On October 29, 2020 Constellation Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company using its expertise in epigenetics to discover and develop novel therapeutics, reported its third-quarter 2020 financial results (Press release, Constellation Pharmaceuticals, OCT 29, 2020, View Source [SID1234569318]). The Company also provided updates on its product candidates CPI-0610 and CPI-0209.

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"Many myelofibrosis patients continue to have significant unmet needs despite available therapy," said Jeff Humphrey, M.D., Chief Medical Officer of Constellation Pharmaceuticals. "Constellation and leading clinical investigators are eager to enroll patients in MANIFEST-2, our pivotal Phase 3 study, to potentially define a new standard of care for MF patients."

"We look forward to providing an update of MANIFEST data for CPI-0610 at the upcoming ASH (Free ASH Whitepaper) conference," said Jigar Raythatha, president and chief executive officer of Constellation Pharmaceuticals. "We believe that CPI-0610 has the potential to modify the course of myelofibrosis by providing benefits across all four hallmarks of the disease: spleen volume reduction, symptom improvement, hemoglobin increases, and bone marrow fibrosis improvement."

CPI-0610

Constellation plans to provide its next MANIFEST data update at the American Society of Hematology (ASH) (Free ASH Whitepaper) in December 2020, including 24-week data for SVR35 (≥35% spleen volume reduction) and TSS50 (50% improvement in Total Symptom Score) from 50-60 first-line and 90-100 second-line myelofibrosis patients.
Two oral presentations will focus on clinical data from JAK-inhibitor-naïve MF patients (Arm 3) and JAK-inhibitor-experienced MF patients being treated with CPI-0610 as an add-on to ruxolitinib (Arm 2).
Three poster presentations will focus on translational data, clinical data from second-line patients being treated with CPI-0610 monotherapy (Arm 1), and the Phase 3 MANIFEST-2 trial in progress.
The Company will also hold an investor event on December 7, 2020, to discuss these data. Event details will be provided later.
Abstracts to be published on November 5, 2020, will be based on the April 17, 2020, data cutoff also used for the Company’s presentation at the European Hematology Association (EHA) (Free EHA Whitepaper) meeting in June 2020. Updated data will be presented at the ASH (Free ASH Whitepaper) meeting.
Patient enrollment in Arm 3 of MANIFEST, the Phase 2 clinical trial for CPI-0610, has been completed at approximately 80 JAK-inhibitor-naïve MF patients.
MANIFEST-2, the pivotal Phase 3 trial for CPI-0610, remains on track to begin patient enrollment in the fourth quarter of 2020.
ASH Oral Presentations

Title: CPI-0610, a Bromodomain and Extraterminal Domain Protein (BET) Inhibitor, in Combination with Ruxolitinib, in JAK-Inhibitor-Naïve Myelofibrosis Patients: Update of MANIFEST Phase 2 Study
Oral Session: 634. Myeloproliferative Syndromes: Clinical: New Therapies and JAKi-based Combinations for Myelofibrosis
Date and Time: December 5, 2020, 11:30 AM EST
Presenter: Dr. John Mascarenhas, Associate Professor of the Icahn School of Medicine at Mount Sinai

Title: CPI-0610, Bromodomain and Extraterminal Domain Protein (BET) Inhibitor, As "Add-on" to Ruxolitinib, in Advanced Myelofibrosis Patients with Suboptimal Response: Update of MANIFEST Phase 2 Study
Oral Session: 634. Myeloproliferative Syndromes: Clinical: New Therapies and JAKi-based Combinations for Myelofibrosis
Date and Time: December 5, 2020, 11:45 AM EST
Presenter: Dr. Srdan Verstovsek, Medical Oncologist, MD Anderson Cancer Center

ASH Poster Presentations

Title: CPI-0610, a Bromodomain and Extraterminal Domain Protein (BET) Inhibitor, As Monotherapy in Advanced Myelofibrosis Patients Refractory / Intolerant to JAK Inhibitor: Update from Phase 2 MANIFEST Study
Session: 634. Myeloproliferative Syndromes: Clinical: Poster II
Date and Time: Sunday, December 6, 2020, 10:00 AM-6:30 PM EST
Presenter: Dr. Moshe Talpaz, Professor of Leukemia Research and Professor of Internal Medicine, University of Michigan Medical School

Title: MANIFEST-2, a Global, Phase 3, Randomized, Double-Blind, Active-Control Study of CPI-610 and Ruxolitinib Vs. Placebo and Ruxolitinib in JAK-Inhibitor-Naïve Myelofibrosis Patients
Session: 634. Myeloproliferative Syndromes: Clinical: Poster III
Date and Time: Monday, December 7, 2020, 10:00 AM-6:30 PM EST
Presenter: Dr. John Mascarenhas, Associate Professor of the Icahn School of Medicine at Mount Sinai

Title: The BET Inhibitor, CPI-0610, Promotes Myeloid Differentiation in Myelofibrosis Patient Bone Marrow and Peripheral CD34+ Hematopoietic Stem Cells
Session: 634. Myeloproliferative Syndromes: Clinical: Poster III
Date and Time: Monday, December 7, 2020, 10:00 AM-6:30 PM EST
Presenter: Dr. Mohamed Salama, Professor of Pathology and Laboratory Medicine, Mayo Clinic School of Medicine

CPI-0209

The Phase 1 dose escalation portion of a Phase 1/2 clinical trial of the EZH2 inhibitor CPI-0209 is progressing well. Patient dosing has advanced through multiple dosing cohorts as planned.
Data from the Phase 1 portion will guide our recommended Phase 2 dose selection for monotherapy and combination expansion arms in select tumor types.
Clinical data will be supplemented with data on biomarkers to identify patients most likely to benefit.
Third Quarter 2020 Financial Results

Cash, cash equivalents, and marketable securities as of September 30, 2020, were $489.4 million. 
Research and development (R&D) expenses increased 56.7% year over year to $25.4 million in the third quarter of 2020, mainly due to increased clinical trial expenses.
General and administrative (G&A) expenses grew 65.0% year over year to $7.9 million in the third quarter of 2020, primarily due to building out the organization of the company.
The net loss attributed to common shareholders increased 59.7% year over year to $33.8 million for the third quarter of 2020, mainly due to increased R&D and G&A expenses. The net loss per share attributable to common shareholders decreased 13.4% to $0.71 per share due to an increase in shares outstanding as a result of the private placement in October 2019 and the public offerings in December 2019 and June 2020, offset in part by the increased net loss.
Nine Month 2020 Financial Results

Research and development (R&D) expenses increased 42.3% year over year to $68.1 million in the first nine months of 2020, mainly due to increased clinical trial expenses.
General and administrative (G&A) expenses grew 47.3% year over year to $20.8 million in the first nine months of 2020, primarily due to building out the organization of the company.
The net loss attributed to common shareholders increased 45.0% year over year to $89.0 million for the first nine months of 2020, mainly due to increased R&D and G&A expenses. The net loss per share attributable to common shareholders decreased 15.1% to $2.02 per share due to an increase in shares outstanding as a result of the private placement in October 2019 and the public offerings in December 2019 and June 2020, offset in part by the increased net loss.
Financial Guidance

Constellation expects that its current cash, cash equivalents, and marketable securities will fund operations into mid-2023.

Conference Call

Constellation will host a conference call at 8:00 AM EDT on October 29, 2020, to discuss its clinical programs and financial results. The event will be webcast live and can be accessed on the Investor Relations section of Constellation’s website at View Source To participate in the live question-and-answer session, please dial (877) 473-2077 (domestic) or (661) 378-9662 (international) and refer to conference ID 7374769.

About MANIFEST

MANIFEST is an open-label Phase 2 clinical trial of CPI-0610 in patients with myelofibrosis (MF), a rare cancer of the bone marrow that disrupts the body’s normal production of blood cells. Constellation is evaluating CPI-0610 in combination with ruxolitinib in JAK-inhibitor-naïve MF patients (Arm 3), with a primary endpoint of the proportion of patients with a ≥35% spleen volume reduction from baseline (SVR35) after 24 weeks of treatment. Constellation is also evaluating CPI-0610, either as a monotherapy in patients who are resistant to, intolerant of, or ineligible for ruxolitinib and no longer on the drug (Arm 1), or as add-on therapy in combination with ruxolitinib in patients with a sub-optimal response to ruxolitinib or MF progression (Arm 2). Patients in Arms 1 and 2 are being stratified based on TD status. The primary endpoint for the patients in cohorts 1A and 2A, who were TD at baseline, is conversion to TI for 12 consecutive weeks. The primary endpoint for the patients in cohorts 1B and 2B, who were not TD at baseline, is the proportion of patients with a ≥35% spleen volume reduction from baseline after 24 weeks of treatment.

About MANIFEST-2

MANIFEST-2 is a global, blinded, randomized, Phase 3 clinical study with CPI-0610 in combination with ruxolitinib versus placebo plus ruxolitinib in JAK-inhibitor-naïve patients with primary myelofibrosis or post-ET or post-PV myelofibrosis, who have splenomegaly and symptoms requiring therapy. It is designed to enroll approximately 310 patients, randomized 1:1 to the CPI-0610 + ruxolitinib arm or the placebo + ruxolitinib arm. The primary endpoint of the study is a ≥35% reduction in spleen volume (SVR35) from baseline at 24 weeks. A key secondary endpoint of the study is 50% or greater improvement in Total Symptom Score (TSS50) from baseline at 24 weeks. Other endpoints include bone marrow fibrosis grade improvements, duration of transfusion independence, rate of red-blood-cell transfusion for the first 24 weeks, and hemoglobin response.

On October 29, 2020 Fresenius Medical Care reported solid revenue and strong earnings growth in the third quarter(Press release, Fresenius, OCT 29, 2020, View Source [SID1234569314])

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"The global COVID-19 pandemic has posed further challenges to us in the third quarter; and it will be a sizable challenge to be managed also in the months to come", said Rice Powell, Chief Executive Officer of Fresenius Medical Care. "It is at times like these that the value of our strong network, of our vertically integrated, resilient business model and of the commitment of our entire Fresenius Medical Care team becomes evident – and proves to be decisive for fostering the wellbeing of our patients as well as creating value for our shareholders. On the back of our strong earnings development in the first nine months, we confirm our outlook for the financial year 2020. Thanks to the lessons learned from the first phase of the pandemic and our highly committed team, I am very confident that our company will successfully cope with COVID-19."

2020 targets confirmed: mid to high single digit growth rates
Fresenius Medical Care continues to expect both revenue and net income1 to grow at a mid to high single digit rate in 2020. These targets are inclusive of anticipated COVID-19 effects, in constant currency and exclude special items3. They are based on the adjusted results 2019, including the effects of the operations of the NxStage acquisition and the IFRS 16 implementation.

1 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
2 For a reconciliation of adjusted figures, please refer to the table at the end of the press release
3 Special items are effects that are unusual in nature and have not been foreseeable or not foreseeable in size or impact at the time of giving guidance.

COVID-19 continues to affect dialysis business
As in previous months – and thanks to the comprehensive protective measures initiated at the beginning of the pandemic – Fresenius Medical Care was able to minimize the impact on patients and to maintain operations in its more than 4,000 dialysis centers worldwide without significant interruptions.

However, the COVID-19 pandemic continued to affect people with advanced kidney disease and the resulting severity of illness generated an increase in hospitalization and mortality rate. The resulting increase in missed treatments and, in addition, delayed referrals of patients with late stage chronic kidney disease, slowed down the organic growth in the third quarter to 3%. In the first nine months the COVID-19 related net effect on operating income was neutral.

Patients, Clinics and Employees
As of September 30, 2020, Fresenius Medical Care treated 349,167 patients in 4,073 dialysis clinics worldwide. At the end of the third quarter, the Company had 126,463 employees (full-time equivalents) worldwide, compared to 120,734 employees as of September 30, 2019.

Solid net income growth despite headwinds from exchange rates
Despite a sizable headwind from exchange rates, revenue was stable and amounted to EUR 4,414 million (+6% at constant currency). Organic growth of 3% was realized including the expected negative impacts from lower reimbursement for calcimimetics and COVID-19 related slower growth in the number of treatments.

Health Care Services revenue remained stable despite the negative effects from exchange rates and amounted to EUR 3,499 million (+6% at constant currency). On a constant currency basis, growth was driven by negative prior year revenue effects ("prior year revenue effects"4) , contributions from acquisitions and was achieved despite the lower reimbursement for calcimimetics as well as COVID-19 related slower growth of the number of treatments.

4 Prior year revenue effects: revenue recognition adjustment for accounts receivable in legal dispute (- EUR 84 million), reduction in patient attribution and a decreasing savings rate for ESCOs (- EUR 46 million)

Health Care Products revenue was negatively impacted by exchange rates as well and decreased by 1% to EUR 915 million (+4% at constant currency). On a constant currency basis, growth was driven by higher sales of products for acute care treatments, machines for chronic treatment and peritoneal dialysis products.

In the first nine months of 2020 revenue increased by 4% to EUR 13,459 million (+6% at constant currency), with organic growth of 4%. Health Care Services revenue grew by 4% to EUR 10,708 million (+6% at constant currency). Health Care Products revenue rose by 5% to EUR 2,751 million (+7% at constant currency).

Operating income increased by 6% to EUR 632 million (+11% at constant currency), resulting in a margin of 14.3% (Q3 2019: 13.5%). The margin increase was driven by negative prior year earnings effects ("prior year earnings effects"5) , an increase in commercial revenue and favorable cost management of pharmaceuticals, offsetting the lower reimbursement for calcimimetics, all in the North America region.

Operating income for the first nine months increased by 11% to EUR 1,843 million (+12% at constant currency), resulting in a margin of 13.7% (9M 2019: 12.8%).

5 Prior year earnings effects: revenue recognition adjustment for accounts receivable in legal dispute (- EUR 84 million), reduction in patient attribution and a decreasing savings rate for ESCOs (- EUR 46 million) as well as a remeasurement effect of the fair value of the Humacyte investment (EUR 76 million).

Net income1 grew by 6% to EUR 354 million (+11% at constant currency), driven by the earnings effects described above and lower refinancing cost in light of favorable market conditions. Basic earnings per share (EPS) rose by 9% to EUR 1.21 (+14% at constant currency), supported by the Company’s completed share buyback program decreasing the average weighted number of shares outstanding.

In the first nine months of 2020, net income increased by 15% to EUR 987 million (+15% at constant currency). EPS rose by 19% to EUR 3.35 (+19% at constant currency).

Exceptional cash-flow development in the first nine months
Fresenius Medical Care generated EUR 746 million of operating cash flow (Q3 2019: EUR 868 million), resulting in a margin of 16.9% (Q3 2019: 19.7%). For the first nine months of 2020, operating cash flow increased to EUR 3,649 million (9M 2019: EUR 1,796 million). This increase was mainly due to U.S. federal relief funding and advanced payments under the CARES Act, other COVID-19 relief, as well as working capital improvements driven by cash collections.

Free cash flow (net cash used in operating activities, after capital expenditures, before acquisitions, investments and dividends) amounted to EUR 507 million (Q3 2019: EUR 584 million), resulting in a margin of 11.5% (Q3 2019: 13.2%). In the first nine months of 2020, the Company generated a free cash flow of EUR 2,913 million (9M 2019: EUR 1,019 million).

Regional developments
In North America, despite a sizable negative exchange rate effect, revenue remained stable and amounted to EUR 3,069 million (+5% at constant currency, +2% organic). On a constant currency basis, growth drivers were the prior year revenue effects4, an improved commercial mix and contributions from acquisitions. This was partially offset by expected headwinds from lower reimbursement for calcimimetics as well as a COVID-19 related slower growth of the number of treatments. For the first nine months, North America revenue increased by 5% to EUR 9,495 million (+5% at constant currency, +3% organic).

Despite significant headwinds from exchange rates, operating income increased by 8% to EUR 514 million (+13% at constant currency), resulting in a margin of 16.8% (Q3 2019: 15.5%). The margin increase was mainly due to the prior year earnings effects5, an increase in commercial revenue and favorable cost management of pharmaceuticals, offsetting the lower reimbursement for calcimimetics. For the first nine months, operating income rose by 24% to EUR 1,587 million (+24% at constant currency), resulting in a margin of 16.7% (9M 2019: 14.2%).

Despite a negative effect from exchange rates, revenue in EMEA remained stable and amounted to EUR 682 million (+3% at constant currency, +1% organic). Growth on a constant currency basis was supported by contributions from acquisitions and growth in same market treatments. For the first nine months, EMEA revenue increased by 3% to EUR 2,048 million (+5% at constant currency, +4% organic).

Operating income for the EMEA region also remained stable and amounted to EUR 99 million (+0% at constant currency), resulting in a margin of 14.6% (Q3 2019: 14.6%). At constant currency, operating income development was negatively influenced by unfavorable impact from foreign currency transaction effects. For the first nine months, operating income decreased by 17% to EUR 278 million (-16% at constant currency), resulting in a margin of 13.6% (9M 2019: 16.8%). The decrease was mainly due to the reduction of a contingent consideration liability related to Xenios in the prior year and an impairment of a license held by the joint venture with Vifor based on an unfavorable clinical trial.

In Asia-Pacific, revenue development was affected by exchange rates and increased by 2% to EUR 484 million (+6% at constant currency, +6 organic), mainly driven by growth in same market treatments, contributions from acquisitions, higher sales of in-center disposables and products for acute care treatments, as well as organic growth in the Care Coordination business. This was partially offset by missing contributions from closed or sold clinics. For the first nine months, revenue grew by 1% to EUR 1,377 million (+2% at constant currency, +2% organic).

Operating income grew by 7% to EUR 97 million (+9% at constant currency), resulting in a margin of 20.0% (Q3 2019: 19.0%). The increase in margin was supported by a favorable impact from cost management initiatives and business growth. For the first nine months, operating income decreased by 7% to EUR 237 million (-7% at constant currency) resulting in a margin of 17.2% (9M 2019: 18.7%).

Including a very significant headwind from exchange rates, Latin America revenue decreased by 7% to EUR 170 million (+22% at constant currency, +17% organic). For the first nine months, revenue decreased by 2% to EUR 508 million (+23% at constant currency, +17% organic).

Operating income increased by 6% to EUR 11 million (+28% at constant currency), resulting in a margin of 6.6% (Q3 2019: 5.8%). For the first nine months, operating income grew by 4% to EUR 29 million (+18% at constant currency), resulting in a margin of 5.7% (9M 2019: 5.4%).

Conference call
Fresenius Medical Care will host a conference call to discuss the results of the third quarter and first nine months of 2020 on October 29, 2020 at 3:30 p.m. CET / 10:30 a.m. ET. Details will be available on the company’s website www.freseniusmedicalcare.com in the "Investors" section. A replay will be available shortly after the call.

On October 29, 2020 NEC reported Financial Results for the Six-month period Ended September 30, 2020 (Press release, NEC, OCT 29, 2020, View Source [SID1234569288])

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1. Consolidated Financial Results for the Six-month Period Ended September 30, 2020 (April 1, 2020 – September 30, 2020)

2. Dividends

3. Consolidated Financial Results Forecast for the Year Ending March 31, 2021 (April 1, 2020 – March 31, 2021)

1. Overview of Business Results As stated in the July 21, 2020 announcement, "NEC to Revise Operating Segments", starting from the first quarter of the consolidated financial results for the fiscal year ending March 31, 2021, NEC announced operating results using revised segments. Figures for the corresponding period of the previous fiscal year have been restated to conform to the new segments. "Adjusted operating profit (loss)" is an indicator for measuring underlying profitability in order to clarify the contribution of acquired companies to NEC’s overall earnings. It is measured by deducting amortization of intangible assets recognized as a result of M&A and expenses for acquisition of companies (financial advisory fees and other fees) from operating profit (loss). Also, "Adjusted net profit (loss) attributable to owners of the parent" is an indicator for measuring underlying profitability attributable to owners of the parent. It is measured by deducting adjustment items of operating profit (loss) and corresponding amount of tax and non-controlling interests from net profit (loss) attributable to owners of the parent.

(1) Overview of Operating Results i) Overview of the six-month period ended September 30, 2020 The world economy and the Japanese economy both deteriorated significantly during the six-month period ended September 30, 2020, due to the effects of restrictions on personal movement and suspension of sales and production activities due to the global pandemic of new coronavirus ("COVID-19"). Even after the lifting of restrictions on personal movement, the pace of improvement slowed down mainly due to self-restraint of economic activity. Under this business environment, the NEC Group recorded consolidated revenue of 1,315.0 billion JPY for the six-month period ended September 30, 2020, a decrease of 134.0 billion JPY (-9.2%) year-on-year.

This decrease was mainly due to decreased revenue in the Enterprise business, the Public Solutions business and the Global business. Regarding profitability, operating profit worsened by 26.9 billion JPY year-on-year, to an operating profit of 20.0 billion JPY, mainly due to decreased revenue, despite improvement in selling, general and administrative expenses from the efficiency on expenditure, in addition to improvement in other operating income from gain on sales of subsidiaries. Adjusted operating profit worsened by 26.3 billion JPY year-on-year, to an adjusted operating profit of 29.0 billion JPY.

Profit before income taxes was a profit of 19.4 billion JPY, a year-on-year worsening of 26.8 billion JPY, mainly due to worsened operating profit. Net profit attributable to owners of the parent was a profit of 11.0 billion JPY, a worsening of 18.2 billion JPY year-on-year. This was primarily due to worsened profit before income taxes. Adjusted net profit attributable to owners of the parent worsened by 17.7 billion JPY year-on-year, to an adjusted net profit attributable to owners of the parent of 16.6 billion JPYNotes: Amounts in this section ii) "Results by main segment" are rounded to 0.1 billion JPY. Amounts in millions of JPY are shown in Note 3 "Segment Information" in Note

(5) "Notes to Condensed Interim Consolidated Financial Statements(Business segment figures in brackets below denote increases or decreases as compared with the corresponding period of the previous fiscal year.) Public Solutions Business Revenue: 177.1 billion JPY （-14.5%） Adjusted Operating Profit (Loss): 4.6 billion JPY （-5.3 billion JPY） In the Public Solutions business, revenue was 177.1 billion JPY, a decrease of 30.1 billion JPY (-14.5%) year-on-year, mainly due to decreased sales in sectors that include healthcare and regional industries, as well as reduced renewal demand for business PCs. Adjusted operating profit (loss) worsened by 5.3 billion JPY year-on-year, to an adjusted operating profit of 4.6 billion JPY, mainly due to decreased sales. Public Infrastructure Business Revenue: 281.6 billion JPY （-5.9%） Adjusted Operating Profit (Loss): 16.6 billion JPY （-7.7 billion JPY） In the Public Infrastructure business, revenue was 281.6 billion JPY, a decrease of 17.6 billion JPY (-5.9%) year-on-year, mainly due to decreased sales in sectors that include aerospace and defense, as well as decreased sales at consolidated subsidiaries. Adjusted operating profit (loss) worsened by 7.7 billion JPY year-on-year, to an adjusted operating profit of 16.6 billion JPY, mainly due to decreased profit at consolidated subsidiaries.

Enterprise Business Revenue: 238.1 billion JPY （-17.4%） Adjusted Operating Profit (Loss): 18.0 billion JPY （-7.3 billion JPY） In the Enterprise business, revenue was 238.1 billion JPY, a decrease of 50.1 billion JPY (-17.4%) year-on-year, mainly due to reduced IT investments in the manufacturing, retail and service sectors, in addition to decreased sales of large-scale projects as compared with the corresponding period of the previous year and reduced renewal demand for business PCs. Adjusted operating profit (loss) worsened by 7.3 billion JPY year-on-year, to an adjusted operating profit of 18.0 billion JPY, mainly due to decreased sales. Network Services Business Revenue: 225.5 billion JPY （+5.2%） Adjusted Operating Profit (Loss): 6.2 billion JPY （-2.9 billion JPY） In the Network Services business, revenue was 225.5 billion JPY, an increase of 11.1 billion JPY (+5.2%) year-on-year, mainly due to increased sales at consolidated subsidiaries. Adjusted operating profit (loss) worsened by 2.9 billion JPY year-on-year, to an adjusted operating profit of 6.2 billion JPY, mainly due to growing 5G investment, despite increased sales.Global Business Revenue: 219.3 billion JPY （-9.9%） Adjusted Operating Profit (Loss):-3.3 billion JPY （-4.4 billion JPY） In the Global business, revenue was 219.3 billion JPY, a decrease of 24.0 billion JPY (-9.9%) yearon-year, mainly due to decreased sales in the display and wireless backhaul areas, in addition to the termination of part of KMD’s business, which was expected from the time of its acquisition, despite increased sales of submarine systems. Adjusted operating profit (loss) worsened by 4.4 billion JPY year-on-year, to an adjusted operating loss of 3.3 billion JPY, mainly due to decreased sales. Others Revenue: 173.4 billion JPY （-11.8%） Adjusted Operating Profit (Loss): 7.2 billion JPY （-6.7 billion JPY） In the Others, revenue was 173.4 billion JPY, a decrease of 23.3 billion JPY (-11.8%) year-on-year.

Adjusted operating profit (loss) worsened by 6.7 billion JPY year-on-year, to an adjusted operating profit of 7.2 billion JPY(2) Overview of Financial Position Analysis of the condition of assets, liabilities, equity, and cash flows Total assets were 3,025.9 billion JPY as of September 30, 2020, a decrease of 97.3 billion JPY as compared with the end of the previous fiscal year. Current assets as of September 30, 2020 decreased by 108.7 billion JPY compared with the end of the previous fiscal year to 1,590.3 billion JPY, mainly due to the collection of trade and other receivables, despite increased inventories. Noncurrent assets as of September 30, 2020 increased by 11.3 billion JPY compared with the end of the previous fiscal year to 1,435.7 billion JPY.

This was mainly due to an increase in other financial assets resulting from the rising market value of equity securities. Total liabilities as of September 30, 2020 decreased by 179.7 billion JPY compared with the end of the previous fiscal year to 1,829.0 billion JPY. This was mainly due to a decrease in trade and other payables from the payment of materials cost and a decrease in interest-bearing debt from repayments. The balance of interest-bearing debt amounted to 631.0 billion JPY, a decrease of 44.5 billion JPY as compared with the end of the previous fiscal year. The debt-equity ratio as of September 30, 2020 was 0.64 (an improvement of 0.10 points as compared with the end of the previous fiscal year). The balance of net interest-bearing debt as of September 30, 2020, calculated by offsetting the balance of interest-bearing debt with the balance of cash and cash equivalents, amounted to 259.6 billion JPY, a decrease of 56.6 billion JPY as compared with the end of the previous fiscal year.

The net debt-equity ratio as of September 30, 2020 was 0.26 (an improvement of 0.09 points as compared with the end of the previous fiscal year). Total equity was 1,196.9 billion JPY as of September 30, 2020, an increase of 82.4 billion JPY as compared with the end of the previous fiscal year, mainly due to the execution of issuance of new shares by way of third-party allotment to Nippon Telegraph and Telephone Corporation ("NTT Corporation"), the increase in other components of equity resulting from the rising market value of equity securities, and the recognition of net profit for the six-month period ended September 30, 2020, despite payment of dividends. As a result, total equity attributable to owners of the parent (total equity less non-controlling interests) as of September 30, 2020 was 993.2 billion JPY, and the ratio of equity attributable to owners of the parent was 32.8% (an improvement of 3.7 points as compared with the end of the previous fiscal year). Net cash inflows from operating activities for the six-month period ended September 30, 2020 were 63.9 billion JPY, a year-on-year worsening of 41.4 billion JPY, mainly due to worsened profit before income taxes, despite improved working capital.

Net cash outflows from investing activities for the six-month period ended September 30, 2020 were 34.2 billion JPY, a decrease of 15.5 billion JPY year-on-year, mainly due to proceeds from sales of subsidiaries. As a result, free cash flows (the sum of cash flows from operating activities and investing activities) for the six-month period ended September 30, 2020 totaled a cash inflow of 29.7 billion JPY, a year-on-year worsening of 25.9 billion JPY Net cash flows from financing activities for the six-month period ended September 30, 2020 totaled a cash outflow of 14.3 billion JPY, mainly due to redemption of bonds, repayments of lease liabilities and dividends paid, despite proceeds from issuance of common shares and proceeds from issuance of bonds.

As a result, cash and cash equivalents as of September 30, 2020 amounted to 371.4 billion JPY, an increase of 12.2 billion JPY as compared with the end of the previous fiscal year.

(3) Outlook for the Fiscal Year Ending March 31, 2021 There is no change to the outlook for the fiscal year ending March 31, 2021, as previously disclosed on July 31, 2020.-9-2.

Condensed Interim Consolidated Financial Statements and Notes to Condensed Interim Consolidated Financial Statements

1. Going Concern Assumptions Not applicable.

2. Significant Accounting Policies Significant accounting policies adopted for the six-month period ended September 30, 2020 are consistent with those applied for the previous fiscal year ended March 31, 2020. Income taxes for the six-month period ended September 30, 2020 are calculated using reasonably estimated annual effective tax rate.

3. Segment Information

(1)General information about reportable segments The reportable segments of NEC Group ("the Company" or "NEC") are determined from operating segments that are identified in terms of similarity of products, services and markets based on business, and are the businesses for which the Company is able to obtain respective financial information separately, and the businesses are investigated periodically in order for the Board of Directors to conduct periodic investigation to determine distribution of management resources and evaluate their business results.

The Company has five reportable segments, which are Public Solutions, Public Infrastructure, Enterprise, Network Services, and Global businesses. Descriptions of each reportable segment are as follows: Public Solutions business mainly provides Systems Integration (Systems Implementation, Consulting), Maintenance and Support, Outsourcing / Cloud Services, and System Equipment, for Public, Healthcare, and Regional industries. Public Infrastructure business mainly provides Systems Integration (Systems Implementation, Consulting), Maintenance and Support, Outsourcing / Cloud Services, and System Equipment, for Government, and Media industry. Enterprise business mainly provides Systems Integration (Systems Implementation, Consulting), Maintenance and Support, Outsourcing / Cloud Services, and System Equipment, for Manufacturing, Retail, Services and Finance industries. Network Services business mainly provides Network Infrastructure (Core Network, Mobile Phone Base Stations, Optical Transmission Systems, Routers / Switches) and Systems Integration (Systems Implementation, and Consulting), and Services & Management (OSS/BSS, Service Solutions), for telecom market in Japan. Global business mainly provides Safer Cities (Public Safety, Digital Government), Software Services for Service Providers (OSS/BSS), Network Infrastructure (Submarine Systems, Wireless Backhaul), System Devices (Displays, Projectors), and Energy Storage System.

Notes: OSS: Operation Support System, BSS: Business Support System (2)Basis of measurement for reportable segment revenue and segment profit or loss Segment profit (loss) is measured by deducting amortization of intangible assets recognized as a result of M&A and expenses for acquisition of companies (financial advisory fees and other fees) from operating profit (loss). Intersegment revenues are made at amount that approximates arm’s-length prices

Notes:

1. "Others" mainly includes businesses such as business consulting and package solution services for the six-month period ended September 30, 2019 and 2020.

2. "Reconciling items" in segment profit (loss) includes amounts not allocated to each reportable segment that consist principally of corporate expenses of 26,558 million JPY and 19,852 million JPY for the six-month period ended September 30, 2019 and 2020, respectively. Corporate expenses are mainly general and administrative expenses and research and development expenses incurred at the headquarters of NEC.

Notes:

1. "Others" mainly includes businesses such as business consulting and package solution services for the three-month period ended September 30, 2019 and 2020.

2. "Reconciling items" in segment profit (loss) includes amounts not allocated to each reportable segment that consist principally of corporate expenses of 18,248 million JPY and 12,354 million JPY for the three-month period ended September 30, 2019 and 2020, respectively. Corporate expenses are mainly general and administrative expenses and research and development expenses incurred at the headquarters of NEC.

(4)Information about revising reportable segments From the first quarter of the fiscal year ending March 31, 2021, the Company’s descriptions of the reportable segments have been revised based on a new performance management system and a new organization structure effective as of April 1, 2020.

Under the former organization structure, among the products and services provided by each business unit to customers, products and services managed by other business units were recorded as revenue in the segment to which the business unit managing the products and services belonged. However, sales revenue of products and services are now recorded in the business unit providing products and services to customers.

Along with this, the "System Platform" segment is no longer an operating segment, and, excluding revenue recorded in other operating segments, revenue previously recorded in the "System Platform" segment, is now included in "Others". NEC also made segment changes due to organizational reforms and changes in the management system of subsidiaries that have been implemented to accelerate business development related to digital transformation (DX) and strengthen business execution capabilities by integrating businesses with compatibility.

In connection with this revision, segment information for the six-month period ended September 30, 2019 and the three-month period ended September 30, 2019 has been reclassified to conform to the presentation of the revised segments for the fiscal year ending March 31, 2021.4. Equity (1)Increase in equity due to issuance of new shares and disposal of treasury shares by way of third-party allotment The board of directors of the Company passed a resolution as of June 25, 2020, to issue 12,376,600 new shares and dispose of 647,000 treasury shares (a total of 13,023,600 shares) at a price of 4,950 JPY per share, or 64,467 million JPY in total, to NTT Corporation by way of third-party allotment. The board of directors also passed a resolution as of the same date, to execute a capital and business alliance agreement with NTT Corporation, and executed the agreement on the same date.

The payment for the shares has completed on July 10, 2020.

(2)Breakdown of other components of equity A breakdown of other components of equity as of March 31 and September 30, 2020, is as follows:

6. Subsequent Events Conclusion of a stock purchase and sale contract The board of directors of the Company passed a resolution as of October 3, 2020 to acquire all of the shares of WP/AV CH Holdings I B.V. ("WP/AV CH Holdings I"), which owns 100% share of Avaloq Group AG ("Avaloq"), a leading Swiss financial software company. This resolution is accompanied with the conclusion of a stock purchase and sale contract with Avaloq’s shareholding association, and a shareholder of WP/AV CH Holdings I that is indirectly wholly owned by funds managed by Warburg Pincus LLC.

Overview of this acquisition is as follows:

(1)Purpose of Acquisition The acquisition of Avaloq will provide NEC with digital finance software and domain knowledge as it enters into the field globally and strengthens its business in the digital government field.

(2)Amount of Acquisition The acquisition is expected to be worth 2.05 billion Swiss francs (approximately 236.0 billion JPY).

(3)Schedule of Acquisition The acquisition is expected to be executed by April 2021.

On October 29, 2020 CStone Pharmaceuticals ("CStone", HKEX: 2616) reported a licensing agreement with LegoChem Biosciences, Inc. ("LCB", KOSDAQ:141080), for the development and commercialization of LCB71, a potential first-in-class/best-in-class antibody drug conjugate ("ADC") (Press release, CStone Pharmaceauticals, OCT 29, 2020, View Source [SID1234569259]).

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Under the agreement, CStone obtains the exclusive global right to lead development and commercialization of LCB71 outside the Republic of Korea. LCB will receive an upfront payment of US$10 million, and up to US$353.5 million in cumulative milestone payments, plus tiered royalties.

Frank Jiang, M.D., Ph.D., Chairman and Chief Executive Officer of CStone, said: "We are very pleased to form this partnership with LCB, a leading ADC platform company, to obtain global rights to an asset with highly differentiated attributes in an exciting new field of oncology. The agreement adds the first ADC to CStone’s development pipeline, and bolsters our precision medicine franchise with a new modality. We look forward to harnessing its full potential and bringing it to patients around the world."

LCB71 is a pre-clinical ADC entering into Investigational New Drug ("IND") enabling studies. It targets ROR1 (receptor tyrosine kinase-like orphan receptor 1), a high-potential ADC target for multiple solid and hematological malignancies. ROR1 protein expression is prevalent in a variety of cancers including various forms of leukemia, non-Hodgkin lymphoma, and breast, lung, and ovarian cancers.

LCB71 has a proprietary tumor-activated pyrrolobenzodiazepine ("PBD") prodrug toxin that addresses the typical toxicity problem associated with traditional PBD payloads. It has demonstrated complete tumor inhibition across several preclinical cancer models, which may translate into a wide therapeutic index for a range of solid and hematologic malignancies. Additionally, it utilizes site-specific conjugation for a precise drug antibody ratio. This supports serum half-life and improves its pharmacokinetic profile, and also enables homogeneous production and large-scale manufacturing.

Dr. Yong-Zu Kim, CEO and President of LCB, said: "We are pleased to have reached this agreement with CStone, which has demonstrated extensive oncology expertise, especially in global clinical development. This partnership puts LCB71 on a path to development and commercialization for patients worldwide. We are convinced that CStone is the right partner to secure the future of this important drug."

On October 29, 2020 Chugai Pharmaceutical Co., Ltd. (TOKYO: 4519; hereinafter "Chugai") reported that results from the investigator-initiated phase I study of RAK/MEK inhibitor, CKI27 (VS-6766) conducted in the U.K. was published on October 28, 2020 (local time) in the online version of the Lancet Oncology. CKI27 is out-licensed from Chugai to Verastem Oncology, a U.S.-based company (Press release, Chugai, OCT 29, 2020, View Source [SID1234569237]).

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"Intermittent schedules of the oral RAF–MEK inhibitor CH5126766/VS-6766 in patients with RAS/RAF-mutant solid tumours and multiple myeloma: a single-centre, open-label, phase 1 dose-escalation and basket dose-expansion study"
https://www.thelancet.com/journals/lanonc/article/PIIS1470-2045(20)30464-2/fulltext

The study was an investigator-initiated study in patients with RAS/RAF-mutated solid tumors and multiple myeloma, conducted at The Institute of Cancer Research, London, and The Royal Marsden NHS Foundation Trust in the U.K. It consisted of two parts; 1) dose escalation part to determine the recommended dosage (29 patients) and 2) basket expansion part to investigate efficacy and safety of the recommended dosage determined in the dose escalation part (29 patients).

The recommended dosage were determined to be 4 mg/day twice weekly in the dose escalation part. In the subsequent basket expansion part, 7 of 26 evaluable patients (26.9%) achieved objective responses. All patients with KRAS-mutation had non-G12C mutations. The most common treatment-related adverse events occurred as grade 3 or higher based on CTCAE v4.0 (the Common Terminology Criteria for Adverse Events provided by the U.S. National Cancer Institute) was skin rash, which developed in 11 of 57 evaluable patients (19.3%). No treatment-related death occurred. The results of the study were announced in the 53rd American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting (June, 2017).

CKI27 (VS-6766) is a new oral RAF/MEK inhibitor. Under the global licensing agreement concluded in January, 2020, clinical development of CKI27 is being conducted by Verastem Oncology under the name of VS-6766.

Chugai, which aims at becoming a top innovator in the healthcare industry, continues to pursue science and proprietary technology and promote open innovation including collaboration with academia, to contribute for patients across the world through innovative drugs.