On February 7, 2019 LabCorp (or the Company) (NYSE: LH) reported results for the fourth quarter and year ended Dec. 31, 2018, and provided 2019 guidance (Press release, LabCorp, FEB 7, 2019, View Source;p=RssLanding&cat=news&id=2386499 [SID1234533164]).

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"LabCorp delivered another strong year in 2018, highlighted by 10% revenue growth and 20% adjusted EPS growth," said David P. King, chairman and chief executive officer. "Our fourth quarter results included an excellent performance by Covance, with a strong 1.34 book to bill, constant currency organic revenue growth of over 9%, and margin expansion of approximately 300 basis points. Non-operational items constrained our Diagnostics business, but excluding those items, the fundamental revenue, margin and cash flow generation characteristics of the business remained strong, and we delivered organic volume growth and favorable mix. Both businesses continued to benefit from differentiated, data-driven solutions and growth opportunities derived from our competitive advantages in data and analytics, patient engagement, scientific innovation, and therapeutic expertise. The power of our Diagnostic-Drug Development combination is translating into unique solutions for patients, customers, and partners, positioning us to deliver growth and shareholder value in the years ahead."

Effective Jan. 1, 2018, the Company adopted the FASB-issued converged standard on revenue recognition (ASC 606), using the full retrospective method. Unless otherwise indicated, all financial results in 2017 and comparisons to financial results in 2017 have been restated in this press release as if the Company had adopted ASC 606 on Jan. 1, 2017.

Consolidated Results

Fourth Quarter Results

Revenue for the quarter was $2.79 billion, an increase of 1.6% compared to $2.74 billion in the fourth quarter of 2017. The increase in revenue was primarily due to organic growth of 2.9% and acquisitions of 0.7%, partially offset by the negative impact from the disposition of businesses of 1.6%, and foreign currency translation of approximately 40 basis points.

Operating income for the quarter was $307.7 million, or 11.0% of revenue, compared to $330.6 million, or 12.0%, in the fourth quarter of 2017. The decrease in operating income and margin were primarily due to lower pricing as a result of the implementation of PAMA, the disposition of businesses, and higher personnel costs, partially offset by increased demand, the Company’s LaunchPad business process improvement initiative, acquisitions, and fewer restructuring charges and special items. The Company recorded restructuring charges, special items, and amortization, which together totaled $87.2 million in the quarter, compared to $102.0 million during the same period in 2017. Adjusted operating income (excluding amortization, restructuring charges, and special items) for the quarter was $394.9 million, or 14.2% of revenue, compared to $432.7 million, or 15.8%, in the fourth quarter of 2017.

Net earnings in the quarter were $157.9 million, compared to $687.8 million in the fourth quarter of 2017. Diluted EPS were $1.56 in the quarter compared to $6.63 in the same period in 2017. During the quarter, the Company recorded a $24.5 million loss on the disposition of its U.S. forensics laboratory testing business, a non-cash $7.5 million settlement charge recorded on one of its legacy pension plans, and a write-off of an investment in its venture fund of $5.2 million (all charges recorded in other income (expense)). In addition, the Company recorded $7.7 million in deferred income tax expense resulting from a revaluation of its deferred tax liabilities after merging Chiltern International, Inc. into Covance, Inc. These charges reduced net earnings and diluted EPS by $29.5 million and $0.29, respectively. In the fourth quarter of 2017, the Company recorded a net benefit of $519.0 million in net earnings, or $5.00 per diluted share, due to the implementation of the Tax Cuts and Jobs Act of 2017 (TCJA), which resulted in a favorable re-valuation of deferred taxes, partially offset by the deemed repatriation tax.

Adjusted EPS (excluding amortization, restructuring charges, and special items) were $2.52 in the quarter, an increase of 11.0% compared to $2.27 in the fourth quarter of 2017. The Company’s adjusted earnings in the quarter were negatively impacted by approximately $0.04 per diluted share due to lower volume caused by the impact from adverse weather.

Operating cash flow and free cash flow (operating cash flow less capital expenditures) for the quarter were $486.4 million and $364.2 million, respectively, each of which was reduced by the net tax payment of approximately $105 million related to the disposition of businesses. Excluding these non-recurring items, operating cash flow would have been $591.4 million, compared to $565.0 million in the fourth quarter of 2017, as the benefit from higher cash earnings was partially offset by increased working capital. Capital expenditures totaled $122.2 million, compared to $96.1 million a year ago. As a result, free cash flow in the quarter would have been $469.2 million excluding the tax payment on the disposition of businesses, compared to $468.9 million in the fourth quarter of 2017.

At the end of the quarter, the Company’s cash balance and total debt were $426.8 million and $6.1 billion, respectively. During the quarter, the Company repurchased $400.0 million of stock representing approximately 2.5 million shares, paid down $400.0 million of debt, and invested $38.7 million in acquisitions. On Feb. 6, 2019, the board replaced the Company’s existing share repurchase plan with a new plan authorizing repurchase of up to $1.25 billion in the Company’s shares.

Full Year Results

Revenue was $11.33 billion, an increase of 9.9% over last year’s $10.31 billion. The increase in revenue was due to acquisitions of 7.6%, organic growth of 2.7%, and the benefit from foreign currency translation of approximately 30 basis points, partially offset by the impact from the disposition of businesses of 0.7%.

Operating income was $1,325.7 million, or 11.7% of revenue, compared to $1,305.2 million, or 12.7%, in 2017. The increase in operating income was primarily due to acquisitions, organic revenue growth, and the Company’s LaunchPad initiatives, partially offset by the implementation of PAMA, personnel costs, and higher restructuring charges and special items. The decline in operating margin was primarily due to the implementation of PAMA, higher personnel costs, as well as the mix impact from the acquisition of Chiltern. The Company recorded restructuring charges, special items, and amortization which together totaled $397.6 million, compared to $367.2 million during the same period in 2017. This increase was due to higher amortization expense, and the payment of a one-time bonus to non-bonus-eligible employees following the implementation of the TCJA. Adjusted operating income (excluding amortization, restructuring charges, and special items) was $1.72 billion, or 15.2% of revenue, compared to $1.67 billion, or 16.2%, last year.

Net earnings in 2018 were $883.7 million, or $8.61 per diluted share, compared to $1,227.1 million, or $11.81 per diluted share, last year. Net earnings and diluted EPS in 2018 benefitted from the net gain on disposition of businesses of $112.9 million and $1.10 per diluted share, respectively. In addition, the Company recorded a non-cash $7.5 million settlement charge on one of its legacy pension plans, and a write-off of an investment in its venture fund of $5.2 million. The Company also recorded $7.7 million in income tax expense resulting from a revaluation of its deferred tax liabilities after merging Chiltern International, Inc. into Covance, Inc. Due to the implementation of the TCJA, the Company recorded a charge of $45.0 million, or $0.44 per diluted share in 2018, and a net benefit of $519.0 million in net earnings, or $5.00 per diluted share in 2017. The net impact from these items increased net earnings and diluted EPS in 2018 by $50.8 million and $0.50 per diluted share, respectively.

Adjusted EPS (excluding amortization, restructuring charges, and special items) were $11.02, an increase of 19.8% compared to $9.20 in 2017.

Operating cash flow and free cash flow (operating cash flow less capital expenditures) were $1,305.4 million and $925.6 million, respectively, each of which was reduced by the net tax payment of approximately $105 million related to the disposition of businesses (the Company realized gross proceeds from the disposition of businesses of $658.2 million in cash reflected in Cash Flows from Investing Activities). Excluding these non-recurring items, operating cash flow would have been $1,410.4 million, compared to $1,498.1 million in 2017, as the benefit of higher cash earnings was more than offset by an increase in working capital. Capital expenditures totaled $379.8 million, compared to $312.9 million in 2017. As a result, free cash flow would have been $1,030.6 million excluding the tax payment on the disposition of businesses, compared to $1,185.2 million in 2017.

During the year, the Company repurchased $700.0 million of stock representing approximately 4.3 million shares, paid down $695.0 million of debt, and invested $117.8 million in acquisitions.

***

The following segment results reflect the Company’s retrospective adoption of ASC 606 on Jan. 1, 2017, and exclude amortization, restructuring charges, special items and unallocated corporate expenses.

Fourth Quarter Segment Results

LabCorp Diagnostics

Revenue for the quarter was $1.69 billion, a decrease of 2.8% from $1.74 billion in the fourth quarter of 2017. Revenue benefitted from acquisitions of 0.4% and favorable mix of 0.7%, which were more than offset by the negative impact from the disposition of businesses of 2.6%, the implementation of PAMA of 1.0%, and foreign currency translation of approximately 0.2%. Excluding the impact from PAMA, foreign currency translation, adverse weather of approximately 0.4%, as well as the year on year impact from the calendar of approximately 0.8%, organic revenue for the quarter would have increased by approximately 1.8%.

Excluding the disposition of businesses, revenue per requisition decreased by 0.4%, driven by the negative impact from PAMA of 1.0%. Total volume (measured by requisitions) excluding the disposition of businesses increased by 0.3%, as acquisition volume contributed 0.4% and organic volume declined by 0.1%. Excluding the impact from adverse weather and the year on year impact from the calendar, organic volume would have increased approximately 1.1%.

Adjusted operating income (excluding amortization, restructuring charges and special items) for the quarter was $279.3 million, or 16.5% of revenue, compared to $357.0 million, or 20.5%, in the fourth quarter of 2017. Operating income and margin declined primarily due to the impact from PAMA of approximately $18 million or 80 basis points, the year on year impact from the calendar of approximately $20 million or 100 basis points, adverse weather, the disposition of businesses, and personnel costs, partially offset by cost reductions and acquisitions. Excluding the disposition of businesses, impact from PAMA, adverse weather, as well as the year on year impact from the calendar, adjusted operating income and margin would have been approximately $328.6 million and 18.5%, respectively.

In addition, the Company has started phase II of LabCorp Diagnostics’ LaunchPad initiative. The Company is focused on eliminating manual processes, digitizing the business, using technology to improve quality, operations and service, and enhancing the consumer experience, which are designed to unlock new avenues for growth and contribute to improvement in long-term margins. This initiative is expected to generate pre-tax net savings of approximately $200 million over the three-year period ending in 2021, with pre-tax, one-time charges expected to be approximately $40 million.

Covance Drug Development

Revenue for the quarter was $1.10 billion, an increase of 9.6% over $1.00 billion in the fourth quarter of 2017. The increase in revenue was due to organic growth of 9.3% and acquisitions of 1.2%, partially offset by the negative impact from foreign currency translation of approximately 90 basis points.

Adjusted operating income (excluding amortization, restructuring charges and special items) for the quarter was $153.5 million, or 14.0% of revenue, compared to $110.9 million, or 11.1%, in the fourth quarter of 2017. The increase in operating income and margin were primarily due to organic demand, LaunchPad savings and acquisitions, partially offset by personnel costs. The Company is on track to deliver $150 million of net savings from its three-year Covance LaunchPad initiative by the end of 2020, and $30 million of cost synergies from the integration of Chiltern by the end of 2019.

Net orders and net book-to-bill during the trailing twelve months were $5.44 billion and 1.26, respectively. Backlog at the end of the quarter was $9.76 billion compared to $9.40 billion last quarter, and the Company expects approximately $3.9 billion of its backlog to convert into revenue in the next twelve months.

***

Outlook for 2019

The following guidance assumes foreign exchange rates effective as of Dec. 31, 2018, for the full year, and includes the estimated impact from currently anticipated capital allocation, including acquisitions and share repurchases.

Revenue growth of 0.5% to 2.5% over 2018 revenue of $11.33 billion, which includes the negative impact from the disposition of businesses of approximately 1% and foreign currency translation of approximately 0.4%.
The change in revenue in LabCorp Diagnostics is expected to be -4.0% to -2.0% as compared to 2018 revenue of $7.03 billion, which includes the negative impact from the disposition of businesses of approximately 2%. Excluding the disposition of businesses, the change in revenue in LabCorp Diagnostics is expected to be approximately -2.0% to 0.0%, primarily due to organic volume growth, favorable test mix, and acquisitions, offset by the impact of PAMA of -1.6%, changes in certain managed care contracts and laboratory provider networks, as well as foreign currency translation of approximately 0.3%.
Revenue growth in Covance Drug Development of 5.0% to 9.0% over 2018 revenue of $4.31 billion, which includes the negative impact from foreign currency translation of approximately 0.6%.
Adjusted EPS of $11.00 to $11.40, a change of 0% to 3% as compared to $11.02 in 2018.
Free cash flow (operating cash flow less capital expenditures) of $950 million to $1.05 billion, compared to $925.6 million in 2018.
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 View Source." target="_blank" title="View Source." rel="nofollow">View Source Analysts and investors are directed to the Current Report on Form 8-K and the website to review this supplemental information.

A conference call discussing LabCorp’s quarterly results will be held today at 9:00 a.m. EDT and is available by dialing 844-634-1444 (615-247-0253 for international callers). The access code is 1669755. A telephone replay of the call will be available through Feb. 21, 2019, and can be heard by dialing 855-859-2056 (404-537-3406 for international callers). The access code for the replay is 1669755. A live online broadcast of LabCorp’s quarterly conference call on Feb. 7, 2019, will be available at View Source or at View Source beginning at 9:00 a.m. EDT. This webcast will be archived and accessible through Jan. 31, 2020.

On February 7, 2019 Arvinas Inc. (Nasdaq: ARVN), a biotechnology company creating a new class of drugs based on protein degradation, reported that it will present a poster at the 2019 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Genitourinary Cancers Symposium (ASCO GU), taking place February 14-16 in San Francisco (Press release, Arvinas, FEB 7, 2019, View Source [SID1234533163]). The presentation will highlight the company’s lead product candidate, ARV-110, an oral androgen receptor (AR)-targeted PROTAC (Proteolysis-Targeting Chimera) protein degrader for the treatment of men with metastatic castration-resistant prostate cancer. ARV-110 employs Arvinas’ proprietary PROTAC protein degradation technology.

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Presentation details are as follows:

Title: ARV-110: An oral androgen receptor PROTAC degrader for prostate cancer.
Abstract Number: 259
Poster: L16
Session Information: Poster Session A: Prostate Cancer
Session Date/Time: February 14; 11:30 a.m. – 1:00 p.m.; 5:30 – 6:30 p.m.
All abstracts for the Symposium will be released by ASCO (Free ASCO Whitepaper) on February 11, 2019 at 5:00 p.m. EST on meetinglibrary.asco.org.

About ARV-110
ARV-110 is an orally-bioavailable PROTAC protein degrader designed to selectively target and degrade androgen receptor (AR). ARV-110 is being developed as a potential treatment for men with metastatic castration-resistant prostate cancer (mCRPC). ARV-110 has demonstrated promising activity in preclinical models of AR mutation or overexpression, both common mechanisms of resistance to currently available AR-targeted therapies. Arvinas believes the differentiated pharmacology of ARV-110, including its iterative activity, has the potential to translate into improved clinical outcomes for patients.

On February 7, 2019 Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY), the leading RNAi therapeutics company, reported its consolidated financial results for the fourth quarter and full year ended December 31, 2018 and reviewed recent commercial and R&D highlights (Press release, Alnylam, FEB 7, 2019, View Source [SID1234533162]).

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"In 2018, we saw the approval and launch of ONPATTRO, the world’s first RNAi therapeutic, heralding the arrival of a whole new class of medicines. With our planned APOLLO-B Phase 3 study to support potential expansion of ONPATTRO to ATTR amyloidosis patients with cardiomyopathy and advancement of subcutaneously administered vutrisiran in the HELIOS-A Phase 3 study, we are committing further efforts to help ATTR amyloidosis patients and to support our plans for the sustained and continued growth in our ATTR amyloidosis franchise for years to come," said John Maraganore, Ph.D., Chief Executive Officer of Alnylam. "While executing on our efforts to bring ONPATTRO to patients around the world, we also made great strides advancing our pipeline of investigational RNAi therapeutics. In 2019, we intend to execute on six Phase 3 programs – of which two are being advanced together with partners – with Phase 3 data expected from three of these programs, and expect two NDA submissions, assuming positive results. In the meanwhile, we’ll continue to benefit from a sustainable RNAi research engine that we expect will fuel future innovation and deliver important medicines for patients."

"We are pleased with our commercial progress to date, as we strive to make ONPATTRO available to patients around the world. Specifically, we are encouraged by our fourth quarter 2018 results, with over 200 patients receiving treatment with commercial ONPATTRO in the U.S. and EU since launch, reflecting what we believe to be strong patient and physician demand and excellent performance by our customer-facing field teams," said Barry Greene, President of Alnylam. "In 2019, we’re focused on continued execution of our ONPATTRO launch in the U.S. and EU, while expanding our global commercial presence in Asia and Latin America. Longer term, we’re excited by the opportunity for positive impact for patients, patient families and caregivers, and meaningful growth potential for our ATTR amyloidosis franchise."

Fourth Quarter 2018 and Recent Significant Corporate Highlights

Commercial Performance at Year-End 2018

Achieved global net product revenues for the fourth quarter of 2018 of $12.1 million for ONPATTRO, and $12.5 million for the full year ended December 31, 2018.
Attained over 200 patients in the U.S. and EU on commercial ONPATTRO treatment.
Including patients on commercial drug and patients in clinical studies and in the Company’s global Expanded Access Program (EAP), approximately 550 total patients worldwide were being treated with patisiran.
Received a total of 250 Start Forms in the U.S., with approximately 50 percent from patients not previously treated in the ONPATTRO EAP.
Start Forms came from a diverse range of prescribing physician specialties, including 44 percent from neurologists, 35 percent from cardiologists, and 21 percent from other specialties.
For Start Forms received, 62 percent of patients were covered by Medicare, 32 percent were covered by commercial insurers, and 6 percent were covered by other government insurers.
Continued significant progress with value-based agreements (VBAs) with commercial payers in the U.S. and with market access efforts in the EU.
Since launch, Alnylam has completed definitive VBAs with Harvard Pilgrim Healthcare, Humana, and another top five U.S. payer. Additional VBAs are under negotiation with over 15 other commercial payers with the potential to cover over 90 percent of commercial lives in the U.S.
The Company announces today that it has advanced pricing & reimbursement procedures with authorities in 15 EU countries – representing the vast majority of the hATTR amyloidosis opportunity in Europe – with positive feedback from several EU payers. Recent examples include positive technology assessment reports from authorities in Germany and Sweden, the special innovation designation of ONPATTRO by the Italian authorities, and favorable alignment with authorities in The Netherlands, among others.
R&D Highlights

Advanced patisiran (the non-branded name for ONPATTRO), an intravenously administered investigational RNAi therapeutic in development for the treatment of ATTR amyloidosis.
Continued global efforts to bring ONPATTRO to patients with filing of a New Drug Submission (NDS) in Canada and a Marketing Authorisation Application (MAA) in Switzerland, which has now been accepted.
Obtained alignment with the U.S. Food and Drug Administration (FDA) on the design of APOLLO-B, a randomized, double-blind, placebo-controlled Phase 3 study of patisiran in hereditary and wild-type ATTR amyloidosis patients with cardiomyopathy, with the goal of starting the trial in mid-2019.
Advanced vutrisiran (ALN-TTRsc02), a subcutaneously administered investigational RNAi therapeutic in development for the treatment of ATTR amyloidosis.
Initiated HELIOS-A Phase 3 study in hereditary ATTR amyloidosis with polyneuropathy.
Announced plans to initiate an additional Phase 3 study, HELIOS-B, of vutrisiran in hereditary and wild-type ATTR amyloidosis with cardiomyopathy in late 2019.
Advanced givosiran, an investigational RNAi therapeutic in development for the treatment of acute hepatic porphyria (AHP).
Initiated rolling submission of a New Drug Application (NDA) with plans to pursue full approval based on complete results – expected in March 2019 – from the ENVISION Phase 3 study. Assuming positive results, the Company expects to submit full clinical sections to the FDA in mid-2019.
Published data from Phase 1 study of givosiran in The New England Journal of Medicine.
Presented updated positive Phase 1/2 open-label extension (OLE) results at The Liver Meeting 2018 of the American Association for the Study of Liver Diseases (AASLD).
Advanced lumasiran, an investigational RNAi therapeutic in development for the treatment of primary hyperoxaluria type 1 (PH1).
Initiated ILLUMINATE-A, a global Phase 3 pivotal trial of lumasiran in children and adult PH1 patients with preserved renal function. Alnylam expects to report topline results from ILLUMINATE-A in late 2019 and, if positive, submit filings for global regulatory approvals starting in early 2020.
Presented updated positive results from the Phase 1/2 study in PH1 patients at the 2018 European Society for Paediatric Nephrology (ESPN) and the American Society of Nephrology (ASN) annual meetings.
Announced alignment with the FDA on the trial design for ILLUMINATE-B, a Phase 3 study of lumasiran in PH1 patients less than six years of age with preserved renal function.
Alnylam’s partner, The Medicines Company, announced in January 2019 that the Independent Data Monitoring Committee for the ongoing inclisiran Phase 3 clinical trials (ORION 9, 10, and 11) conducted its fifth planned review of safety and efficacy data from the ORION trials and recommended that the trials continue without modification.
The safety database for inclisiran now provides more than 2,450 patient-years of exposure to an RNAi therapeutic, representing the industry’s most comprehensive body of safety data for an RNA therapeutic.
Alnylam’s partner, Sanofi, continues enrollment in the fitusiran Phase 3 ATLAS program in patients with hemophilia A or B with and without inhibitors.
Advanced early-stage RNAi pipeline programs.
Discontinued a Phase 2 study of cemdisiran in atypical hemolytic uremic syndrome (aHUS) due to recruitment challenges. Alnylam announces today that it has received regulatory approval to initiate a Phase 2 study of cemdisiran in IgA nephropathy.
Submitted a Clinical Trial Authorization (CTA) application for ALN-AAT02, an investigational RNAi therapeutic for the treatment of alpha-1 antitrypsin deficiency-associated liver disease (alpha-1 liver disease). Alnylam announces today that it has initiated a Phase 1 study of ALN-AAT02, with initial results expected in 2019.
With Vir Biotechnology, initiated a Phase 1/2 study of ALN-HBV02 (also known as VIR-2218), with initial results expected in 2019.
Reported new platform innovations at the Oligonucleotide Therapeutics Society 2018 Annual Meeting, including pre-clinical results demonstrating potent, wide-spread, and highly durable CNS and ocular delivery of RNAi therapeutics in rats and non-human primates.
Selected its first CNS-targeted development candidate, ALN-APP, an investigational RNAi therapeutic targeting amyloid precursor protein (APP) for the treatment of cerebral amyloid angiopathy (CAA).
Additional Business Highlights

Entered into an exclusive distribution agreement with Medison Pharma for the commercialization of certain RNAi therapeutics in Israel.
Resolved all litigation worldwide with Silence Therapeutics.
Upcoming Events in Early 2019

Alnylam expects to report topline results from the ENVISION Phase 3 study of givosiran in March 2019, and announces today that it plans to present full study results in an oral presentation at the The International Liver Congress 2019 of the European Association for the Study of the Liver (EASL) on Saturday, April 13, 2019 in Vienna, Austria.
Financial Results for the Quarter and Year Ended December 31, 2018

"We ended 2018 with cash and investments on our balance sheet of $1.13 billion, exceeding our 2018 guidance, and we’re pleased to have recently strengthened our balance sheet further with our public offering in January resulting in net proceeds of approximately $382 million," said Manmeet Soni, Chief Financial Officer of Alnylam. "Taken together with our growing product revenues, we believe Alnylam is in a strong position to continue executing on global commercialization plans while advancing our pipeline of late- and early-stage programs."

Cash and Investments

At December 31, 2018, Alnylam had cash, cash equivalents and marketable debt securities and restricted investments, excluding equity securities, of $1.13 billion, as compared to $1.73 billion at December 31, 2017.

In January 2019, Alnylam sold an aggregate of 5,000,000 shares of its common stock through an underwritten public offering at a price to the public of $77.50 per share. As a result of the offering, Alnylam received aggregate net proceeds of approximately $382 million.

GAAP and Non-GAAP Net Loss

The net loss according to accounting principles generally accepted in the U.S. (GAAP) for the fourth quarter of 2018 was $211.4 million, or $2.09 per share on both a basic and diluted basis, as compared to a net loss of $142.2 million, or $1.48 per share on both a basic and diluted basis, for the same period in the previous year. For the year ended December 31, 2018, the net loss was $761.5 million, or $7.57 per share on both a basic and diluted basis, as compared to a net loss of $490.9 million, or $5.42 per share on both a basic and diluted basis, for the prior year.

The non-GAAP net loss for the fourth quarter of 2018 was $183.5 million, or $1.82 per share on both a basic and diluted basis, as compared to a non-GAAP net loss of $115.1 million, or $1.20 per share on both a basic and diluted basis for the same period in the previous year. The non-GAAP net loss for the year ended December 31, 2018 was $624.3 million, or $6.21 per share on both a basic and diluted basis, as compared to a non-GAAP net loss of $398.1 million, or $4.40 per share on both a basic and diluted basis, for the prior year.

The non-GAAP net loss excludes stock-based compensation expense and gain on litigation settlement. See "Use of Non-GAAP Financial Measures" below for a description of non-GAAP financial measures and a reconciliation between GAAP and non-GAAP net loss appearing later in this press release.

ONPATTRO Revenues, Net

Net product revenues from sales of ONPATTRO were $12.1 million in the fourth quarter of 2018. Net product revenues from sales of ONPATTRO were $12.5 million in the year ended December 31, 2018.

Net Revenues from Collaborators

Net revenues from collaborators were $9.0 million in the fourth quarter of 2018, as compared to $37.9 million in the fourth quarter of 2017. Net revenues from collaborators were $62.4 million in the year ended December 31, 2018, as compared to $89.9 million in the year ended December 31, 2017.

GAAP and Non-GAAP Research and Development Expenses

GAAP research and development (R&D) expenses were $131.0 million in the fourth quarter of 2018 as compared to $117.8 million in the fourth quarter of 2017. GAAP R&D expenses were $505.4 million in the year ended December 31, 2018 as compared to $390.6 million for the prior year.

Non-GAAP R&D expenses were $118.1 million in the fourth quarter of 2018 as compared to $102.9 million in the fourth quarter of 2017. Non-GAAP R&D expenses were $424.9 million in the year ended December 31, 2018 as compared to $338.8 million for the prior year. Non-GAAP R&D expenses exclude stock-based compensation expense. A reconciliation between GAAP and non-GAAP R&D expenses appears later in this press release.

GAAP and Non-GAAP Selling, General and Administrative Expenses

GAAP selling, general and administrative (SG&A) expenses were $108.7 million in the fourth quarter of 2018 as compared to $67.5 million in the fourth quarter of 2017. GAAP SG&A expenses were $382.4 million in the year ended December 31, 2018 as compared to $199.4 million for the prior year.

Non-GAAP SG&A expenses were $93.7 million in the fourth quarter of 2018 as compared to $55.2 million in the fourth quarter of 2017. Non-GAAP SG&A expenses were $305.1 million in the year ended December 31, 2018 as compared to $158.4 million for the prior year. Non-GAAP SG&A expenses exclude stock-based compensation expense. A reconciliation between GAAP and non-GAAP SG&A expenses appears later in this press release.

2019 Financial Guidance

Alnylam expects its 2019 annual non-GAAP R&D expenses to be in the range of $520 to $560 million and non-GAAP SG&A expenses to be in the range of $390 to $420 million. Both non-GAAP R&D and non-GAAP SG&A expenses exclude stock-based compensation expenses.

The Company expects its current cash, cash equivalents, and marketable debt securities will support company operations for approximately two years based upon its current operating plan.

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, including expenses adjusted to exclude certain non-cash expenses and non-recurring gains outside the ordinary course of the Company’s business. These measures are not in accordance with, or an alternative to, GAAP, and may be different from non-GAAP financial measures used by other companies.

The items included in GAAP presentations but excluded for purposes of determining non-GAAP financial measures for the periods presented in the press release are stock-based compensation expense and the gain on litigation settlement. The Company has excluded the impact of stock-based compensation expense, which may fluctuate from period to period based on factors including the variability associated with performance-based grants for stock options and restricted stock units and changes in the Company’s stock price, which impacts the fair value of these awards. The Company has excluded the impact of the gain on litigation settlement because the Company believes this item is a one-time event occurring outside the ordinary course of the Company’s business.

The Company believes the presentation of non-GAAP financial measures provides useful information to management and investors regarding the Company’s financial condition and results of operations. When GAAP financial measures are viewed in conjunction with non-GAAP financial measures, investors are provided with a more meaningful understanding of the Company’s ongoing operating performance and are better able to compare the Company’s performance between periods. In addition, these non-GAAP financial measures are among those indicators the Company uses as a basis for evaluating performance, allocating resources and planning and forecasting future periods. Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for GAAP financial measures. A reconciliation between GAAP and non-GAAP measures is provided later in this press release.

The Company does not provide in this press release a reconciliation of its estimated 2019 non-GAAP R&D and non-GAAP SG&A expense guidance to the comparable GAAP measures because it is not able to estimate 2019 stock-based compensation expense without unreasonable efforts. The Company’s stock-based compensation expense is subject to significant fluctuations from period to period due to variability in the probability of performance-based vesting events for stock options and restricted stock units and changes in the Company’s stock price which materially impacts the recognition, timing of expense and fair value of these awards. In addition, we believe such reconciliations for our 2019 financial guidance would imply a degree of precision that would be confusing or misleading to investors.

Conference Call Information

Management will provide an update on the Company and discuss fourth quarter and year end 2018 results as well as expectations for the future via conference call on Thursday, February 7, 2019 at 4:30 pm ET. To access the call, please dial 800-667-5617 (domestic) or 334-323-0509 (international) five minutes prior to the start time and refer to conference ID 4263166. A replay of the call will be available beginning at 7:30 pm ET on the day of the call. To access the replay, please dial 888-203-1112 (domestic) or 719-457-0820 (international) and refer to conference ID 4263166.

Alnylam – Sanofi Genzyme Alliance

Alnylam and Sanofi Genzyme, the specialty care global business unit of Sanofi, established an alliance to accelerate the advancement of RNAi therapeutics as a potential new class of medicines for patients around the world with rare genetic diseases. The alliance enables Sanofi Genzyme to expand its rare disease pipeline with Alnylam’s novel RNAi technology and provides access to Alnylam’s R&D engine, while Alnylam benefits from Sanofi Genzyme’s proven global capabilities to advance late-stage development and, upon commercialization, accelerate market access for these promising genetic medicines products.

About ONPATTRO (patisiran)

Patisiran, based on Nobel Prize-winning science, is an intravenously administered RNAi therapeutic targeting transthyretin (TTR) for the treatment of hereditary ATTR amyloidosis. It is designed to target and silence TTR messenger RNA, thereby blocking the production of TTR protein before it is made. Patisiran blocks the production of TTR in the liver, reducing its accumulation in the body’s tissues in order to halt or slow down the progression of the disease. In August 2018, patisiran received U.S. Food and Drug Administration (FDA) approval for the treatment of the polyneuropathy of hATTR amyloidosis in adults, as well as European Medicines Agency marketing authorization for the treatment of hATTR amyloidosis in adults with Stage 1 or Stage 2 polyneuropathy.

Important Safety Information

Infusion-Related Reactions

Infusion-related reactions (IRRs) have been observed in patients treated with ONPATTRO. In a controlled clinical study, 19 percent of ONPATTRO-treated patients experienced IRRs, compared to 9 percent of placebo-treated patients. The most common symptoms of IRRs with ONPATTRO were flushing, back pain, nausea, abdominal pain, dyspnea, and headache.

To reduce the risk of IRRs, patients should receive premedication with a corticosteroid, paracetamol, and antihistamines (H1 and H2 blockers) at least 60 minutes prior to ONPATTRO infusion. Monitor patients during the infusion for signs and symptoms of IRRs. If an IRR occurs, consider slowing or interrupting the infusion and instituting medical management as clinically indicated. If the infusion is interrupted, consider resuming at a slower infusion rate only if symptoms have resolved. In the case of a serious or life-threatening IRR, the infusion should be discontinued and not resumed.

Reduced Serum Vitamin A Levels and Recommended Supplementation

ONPATTRO treatment leads to a decrease in serum vitamin A levels. Supplementation at the recommended daily allowance (RDA) of vitamin A is advised for patients taking ONPATTRO. Higher doses than the RDA should not be given to try to achieve normal serum vitamin A levels during treatment with ONPATTRO, as serum levels do not reflect the total vitamin A in the body.

Patients should be referred to an ophthalmologist if they develop ocular symptoms suggestive of vitamin A deficiency (e.g. night blindness).

Adverse Reactions

The most common adverse reactions that occurred in patients treated with ONPATTRO were respiratory-tract infection (29 percent) and infusion-related reactions (19 percent).

About LNP Technology

Alnylam has licenses to Arbutus Biopharma LNP intellectual property for use in RNAi therapeutic products using LNP technology.

About RNAi

RNAi (RNA interference) is a natural cellular process of gene silencing that represents one of the most promising and rapidly advancing frontiers in biology and drug development today. Its discovery has been heralded as "a major scientific breakthrough that happens once every decade or so," and was recognized with the award of the 2006 Nobel Prize for Physiology or Medicine. By harnessing the natural biological process of RNAi occurring in our cells, a new class of medicines, known as RNAi therapeutics, is now a reality. Small interfering RNA (siRNA), the molecules that mediate RNAi and comprise Alnylam’s RNAi therapeutic platform, function upstream of today’s medicines by potently silencing messenger RNA (mRNA) – the genetic precursors – that encode for disease-causing proteins, thus preventing them from being made. This is a revolutionary approach with the potential to transform the care of patients with genetic and other diseases.

On February 7, 2019 Cardinal Health (NYSE: CAH) reported second quarter fiscal year 2019 revenues of $37.7 billion, an increase of 7 percent (Press release, Cardinal Health, FEB 7, 2019, View Source [SID1234533161]). The company also reported growth in GAAP operating earnings of 26 percent to $504 million and a decrease in non-GAAP operating earnings of 13 percent to $637 million. GAAP diluted earnings per share (EPS) were $0.93, a decrease of 72 percent. This decrease reflects $2.83 of transitional tax benefits in the prior-year quarter related to the enactment of U.S. tax reform. Non-GAAP diluted EPS decreased 15 percent to $1.29.

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"Overall, results this quarter came in ahead of our expectations led by the Pharmaceutical segment," said Mike Kaufmann, CEO of Cardinal Health. "We are making good progress on our strategic initiatives to drive future growth and are well-positioned to exceed our cost-savings targets for the enterprise. As a result, we are raising our guidance for the full fiscal year."

During the second quarters of fiscal 2019 and 2018, GAAP effective tax rates were 31.0 percent and (231.9) percent, respectively, and non-GAAP effective tax rates were 28.5 percent and 26.2 percent, respectively.

The change in the GAAP effective tax rate is primarily attributable to transitional tax benefits of $2.83 per share from the U.S. Tax Cuts and Jobs Act ("Tax Act") recorded during the second quarter of fiscal 2018. These benefits reflected the re-measurement of the company’s net U.S. deferred tax liabilities and assets at the lower federal rate, partially offset by the required U.S. repatriation tax on undistributed foreign earnings. These transitional tax benefits have been excluded from the company’s reported non-GAAP earnings.

Fiscal year 2019 outlook
The company does not provide GAAP EPS outlook because it is unable to reliably forecast most of the items that are excluded from GAAP EPS to calculate non-GAAP EPS. These items could cause EPS to differ materially from non-GAAP EPS. See "Use of Non-GAAP Measures" following the attached schedules for additional explanation.
The company is raising its fiscal 2019 non-GAAP EPS guidance to the range of $4.97 to $5.17 from the range of $4.90 to $5.15.
Segment results
Pharmaceutical segment
Second quarter revenue for the Pharmaceutical segment increased 8 percent to $33.7 billion due to sales growth from Pharmaceutical Distribution and Specialty Solutions customers, partially offset by the divestiture of the China distribution business.

Segment profit for the quarter decreased 14 percent to $443 million, which reflects the negative impact from the company’s generics program performance, partially offset by Specialty Solutions performance.

Additional second quarter and recent highlights

Cardinal Health board of directors approved a quarterly dividend of $0.4763 per share. The dividend will be payable on April 15, 2019 to shareholders of record at the close of business on April 1, 2019

Cardinal Health announced Brian Rice as EVP, Chief Information Officer and Customer Support Services

Cardinal Health board of directors elected J. Michael Losh as an independent director serving as chairman of the Audit Committee

The Cardinal Health Foundation announced a $530,000 grant to the Ohio Hospital Association (OHA) to identify and deploy best opioid prescribing practices for pain management among OHA member hospitals across the state

Webcast
Cardinal Health will host a webcast today at 8:30 a.m. Eastern to discuss second quarter results. To access the webcast and corresponding slide presentation, go to the Investor Relations page at ir.cardinalhealth.com. No access code is required.

Presentation slides and a webcast replay will be available on the Cardinal Health website at ir.cardinalhealth.com until February 6, 2020.

Upcoming webcasted investor events

Barclays Global Healthcare Conference on March 13 at 8:30 a.m. Eastern in Miami Beach, Fla.

On February 7, 2019 Alkermes plc (Nasdaq: ALKS) reported that it will host a conference call and webcast presentation at 8:30 a.m. ET (1:30 p.m. BST) on Thursday, Feb. 14, 2019, to discuss the company’s fourth quarter and year-end 2018 financial results (Press release, Alkermes, FEB 7, 2019, https://www.prnewswire.com/news-releases/alkermes-to-host-conference-call-to-discuss-fourth-quarter-and-year-end-2018-financial-results-300791901.html [SID1234533145]). Management will also discuss financial expectations for 2019 and provide an update on the company.

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

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The webcast player and accompanying slides may be accessed on the Investors section of Alkermes’ website at www.alkermes.com. The conference call may be accessed by dialing +1 877 407 2988 for U.S. callers and +1 201 389 0923 for international callers.

A replay of the conference call will be available from 11:00 a.m. ET (4:00 p.m. BST) on Thursday, Feb. 14, 2019, through Thursday, Feb. 21, 2019, and may be accessed by visiting Alkermes’ website or by dialing +1 877 660 6853 for U.S. callers and +1 201 612 7415 for international callers. The replay conference ID is 13687392.