On February 4, 2020 McKesson Corporation (NYSE:MCK) reported results for the third quarter ended December 31, 2019 (Press release, McKesson, FEB 4, 2020, View Source [SID1234553845]).

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Fiscal 2020 Third-Quarter and Year-to-Date Result Summary

1Reflects continuing operations attributable to McKesson, net of tax

2Represents a non-GAAP financial measure; refer to the reconciliations of non-GAAP financial measures included in accompanying schedules

"We delivered solid operating performance and we are pleased to report third-quarter adjusted earnings results ahead of our expectations," said Brian Tyler, chief executive officer. "McKesson’s unwavering focus on strategic and operational execution is demonstrated in the adjusted operating profit growth we reported in the third quarter across our core operating segments. Additionally, we have deployed meaningful capital toward share repurchases year-to-date, delivering further value to our shareholders. Our outlook for fiscal 2020 Adjusted EPS remains unchanged from the prior guidance we provided on January 13th, 2020."

Third-quarter revenues were $59.2 billion, up 5% from a year ago. On an FX-adjusted basis, revenues grew 6%, primarily driven by growth in the U.S. Pharmaceutical and Specialty Solutions segment, largely due to branded pharmaceutical price increases and higher volumes from retail national account customers.

Third-quarter earnings per diluted share of $1.06 included a pre- and post-tax charge of $282 million within our European Pharmaceutical Solutions segment for the remeasurement to fair value of assets and liabilities held for sale related to the expected formation of a new German wholesale joint venture with Walgreens Boots Alliance.

Third-quarter Adjusted Earnings per diluted share was $3.81 compared to $3.40 a year ago, an increase of 12%, primarily driven by growth in the U.S. Pharmaceutical and Specialty Solutions, Medical Surgical and European segments and a lower share count, partially offset by the previously anticipated increase in corporate expenses and a higher tax rate. Prior year third-quarter results included a pre-tax charge of $60 million related to a customer bankruptcy, partially offset by a $17 million pre-tax reversal of an accrued estimated liability related to the New York State Opioid Stewardship Act. Excluding the impact of these prior year items from Adjusted Earnings, third-quarter adjusted results per diluted share increased approximately 7% year-over-year.

For the first nine months of the fiscal year, McKesson returned $2.2 billion of cash to shareholders via $1.9 billion of common stock repurchases and $222 million of dividend payments. During the first nine months of the fiscal year, McKesson used cash from operations of $280 million, and invested $338 million internally, resulting in negative free cash flow of $618 million.

U.S. Pharmaceutical and Specialty Solutions Segment

Third-quarter revenues were $46.9 billion, up 6%, driven primarily by branded pharmaceutical price increases and higher volumes from retail national account customers, partially offset by branded to generic conversions.
Third-quarter operating profit was $687 million and operating margin was 1.46%. Adjusted operating profit was $658 million, up 11% from a year ago. Prior year third-quarter results included a $60 million pre-tax charge related to a customer bankruptcy, partially offset by a $17 million pre-tax reversal of an accrued estimated liability related to the New York State Opioid Stewardship Act. Excluding the net $43 million impact of these prior year items, adjusted operating profit increased approximately 3%, driven by continued growth in the specialty businesses. Adjusted operating margin was 1.40%, up 6 basis points.
European Pharmaceutical Solutions Segment

Third-quarter revenues were $6.9 billion, flat on a reported basis and up 3% on an FX-adjusted basis, driven primarily by growth in the pharmaceutical distribution business.
Third-quarter operating loss was ($303 million) and operating margin was (4.37)%, primarily driven by a pre- and post-tax charge of $282 million for the remeasurement to fair value of assets and liabilities held for sale related to the expected formation of a new German wholesale joint venture with Walgreens Boots Alliance. Adjusted operating profit was $80 million, up 16%, and adjusted operating margin was 1.15%. On an FX-adjusted basis, adjusted operating profit was $82 million, up 19%, and adjusted operating margin was 1.16%, up 16 basis points, driven in part by expense rationalization.
Medical-Surgical Solutions Segment

Third-quarter revenues were $2.1 billion, up 6%, driven primarily by growth in the Primary Care business, largely due to higher pharmaceutical volumes and an early start to influenza season.
Third-quarter operating profit was $124 million and operating margin was 5.79%. Adjusted operating profit was $184 million, up 8%, and adjusted operating margin was 8.59%, up 14 basis points. The year-over-year increase primarily reflects organic growth in the Primary Care business.
Other remaining businesses

Third-quarter revenues were $3.2 billion, up 6% on a reported basis and up 5% on an FX-adjusted basis, primarily driven by growth in the Canadian business.
Third-quarter operating profit was $61 million. Adjusted operating profit was $214 million, down 4% on both a reported and FX-adjusted basis, as increased investment spend within the MRxTS business was partially offset by growth in the Canadian business.
Company Updates

On February 4, 2020, McKesson’s wholly-owned subsidiary, PF2 SpinCo, Inc., filed a registration statement with the Securities and Exchange Commission (SEC) relating to a potential exit of the company from its investment in the Change Healthcare joint venture.
McKesson was selected by the Department of Veterans Affairs to continue to serve as the prime pharmaceutical provider when the current contract expires in August 2020.
On December 12, 2019, McKesson and Walgreens Boots Alliance announced an agreement to create a joint venture that is expected to combine their respective pharmaceutical wholesale businesses in Germany.
For the seventh year in a row, McKesson was honored as one of the "Best Places to Work for LGBTQ Equality" by the Human Rights Campaign (HRC) Foundation, achieving 100 percent on the HRC’s 2020 Corporate Equality Index (CEI).
McKesson appointed Nancy Flores as Executive Vice President, Chief Information and Technology Officer effective January 13, 2020, following Kathy McElligott’s announced retirement.
Fiscal 2020 Outlook

McKesson reaffirmed fiscal 2020 Adjusted Earnings per diluted share guidance range of $14.60 to $14.80, which was previously narrowed and raised from $14.00 to $14.60 on January 13, 2020.
Conference Call Details

The company has scheduled a conference call for today, Tuesday, February 4th at 8:00 AM ET to discuss the company’s financial results. A live audio webcast of the conference call will be available on McKesson’s Investor Relations website at View Source The conference call can also be accessed by dialing 786-815-8297. The password is ‘McKesson’. A telephonic replay of this conference call will be available for 14 calendar days. For individuals wishing to listen to the replay, the dial-in number is 404-537-3406 and the pass code is 6206708. An archive of the conference call will also be available on the company’s Investor Relations website at View Source

Non-GAAP Financial Measures

GAAP refers to the U.S. generally accepted accounting principles. This press release includes GAAP financial measures as well as Non-GAAP financial measures, including Adjusted Earnings, FX-Adjusted results and Free Cash Flow which are financial measures not calculated in accordance with GAAP. Refer to the "Supplemental Non-GAAP Financial Information" section of the accompanying financial statement tables for the definitions and usefulness of the Company’s Non-GAAP financial measures and the attached schedules for reconciliations of the differences between the Non-GAAP financial measures and their most directly comparable GAAP financial measures.

The company does not provide forward-looking guidance on a GAAP basis as McKesson is unable to provide a quantitative reconciliation of this forward-looking non-GAAP measure to the most directly comparable forward-looking GAAP measure, without unreasonable effort, because McKesson cannot reliably forecast LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring, impairment and related charges, and other adjustments, which are difficult to predict and estimate. These items are inherently uncertain and depend on various factors, many of which are beyond the company’s control, and as such, any associated estimate and its impact on GAAP performance could vary materially.

On February 4, 2020 Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH) reported financial results for the quarter and year ended December 31, 2019 (Press release, Zimmer Holdings, FEB 4, 2020, View Source [SID1234553861]). The Company reported fourth quarter net sales of $2.126 billion, an increase of 2.6% over the prior year period, and an increase of 3.2% on a constant currency basis. Net sales for the full year were $7.982 billion, an increase of 0.6% over 2018 and an increase of 2.2% on a constant currency basis. Net earnings for the fourth quarter were $321 million and $478 million on an adjusted basis, and for the full year were $1.132 billion and $1.626 billion on an adjusted basis.

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Diluted earnings per share were $1.54 for the fourth quarter and $5.47 for the full year. Adjusted diluted earnings per share were $2.30 for the fourth quarter, an increase of 5.5% over the prior year period, and were $7.87 for the full year, an increase of 3.0% over 2018.

"In 2019 we continued to successfully execute our plan to reposition the company for success, driven by our global team’s focus on our One ZB mission and culture," said Bryan Hanson, President and CEO of Zimmer Biomet. "We continued to invest for growth and drove improved performance in 2019, especially in the second half of the year. We are operating from a position of strength for 2020 and beyond. I am proud of the entire ZB team and their unyielding commitment to the ZB mission and bettering the lives of patients around the world."

Key drivers in the fourth quarter included solid performance from the Americas and Asia Pacific, with continued strong results across our global Knee and Hip businesses. Additionally, ROSA Knee System sales accelerated from the third quarter of 2019.

Please see the attached schedules accompanying this press release for additional details on performance in the quarter, including sales by Zimmer Biomet’s three geographies and six product categories.

Recent Highlights

Fourth quarter launch, positive customer feedback and good momentum for the Persona Revision and Avenir Complete products
The Company began a number of restructuring initiatives, including reorganizing business units to create greater strategic alignment, increased efficiency and improved resource allocation for accelerated growth
Zimmer Biomet named 2019 Medtech Company of the Year by Medical Device and Diagnostic Industry (MD+DI)
Geographic and Product Category Sales

The following sales tables provide results by geography and product category for the three-month period and year ended December 31, 2019, as well as the percentage change compared to the prior year periods, on both a reported basis and a constant currency basis.

Cash Flow and Balance Sheet

Operating cash flow for the fourth quarter was $423 million and free cash flow was $295 million. In the fourth quarter, the Company paid down $161 million of debt, net of debt proceeds, paid $49 million in dividends and declared a dividend of $0.24 per share. Operating cash flow for the full year was $1.586 billion and free cash flow was $1.063 billion. In the full year, the Company paid down $716 million of debt, net of debt proceeds, paid $197 million in dividends and declared dividends of $0.96 per share.

Guidance

The Company is providing the following full-year 2020 financial guidance:

Projected Year Ending December 31, 2020

Expected to be negative in the first half of the year and slightly positive in the second half of the year based on current foreign currency exchange rates

These measures are non-GAAP financial measures for which a reconciliation to the most directly comparable GAAP financial measure is not available without unreasonable efforts. See "Forward-Looking Non-GAAP Financial Measures."

Conference Call

The Company will conduct its fourth quarter and full-year 2019 investor conference call today, February 4, 2020, at 8:30 a.m. Eastern Time. The audio webcast can be accessed via Zimmer Biomet’s Investor Relations website at https://investor.zimmerbiomet.com. It will be archived for replay following the conference call.

On February 4, 2020 OncoSec Medical Incorporated ("OncoSec") (Nasdaq: ONCS), a company developing late-stage intratumoral cancer immunotherapies, reported the publication of data showing that TAVO (plasmid-based interleukin-12) treatment, administered through OncoSec’s electroporation gene delivery system, resulted in regression of injected and non-injected Merkel cell carcinoma (MCC) tumors (Press release, OncoSec Medical, FEB 4, 2020, View Source [SID1234553808]). The study, a pilot with fifteen patients, is featured on the cover of the February issue of Clinical Cancer Research (print edition available here).

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The study showed that all patients successfully received at least one treatment cycle of TAVO via electroporation, OncoSec’s lead product candidate, without significant systemic toxicity and with only transient, mild grade adverse events. Sustained intratumoral expression of IL-12 protein was observed, along with increased tumor-specific CD8+ T cell infiltration, as well as systemic immunologic and clinical responses. In the first cohort (A, n=3), two of three patients were recurrence-free at 44+ and 75+ months, respectively, and one of these patients experienced pathologic complete remission. In the second cohort (B, n=12), overall response rate was 25 percent, with two patients experiencing durable clinical benefit (16 and 55+ months, respectively).

"Achieving the cover study in Clinical Cancer Research is an important milestone, as it further validates the use of TAVO via electroporation as a meaningful immunotherapeutic agent in this cancer setting," stated Christopher G. Twitty, Ph.D., Chief Scientific Officer of OncoSec. "We believe this study reinforces the broad potential to treat multiple types of cancer using TAVO with our proprietary electroporation gene delivery system. We look forward to building on these studies and further investigating TAVO for the immunotherapy of cancer."

On February 4, 2020 IMV Inc. (Nasdaq: IMV; TSX: IMV), a clinical stage biopharmaceutical company pioneering a novel class of immunotherapies, reported that clinical translational data supporting the mechanism of action of its lead compound, DPX-Survivac, will be presented during the 2020 ASCO (Free ASCO Whitepaper)-SITC Clinical Immuno-Oncology Symposium, being held on February 6 – 8, 2020 in Orlando, FL (Press release, IMV, FEB 4, 2020, View Source [SID1234553830]).

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"These translational data continue to validate the mechanism of action of our lead program in advanced ovarian cancer," said Frederic Ors, President and Chief Executive Officer at IMV. "We continue to believe DPX-Survivac may offer significant clinical utility and a potentially meaningful treatment option for patients in this setting, as well as in other hard-to-treat indications in which survivin is highly expressed. We look forward to reporting topline results from our Phase 1b/2 study evaluating DPX-Survivac in advanced ovarian cancer, in the first quarter of 2020."

As part of this analysis, the Company measured systemic immune responses, tumor immune infiltrates and clinical tumor response from pre- and post-treatment patient samples in connection with three Phase 1 and/or Phase 2 clinical studies, each evaluating DPX-Survivac alone or in a combination regimen in patients with platinum sensitive or resistant, advanced ovarian cancer. Highlights from these translational data include:

DPX-Survivac generated survivin-specific T cells in the blood of 80% of patients sampled

Clinical anti-tumor responses were correlated with increased infiltration of T cells into tumors following treatment with DPX-Survivac

DPX-Survivac induced enrichment in T cell, cytotoxic lymphocytes and B cell-specific signatures which correlate with clinical response

Antigen-specific T cells retained their functionality throughout the duration of treatment

DPX-Survivac is currently being evaluated in three Phase 2 studies in advanced ovarian cancer, relapsed/refractory diffuse large B-cell lymphoma and a basket trial of five solid tumors, all of which are expected to report topline results in the first half of 2020.

Poster Presentation Details:

Poster Title: DPX-Survivac, a novel T cell immunotherapy, induces robust T cell responses in advanced ovarian cancer with significant anti-tumor efficacy Presenter: Oliver Dorigo, M.D., Ph.D., Associate Professor of Obstetrics and Gynecology (Oncology), Stanford University Medical Center

Abstract Number: 6 – Poster Session A

Date and Time: Poster will be displayed all day on February 6, 2020

ASCO-SITC has published the official abstracts on its meeting website in advance of the Clinical Immuno-Oncology Symposium on February 3rd, 2020 at 5:00PM EST.

The final conference poster presentation will include additional data collected between the abstract submission on October 15, 2019 and the presentation itself. The poster will be available under Events, Webcasts and Presentations in the investors section of IMV’s website on the day of presentation.

About DPX-Survivac

DPX-Survivac is the lead candidate in IMV’s new class of targeted immunotherapies designed to elicit antigen-specific functional, robust and sustained de novo T cell response. IMV believes this mechanism of action (MOA) is key to generating durable solid tumor regressions. DPX-Survivac consists of five unique HLA-restricted survivin peptides formulated in IMV’s proprietary DPX drug delivery platform and known to induce a cytotoxic CD8+ T cell response against survivin expressing cancer cells.

Survivin, recognized by the National Cancer Institute (NCI) as a promising tumor-associated antigen, is broadly over-expressed in most cancer types and plays an essential role in antagonizing cell death, supporting tumor-associated angiogenesis and promoting resistance to chemotherapies. IMV has identified over 20 cancer indications in which survivin can be targeted by DPX-Survivac.

DPX-Survivac has received Fast Track designation from the U.S. Food and Drug Administration (FDA) as maintenance therapy in advanced ovarian cancer, as well as orphan drug designation status from the U.S. FDA and the European Medicines Agency (EMA) in the ovarian cancer indication.

On February 4, 2020 SIRION Biotech GmbH ("SIRION"), a world leader in viral vector-based gene delivery technologies for gene and cell therapy, and InProTher Aps ("InProTher"), a Danish start up supported by Novo Nordisk Foundation’s BioInnovation Institute (BII), reported a broad licensing agreement which includes coverage of SIRION’s adenovirus technologies to cancer vaccines encoding Endogenous Retrovirus (ERV)-derived antigens for active immunotherapy (Press release, Sirion Therapeutics, FEB 4, 2020, View Source [SID1234553846]). In addition, the companies have agreed to the assignment of ownership rights in a patent application for an adenoviral vector capable of encoding a virus-like particle (VLP), which displays an inactive immune-suppressive domain (ISD). This vaccine shows an improved immune response from either or both of the response pathways initiated by CD4 T cells or CD8 T cells. SIRION and InProTher have been collaborating for over five years in the fields of HPV vaccine development and ERVs.

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InProTher is an immunotherapy company that is applying adenovirus technologies both for cloning large nucleic acids and increasing the yield of replication-incompetent adenoviruses. The goal is to develop the world’s first adaptive immune therapy capable of targeting immunosuppressive genes of ancient retroviruses that normally are dormant in the human genome. The retroviral genes are reactivated in cancer and essential for tumor development. InProTher’s proprietary combination of novel technologies is designed to break tolerance to this unique antigen family, thus providing broad anti-cancer efficacy.

As part of this agreement, SIRION Biotech will receive shares of InProTher Aps, as well as representation on their Board of Directors. The parties have also agreed on milestones and royalties should InProTher’s developments pass clinical development hurdles.

"This innovative cancer vaccine approach holds great promise, and our adenovirus was initially developed for such a vaccination. We congratulate InProTher as they prepare to enter clinical development with the support of the BII," said Dr. Christian Thirion, Chief Executive Officer of SIRION.

Peter J. Holst, Ph.D., Interim CEO and CSO of InProTher, is a former Associate Professor at the University of Copenhagen with long-standing experience in immunology, having made pivotal discoveries in the field. "InProTher’s proprietary combination of novel technologies is designed to break tolerance to this unique antigen family, thus providing broad anti-cancer efficacy. SIRION has been a creative, loyal and responsive partner over the years, and their adenovirus technology is ideally suited to our needs."