On October 29, 2020 Evelo Biosciences, Inc. (Nasdaq:EVLO), a clinical stage biotechnology company developing a new modality of orally delivered, systemically acting biologics, reported financial results and business highlights for the third quarter of 2020 (Press release, Evelo Biosciences, OCT 29, 2020, View Source [SID1234569328]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

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

                  Schedule Your 30 min Free Demo!

"We can reduce systemic inflammation in humans by oral delivery of our candidate medicines which engage SINTAX, the small intestinal axis. We have accumulated the evidence for this from multiple cohorts of patients in two clinical trials. We are now building on these results in the next phases of development, with clinical trials across three distinct patient populations, including mid-stage studies in psoriasis and COVID-19," said Simba Gill, Ph.D., Chief Executive Officer of Evelo. "Together with our work on EDP1503 and EDP1867, we expect to announce six clinical results over the next three to nine months. In parallel, we have a remarkable discovery from our continued investment in research – microbial extracellular vesicles are a new form of SINTAX medicines that are now in preclinical development in both inflammation and oncology. Our portfolio is making significant progress towards our goal of providing therapies to patients with chronic inflammatory diseases and cancer."

Third Quarter 2020 Highlights and Recent Progress

Inflammation
EDP1815 in Psoriasis

Today, Evelo presented data from the Phase 1b clinical trial cohorts evaluating EDP1815 for the treatment of mild to moderate psoriasis at the European Academy of Dermatology and Venereology (EADV) Virtual Congress. The poster, as well as a prerecorded presentation, are now available online on the EADV conference website. The poster was selected as one of EADV’s key stories and highlighted at a virtual press conference at the event. Also at EADV, Evelo presented preclinical data, highlighting the potent anti-inflammatory effects of EDP1815 in murine models of TH1-, TH2- and TH17-mediated inflammation, including a model of chronic nervous system inflammation.
In October, Evelo dosed the first patients in the Phase 2 dose-ranging trial evaluating EDP1815 for the treatment of mild to moderate psoriasis. The trial is evaluating three doses of EDP1815 versus placebo in approximately 225 individuals, over a 16-week treatment period. The primary endpoint is mean reduction in PASI score.
EDP1815 in Atopic Dermatitis

In October, Evelo completed enrollment in the Phase 1b clinical trial cohort evaluating EDP1815 for the treatment of mild to moderate atopic dermatitis. The cohort is evaluating EDP1815 versus placebo in 24 individuals, over a 56-day treatment period. The primary endpoint is safety and tolerability.
EDP1815 in COVID-19

Patient recruitment continues in two studies evaluating EDP1815 for the treatment of newly hospitalized patients with COVID-19: the Phase 2 trial in partnership with Rutgers University, and TACTIC-E, a Phase 2/3 trial sponsored by the Cambridge University Hospitals NHS Foundation Trust and led by Addenbrooke’s Hospital in Cambridge, United Kingdom.
Evelo now expects to report data from the clinical trial in partnership with Rutgers University and interim safety data and futility analysis from TACTIC-E in 2Q 2021, depending on the prevalence of hospitalized patients with COVID-19. Subject to the receipt of positive data, Evelo plans to engage in discussions with global regulatory agencies to determine an appropriate path to registration for EDP1815 in COVID-19.
In order to expedite patient recruitment and expand access to potential therapies for COVID-19, new trial sites are being opened for TACTIC-E.
Business Highlights

In September 2020, Evelo appointed Julie Carretero as Chief People Officer. In her role, Ms. Carretero is responsible for leading the Company’s people initiatives, including talent acquisition and employee development.
In October 2020, the U.S. Patent and Trademark Office issued to Evelo U.S. Patent No. 10,792,314, entitled "Compositions and methods of treating cancer using Bifidobacterium animalis ssp. lactis." The patent covers a pharmaceutical composition formulated for oral administration comprising Bifidobacterium animalis ssp. Lactis Strain A and a pharmaceutically acceptable carrier within an enteric coating.
Upcoming Key Milestones
EDP1815

Data from Phase 1b trial in mild to moderate atopic dermatitis in 1Q 2021
Data from Phase 2 Rutgers University trial in COVID-19 in 2Q 2021
Interim safety data and futility analysis from Phase 2/3 TACTIC-E trial in COVID-19 in 2Q 2021
Interim data from Phase 2 trial in mild to moderate psoriasis by mid-2021
EDP1867

Data from Phase 1b trial in atopic dermatitis in mid-2021
EDP1503

Additional data from Phase 1/2 trial in triple-negative breast cancer (TNBC) accepted for poster presentation at the 2020 San Antonio Breast Cancer Symposium (SABSC), to be held virtually from December 8-11
EDP1908

Abstract titled "Oral delivery of a microbial extracellular vesicle induces potent anti-tumor immunity in mice," accepted for poster presentation at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper)’s (SITC) (Free SITC Whitepaper) 35th Anniversary Annual Meeting, to be held virtually from November 11-14
Third Quarter 2020 Financial Results

Cash Position: As of September 30, 2020, cash and cash equivalents were $81.6 million, as compared to cash and cash equivalents of $77.8 million as of December 31, 2019. This increase was primarily due to $48.4 million in net proceeds from the Company’s June 2020 follow-on offering and draw down of an additional $10 million under its existing debt facility in July 2020, partially offset by cash used in operating activities. Evelo expects that its cash and cash equivalents will enable it to fund its planned operating expenses and capital expenditure requirements into the beginning of the third quarter of 2021.
Research and Development Expenses: R&D expenses were $14.9 million for the three months ended September 30, 2020, compared to $15.6 million for the three months ended September 30, 2019. The decrease of $0.7 million was primarily due to decrease in platform expenses and oncology program spend primarily driven by COVID-19 pandemic impact, partially offset by increases in inflammation programs and personnel costs due to advancing EDP1815 into Phase 2, additional trials and headcount increase in R&D.
General and Administrative Expenses: G&A expenses were $5.3 million for the three months ended September 30, 2020, compared to $5.9 million for the three months ended September 30, 2019. The decrease of $0.6 million was primarily due to lower personnel costs associated with temporarily lower general and administrative headcount and lower professional fees, partially offset by higher facility and office costs due to the impact of the COVID-19 pandemic.
Net Loss: Net loss was $20.9 million for the three months ended September 30, 2020, or $(0.45) per basic and diluted share, as compared to a net loss of $21.6 million for the three months ended September 30, 2019, or $(0.67) per basic and diluted share.
Conference Call
Evelo will host a conference call and webcast at 8:30 a.m. ET today to review third quarter 2020 highlights. To access the call, please dial (866) 795-3242 (domestic) or (409) 937-8909 (international) and refer to conference ID 5480508. A live webcast of the event will also be available under "News and Events" in the Investors section of Evelo’s website at View Source The archived webcast will be available on Evelo’s website approximately two hours after the completion of the event and will be available for 30 days following the call.

On October 29, 2020 Lexicon Pharmaceuticals, Inc. (Nasdaq: LXRX), reported financial results for the three months ended September 30, 2020 and provided an update of key milestones (Press release, Lexicon Pharmaceuticals, OCT 29, 2020, View Source [SID1234569327]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

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

                  Schedule Your 30 min Free Demo!

"In the third quarter, we streamlined our operations to prioritize our focus on our advancement of LX9211, a promising drug candidate with potential to become a treatment option for the millions of people living with neuropathic pain. Most people suffering with neuropathic pain experience only limited success with available therapies while enduring substantial side effects," said Lonnel Coats, Lexicon’s president and chief executive officer. "We have commenced our first Phase 2 study in diabetic peripheral neuropathic pain and plan to commence our second Phase 2 study in post-herpetic neuralgia shortly with results for both studies expected by the end of next year."

Third Quarter Highlights

LX9211

Commenced patient dosing in RELIEF-DPN-1, a Phase 2 randomized, placebo-controlled, multi-center clinical study of LX9211 for the treatment of diabetic peripheral neuropathic pain. Enrollment is expected to total approximately 300 patients at 30 U.S. clinical sites.
Preparing to commence an additional Phase 2 study of LX9211 in post-herpetic neuralgia later this year.
Realignment and Debt Reduction

Realignment of the business around LX9211, sotagliflozin and other drug discovery and development programs.
Reduced outstanding debt by more than 90%, including the elimination of its $150 million secured term loan and $75.8 million principal amount of its 5.25% Convertible Senior Notes due 2021.
XERMELO (telotristat ethyl)

XERMELO U.S. net sales were $6.5 million in the third quarter of 2020, reflecting sales during the quarter prior to the completion of the sale of XERMELO and related assets to TerSera Therapeutics LLC on September 8, 2020.
Received $160.4 million in cash at closing of the sale and eligible to receive up to $65 million in additional milestone payments for the development and commercialization of XERMELO in patients with biliary tract cancer and mid-teens royalties on net sales of XERMELO in biliary tract cancer.
Sotagliflozin

Announced topline data from four Phase 3 sotagliflozin studies in type 2 diabetes: SOTA-MONO, SOTA-SU, SOTA-GLIM and SOTA-INS with all four studies meeting their primary objectives of lowering A1C in patients with type 2 diabetes.
Upcoming Milestones

Q4 2020: Initiation of a Phase 2 study for LX9211 in post-herpetic neuralgia.
Q4 2020: Presentation of data from the sotagliflozin SOLOIST and SCORED Phase 3 studies at the American Heart Association Scientific Sessions 2020.
Q4 2021: Phase 2 study results in diabetic peripheral neuropathic pain and in post-herpetic neuralgia.
Third Quarter 2020 Financial Highlights

Revenues: Revenues for the three months ended September 30, 2020 decreased to $6.6 million from $294.4 million for the corresponding period in 2019. The three months ended September 30, 2019 included collaborative revenues of $260.0 million from the termination of the alliance with Sanofi and recognition of the remaining amount of $23.5 million allocated to performance obligations from the initial agreement with Sanofi. Net product revenues for the three months ended September 30, 2020 consisted of $6.5 million from net sales of XERMELO in the U.S.

Cost of Sales: Cost of sales related to sales of XERMELO for the three months ended September 30, 2020 and 2019 were $0.6 million.

Research and Development (R&D) Expenses: Research and development expenses for the three months ended September 30, 2020 increased to $40.1 million from $26.7 million for the corresponding period in 2019, primarily due to increases in external clinical development costs related to sotagliflozin subsequent to the termination of the alliance with Sanofi.

Selling, General and Administrative (SG&A) Expenses: Selling, general and administrative expenses for the three months ended September 30, 2020 decreased to $12.0 million from $13.9 million for the corresponding period in 2019.

Gain on Sale of XERMELO: A gain of $132.8 million was recognized for the three months ended September 30, 2020 from the sale of XERMELO and related assets to TerSera.

Net Income: Net income for the three months ended September 30, 2020 was $82.6 million, or $0.71 per diluted share, as compared to net income of $226.1 million, or $1.95 per diluted share, in the corresponding period in 2019. For the three months ended September 30, 2020 and 2019, net loss included non-cash, stock-based compensation expense of $1.9 million and $3.6 million, respectively.

Cash and Investments: As of September 30, 2020, Lexicon had $111.4 million in cash and investments, as compared to $271.7 million as of December 31, 2019.

Conference Call and Webcast Information

Lexicon management will hold a live conference call and webcast today at 8:00 am ET / 7:00 am CT to review its financial and operating results and to provide a general business update. The dial-in number for the conference call is (888) 645-5785 (U.S./Canada) or (970) 300-1531 (international). The conference ID for all callers is 7787988. The live webcast and replay may be accessed by visiting Lexicon’s website at View Source An archived version of the webcast will be available on the website for 14 days.

About LX9211

LX9211 is a potent, orally delivered, selective small molecule inhibitor of AAK1, a target with a pain phenotype discovered and extensively characterized in an alliance with Bristol Myers Squibb. Preclinical studies of LX9211 demonstrated central nervous system penetration and reduction in pain behavior in models of neuropathic pain without affecting opiate pathways. Lexicon holds exclusive research, development and commercialization rights to LX9211 and additional compounds acting through AAK1 under the alliance.

About Sotagliflozin

Discovered using Lexicon’s unique approach to gene science, sotagliflozin is an oral dual inhibitor of two proteins responsible for glucose regulation known as sodium-glucose co-transporter types 1 and 2 (SGLT1 and SGLT2). SGLT1 is responsible for glucose absorption in the gastrointestinal tract, and SGLT2 is responsible for glucose reabsorption by the kidney. Sotagliflozin is approved in the European Union (EU) for use as an adjunct to insulin therapy to improve blood sugar (glycemic) control in adults with type 1 diabetes with a body mass index ≥ 27 kg/m2, who could not achieve adequate glycemic control despite optimal insulin therapy, but has not yet been commercially launched.

On October 29, 2020 Calithera Biosciences, Inc. (Nasdaq: CALA), a clinical-stage biotechnology company focused on discovering and developing novel small molecule drugs for the treatment of cancer and other life-threatening diseases, reported that the Company’s third quarter 2020 financial results will be released on Thursday, November 5, 2020 (Press release, Calithera Biosciences, OCT 29, 2020, View Source [SID1234569326]). Company management will host a conference call on Thursday, November 5, 2020 at 2:00 p.m. Pacific Time/ 5:00 p.m. Eastern Time to discuss the financial results and other recent corporate highlights.

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

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

                  Schedule Your 30 min Free Demo!

The press release and live audio webcast can be accessed via the Investor section of the Company’s website at www.calithera.com. The conference call can be accessed by dialing (855) 783-2599 (domestic) or (631) 485-4877 (international) and refer to conference ID 6869011. Please log in approximately 5-10 minutes before the event to ensure a timely connection. The archived webcast will remain available for replay on Calithera’s website for 30 days.

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.

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

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

                  Schedule Your 30 min Free Demo!

"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])

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

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

                  Schedule Your 30 min Free Demo!

"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.