selected a lead product candidate to advance into preclinical studies under our research collaboration, leading to receipt of a $2 million milestone payment. The achievement further validates Agenus’ discovery platform, which is capable of identifying unique antibodies for a broad range of therapeutic targets. Under the terms of the agreement, Merck will be responsible for all future product development expenses for the selected antibody candidate targeting an undisclosed Merck checkpoint target. Agenus is eligible to receive up to $100 million in milestone payments, in addition to royalties on worldwide product sales.

May: Appointed Ulf Wiinberg to the Company’s Board of Directors. Ulf brings over 30 years of experience in the pharmaceutical industry with senior leadership roles at multiple global drug development companies. Most recently, he served as Chief Executive Officer of H. Lundbeck A/S, and previously held multiple executive roles at Wyeth, one of the world’s largest research-driven pharmaceutical companies. Currently, he serves on the boards of multiple drug companies including Avillion, Hansa Medical, Nestle Health Sciences and UCB SA.

Second Quarter 2016 Financial Results

For the second quarter ended June 30, 2016, Agenus reported a net loss attributable to common stockholders of $28.4 million which includes $7.6 million of non-cash expenses. This compares to a net loss attributable to common stockholders for the second quarter of 2015 of $40.5 million which included $17.3 million of non-cash expenses. Net loss was $0.33 per share, and $0.53 per share, basic and diluted, for the three months ended June 30, 2016 and 2015, respectively. The decrease in net loss attributable to common stockholders for the three months ended June 30, 2016, compared to the net loss attributable to common stockholders for the same period in 2015, was primarily due to the $13.2 million charge for the purchase of the SECANT yeast display platform in 2015 and the non-cash expense from fair value adjustments of the contingent obligations partially offset by the advancement of the checkpoint antibody programs.

For the six months ended June 30, 2016, the company reported a net loss attributable to common stockholders of $60.2 million, which includes $17.2 million in non-cash expenses, compared with a net loss attributable to common stockholders of $59.3 million, which included $26.5 million in non-cash expenses, for the six months ended June 30, 2015. Net loss was $0.69 per share and $0.83 per share, basic and diluted for the six months ended June 30, 2016 and 2015, respectively.

Cash, cash equivalents and short-term investments were $123.3 million as of June 30, 2016.