On February 18, 2016 Laboratory Corporation of America Holdings (LabCorp or the "Company") (NYSE: LH) reported results for the fourth quarter and year ended December 31, 2015 and 2016 guidance (Press release, LabCorp, FEB 18, 2016, View Source;p=RssLanding&cat=events&id=5215848 [SID:1234509089]).

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"The year was transformative for LabCorp," said David P. King, chairman and chief executive officer. "We significantly expanded the Company’s capabilities, global presence and avenues for future growth while reinforcing our position as the world’s leading healthcare diagnostics company. We concluded the year with strong fourth quarter results including continued organic volume growth in LabCorp Diagnostics, accelerated revenue growth in Covance Drug Development, double-digit adjusted EPS growth, and robust free cash flow."

Consolidated Results

Fourth Quarter Results

Net revenue for the quarter was $2.24 billion, an increase of 48.4% over last year’s $1.51 billion. The acquisition of Covance contributed $669.5 million in net revenue during the quarter, driving 44.3% year-over-year growth. The remainder of the increase of $62.6 million, or 4.1%, was driven by organic volume growth, price, mix and tuck-in acquisitions, partially offset by currency. Organic revenue growth in the quarter, excluding currency, was 3.9%.

Operating income for the quarter was $243.5 million, compared to $219.0 million in the fourth quarter of 2014. The Company recorded restructuring charges and special items of $86.4 million during the fourth quarter of 2015, compared to $15.6 million during the same period in 2014. Adjusted operating income (excluding amortization of $38.3 million, restructuring and special items) for the quarter was $368.2 million, or 16.4% of net revenue, compared to $250.0 million, or 16.5%, in the fourth quarter of 2014. The increase in adjusted operating income was primarily due to the Covance acquisition, organic volume growth, productivity, price and mix, partially offset by personnel costs. The decline in margin was due to the mix impact from the acquisition of Covance.

The Company recorded net earnings in the quarter of $114.2 million, or $1.11 per diluted share, compared to $119.6 million, or $1.39 per diluted share, last year. Adjusted EPS (excluding amortization, restructuring and special items) were $1.98 in the quarter, an increase of 20.0% compared to $1.65 in the fourth quarter of 2014.

Operating cash flow for the fourth quarter was $384.6 million, compared to $213.7 million in the fourth quarter of 2014. The increase in operating cash flow was due to the acquisition of Covance as well as favorable working capital. Capital expenditures totaled $85.1 million, compared to $46.3 million in the fourth quarter of 2014. As a result, free cash flow (operating cash flow less capital expenditures) was $299.5 million, compared to $167.4 million in the fourth quarter of 2014.

At the end of the quarter, the Company’s cash balance and total debt were $716.4 million and $6.4 billion, respectively. During the quarter, the Company invested $43.3 million in tuck-in acquisitions and paid down $250.0 million of debt. The Company’s liquidity at the end of the quarter was approximately $1.7 billion, consisting of cash and available credit.

Full Year Results
The following full year consolidated results of the Company include Covance as of February 19, 2015; prior to February 19, 2015, these consolidated results exclude Covance.

Net revenue was $8.51 billion, an increase of 41.5% over last year’s $6.01 billion. The acquisition of Covance contributed $2.20 billion from the February 19, 2015 closing date, driving 36.7% year over year net revenue growth. The remainder of the increase of $289.5 million, or 4.8%, was due to strong organic volume growth, tuck-in acquisitions, price, and mix, partially offset by currency. Organic revenue growth in 2015, excluding currency, was 4.6%.

Operating income for 2015 was $1,002.9 million, compared to $910.4 million in 2014. Operating income was reduced by $279.5 million in restructuring charges and special items (primarily costs associated with the acquisition of Covance and Project LaunchPad, the Company’s enterprise-wide business process improvement initiative) recorded during 2015, compared to $41.2 million in 2014. Adjusted operating income (excluding amortization of $164.5 million, restructuring and special items) was $1.45 billion, or 17.0% of net revenue, compared to $1.03 billion, or 17.1%, in 2014. The increase in adjusted operating income was primarily due to the acquisition of Covance, organic volume growth, price, mix and productivity, partially offset by currency and personnel costs. The decline in margin was due to the mix impact from the acquisition of Covance.

The Company’s pre-tax earnings were reduced by restructuring and special items of $334.4 million ($279.5 million impacted operating income, $52.6 million impacted interest expense, and $2.3 million impacted other, net), or $245.7 million after-tax. As a result, the Company recorded net earnings in 2015 of $436.9 million, or $4.34 per diluted share, compared to $511.2 million, or $5.91 per diluted share, last year. Adjusted EPS (excluding amortization, restructuring and special items) were $7.91 in 2015, an increase of 16.3% compared to $6.80 in 2014.

Operating cash flow for 2015 was $982.4 million, compared to $739.0 million in 2014, driven by the Covance acquisition and improved earnings. Capital expenditures totaled $255.8 million, compared to $203.5 million in 2014, due to the Covance acquisition. As a result, free cash flow (operating cash flow less capital expenditures) was $726.6 million, compared to $535.5 million last year. Free cash flow in 2015 was negatively impacted by approximately $110 million in net non-recurring items relating to the acquisition of Covance. Excluding these items, free cash flow would have been $836.6 million in 2015.

The following segment results are presented on a pro forma basis for all periods as if the acquisition of Covance closed on January 1, 2014 and exclude amortization, restructuring, special items and unallocated corporate expenses. In the fourth quarter of 2015, the Company refined its methodology for the calculation of unallocated corporate expenses, which impacts segment results and has been applied to prior periods for comparative purposes. As a result, LabCorp Diagnostics’ operating expenses increased by $8.5 million in the quarter, and would have increased by $7.6 million in the fourth quarter of 2014. In addition, unallocated corporate expenses were reduced by $8.5 million in the quarter, and would have been reduced by $7.6 million in the fourth quarter of 2014. Reconciliations of segment results to historically reported results are included in the Condensed Pro Forma Segment Information tables and notes.

Fourth Quarter Pro Forma Segment Results

LabCorp Diagnostics
Net revenue for the quarter was $1.55 billion, an increase of 4.3% over $1.49 billion for the fourth quarter of 2014. The increase in net revenue was the result of organic volume growth (measured by requisitions), Beacon LBS, price, mix and tuck-in acquisitions, partially offset by currency. The increase in net revenue of 4.3% includes the benefit from Beacon LBS of 1.1%, and unfavorable foreign currency translation of 0.8%. Total volume (measured by requisitions) increased by 1.8% (organic volume of 1.6% and acquisition volume of 0.2%). Revenue per requisition increased by 2.2%.

Adjusted operating income (excluding amortization, restructuring and special items) for the quarter was $293.3 million, or 18.9% of net revenue, compared to adjusted operating income of $273.3 million, or 18.4% of net revenue, in the fourth quarter of 2014. The increase was primarily due to volume, price, mix, and productivity, partially offset by personnel costs. Improvement in productivity was driven by Project LaunchPad, which generated approximately $20 million in net benefits during the quarter.

Covance Drug Development
Net revenue for the quarter was $691.4 million, an increase of 4.7% over $660.1 million for the fourth quarter of 2014. The stronger U.S. Dollar negatively impacted year-over-year revenue growth by approximately 230 basis points. Excluding currency, net revenue increased 7.0% year-over-year due to increased demand.

Adjusted operating income (excluding amortization, restructuring and special items) was $110.4 million, or 16.0% of net revenue, compared to adjusted operating income of $89.8 million, or 13.6% of net revenue, in the fourth quarter of 2014. The increase was primarily due to demand, productivity and cost synergies, partially offset by personnel costs. The Company generated approximately $15 million in cost synergies during the quarter.

Net orders (gross orders less cancellations and reductions) in the quarter were $816 million, representing a net book-to-bill of 1.18. Backlog at December 31, 2015 was approximately $6.7 billion.

Outlook for 2016
The following guidance assumes foreign exchange rates effective as of January 31, 2016 for the full year.

Net revenue growth of 7.5% to 9.5% over 2015 net revenue of $8.51 billion, which includes the impact from approximately 100 basis points of negative currency.

Net revenue growth in LabCorp Diagnostics of 3.5% to 5.5% over 2015 pro forma revenue of $6.21 billion, which includes the impact from approximately 50 basis points of negative currency.

Net revenue growth in Covance Drug Development of 2% to 5% over 2015 pro forma revenue of $2.63 billion. Excluding the impact from approximately 200 basis points of negative currency and the anticipated expiration of the Sanofi site support agreement, net revenue is expected to increase 6.6% to 9.6%.

Adjusted EPS of $8.45 to $8.85, an increase of approximately 7% to 12% over the prior year.

Free cash flow (operating cash flow less capital expenditures) of $900 million to $950 million, an increase of approximately 24% to 31% over the prior year.

"We are enthusiastic about our prospects for 2016," Mr. King added. "We are focused on improving health and improving lives through execution of our strategic priorities: delivering world class diagnostics, bringing innovative medicines to patients faster, and changing the way care is provided. This focus will drive top-line growth and margin expansion, resulting in attractive year-over-year EPS growth and free cash flow."

Use of Adjusted Measures
The Company has provided in this press release and accompanying tables "adjusted" financial information that has not been prepared in accordance with GAAP, including Adjusted EPS, Adjusted Operating Income, Free Cash Flow, and certain segment information. The Company believes these adjusted measures are useful to investors as a supplement to, but not as a substitute for, GAAP measures, in evaluating the Company’s operational performance. The Company further believes that the use of these non-GAAP financial measures provides an additional tool for investors in evaluating operating results and trends, and growth and shareholder returns, as well as in comparing the Company’s financial results with the financial results of other companies. However, the Company notes that these adjusted measures may be different from and not directly comparable to the measures presented by other companies. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the tables accompanying this press release.

The Company today is furnishing a Current Report on Form 8-K that will include additional information on its business and operations. This information will also be available in the investor relations section of the Company’s website at www.labcorp.com. Analysts and investors are directed to the Current Report on Form 8-K and the website to review this supplemental information.

On February 18, 2016 Agios Pharmaceuticals, Inc. (NASDAQ:AGIO), a leader in the fields of cancer metabolism and rare genetic metabolic disorders, reported business highlights and financial results for the fourth quarter and year ended December 31, 2015 (Press release, Agios Pharmaceuticals, FEB 18, 2016, View Source;p=RssLanding&cat=news&id=2140406 [SID:1234509085]). In addition, Agios highlighted select corporate milestones for its preclinical and clinical development programs.

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"2015 marked a year of significant achievements for Agios as we rapidly advanced our IDH inhibitors in AML, presented initial data in solid tumors and selected our fifth molecule for clinical development," said David Schenkein, M.D., chief executive officer at Agios. "We are in a strong position entering 2016, focusing on rapid and broad late-stage clinical development for our lead IDH mutant inhibitors, executing clinical trials of our PKR activators and advancing our research programs. We look forward to several important milestones, beginning with presenting the first data from both of our PKR activators in the first half of the year. These milestones will bring us closer to our vision of helping people with cancer and rare genetic disorders."

2016 EXPECTED MILESTONES IN CANCER METABOLISM PROGRAMS

AG-221, AG-120 and AG-881 are part of Agios’ global strategic collaboration with Celgene Corporation.

IDH Mutant Inhibitors in Hematologic Malignancies:

Complete enrollment of both 125-patient expansion cohorts for the Phase 1/2 study of AG-221 and Phase 1 study of AG-120 in patients with relapsed/refractory (R/R) acute myeloid leukemia (AML) in the second half of 2016

Initiate a global, registration-enabling Phase 3 study of AG-120 in frontline AML patients with an IDH1 mutation in the second half of 2016

Initiate an expansion arm in high-risk myelodysplastic syndrome patients for AG-221 in 2016

Initiate a Phase 1/2 frontline combination study of AG-221 or AG-120 with VIDAZA (azacitidine) in newly diagnosed AML patients not eligible for intensive chemotherapy in the first quarter of 2016

Continue to enroll patients in the following ongoing clinical trials:
Phase 3 IDHENTIFY study of AG-221 vs. standard of care chemotherapy in R/R AML
Phase 1b frontline combination study of AG-221 or AG-120 with standard-of-care intensive chemotherapy in AML
Phase 1 dose-escalation and expansion study of AG-881 in IDH mutant positive hematologic malignancies

IDH Mutant Inhibitors in Solid Tumors:

Present data from the expansion phase of the ongoing Phase 1 study of AG-120 in advanced IDH1 mutant positive low grade glioma in the second half of 2016

Initiate a randomized Phase 2 study of AG-120 in IDH1 mutant positive cholangiocarcinoma in the second half of 2016

Continue to enroll patients in the following ongoing clinical trials:
Expansion phase of the ongoing Phase 1 study of AG-120 in advanced IDH1 mutant positive solid tumors
Phase 1 dose-escalation and expansion study of AG-881 in IDH mutant positive solid tumors

Cancer Metabolism Research:

Present preclinical findings on a new research program focused on MTAP (methylthioadenosine phosphorylase) deleted cancers at the Keystone Symposia on New Frontiers in Understanding Tumor Metabolism taking place February 21-25, 2016 in Banff, Alberta, Canada

Initiate preclinical development activities for the first molecule in the next wave of novel investigational medicines

2016 EXPECTED MILESTONES IN RARE GENETIC METABOLIC DISORDERS PROGRAMS

Plan to submit the first data from DRIVE PK, a global Phase 2, open-label safety and efficacy trial of AG-348 in adult, transfusion-independent patients with pyruvate kinase (PK) deficiency, for presentation at the 21st Congress of the European Hematology Association (EHA) (Free EHA Whitepaper) in June 2016

Plan to submit the first data from the Phase 1 study of AG-519 in healthy volunteers for presentation at EHA (Free EHA Whitepaper) in June 2016. Preclinical findings about the molecule will also be submitted for presentation at EHA (Free EHA Whitepaper).

Outline the clinical development plans for Agios’ PKR activators in beta-thalassemia in the second half of 2016
Present new findings from the Natural History Study of PK deficiency being conducted with Boston Children’s Hospital in the second half of 2016

FOURTH QUARTER 2015 HIGHLIGHTS OF CANCER METABOLISM PROGRAMS

Agios has provided the following updates on its clinical development programs in collaboration with Celgene:

IDH Mutant Inhibitors in Hematologic Malignancies:

New data from the dose-escalation phase and expansion cohorts from the ongoing Phase 1/2 study for AG-221 and the Phase 1 study of AG-120 were presented in December at the 2015 American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting (ASH) (Free ASH Whitepaper). Read the full AG-221 data here and the AG-120 data here.

In December, Agios initiated a Phase 1b, multicenter, international, open-label study of AG-221 or AG-120 in combination with induction and consolidation therapy in patients with newly diagnosed AML with an IDH mutation who are eligible for intensive chemotherapy.

IDH Mutant Inhibitors in Solid Tumors:

The first data from the ongoing Phase 1 dose-escalation trial of AG-120 in advanced IDH1-mutant positive solid tumors were presented in an oral presentation at AACR (Free AACR Whitepaper)-EORTC-NCI AACR-NCI-EORTC (Free AACR-NCI-EORTC Whitepaper) International Conference on Molecular Targets and Cancer Therapeutics (EORTC-NCI-AACR) (Free ASGCT Whitepaper) (Free EORTC-NCI-AACR Whitepaper) in November. Read the full data here.

RECENT CORPORATE AND FINANCIAL UPDATES

Agios recently announced the appointment of Steve Hoerter to chief commercial officer. Mr. Hoerter has more than 20 years of extensive pharmaceutical and biotechnology commercial experience and most recently served as executive vice president and chief commercial officer at Clovis Oncology, Inc. Prior to Clovis, Mr. Hoerter held senior commercial roles at Genentech and Roche.

In January 2016, Agios received a $25 million milestone payment from Celgene for achievement of the first patient dosed in the Phase 3 IDHENTIFY study of AG-221 vs. standard of care chemotherapy in R/R AML. This is an international, multi-center, open-label, randomized clinical trial designed to compare the efficacy and safety of AG-221 versus conventional care regimens in patients 60 years or older with IDH2 mutant-positive AML that is refractory to or relapsed after second- or third-line therapy.

FULL YEAR 2015 FINANCIAL RESULTS

Cash, cash equivalents and marketable securities as of December 31, 2015 were $375.9 million, compared to $467.4 million as of December 31, 2014. The decrease was driven by cash used to fund operating activities of approximately $161.8 million, which was offset by funding of approximately $64.7 million from Celgene during the year ended December 31, 2015 related to our collaboration agreements.

Collaboration revenue was $59.1 million for the year ended December 31, 2015, compared to $65.4 million for the prior year. Beginning in the first quarter of 2015, the company began offsetting research and development expense for amounts received from Celgene for reimbursement of certain development costs incurred on Celgene’s behalf related to AG-221 which were presented as gross collaboration revenue during 2014.

Research and development (R&D) expenses were $141.8 million, including $17.4 million of stock-based compensation expense, for the year ended December 31, 2015, compared to $100.4 million, including $6.7 million in stock-based compensation expense, for the year ended December 31, 2014. The increase in R&D expenses was primarily due to increased costs to support advancement of the company’s lead investigational medicines toward later-stage development. Celgene is responsible for all development costs for AG-221 and certain development costs for AG-120 and AG-881 and reimburses the company for development costs incurred for these investigational medicines.

General and administrative (G&A) expenses were $36.0 million, including $14.5 million of stock-based compensation expense, for the year ended December 31, 2015, compared to $19.1 million, including $4.8 million of stock-based compensation expense, for the year ended December 31, 2014. The increase in G&A expense was largely due to increased headcount and other professional expenses to support growing operations.

Net loss for the year ended December 31, 2015 was $117.7 million, compared to a net loss of $53.5 million for the year ended December 31, 2014.

FINANCIAL GUIDANCE FOR THE FULL YEAR 2016

Agios announced today that it expects to end 2016 with more than $180 million of cash, cash equivalents and marketable securities. The anticipated year-end 2016 cash position does not include any additional program-specific milestone payments. The company expects that its cash, cash equivalents and marketable securities would be sufficient to fund its operating expenses and capital expenditure requirements until late 2017.

On February 08, 2016 Innate Pharma SA (the "Company" – Euronext Paris: FR0010331421 – IPH) reported its consolidated financial results for the year ended December 31, 2015 (Press release, Innate Pharma, FEB 17, 2016, View Source [SID:1234509346]). The consolidated financial statements are attached to this press release.

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Hervé Brailly, Chief Executive Officer and co-founder of Innate Pharma, commented: "2015 was a very important year for Innate Pharma. We signed a landmark co-development and commercialization agreement in April with AstraZeneca which we can leverage on to bring us to the next steps of our corporate progress, i.e. late stage drug development and marketing. The initial payment also gives us financial flexibility which we are using to expand the base of the Company. We are growing the organization, hiring new talent and investing in our proprietary clinical and preclinical pipeline to ensure the future growth of Innate. One tangible move in this direction was the recent acquisition of CD39, a new, preclinical first-in-class checkpoint inhibitor program, and our investment in innovative technologies such as the NK bispecific engagers illustrated by the recently announced collaboration with Sanofi.

As we await important clinical data for lirilumab, we intend to continue to broaden and consolidate our unique positioning in the very promising area of immuno-oncology".

On February 17, 2016 bluebird bio, Inc. (Nasdaq: BLUE), a clinical-stage company committed to developing potentially transformative gene therapies for severe genetic diseases and T cell-based immunotherapies for cancer, reported treatment of the first patient in a Phase 1 study of its product candidate bb2121 in patients with relapsed/refractory multiple myeloma (Filing, 8-K, bluebird bio, FEB 17, 2016, View Source [SID:1234509086]). bb2121 is a chimeric antigen receptor T cell (CAR T) therapy targeting B cell maturation antigen (BCMA), and bluebird bio is developing bb2121 in collaboration with Celgene Corporation. bluebird bio also announced today that Celgene has exercised its option to exclusively license bb2121, under the terms of the collaboration agreement between the two companies.

"bb2121 is bluebird bio’s first oncology program to enter the clinic, and the treatment of this first patient marks an important milestone for us as we build a broad, fully integrated T cell immunotherapy franchise," said Nick Leschly, chief bluebird. "We are pleased that Celgene has exercised their option to license bb2121. We believe our combined manufacturing, development and commercial expertise will enable us to rapidly advance bb2121 through clinical trials."

"Despite many recent advances in the field, multiple myeloma remains incurable, with almost all patients becoming refractory to therapy eventually," said James N. Kochenderfer, M.D., National Cancer Institute, an investigator for the CRB-401 study. "BCMA is one of the most exciting targets in multiple myeloma, and we are eager to explore the potential of bb2121 to become an important new treatment option for patients living with multiple myeloma."

bluebird bio and Celgene amended and restated their collaboration agreement in June 2015 to focus on developing product candidates targeting BCMA during a three-year collaboration term. By exercising its exclusive option under the terms of the agreement, Celgene will be responsible for worldwide development and commercialization of bb2121 after Phase 1. bluebird bio is responsible for the development of bb2121 through the completion of the CRB-401 Phase 1 study and has an option to share in the development, promotion and profits in the United States. bluebird bio will receive a $10 million option exercise payment from Celgene, and bluebird bio is also eligible to receive specified development and regulatory and commercial milestone payments and royalty payments on net sales.

About the CRB-401 Study

The primary objective of the CRB-401 study is to evaluate the maximum tolerated dose of bb2121 and determine the recommended Phase 2 dose. The secondary objective is patient response, measured using the International Myeloma Working Group (IMWG) Response Criteria for Multiple Myeloma. The first portion of the study includes a dose-escalation phase in which cohorts of patients will receive ascending doses of bb2121 to determine the maximum tolerated dose and establish a recommended Phase 2 dose. The second portion of the study is a dose expansion phase where patients will receive bb2121 to further evaluate the safety, tolerability and clinical activity at the recommended Phase 2 dose.

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