On February 13, 2020 Alkermes plc (Nasdaq: ALKS) reported financial results for the quarter and year ended Dec. 31, 2019 and provided financial expectations for 2020 (Press release, Alkermes, FEB 13, 2020, View Source [SID1234554281]).

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"2019 was an important year for Alkermes as we took active steps to shape the future of our business and continued to make a real-world impact in the treatment of serious diseases. We made significant progress on three fronts: driving growth in our proprietary product portfolio, advancing and expanding our diversified neuroscience and oncology pipeline, and positioning the business for long-term growth and future profitability," said Richard Pops, Chief Executive Officer of Alkermes. "Looking ahead, our priorities for 2020 are clear as we focus on commercial execution for VIVITROL and ARISTADA, prepare for potential approval and launch of ALKS 3831, advance the development of ALKS 4230, and continue to develop our pipeline of preclinical assets. We remain steadfast in our commitment to be a positive force for change through our science, our medicines, and our advocacy, as we advance patient-centered care."

Quarter Ended Dec. 31, 2019 Financial Highlights

Total revenues for the quarter were $412.7 million. This compared to $315.8 million for the same period in the prior year.

Net loss according to generally accepted accounting principles in the U.S. (GAAP) was $5.4 million for the quarter, or a basic and diluted GAAP loss per share of $0.03. This compared to GAAP net loss of $9.7 million, or a basic and diluted GAAP loss per share of $0.06, for the same period in the prior year.

Non-GAAP net income was $131.4 million for the quarter, or a non-GAAP basic and diluted earnings per share of $0.83. This compared to non-GAAP net income of $54.8 million, or a non-GAAP basic earnings per share of $0.35 and non-GAAP diluted earnings per share of $0.34, for the same period in the prior year.

In October 2019, Alkermes implemented a strategic restructuring plan, which included the elimination of approximately 160 current positions across the organization, a decrease in the company’s expected near-term hiring plans and the implementation of cost-saving measures related to external spend. These efforts are expected to result in cost savings of approximately $150 million in 2020.

In November 2019, Alkermes completed the acquisition of Rodin Therapeutics, Inc. (Rodin), a privately held biopharmaceutical company focused on developing novel, small molecule therapeutics for synaptopathies. At the closing of the transaction, Alkermes made a cash payment of $98.1 million to Rodin’s former security holders. This upfront cash payment was funded by Alkermes’ available cash and was accounted for as an asset acquisition, with $86.6 million of this upfront payment recorded as research and development (R&D) expense in the quarter.

Quarter Ended Dec. 31, 2019 Financial Results

Revenues

Net sales of proprietary products were $149.6 million, compared to $132.7 million for the same period in the prior year.

Net sales of VIVITROL were $92.8 million, compared to $83.8 million for the same period in the prior year, representing an increase of approximately 11%.

Net sales of ARISTADA1 were $56.8 million, compared to $48.8 million for the same period in the prior year, representing an increase of approximately 16%.

Manufacturing and royalty revenues were $107.3 million, compared to $167.4 million for the same period in the prior year.

Manufacturing and royalty revenues from RISPERDAL CONSTA, INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA were $79.1 million, compared to $81.4 million for the same period in the prior year.

Manufacturing and royalty revenues from AMPYRA/FAMPYRA2 were $7.5 million, compared to $38.8 million for the same period in the prior year, due to generic competition to AMPYRA entering the U.S. market in 2018.

Manufacturing and royalty revenues in the fourth quarter of 2018 included $26.7 million related to Alkermes’ share of proceeds from the sale of certain royalty streams by Zealand Pharma A/S related to products using Alkermes technology.

Total revenues also included a $150.0 million milestone payment from Biogen related to the U.S. Food and Drug Administration (FDA) approval of VUMERITY, of which $144.8 million was recorded as license revenue and $5.2 million was recorded as R&D revenue.

R&D revenues were $11.1 million, primarily related to R&D reimbursement from the company’s collaboration with Biogen for VUMERITY and a portion of the milestone payment noted above.

Costs and Expenses

Total operating expenses were $422.7 million, compared to $315.7 million for the same period in the prior year.

R&D expenses were $198.2 million, which included $86.6 million related to the acquisition of Rodin during the fourth quarter. Excluding this R&D charge related to Rodin, R&D expenses were $111.6 million compared to $109.0 million for the same period in the prior year.

Selling, General and Administrative (SG&A) expenses were $154.5 million, compared to $141.2 million for the same period in the prior year, primarily reflecting increased investment in the commercialization of ARISTADA and VIVITROL.

As a result of the restructuring implemented in October 2019, the company recorded a restructuring expense charge of $13.4 million in the fourth quarter of 2019, consisting of one-time termination benefits for employee severance, benefits and related costs.

"Our 2019 results reflect volume growth of VIVITROL and ARISTADA, continued strength of our royalty and manufacturing portfolio and investment in the commercialization of our products and our research and development pipeline," commented James Frates, Chief Financial Officer of Alkermes. "We enter 2020 well positioned to drive growth of our proprietary product portfolio and advance our pipeline of novel oncology and neuroscience candidates. Our financial expectations for 2020 reflect anticipated net

sales growth of our proprietary products and operating expenses in line with the predicted impact of the strategic restructuring that we implemented in the fourth quarter of 2019, reflecting our commitment to non-GAAP profitability while investing in the long-term growth of the company."

Calendar Year 2019 Financial Highlights

Total revenues increased 7% to $1.17 billion in 2019, which included VIVITROL net sales of $335.4 million, ARISTADA net sales of $189.1 million, and the $150.0 million milestone payment from Biogen related to the approval of VUMERITY. This compared to total revenues of $1.09 billion in 2018, which included VIVITROL net sales of $302.6 million, ARISTADA net sales of $147.7 million and license revenues of $48.4 million from Biogen. Please see the tables at the end of this press release for a detailed breakdown of the revenues from our key commercial products.

GAAP net loss was $196.6 million, or a basic and diluted GAAP loss per share of $1.25, for 2019. This compared to a GAAP net loss of $139.3 million, or a basic and diluted GAAP loss per share of $0.90, for 2018.

Non-GAAP net income was $112.2 million, or a non-GAAP basic and diluted earnings per share of $0.71, for 2019, and excludes the impact of the acquisition of Rodin and the restructuring. This compared to non-GAAP net income of $97.8 million, or a non-GAAP basic earnings per share of $0.63 and non-GAAP diluted earnings per share of $0.61, for 2018.

At Dec. 31, 2019, Alkermes recorded cash, cash equivalents and total investments of $614.4 million, compared to $620.0 million at Dec. 31, 2018. At Dec. 31, 2019, the company’s total debt outstanding was $277.1 million, compared to $279.3 million at Dec. 31, 2018.

Recent Events:

ALKS 3831

In January 2020, the FDA accepted for review the company’s New Drug Application (NDA) seeking approval of ALKS 3831 (olanzapine/samidorphan) for the treatment of schizophrenia and for the treatment of bipolar I disorder, and assigned the NDA a Prescription Drug User Fee Act (PDUFA) target action date of Nov. 15, 2020.

VUMERITY

In October 2019, the FDA approved VUMERITY, a novel oral fumarate with a distinct chemical structure, for the treatment of relapsing forms of multiple sclerosis in adults, including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease. Biogen holds the exclusive worldwide license to commercialize VUMERITY. In November 2019, Alkermes received a $150 million milestone payment from Biogen related to the approval of VUMERITY.

ALKS 4230

In November 2019, Alkermes presented preliminary clinical data from the ARTISTRY-1 phase 1/2 study investigating intravenous administration of ALKS 4230 as monotherapy and in combination with pembrolizumab in adults with advanced solid tumors, and study design details and preliminary safety data from the ARTISTRY-2 phase 1/2 study evaluating subcutaneous administration of ALKS 4230 as monotherapy and in combination with pembrolizumab at the 2019 Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) Annual Meeting.

HDAC-Inhibitor Platform

In November 2019, Alkermes announced the acquisition of Rodin, a privately held biopharmaceutical company focused on developing novel, small molecule therapeutics

for synaptopathies, which expanded Alkermes’ neuroscience development efforts into a wide range of neurodegenerative disorders.

Financial Expectations for 2020

The following outlines the company’s financial expectations for 2020, which reflect the expected impact of the strategic restructuring implemented in 2019. All line items are according to GAAP, except as otherwise noted.

Revenues: The company expects total revenues to range from $1.03 billion to $1.08 billion. Excluding license and R&D revenues from Biogen of approximately $195 million related to the development and approval of VUMERITY recorded in 2019, this represents revenue growth of approximately 8%. Included in this total revenue expectation, Alkermes expects VIVITROL net sales to range from $340 million to $355 million, and ARISTADA net sales to range from $220 million to $235 million.

Cost of Goods Manufactured and Sold: The company expects cost of goods manufactured and sold to range from $185 million to $195 million.

Research and Development (R&D) Expenses: The company expects R&D expenses to range from $405 million to $430 million.

Selling, General and Administrative (SG&A) Expenses: The company expects SG&A expenses to range from $535 million to $560 million.

Amortization of Intangible Assets: The company expects amortization of intangibles to be approximately $40 million.

Net Interest Expense: The company expects interest expense and interest income to offset one another.

Income Tax Expense: The company expects income tax expense of up to $10 million.

GAAP Net Loss: The company expects GAAP net loss to range from $130 million to $160 million, or a basic and diluted loss per share of $0.82 to $1.01, based on a weighted average share count of approximately 159 million shares outstanding.

Non-GAAP Net Income: The company expects non-GAAP net income to range from $40 million to $70 million, or a non-GAAP basic earnings per share of $0.25 to $0.44, based on a weighted average basic share count of approximately 159 million shares outstanding and a non-GAAP diluted earnings per share of $0.25 to $0.43, based on a weighted average diluted share count of approximately 161 million shares outstanding.

Share-Based Compensation: The company expects share-based compensation of approximately $110 million.

Capital Expenditures: The company expects capital expenditures to range from $45 million to $55 million.

Conference Call

Alkermes will host a conference call and webcast presentation with accompanying slides at 8:00 a.m. ET (1:00 p.m. GMT) on Thursday, Feb. 13, 2020, to discuss these financial results and provide an update on the company. The webcast may be accessed on the Investors section of Alkermes’ website at www.alkermes.com. The conference call may be accessed by dialing +1 877 407 2988 for U.S. callers and +1 201 389 0923 for international callers. In addition, a replay of the conference call will be available from 11:00 a.m. ET (4:00 p.m. GMT) on Thursday, Feb. 13, 2020, through Thursday, Feb. 20, 2020, and may be accessed by visiting Alkermes’ website or by dialing +1 877 660 6853 for U.S. callers and +1 201 612 7415 for international callers. The replay conference ID is 13698323.

On February 13, 2020 Five Prime Therapeutics, Inc. (NASDAQ: FPRX), a clinical-stage biotechnology company focused on developing immune modulators and precision therapies for solid tumor cancers, reported that it will report its fourth quarter and full year 2019 operational and financial results on Thursday, February 27, 2020 after the U.S. financial markets close (Press release, Five Prime Therapeutics, FEB 13, 2020, View Source [SID1234554314]). Five Prime will also host a conference call and live audio webcast on Thursday, February 27, 2020 at 4:30 p.m. (ET) / 1:30 p.m. (PT) to provide a general business update and dicuss the company’s financial results.

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The live audio webcast may be accessed through the "Events & Presentations" page in the "Investors" section of the company’s website at www.fiveprime.com. Alternatively, participants may dial (877) 878-2269 (domestic) or (253) 237-1188 (international) and refer to conference ID: 3872638.

The archived conference call will be available on Five Prime’s website beginning approximately two hours after the event and will be archived and available for replay for at least 30 days after the event.

On February 13, 2020 Decipher Biosciences, a commercial-stage precision oncology company committed to improving patient care, initially focused on urologic cancers, reported that a Decipher GRID molecular subtyping signature, studied in patients from the phase III, randomized controlled trial, CHAARTED, successfully predicted which prostate cancer patients diagnosed with metastatic hormone sensitive prostate cancer (mHSPC) benefited from the addition of chemotherapy to androgen deprivation hormone therapy (Press release, Decipher Biosciences, FEB 13, 2020, View Source [SID1234554330]).

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The standard of care treatment for patients with mHSPC is androgen deprivation hormone therapy with the option for additional systemic therapy, such as taxane chemotherapy. Optimal treatment selection for these patients, however, remains challenging without knowledge of how each patient will respond. The Decipher GRID signature has demonstrated that patients with specific molecular subtypes have varying responses to systemic therapies, and investigators from the practice-changing CHAARTED trial used the signature to profile tumor tissue from trial participants and to identify which patients would receive the most benefit from the addition of taxane chemotherapy.

The investigators found that patients with the luminal B molecular subtype derived the most benefit from the addition of taxane chemotherapy, with a 55% reduction in risk of death, adding 22 months of median survival. In the trial population tested, 48% of the patients were found to have the luminal B molecular subtype. Patients with the remaining molecular subtypes received no significant survival benefit from the addition of taxane chemotherapy.

"Identifying which patients will benefit from chemotherapy is one of the most important clinical questions in the management of metastatic prostate cancer," said Christopher Sweeney, MBBS, a medical oncologist and professor of medicine at Dana-Farber Cancer Institute. "The ability to identify these patients at diagnosis is a very important step towards improving patient outcomes and accelerating the inclusion of novel drugs into the standard of care."

Results will be presented February 13, 2020, at the Genitourinary Cancer Symposium Oral Abstract A session:

Hamid A, et al. Luminal B subtype as a predictive biomarker of docetaxel benefit for newly diagnosed metastatic hormone sensitive prostate cancer (mHSPC): A correlative study of E3805 CHAARTED. Abstract #162

Findings from nine other studies of Decipher tests will be presented at the Genitourinary Cancer Symposium:

Ganguly S, et al. Tumor cell intrinsic androgen biosynthesis by 3β-hydroxy steroid dehydrogenase (HSD3B1) to modulate radiosensitivity in prostate cancer cells. Abstract #349

Grist E, et al. Multiregion expression profiling of prostate cancer from men randomized in the STAMPEDE trial: Stage I results of a multistage biomarker analysis. Abstract #349

Gupta S et al. Results from BLASST-1 (Bladder Cancer Signal Seeking Trial) of nivolumab, gemcitabine, and cisplatin in muscle invasive bladder cancer (MIBC) undergoing cystectomy. Abstract #439

Feng FY, et al. Transcriptome profiling of NRG Oncology/RTOG 9601: Validation of a prognostic genomic classifier in salvage radiotherapy prostate cancer patients from a prospective randomized trial. Abstract #276

King M, et al. INTREPId (INTermediate Risk Erection Preservation Trial): A randomized trial of radiation therapy and darolutamide for prostate cancer. Abstract #TPS384

Muralidhar V, et al. Clinical-genomic sub-classification of high-risk prostate cancer: Implications for tailoring therapy and clinical trial design. Abstract #337

Necchi A, et al. Association of an immune-gene signature with pathologic response and outcome after neoadjuvant pembrolizumab (pembro), compared to neoadjuvant chemotherapy (NAC), in muscle-invasive bladder cancer (MIBC). Abstract #533

Necchi A, et al. Development of a composite biomarker-based calculator to predict the probability of pathologic complete response (pT0) after neoadjuvant pembrolizumab (pembro) in muscle invasive bladder cancer (MIBC). Abstract #539

Shahait M, et al. Head-to-head comparison between decipher and prolaris tests: Two commercially available post-prostatectomy genomic tests. Abstract #348
About Decipher Prostate RP and Decipher GRID

Our Decipher Prostate RP genomic tests are currently marketed and sold to physicians treating prostate cancer through the adjuvant therapy decision for patients who have received a radical prostatectomy and are being considered for additional therapy. The test reports the Decipher score which prognosticates a patient’s risk of metastasis within five years. The Decipher score is intended to improve clinical decision making by helping physicians identify patients who have high risk of metastasis and require more intensive therapy or who have low risk of metastasis and can reduce treatment intensity. We have obtained Medicare coverage for patients, including for those who have been diagnosed with adverse pathology following a radical prostatectomy and are being considered for additional therapy. Decipher Prostate RP can help guide physicians to better select the appropriate therapy for a specific patient, which in turn can result in improved patient outcomes.

Decipher GRID is our Real-World Evidence genomic database containing over 75,000 urologic cancer transcriptomes matched to patient demographics and including clinical trial outcome data, which is one of the largest and well-annotated urologic cancer genomic databases in the world. Decipher GRID’s patient data is derived from decades of clinical trials and is continuously being expanded through a growing community of pharmaceutical and academic partners. The diversity of clinical sample inputs, ranging from global clinical trials to standard-of-care practices in urban, suburban and rural centers, help provide a comprehensive view of the future and current states of the practice of urologic cancer care. We leverage Decipher GRID outputs to partner with investigators and pharmaceutical companies to help identify patient populations that might benefit from earlier use of proprietary drugs or combination therapeutic strategies, or that are prime candidates for novel therapeutics. Decipher GRID is our proprietary engine that drives product development for us, and informs the product development efforts for our pharmaceutical partners.

On February 13, 2020 Bristol-Myers Squibb Company (NYSE: BMY) reported that the U.S. Food and Drug Administration (FDA) has accepted for Priority Review its Biologics License Application (BLA) for lisocabtagene maraleucel (liso-cel), the company’s autologous anti-CD19 chimeric antigen receptor (CAR) T-cell immunotherapy with a defined composition of purified CD8+ and CD4+ CAR T cells for the treatment of adult patients with relapsed or refractory (R/R) large B-cell lymphoma after at least two prior therapies (Press release, Bristol-Myers Squibb, FEB 13, 2020, View Source [SID1234554259]). The FDA has set a Prescription Drug User Fee Act (PDUFA) goal date of August 17, 2020.

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"There remains a critical need for additional therapies in large B-cell lymphoma, particularly for relapsed or refractory patients," said Stanley Frankel, M.D., senior vice president, Cellular Therapy Development, Bristol-Myers Squibb. "Based on the TRANSCEND NHL 001 data, liso-cel has the potential to expand treatment options for those affected by this aggressive blood cancer who did not respond to initial therapies or whose disease has relapsed. This BLA acceptance and Priority Review designation is an important step as we work to improve treatment for these patients in need."

The BLA, submitted by Juno Therapeutics, a wholly owned subsidiary of Bristol-Myers Squibb Company, is based on the safety and efficacy results from the TRANSCEND NHL 001 trial, evaluating liso-cel in 268 patients with R/R large B-cell lymphoma, including diffuse large B-cell lymphoma (DLBCL), high-grade lymphoma, primary mediastinal B-cell lymphoma and Grade 3B follicular lymphoma. TRANSCEND NHL 001 is the largest study of CD19-directed CAR T cells to support a BLA to date and was recently the subject of an oral presentation at the 61st American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting and Exposition.

According to the FDA, a Priority Review designation will direct overall attention and resources to the evaluation of applications for drugs that, if approved, would be significant improvements in the safety or effectiveness of the treatment, diagnosis, or prevention of serious conditions when compared to standard applications.

Liso-cel was previously granted Breakthrough Therapy and Regenerative Medicine Advanced Therapy designations by the FDA for R/R aggressive large B-cell non-Hodgkin lymphoma, including DLBCL, not otherwise specified (de novo or transformed from indolent lymphoma), PMBCL or Grade 3B FL, and Priority Medicines (PRIME) scheme by the European Medicines Agency for R/R DLBCL.

Liso-cel is an investigational compound that is not approved for use in any country.

About Large B-cell Lymphoma

Diffuse large B-cell lymphoma (DLBCL) is the most common of large B-cell lymphomas. It is an aggressive form of non-Hodgkin lymphoma (NHL), accounting for three out of every five cases. Approximately one-third of patients with DLBCL relapse after receiving first-line treatment, and about 10% have refractory disease. Historically, median life expectancy for patients who relapse or are refractory to current standard of care treatments is approximately six months.

Bristol-Myers Squibb: Advancing Cancer Research

At Bristol-Myers Squibb, patients are at the center of everything we do. The goal of our cancer research is to increase quality, long-term survival and make cure a possibility. We harness our deep scientific experience, cutting-edge technologies and discovery platforms to discover, develop and deliver novel treatments for patients.

Building upon our transformative work and legacy in hematology and Immuno-Oncology that has changed survival expectations for many cancers, our researchers are advancing a deep and diverse pipeline across multiple modalities. In the field of immune cell therapy, this includes registrational CAR T-cell agents for numerous diseases, and a growing early-stage pipeline that expands cell and gene therapy targets, and technologies. We are developing cancer treatments directed at key biological pathways using our protein homeostasis platform, a research capability that has been the basis of our approved therapies for multiple myeloma and several promising compounds in early- to mid-stage development. Our scientists are targeting different immune system pathways to address interactions between tumors, the microenvironment and the immune system to further expand upon the progress we have made and help more patients respond to treatment. Combining these approaches is key to delivering new options for the treatment of cancer and addressing the growing issue of resistance to immunotherapy. We source innovation internally, and in collaboration with academia, government, advocacy groups and biotechnology companies, to help make the promise of transformational medicines a reality for patients.

About Lisocabtagene Maraleucel (liso-cel)

Liso-cel is an investigational chimeric antigen receptor (CAR) T-cell therapy designed to target CD19, which is a surface glycoprotein expressed during normal B-cell development and maintained following malignant transformation of B cells. Liso-cel aims to target CD19-expressing cells through a CAR construct that includes an anti-CD19 single-chain variable fragment (scFv) targeting domain for antigen specificity, a transmembrane domain, a 4-1BB costimulatory domain hypothesized to increase T-cell proliferation and persistence, and a CD3-zeta T-cell activation domain. The defined composition of CAR-positive viable T-cells (consisting of CD8 and CD4 components) in liso-cel may reduce product variability; however, the clinical significance of defined composition is unknown.

About TRANSCEND NHL 001

TRANSCEND NHL 001 is an open-label, multicenter, pivotal phase 1 study to determine the safety, antitumor activity, and pharmacokinetics of liso-cel in patients with R/R B-cell NHL, including DLBCL, HGL, PMBCL, Grade 3B FL. Mantle cell lymphoma is investigated in a separate cohort. The primary outcome measures included treatment-related adverse events, dose-limiting toxicities and objective response rate. Key secondary outcome measures included complete response rate, duration of response, and progression-free survival. The TRANSCEND program is a broad clinical program evaluating liso-cel in multiple disease states and treatment stages.

On February 13, 2020 Bio-Rad Laboratories, Inc. (NYSE: BIO and BIOb), a global leader of life science research and clinical diagnostic products, reported financial results for the fourth quarter and full year ended December 31, 2019 (Press release, Bio-Rad Laboratories, FEB 13, 2020, View Source [SID1234554315]).

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Fourth-quarter 2019 net sales were $624.4 million, an increase of 1.2 percent compared to $616.8 million reported for the fourth quarter of 2018. On a currency-neutral basis, quarterly sales increased 2.3 percent compared to the same period in 2018. Fourth-quarter gross margin was 52.9 percent compared to 53.9 percent during the fourth quarter in 2018. As previously disclosed, we experienced a cyberattack on our network on December 5, 2019. We immediately took affected systems offline as part of our comprehensive response to contain the activity. We have since resumed normal operations, although this occurrence did have an impact on sales and operations during December 2019.

Life Science segment net sales for the fourth quarter were $242.0 million, an increase of 1.0 percent compared to the same period in 2018. On a currency-neutral basis, Life Science segment sales increased by 1.8 percent compared to the same quarter in 2018. Currency-neutral sales growth was primarily driven by growth of Process Media, Droplet Digital PCR and Food Safety products. On a geographic view, the sales increase was due to growth in North America and Europe.

Clinical Diagnostics segment net sales for the fourth quarter were $379.0 million, an increase of 1.6 percent compared to the same period in 2018. On a currency-neutral basis, net sales were up 2.8 percent compared to the same quarter last year. Currency-neutral sales were primarily attributed to Diabetes, Quality Controls, Autoimmune, and Blood Typing products. Sales increase during the fourth quarter of 2019 was the result of growth in Asia and the Americas.

Net income for the fourth quarter of 2019 was $553.5 million, or $18.31 per share on a diluted basis, compared to a net loss of ($828.5) million, or ($27.73) per share on a diluted basis, during the same period in 2018. Net income for the fourth quarter of 2019 was significantly and favorably impacted by the recognition on the income statement of changes in the fair market value of equity securities reflecting an increase in value of $646.0 million during the fourth quarter of 2019, primarily related to our holdings of Sartorius AG.

The effective tax rate for the fourth quarter of 2019 was 20.9 percent, compared to 20.4 percent for the same period in 2018.

"Aside from the impact of the cyberattack on our network in December, sales performance for the fourth quarter reflected continued momentum of many of our key life science and diagnostic product lines," said Norman Schwartz, Bio-Rad President and Chief Executive Officer. "Looking back at the year, we are encouraged by our overall performance, in particular, our core operating results that provide us with good momentum toward continued topline growth and reaching our long-term goals as we head into 2020."

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements that are part of this press release. Non-GAAP adjustments include amortization of purchased intangibles; acquisition-related expenses and benefits; restructuring, impairment charges and valuation changes in equity-owned investments; gains and losses on equity-method investments; significant litigation charges or benefits and legal costs; and, discrete income tax events and the income tax effect on these non-GAAP adjustments.

Non-GAAP net income and non-GAAP diluted income per share (non-GAAP EPS) are non-GAAP measures that exclude certain items detailed later in this press release under the heading "Non-GAAP Reporting."

Non-GAAP net income for the fourth quarter of 2019 was $70.0 million, or $2.32 per share on a diluted basis, compared to $63.1 million, or $2.09 per share on a diluted basis, during the same period in 2018. The non-GAAP effective tax rate for the fourth quarter of 2019 was 17.7 percent, compared to 28.7 percent for the same period in 2018. The lower rate in 2019 was largely driven by favorable regulatory guidance relating to U.S. Tax reform issued in the fourth quarter of 2019.

The following table represents a reconciliation of Bio-Rad’s reported net income and diluted income per share to non-GAAP net income and non-GAAP diluted income per share for the three months and for the full year ended December 31, 2019 and 2018:

Full Year 2019 Results

On a reported basis, net sales for the full year of 2019 increased 1.0 percent to $2,311.7 million compared to $2,289.4 million for the full year of 2018. On a currency-neutral basis, net sales grew 3.3 percent. Full-year reported net sales for the Life Science segment were $885.9 million, an increase of 2.8 percent compared to 2018. On a currency-neutral basis sales increased 4.6 percent versus 2018. Full-year reported net sales for the Clinical Diagnostics segment were $1,412.0 million, flat compared to 2018, or an increase of 2.8 percent on a currency-neutral basis. Full-year gross margin was 54.4 percent, compared to 53.4 percent during the same period in 2018.

Net income for 2019 was $1,758.7 million, or $58.27 per share on a fully diluted basis, compared to $365.6 million, or $12.10 per share, respectively, during the same period in 2018. This significant increase was primarily due to the change in fair market value of our equity securities in 2019 primarily related to our holdings of Sartorius AG.

The effective tax rate in 2019 was 22.2 percent compared to 28.7 percent in 2018. The tax rate in 2019 and 2018 was driven by the large unrealized gain in equity securities. The rate in 2018 was also impacted by our accounting for U.S. Tax reform and non-deductible goodwill impairment.

2019 Full-Year Highlights

Full-year sales were $2,311.7 million compared to $2,289.4 million for the full year of 2018. After normalizing for the impact of currency, full-year sales increased 3.3 percent.
Year-to-date net income for 2019 was $1,758.7 million, or $58.27 per share on a fully diluted basis, compared to $365.6 million, or $12.10 per share, respectively, during the same period in 2018.
In February, Bio-Rad’s QXDx AutoDG ddPCR System and QXDx BCR-ABL %IS Kit were the industry’s first digital PCR products to receive U.S. Food and Drug Administration (FDA) clearance. The system uses Bio-Rad’s Droplet Digital PCR (ddPCR) technology to monitor and quantitate the molecular response of chronic myeloid leukemia patients undergoing tyrosine kinase inhibitor therapy.
During the second quarter, Bio-Rad announced the launch of an innovative test to aid in the diagnosis of Lyme disease with the FDA clearance of its BioPlex 2200 Lyme Total Assay. Also during the second quarter, Bio-Rad’s IH-500 automated random access system for blood typing and screening, received FDA 510(k) clearance.
In April, Bio-Rad named Ilan Daskal as Executive Vice President and Chief Financial Officer and Andrew Last as Executive Vice President and Chief Operating Officer.
In June, Bio-Rad announced the launch of its scATAC-Seq solution, a single-cell assay for transposase-accessible chromatin using sequencing, offering high capture efficiency and sensitivity for profiling of gene regulation of individual human cells.
In August, Bio-Rad acquired Exact Diagnostics, a leading provider of a broad range of molecular diagnostics controls. With this acquisition, Bio-Rad expanded its line of quality control products in the area of transplant, respiratory, virology, microbiology, sexually transmitted infections, and vector-borne diseases.
In November, Bio-Rad installed its QX ONE Droplet Digital PCR System at select customer labs prior to the official product launch. The system automates the company’s Droplet Digital technology into a single integrated instrument designed for drug development and manufacturing quality control as well as other highly critical testing environments.
2020 Financial Outlook

For the full year 2020, the company anticipates currency-neutral revenue growth of approximately 4.5 to 5.25 percent and improved profitability with an estimated non-GAAP operating margin of 13.8 to 14.3 percent. Management will discuss this outlook in greater detail on the fourth-quarter and full-year 2019 financial results conference call.

"Looking ahead to 2020, we expect another year of progress driven by a combination of healthy markets, new products, and a focus on operating efficiencies," Mr. Schwartz said. "We continue to pursue our goal of 20 percent adjusted EBITDA run rate by the end of the year."

Non-GAAP Reporting

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including non-GAAP net income and non-GAAP EPS, which exclude amortization of acquisition-related intangible assets, certain acquisition-related expenses and benefits, restructuring charges, asset impairment charges, valuation changes of equity owned investments, gains and losses on equity-method investments, and significant legal-related charges or benefits and associated legal costs. Non-GAAP net income and non-GAAP EPS also exclude certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, tax provisions/benefits related to the previous items, and significant discrete tax events. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods.

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, forecasting and planning for future periods, and determining payments under compensation programs. We consider the use of the non-GAAP measures to be helpful in assessing the performance of the ongoing operation of our business. We believe that disclosing non-GAAP financial measures provides useful supplemental data that, while not a substitute for financial measures prepared in accordance with GAAP, allows for greater transparency in the review of our financial and operational performance. We also believe that disclosing non-GAAP financial measures provides useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. More specifically, management adjusts for the excluded items for the following reasons:

Amortization of purchased intangible assets: we do not acquire businesses and assets on a predictable cycle. The amount of purchase price allocated to purchased intangible assets and the term of amortization can vary significantly and are unique to each acquisition or purchase. We believe that excluding amortization of purchased intangible assets allows the users of our financial statements to better review and understand the historic and current results of our operations, and also facilitates comparisons to peer companies.

Acquisition-related expenses and benefits: we incur expenses or benefits with respect to certain items associated with our acquisitions such as transaction costs; professional fees for assistance with the transaction; valuation or integration costs; changes in the fair value of contingent consideration; gain or loss on settlement of pre-existing relationships with the acquired entity; or adjustments to purchase price. We exclude such expenses or benefits as they are related to acquisitions and have no direct correlation to the operation of our on-going business.

Restructuring, impairment charges, valuation changes in equity owned investments and gains and losses on equity-method investments: we incur restructuring and impairment charges on individual or groups of employed assets, charges and benefits arising from valuation changes in equity owned investments and gains and losses on equity-method investments, which arise from unforeseen circumstances and/or often occur outside of the ordinary course of our on-going business. Although these events are reflected in our GAAP financials, these unique transactions may limit the comparability of our on-going operations with prior and future periods.

Significant litigation charges or benefits and legal costs: we may incur charges or benefits as well as legal costs in connection with litigation and other contingencies unrelated to our core operations. We exclude these charges or benefits, when significant, as well as legal costs associated with significant legal matters, because we do not believe they are reflective of on-going business and operating results.

Income tax expense: we estimate the tax effect of the excluded items identified above to determine a non-GAAP annual effective tax rate applied to the pretax amount in order to calculate the non-GAAP provision for income taxes. We also adjust for items for which the nature and/or tax jurisdiction requires the application of a specific tax rate or treatment.

From time to time in the future, there may be other items excluded if we believe that doing so is consistent with the goal of providing useful information to investors and management.

There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact on our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP in the United States. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.

Conference Call and Webcast

Management will discuss fourth quarter and full year ended December 31, 2019 results in a conference call at 2 PM Pacific Time (5 PM Eastern Time) February 13, 2020. Interested parties may access the call at 855-779-9068 within the U.S. or 631-485-4862 outside the U.S., Conference ID: 1397614. You may also listen to the conference call via a webcast that is available in the "Investor Relations" section of our website under "Quarterly Results" at www.bio-rad.com. The webcast will be available for up to a year.