On August 6, 2020 Exelixis, Inc. (Nasdaq: EXEL) reported financial results for the second quarter of 2020 and provided an update on progress toward fulfilling its key corporate objectives, as well as commercial and clinical development milestones (Press release, Exelixis, AUG 6, 2020, View Source [SID1234563085]).

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"Exelixis continued to execute on our key priorities and milestones in the second quarter of 2020," said Michael M. Morrissey, Ph.D., President and Chief Executive Officer of Exelixis. "The data flow in the quarter was headlined by the positive top-line results from the phase 3 pivotal CheckMate -9ER study evaluating the combination of cabozantinib and nivolumab in first-line renal cell carcinoma. We’re looking forward to the presentation of detailed results from the trial at the European Society for Medical Oncology’s Virtual Congress in September, where CheckMate -9ER has been selected for an oral presentation in the conference’s Presidential Symposium track. Working in tandem with Bristol Myers Squibb, the trial’s sponsor, and Ipsen and Takeda, our partners in cabozantinib’s global clinical development and commercialization, we’re quickly moving forward with the associated high-priority regulatory filings on a global basis. At the same time, the Exelixis commercial organization is well into their preparations for a potential launch in the United States."

Dr. Morrissey continued: "As we move forward on the next commercial growth opportunity for cabozantinib, we’re also moving quickly to evaluate its potential utility in additional disease settings. Based on the results from COSMIC-021, we and our collaboration partner Roche recently initiated the CONTACT clinical trial program, which consists of three global phase 3 pivotal trials of cabozantinib in combination with atezolizumab in metastatic non-small cell lung cancer, castration-resistant prostate cancer, and renal cell carcinoma. In addition, as a result of our internal efforts complemented by the work of our research partners, we remain on track to file up to three new Investigational New Drug applications by the end of this year, including a CDK7 inhibitor from our Aurigene collaboration, a tissue factor-targeting antibody-drug conjugate from our Iconic collaboration, as well as XL265, a TAM kinase-focused kinase inhibitor from our own laboratories. I’m proud of the commitment demonstrated by the entire Exelixis team to continue to drive our business forward during these difficult times. We look forward to providing updates on our continued progress throughout the second half of the year."
Second Quarter 2020 Financial Results

Total revenues for the quarter ended June 30, 2020 were $259.5 million, compared to $240.3 million for the comparable period in 2019.

Total revenues for the quarter ended June 30, 2020 included net product revenues of $178.7 million, compared to $193.7 million for the comparable period in 2019. The decrease in net product revenues was due to a decrease in sales volume, which was partially offset by an increase in the average net selling price. Net product revenues in the second quarter 2020 were negatively impacted by the COVID-19 pandemic and by an inventory build by wholesalers and end customers in the first quarter 2020, which generally reversed in the second quarter 2020.

Collaboration revenues, composed of license revenues and collaboration services revenues, were $80.7 million for the quarter ended June 30, 2020, compared to $46.6 million for the comparable period in 2019. The increase in collaboration revenues was primarily related to an increase in the recognition of milestone related revenues, increases in development cost reimbursements earned, and higher royalty revenues for the sales of cabozantinib outside of the U.S. generated by Exelixis’ collaboration partner, Ipsen Pharma SAS (Ipsen).

Research and development expenses for the quarter ended June 30, 2020 were $114.9 million, compared to $81.9 million for the comparable period in 2019. The increase in research and development expenses was primarily related to increases in clinical trial costs and personnel expenses, which were partially offset by decreases in license and other collaboration costs. The increase in clinical trial costs was primarily due to costs associated with expanding clinical trial programs for cabozantinib, which includes COSMIC-312, COSMIC-313, CONTACT-02 and COSMIC-021. The increase in personnel expenses was primarily due to an increase in headcount to support Exelixis’ expanding discovery and development efforts. Decreases in license and other collaboration costs were primarily due to upfront license fee payments made in the comparable period of 2019, offset by an increase in research funding commitments in this quarter.

Selling, general and administrative expenses for the quarter ended June 30, 2020 were $59.8 million, compared to $58.8 million for the comparable period in 2019. The increase in selling, general and administrative expenses was primarily related to increases in personnel expenses, which was offset by decreases in marketing costs. The increase in personnel expenses was primarily due to an increase in administrative headcount to support Exelixis’ commercial and research and development organizations.

Provision for income taxes for the quarter ended June 30, 2020 decreased to $13.9 million, compared to $20.7 million for the comparable period in 2019, primarily due to a decrease in pre-tax income.

GAAP net income for the quarter ended June 30, 2020 was $66.8 million, or $0.22 per share, basic and $0.21 per share, diluted, compared to GAAP net income of $79.0 million, or $0.26 per share, basic and $0.25 per share, diluted, for the comparable period in 2019. The decrease in GAAP net income was primarily related to an increase in research and development expenses and a decrease in net product revenues, which were partially offset by an increase in collaboration revenues.

Non-GAAP net income for the quarter ended June 30, 2020 was $79.4 million, or $0.26 per share, basic and $0.25 per share, diluted, compared to non-GAAP net income of $90.7 million, or $0.30 per share, basic and $0.29 per share, diluted, for the comparable period in 2019. Non-GAAP net income excludes stock-based compensation, adjusted for the related income tax effect.

Cash and investments were $1.5 billion at June 30, 2020, compared to $1.4 billion at December 31, 2019.
Non-GAAP Financial Measures

To supplement Exelixis’ financial results presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), Exelixis presents non-GAAP net income (and the related per share measures), which excludes from GAAP net income (and the related per share measures) stock-based compensation expense, adjusted for the related income tax effect for all periods presented.

Exelixis believes that the presentation of these non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors. In particular, Exelixis believes that these non-GAAP financial measures, when considered together with its financial information prepared in accordance with GAAP, can enhance investors’ and analysts’ ability to meaningfully compare Exelixis’ results from period to period, and to identify operating trends in Exelixis’ business. Exelixis has excluded stock-based compensation expense, adjusted for the related income tax effect, because it is a non-cash item that may vary significantly from period to period as a result of changes not directly or immediately related to the operational performance for the periods presented. Exelixis also regularly uses these non-GAAP financial measures internally to understand, manage and evaluate its business and to make operating decisions.

These non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Exelixis encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP financial information and the reconciliation between these presentations, to more fully understand Exelixis’ business. Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.
Cabozantinib Highlights

Cabozantinib Franchise Net Product Revenues and Royalties. Net product revenues generated by the cabozantinib franchise in the U.S. were $178.7 million during the second quarter of 2020, with net product revenues of $173.6 million from CABOMETYX (cabozantinib) and $5.1 million from COMETRIQ (cabozantinib). Based upon cabozantinib-related revenues generated by Exelixis’ partner Ipsen in the second quarter of 2020, Exelixis earned $16.3 million in royalty revenues.

Positive Top-line Results from Pivotal Phase 3 CheckMate -9ER Trial Evaluating Nivolumab in Combination with Cabozantinib in Previously Untreated Advanced Renal Cell Carcinoma (RCC). In April 2020, Exelixis and
BMS announced that CheckMate -9ER, the phase 3 pivotal trial evaluating nivolumab in combination with cabozantinib compared to sunitinib in previously untreated advanced or metastatic RCC, met its primary endpoint of progression-free survival (PFS) at final analysis, as well as the secondary endpoints of overall survival (OS) at a pre-specified interim analysis, and objective response rate. This preliminary analysis of data showed a favorable safety profile for the combination of a 40 mg dose of cabozantinib with nivolumab.

Cabozantinib Data Presentations at the European Society for Medical Oncology Virtual Congress 2020 (ESMO 2020), including Oral Presentation of CheckMate -9ER in the Meeting’s Presidential Symposium II. In September 2020, cabozantinib will be the subject of multiple presentations at ESMO (Free ESMO Whitepaper) 2020 (September 19-21). Notably, detailed results from CheckMate -9ER will be the subject of an oral presentation during the meeting’s Presidential Symposium II. In addition, data from two cohorts of COSMIC-021 evaluating cabozantinib in combination with atezolizumab, expansion cohort 1 in first-line advanced clear cell RCC and cohort 10 in non-clear cell RCC, will be presented during ESMO (Free ESMO Whitepaper) 2020 as an oral and a poster presentation, respectively.

Initiation of Three Phase 3 Pivotal Trials of Cabozantinib in Combination with Atezolizumab in Previously Treated Metastatic Non-Small Cell Lung Cancer (NSCLC), Castration-Resistant Prostate Cancer (CRPC) and RCC. In June and July 2020, Exelixis announced the initiation of CONTACT-01, CONTACT-02 and CONTACT-03, three global phase 3 pivotal trials of cabozantinib in combination with atezolizumab in patients with previously treated, metastatic NSCLC, CRPC and RCC, respectively. The CONTACT program is part of a joint clinical research collaboration between Exelixis and F. Hoffmann-La Roche Ltd.

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CONTACT-01 is evaluating the combination of cabozantinib and atezolizumab in patients with metastatic NSCLC who have been previously treated with an immune checkpoint inhibitor (ICI) and platinum-containing chemotherapy.
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CONTACT-02 is evaluating the combination of cabozantinib and atezolizumab in patients with metastatic CRPC who have been previously treated with one novel hormonal therapy.
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CONTACT-03 is evaluating the combination of cabozantinib and atezolizumab in patients with metastatic RCC who progressed during or following treatment with an ICI as the immediate preceding therapy.

Completion of Patient Enrollment for COSMIC-312 Phase 3 Pivotal Trial in Previously Untreated Hepatocellular Carcinoma (HCC). Today, Exelixis is announcing the completion of patient enrollment in COSMIC-312, a global phase 3 pivotal trial of cabozantinib in combination with atezolizumab versus sorafenib in previously untreated advanced HCC, providing the patient population for the event-driven analyses of the study’s endpoints. Separately, patient enrollment remains open in China with a focus on enrolling the necessary patient number to enable local registration, if supported by the clinical data. The co-primary endpoints of the trial are PFS and OS for the combination of cabozantinib and atezolizumab versus sorafenib. Based on current event rates, Exelixis anticipates announcing top-line results in the first half of 2021.

Announcement of Results from Phase 1b COSMIC-021 Trial of Cabozantinib in Combination with Atezolizumab in Multiple Advanced Solid Tumor Types. In May 2020, Exelixis announced encouraging results from three expansion cohorts of the phase 1b COSMIC-021 trial evaluating the combination of cabozantinib and atezolizumab in patients with metastatic NSCLC, CRPC and urothelial carcinoma. These data were subsequently presented during the 2020 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Virtual Scientific Program.

Completion of Patient Enrollment for EXAMINER Phase 4 Trial of Cabozantinib in Metastatic Medullary Thyroid Cancer. In July 2020, Exelixis completed patient enrollment in EXAMINER, the phase 4 trial evaluating the safety and efficacy of the 60 mg tablet formulation of cabozantinib compared with the 140 mg capsule formulation, which is marketed as COMETRIQ, for the treatment of patients with progressive, metastatic medullary thyroid cancer. EXAMINER is a post-marketing requirement from the U.S. Food and Drug Administration (FDA) and the
European Commission. The trial was designed to enroll up to 250 patients, and top-line results from the trial are anticipated later this year.

Corporate Updates

Takeda Pharmaceutical Company Limited (Takeda) Records First Commercial Sale of CABOMETYX in Japan. In March 2020, Takeda, Exelixis’ partner responsible for the clinical development and commercialization of CABOMETYX in Japan, received approval from the Japanese Ministry of Health, Labour and Welfare to manufacture and market CABOMETYX as a treatment for patients with curatively unresectable or metastatic RCC. During the second quarter of 2020, Takeda launched CABOMETYX in Japan, triggering a $31.0 million milestone payment to Exelixis from Takeda upon the first commercial sale of CABOMETYX, of which $23.7 million was recognized as revenue in this quarter.

Exelixis Files Second Complaint in Patent Infringement Lawsuit against MSN Pharmaceuticals, Inc. (MSN). In May 2020, Exelixis filed a second complaint in the company’s patent infringement lawsuit against MSN, following receipt of notice from MSN that it had amended its Abbreviated New Drug Application (ANDA), originally filed with the FDA in September 2019, to add two previously-unasserted CABOMETYX Orange Book-listed patents: U.S. Patent No. 7,579,473, the composition of matter patent, and U.S. Patent No. 8,497,284, a method of use patent. Exelixis is seeking, among other relief, an order that the effective date of any FDA approval of the ANDA would be a date no earlier than the expiration of all of U.S. Patent No. 7,579,473, U.S. Patent No. 8,497,284, and U.S. Patent No. 8,877,776, the latest of which expires on October 8, 2030, and equitable relief enjoining MSN from infringing this patent.

FDA Approves Tecentriq (Atezolizumab) Plus COTELLIC (Cobimetinib) and Zelboraf (Vemurafenib) for Previously Untreated BRAF V600 Mutation-Positive Advanced Melanoma. In July 2020, the FDA approved the supplemental Biologics License Application (sBLA) submitted by Genentech, Inc. (a member of the Roche Group) (Genentech), for Tecentriq plus COTELLIC and Zelboraf for the treatment of BRAF V600-mutation positive advanced melanoma in previously untreated patients. The approval is based on positive results from the phase 3 IMspire150 study, which demonstrated that adding Tecentriq to COTELLIC and Zelboraf helped to reduce the risk of disease worsening or death, compared to placebo plus COTELLIC and Zelboraf. This is the second FDA approval for a regimen including COTELLIC, which was discovered by Exelixis and is now being developed by Genentech as part of a worldwide collaboration agreement between the two companies.

Basis of Presentation

Exelixis has adopted a 52- or 53-week fiscal year that generally ends on the Friday closest to December 31st. For convenience, references in this press release as of and for the fiscal periods ended July 3, 2020, January 3, 2020 and June 28, 2019 are indicated as being as of and for the periods ended June 30, 2020, December 31, 2019 and June 30, 2019, respectively.

Conference Call and Webcast

Exelixis management will discuss the company’s financial results for the second quarter of 2020 and provide a general business update during a conference call beginning at 5:30 p.m. EDT / 2:30 p.m. PDT today, Thursday, August 6, 2020.

To access the webcast link, log onto www.exelixis.com and proceed to the News & Events / Event Calendar page under the Investors & Media heading. Please connect to the company’s website at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to listen to the
webcast. Alternatively, please call 855-793-2457 (domestic) or 631-485-4921 (international) and provide the conference call passcode 6548897 to join by phone.

A telephone replay will be available until 8:00 p.m. EDT on August 8, 2020. Access numbers for the telephone replay are: 855-859-2056 (domestic) and 404-537-3406 (international); the passcode is 6548897. A webcast replay will also be archived on www.exelixis.com for one year.

On August 6, 2020 Illumina, Inc. (NASDAQ: ILMN) reported its financial results for the second quarter of fiscal year 2020 (Press release, Illumina, AUG 6, 2020, View Source [SID1234563084]).

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Second quarter 2020 results reflect the impact of the global COVID-19 pandemic:

•Revenue of $633 million, a 25% decrease compared to $838 million in the second quarter of 2019
•GAAP net income attributable to Illumina stockholders for the quarter of $47 million, or $0.32 per diluted share, compared to $296 million, or $1.99 per diluted share, for the second quarter of 2019
•Non-GAAP net income attributable to Illumina stockholders for the quarter of $92 million, or $0.62 per diluted share, compared to $200 million, or $1.35 per diluted share, for the second quarter of 2019. Non-GAAP net income excludes discrete tax expenses and net gains from mark-to-market adjustments on our strategic investments, primarily from our marketable equity securities (see the "Reconciliation Between GAAP and Non-GAAP Net Income Attributable to Illumina Stockholders" table for a reconciliation of these GAAP and non-GAAP financial measures)
•Cash flow from operations of $240 million compared to $143 million in the second quarter of 2019. Cash flow from operations for the second quarter of 2019 included an $84 million payment of the accreted debt discount related to the conversion of our 2019 Notes
•Free cash flow (cash flow from operations less capital expenditures) of $202 million for the quarter compared to $96 million in the second quarter of 2019. Free cash flow for the second quarter of 2019 included the convertible notes payment, referenced above

Gross margin in the second quarter of 2020 was 67.7% compared to 68.4% in the prior year period. Excluding amortization of acquired intangible assets and the net impact from payroll credits and expenses related to COVID-19, non-GAAP gross margin was 68.6% for the second quarter of 2020 compared to 69.5% in the prior year period.

Research and development (R&D) expenses for the second quarter of 2020 were $155 million compared to $166 million in the prior year period. Excluding payroll credits related to COVID-19, non-GAAP R&D expenses as a percentage of revenue were 24.7% compared to 19.8% in the prior year period.

Selling, general and administrative (SG&A) expenses for the second quarter of 2020 were $177 million compared to $202 million in the prior year period. Excluding acquisition-related expenses, restructuring charges, and the net impact from payroll credits and expenses related to COVID-19, non-GAAP SG&A expenses as a percentage of revenue were 28.1% compared to 23.1% in the prior year period.

Depreciation and amortization expenses were $46 million and capital expenditures for free cash flow purposes were $38 million during the second quarter of 2020. At the close of the quarter, the company held $3.3 billion in cash, cash equivalents and short-term investments, compared to $3.4 billion as of December 29, 2019.

"As expected, the second quarter was significantly impacted by pandemic-related disruption in our customers’ operations and was particularly challenging for many of our research customers who remain closed or operating at limited scale," said Francis deSouza, President and CEO. "It is clear that the role of genomics in infectious disease will continue to grow through and beyond this pandemic."

Updates since our last earnings release:

•Launched TruSight software to accelerate the identification of rare genetic diseases through whole genome sequencing
•Received an Emergency Use Authorization from the US FDA for COVIDSeq, the first sequencing-based COVID-19 diagnostic test
•Acquired BlueBee and Enancio to lower data storage costs and accelerate data interpretation
•Accepted seven genomic startups to Illumina Accelerator’s first global cohort, with 3 in Cambridge, UK and 4 in San Francisco, to build breakthrough genomic technologies
•Repurchased approximately $143 million of common stock in the second quarter and $420 million remains available for repurchase under our current plan
•Welcomed Dr. Alex Aravanis to lead research and development efforts as CTO and appointed Mostafa Ronaghi to lead entrepreneurial development

Financial outlook and guidance

As previously announced, Illumina has withdrawn its fiscal 2020 full year revenue and earnings per share guidance due to the uncertainties around the severity and duration of the COVID-19 pandemic.

Quarterly conference call information

The conference call will begin at 2:00 pm Pacific Time (5:00 pm Eastern Time) on Thursday, August 6, 2020. Interested parties may access the live teleconference through the Investor Info section of Illumina’s website under the "Company" tab at www.illumina.com. Alternatively, individuals can access the call by dialing 1 (866) 211-4597 or 1 (647) 689-6853 outside North America, both with conference ID 4194447.

A replay of the conference call will be posted on Illumina’s website after the event and will be available for at least 30 days following.

Statement regarding use of non-GAAP financial measures

The company reports non-GAAP results for diluted net income per share, net income, gross margins, operating expenses, operating margins, other income, and free cash flow in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The company’s financial measures under GAAP include substantial charges such as amortization of acquired intangible assets, non-cash interest expense associated with the company’s convertible debt instruments that may be settled in cash, and others that are listed in the itemized reconciliations between GAAP and non-GAAP financial measures included in this press release. Management has excluded the effects of these items in non-GAAP measures to assist investors in analyzing and assessing past and future operating performance. Additionally, non-GAAP net income attributable to Illumina stockholders and diluted earnings per share attributable to Illumina stockholders are key components of the financial metrics utilized by the company’s board of directors to measure, in part, management’s performance and determine significant elements of management’s compensation.

The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.

On August 6, 2020 ardant Health, Inc. (Nasdaq: GH), a leading precision oncology company focused on helping conquer cancer globally through use of its proprietary blood tests, vast data sets and advanced analytics, reported financial results for the quarter ended June 30, 2020 (Press release, Guardant Health, AUG 6, 2020, View Source [SID1234563083]).
Recent Highlights
•Revenue of $66.3 million for the second quarter of 2020, an increase of 23% over the corresponding period of 2019
◦Precision oncology revenue of $51.0 million, an increase of 21% over the corresponding period of 2019
◦Development services revenue of $15.3 million, an increase of 29% over the corresponding period of 2019
•Reported 13,694 tests to clinical customers and 2,805 tests to biopharmaceutical customers in the second quarter of 2020, representing an increase of 15% and a decrease of 47%, respectively, over the second quarter of 2019
•Presented data from a new patient cohort that demonstrated that its LUNAR-2 liquid assay achieved 90% sensitivity and 94% specificity in detecting early-stage colorectal cancer
•Launched GuardantINFORM, a real-world clinical-genomic platform to accelerate precision oncology drug development
•Announced two strategic collaborations to develop the Guardant360 assay as a companion diagnostic for Janssen Biotech’s amivantamab in non-small-cell lung carcinoma, and expanding to a new indication, for Radius Health’s elacestrant in breast cancer
•Strengthened financial position with an underwritten public offering raising $354.6 million in net proceeds, ending the second quarter with $1.1 billion cash, cash equivalents and marketable securities
"During this challenging time, our team at Guardant Health successfully executed across our business and has never wavered from our commitment to serve patients," said Helmy Eltoukhy, PhD, co-founder and CEO. "As we look to the second half of this year, despite the ongoing pandemic, I am more confident than ever in the strength and resilience of our team, the promise of the Guardant platform and the significant opportunity ahead to transform patient care."
Second Quarter 2020 Financial Results
Revenue was $66.3 million for the three months ended June 30, 2020, a 23% increase from $54.0 million for the three months ended June 30, 2019. Precision oncology revenue grew 21% driven predominantly by an increase in average selling price. There were 13,694 clinical tests and 2,805 biopharmaceutical tests performed during the second quarter of 2020. Development services revenue increased 29% primarily related to the timing of project related milestones for companion diagnostic development programs.
Gross profit, or total revenue less cost of precision oncology testing and cost of development services, was $43.9 million for the second quarter of 2020, an increase of $6.8 million from $37.1 million for the corresponding prior year period. Gross margin, or gross profit divided by total revenue, was 66%, as compared to 69% for the corresponding prior year period.
Operating expenses were $98.5 million for the second quarter of 2020, as compared to $52.4 million for the corresponding prior year period, an increase of 88%.
Net loss attributable to Guardant Health, Inc. common stockholders was $54.6 million for the second quarter of 2020, as compared to $11.6 million for the corresponding prior year period. Net loss per share attributable to Guardant Health, Inc. common stockholders was $0.57 for the second quarter of 2020, as compared to $0.13 for the corresponding prior year period.
Cash, cash equivalents and marketable securities were $1.1 billion as of June 30, 2020. This includes approximately $354.6 million of net proceeds from Guardant Health’s follow-on public offering which closed in early June.
2020 Guidance
Guardant Health is not providing 2020 financial guidance due to the continued uncertainties from the impact of COVID-19.
Webcast and Conference Call Information
Guardant Health will host a conference call to discuss the second quarter 2020 financial results after market close on Thursday, August 6, 2020 at 1:30 PM Pacific Time / 4:30 PM Eastern Time. A webcast of the conference call can be accessed at View Source The webcast will be archived and available for replay for at least 90 days after the event.

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Non-GAAP Measure
We believe that the exclusion of certain income and expenses in calculating non-GAAP Adjusted EBITDA can provide a useful measure for investors when comparing our period-to-period core operating results, and when comparing those same results to that published by our peers. To derive Adjusted EBITDA, we remove from GAAP results the impact of income (expenses) attributable to material non-cash items, specifically stock-based compensation and fair value remeasurements due to the subjectivity, management judgment, and market fluctuations involved around these amounts. We exclude certain other items because we believe that these income (expenses) do not reflect expected future operating expenses. Additionally, certain items are inconsistent in amounts and frequency, making it difficult to perform a meaningful evaluation of our current or past operating performance.
This non-GAAP financial measure is not intended to be considered in isolation from, as substitute for, or as superior to, the corresponding financial measure prepared in accordance with GAAP. There are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation, and do not present the full measure of our recorded costs against its revenue. In addition, our definition of the non-GAAP financial measures may differ from non-GAAP measures used by other companies.
Definition of Non-GAAP Adjusted EBITDA
"Adjusted EBITDA" is defined as net loss attributable to Guardant Health, Inc. common stockholders before: (i) interest income,(ii) interest expense (iii) provision for (benefit from) income taxes, (iv) depreciation and amortization expense, (v) other (income) expense, net, (vi) stock-based compensation expense, (vii) adjustments relating to non-controlling interest and contingent consideration and, if applicable in a reporting period, and (viii) acquisition-related expenses, and other non-recurring items.

On August 6, 2020 Kura Oncology, Inc. (Nasdaq: KURA), a clinical-stage biopharmaceutical company committed to realizing the promise of precision medicines for the treatment of cancer, reported second quarter 2020 financial results and provided a corporate update (Press release, Kura Oncology, AUG 6, 2020, View Source [SID1234563082]).

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"Last quarter we implemented a number of strategic measures to focus on our two major development pillars: tipifarnib in HRAS-dependent head and neck squamous cell carcinoma (HNSCC) and KO-539 in acute myeloid leukemia (AML)," said Troy Wilson, Ph.D., J.D., President and Chief Executive Officer of Kura Oncology. "We believe tipifarnib and KO-539 provide opportunities to address large proportions of head and neck cancers and acute leukemias, respectively. Now, following a successful public offering this past quarter, we are well-positioned to advance each of these programs toward important upcoming catalysts."

Corporate Update

Encouraging progress in Phase 1/2A trial of menin inhibitor, KO-539 – KO-539 is a potent and small molecule inhibitor of the menin-KMT2A(MLL) protein-protein interaction, with the potential to target at least 35% of patients with AML. A Phase 1/2A clinical trial of KO-539 in patients with relapsed/refractory AML (KOMET-001) continues in dose escalation. Kura remains focused on its goal of reaching a recommended Phase 2 dose and schedule, after which it intends to open expansion cohorts in NPM1-mutant and KMT2A(MLL)-rearranged AML – selected patient populations where KO‑539 has the potential to demonstrate increased clinical benefit. The Company intends to submit an abstract for preliminary data presentation of the KO-539 program at the American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting in

December 2020, and continues to add clinical sites to the trial in anticipation of moving into the expansion cohorts.

Updated data from Phase 2 trial of tipifarnib in HRAS mutant HNSCC – Kura reported updated clinical outcome data from a Phase 2 clinical trial of tipifarnib in patients with recurrent or metastatic HRAS mutant HNSCC (RUN-HN) at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Virtual Scientific Program in May 2020. The data showed a median overall survival of 15.4 months, median progression-free survival of 5.9 months and an overall response rate of 50% among the 18 evaluable patients. Outcomes for three FDA-approved therapies for HNSCC are poor, with reported median OS of 5-8 months, PFS of 2-3 months and ORR of 13-16% in the second line. These data further support the Company’s efforts in HRAS mutant HNSCC, a disease of high unmet need.

Expanded enrollment in registration-directed trial of tipifarnib – Kura has amended its ongoing registration-directed trial of tipifarnib (AIM-HN) to enroll all recurrent or metastatic HNSCC patients with HRAS mutations, regardless of variant allele frequency, expanding the proportion of patients who are being treated in the trial. The primary outcome measure for AIM-HN remains overall response rate in patients with high HRAS mutant variant allele frequency. The amendment enables the Company to assess the potential clinical benefit of tipifarnib in the overall HRAS mutant HNSCC population as well.

Expansion opportunity for tipifarnib in HRAS and PI3K dependent tumors – Based upon the unmet need and encouraging preclinical data, Kura is prioritizing the clinical development of tipifarnib in combination with a PI3K alpha inhibitor as a strategy to treat HNSCC patients whose tumors overexpress the HRAS protein, as well as those with PI3K dependent tumors. These patients may represent significant subsets of HNSCC patients with distinct biology that may be targeted by tipifarnib, which is supported by observed activity in multiple models and in each of these subsets in preclinical studies. The Company believes that the total addressable population for tipifarnib may be as high as 50% of HNSCC.

Financial Results

Research and development expenses for the second quarter of 2020 were $13.7 million, compared to $11.4 million for the second quarter of 2019.

General and administrative expenses for the second quarter of 2020 were $7.5 million, compared to $4.5 million for the second quarter of 2019.

Net loss for the second quarter of 2020 was $20.5 million, compared to a net loss of $14.9 million for the second quarter of 2019.

Cash, cash equivalents and short-term investments totaled $338.9 million as of June 30, 2020, including net proceeds of approximately $134.9 million from a public

offering completed in May 2020, compared with $236.9 million as of December 31, 2019.

Management expects that current cash, cash equivalents and short-term investments will be sufficient to fund current operations into 2023.

Conference Call and Webcast

Kura’s management will host a webcast and conference call today at 4:30 p.m. ET / 1:30 p.m. PT today, August 6, 2020, to discuss the financial results for the second quarter 2020 and provide a corporate update. The live call may be accessed by dialing (866) 278-7953 for domestic callers and +1 (323) 347-3281 for international callers and entering the conference code: 1697775. A live webcast of the call will be available from the Investors and Media section of the Company’s website at www.kuraoncology.com, and will be archived there for 30 days.

On August 6, 2020 PDL BioPharma, Inc. ("PDL" or "the Company") (Nasdaq: PDLI) reported financial results for the three and six months ended June 30, 2020 and provides an update on important milestones achieved in the execution of its monetization plan (Press release, PDL BioPharma, AUG 6, 2020, View Source [SID1234563081]):

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"I am pleased with the significant progress we have made over the past couple of months in the execution of our monetization strategy," commented PDL’s President and CEO Dominique Monnet. "We continue to focus on maximizing the net proceeds from the monetization of our assets for our stockholders, and I believe the actions we have taken so far have served them well. I would like to thank the PDL Board and team, our advisors and our LENSAR and Noden colleagues for their continued engagement, dedication and support."

•On May 21, 2020, the Company distributed 100% of its shares of Evofem Biosciences, Inc. ("Evofem") common stock to the PDL stockholders.
•On July 17, 2020, the Company announced that its majority owned subsidiary, LENSAR, Inc. ("LENSAR"), confidentially submitted a registration statement on Form 10 to the Securities and Exchange Commission relating to a potential spin-off of LENSAR as a stand-alone publicly traded company. The Company continues to pursue various strategic alternatives for LENSAR in addition to a spin-off.
•On July 30, 2020, the Company announced the signing of a definitive agreement for the sale of 100% of the outstanding stock in its wholly owned subsidiaries Noden Pharma DAC and Noden Pharma USA (collectively "Noden"). The total value of the transaction will result in payments to PDL of up to $48.25 million in cash. Upon closing, which we expect to occur by mid-August, PDL will be released of its guarantee to Novartis under Noden’s supply agreement.

In February 2020, the Board of Directors of PDL BioPharma (the "Board") approved a Plan of Complete Liquidation ("Plan of Liquidation"). The Company is seeking stockholder approval at its 2020 Annual Meeting of Stockholders on August 19, 2020 to dissolve the Company under Delaware state law. If stockholders approve the dissolution proposal, the Board would have the authority to cause the Company to file a Certificate of Dissolution to begin the process of winding down and dissolving the Company if and when the Board decides that it would serve best the interest of PDL stockholders.

As announced previously, the Company has engaged financial advisors and initiated processes either to sell its remaining assets separately or to sell the Company as a whole. The Company intends to pursue its monetization strategy in a disciplined and cost-effective manner seeking to maximize net proceeds to stockholders. While the Company cannot provide a definitive

timeline for the liquidation process, it is targeting to complete the monetization or distribution of its key assets over the next 12 months.

Discontinued Operations Classified as Assets Held for Sale

As a result of the Company’s plans to monetize its assets and the actions put in place in the first quarter of 2020, as of March 31, 2020 the assets held for sale and discontinued operations criteria were met for the Company’s royalty assets and for its Pharmaceutical segment, which consisted of Noden. The royalty assets are a component of the Income Generating Assets segment. In the second quarter of 2020, upon the distribution of the Evofem common stock to the Company’s stockholders, the discontinued operations criteria were met for the Strategic Positions segment. The Strategic Positions segment was comprised solely of the Company’s investment in Evofem.

During the period in which a component meets the assets held for sale and discontinued operations criteria, an entity must present the assets and liabilities of the discontinued operation separately in the asset and liability sections of the balance sheet for the current and comparative reporting periods. The prior period balance sheet is reclassified for the held for sale items. For statements of operations, the current and prior periods report the results of operations of the component in discontinued operations.

Second Quarter Financial Highlights

•Total revenues were $5.2 million, consisting primarily of LENSAR product, lease and service revenues.
•LENSAR revenues were $5.1 million, a decrease of 31% over the prior-year period, with procedure volume also declining 31%.
•Net cash from all royalty rights was $11.5 million, down 43% from $20.1 million for the prior-year period.
•Revenue from our Pharmaceutical segment was $8.2 million, compared with $10.4 million for the prior-year period.
•GAAP net loss was $50.0 million. Non-GAAP net loss was $23.0 million. A reconciliation of GAAP to non-GAAP financial results can be found in Table 4 at the end of this news release.

Revenue Highlights

•Total revenues for the second quarter of 2020 were $5.2 million and consisted primarily of LENSAR product, lease and service revenues.
•Product revenue from LENSAR was $5.1 million, a 31% decrease from the second quarter of 2019. LENSAR procedure volume for the second quarter of 2020 also declined 31% from the prior-year period, primarily due to lower system sales and procedures driven by the negative impact of the COVID-19 pandemic and the associated decline in elective surgical procedures. LENSAR operating results are expected to improve as elective surgical procedures progressively ramp to pre-COVID-19 levels as the pandemic subsides.
•Total revenues for the first half of 2020 were $11.2 million, compared with $14.2 million for the first half of 2019.
◦Revenues from LENSAR for the six months ended June 30, 2020 decreased by $3.0 million, or 21%, to $11.1 million from $14.1 million for the six months ended June 30, 2019. LENSAR procedure volume for the six months ended June 30, 2020 declined by 18% from the prior-year period.

Operating Expense Highlights

•Operating expenses from continuing operations of the Company include general and administrative expenses for corporate overhead. A significant amount of these costs had historically not been allocated to individual segments.
•Operating expenses for the three months ended June 30, 2020 were $19.0 million, a $2.3 million increase from $16.7 million for the three months ended June 30, 2019. The increase was primarily a result of:
◦higher general and administrative expenses, primarily due to increased professional fees associated with the ongoing monetization efforts,
◦higher research & development expenses in our Medical Devices segment as LENSAR pursues its next-generation workstation, ALLY, which integrates an enhanced femtosecond laser with a phacoemulsification system in a compact, mobile workstation, partially offset by
◦lower cost of product revenue, due to decreased sales in our Medical Devices segment, and
◦lower sales and marketing expenses in our Medical Devices segment.

•Operating expenses for the six months ended June 30, 2020 were $56.7 million, a $25.1 million increase from $31.6 million for the six months ended June 30, 2019. The increase was primarily a result of:
◦provisions under our Wind-Down Retention Plan, which, as a result of the adoption of the Plan of Liquidation, accelerated the vesting of outstanding stock awards for employees in the first quarter of 2020,
◦higher general and administrative expenses of $5.5 million, or 32% from the prior period, primarily due to increased professional fees, and
◦higher research & development expenses in our Medical Devices segment, partially offset by
◦lower cost of product revenue, due to decreased sales in our Medical Devices segment.

Discontinued Operations Highlights

•Loss from discontinued operations for the three months ended June 30, 2020 was $37.4 million, a $40.9 million decrease from the $3.5 million of income recognized for the three months ended June 30, 2019. The change was primarily a result of:
◦A $58.4 million change in the fair value of our equity affiliate from an unrecognized gain of $45.5 million in the three months ended June 30, 2019, compared with a $12.9 million loss in the three months ended June 30, 2020.
◦A $16.8 million loss recorded in the three months ended June 30, 2020 associated with reducing the estimated fair value of Noden as informed by negotiations and terms for the disposition of the entity.
◦A $2.2 million, or 22%, decline in revenue from our Pharmaceutical segment for the three months ended June 30, 2020, compared with the same period in the prior year. The decrease in revenue from our Pharmaceutical segment is primarily due to lower net revenues in the United States.
▪The decrease in revenue from our Pharmaceutical segment in the U.S. for the three months ended June 30, 2020 is due to the increased sales of our authorized generic and lower sales of our branded Tekturna, compared with the second quarter of 2019.
▪U.S. market share for branded Tekturna and the authorized generic of Tekturna of approximately 65% at June 30, 2020 declined from 68% as of March 31, 2020.

These amounts were partially offset by:
◦Revenue from our royalty right assets of negative $16.3 million in the three months ended June 30, 2020, compared with a negative $40.4 million for the three months ended June 30, 2019. The difference was primarily due to a larger decrease in fair value in the second quarter of 2019 primarily resulting from the $60.0 million AcelRx write-down, compared with a $22.9 million write down in the three months ended June 30, 2020 for certain royalty assets, as informed by bids received during our monetization process.
▪The royalty right assets in our Income Generating Assets segment generated cash flows of $11.5 million and a loss from the net change in fair value of $27.8 million in the three months ended June 30, 2020, compared with cash flows of $20.1 million and a loss in the net change in fair value of $60.5 million in the three month period ended June 30, 2019.
▪See Table 3 for a rollforward of royalty assets for the second quarter of 2020, compared with the comparable period in 2019.

•Loss from discontinued operations for the six months ended June 30, 2020 was $50.2 million, a $68.7 million decrease from the $18.6 million of income recognized for the six months ended June 30, 2019. The unfavorable change was primarily a result of:
◦A $72.2 million change in the fair value of our equity affiliate from an unrecognized gain of $45.5 million in the six months ended June 30, 2019, compared with a $26.7 million loss in the six months ended June 30, 2020.
◦A $23.5 million write down of our Pharmaceutical segment in the current year due to a decrease in the estimated fair value of the entity.
◦A $7.2 million, or 24%, decline in revenue from our Pharmaceutical segment for the six months ended June 30, 2020, compared with the same period in the prior year.

3

These amounts were partially offset by:
◦Revenue from our royalty right assets in our Income Generating Assets segment of negative $6.9 million for the six months ended June 30, 2020, compared with negative $28.1 million for the corresponding period of the prior year. The difference was primarily due to a larger decrease in fair value in the second quarter of 2019 resulting from the $60 million AcelRx write-down, compared with the six months ended June 30, 2020, which includes the fair value adjustments for certain royalty assets as informed by the bids received during our monetization process.
▪The royalty right assets generated cash flows of $25.0 million in the current period, compared with $32.7 million in the prior-year period.

Other Financial Highlights

•On a GAAP basis, the net loss attributable to PDL’s shareholders for the second quarter of 2020 was $50.0 million, or $0.43 per share, compared with a GAAP net loss attributable to PDL’s shareholders of $4.4 million, or $0.04 per share, for the prior-year period. Non-GAAP net loss attributable to PDL’s shareholders was $23.0 million for the second quarter of 2020, compared with non-GAAP net income for PDL’s shareholders of $12.7 million for the second quarter of 2019.
•On a GAAP basis, the net loss attributable to PDL’s shareholders for the first half of 2020 was $81.7 million, or $0.68 per share, compared with GAAP net income attributable to PDL’s shareholders of $2.3 million, or $0.02 per share, for the prior-year period. Non-GAAP net loss attributable to PDL’s shareholders was $29.7 million for the first half of 2020, compared with non-GAAP net income for PDL’s shareholders of $24.5 million for the first half of 2019.
•PDL had cash and cash equivalents from continuing operations of $105.4 million as of June 30, 2020, compared with $169.0 million as of December 31, 2019.
◦The $63.6 million reduction was primarily the result of common stock repurchases of $39.4 million, the net cash used for the repurchase of convertible debt of $18.0 million and net cash used in operations of $33.8 million. This reduction was partially offset by the proceeds from royalty rights of $25.0 million.

Stock and Convertible Note Repurchase Program

•In January 2020, PDL began repurchasing shares of its common stock in the open market pursuant to the 10b5-1 program entered into in December 2019 following a $275 million repurchase plan approved by the Board. In the first half of 2020, the Company acquired 12.3 million shares of its common stock for $39.4 million, at an average cost of $3.20 per share, including commissions.
•Under this same program, in the first half of 2020, the Company also repurchased $15.9 million par value of convertible notes.
•In consideration of the impact and uncertainty introduced by the COVID-19 pandemic on the Company’s monetization process, the Company discontinued its 10b5-1 program on May 31, 2020.
•Through June 30, 2020, the total amount spent of the $275 million Board authorized repurchase program, including the value of the Company’s stock issued in connection with the December 2019 convertible debt exchange, was $213.0 million.
•As of July 31, 2020, the Company had approximately 114.0 million shares of common stock outstanding.

Conference Call and Webcast

PDL will hold a conference call to discuss financial results and provide a business update at 4:30 p.m. Eastern time today. Slides to accompany the conference call will be available in the Investor Relations section of View Source." target="_blank" title="View Source." rel="nofollow">View Source

To access the live conference call via phone, please dial (866) 777-2509 from the United States or (412) 312-5413 internationally. The conference ID is 10146007. A telephone replay will be available for one week beginning approximately one hour after the completion of the call and can be accessed by dialing (877) 344-7529 from the U.S., (855) 669-9658 from Canada or (412) 317-0088 internationally. The replay passcode is 10146007.

To access the live and subsequently archived webcast of the conference call, go to the Investor Relations section of View Source and select "Events & Presentations."