Entry into a Material Definitive Agreement

On August 1, 2019 (the "Effective Date"), AVEO Pharmaceuticals, Inc. ("AVEO") reported that it has entered into an amendment (the "Amendment") to the license agreement dated December 21, 2006 (the "KKC Agreement") with Kyowa Kirin Co., Ltd. (formerly Kirin Brewery Co., Ltd.) ("KKC") (Filing, 8-K, AVEO, AUG 1, 2019, View Source [SID1234537983]). Under the KKC Agreement, KKC granted AVEO an exclusive license to research, develop, manufacture and commercialize tivozanib in all human diseases and conditions in the territory licensed to AVEO, which covers all territories in the world except for Asia and the Middle East (the "AVEO Territory"). Pursuant to the Amendment, KKC repurchased the non-oncology rights to tivozanib in the AVEO Territory, excluding the rights AVEO sublicensed to EUSA Pharma (UK) Limited ("EUSA") under the license agreement between AVEO and EUSA dated December 18, 2015.

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In consideration for KKC’s repurchase of the non-oncology rights to tivozanib in the AVEO Territory, KKC has upfront, milestone and royalty payment obligations to AVEO under the Amendment. The Amendment provides that KKC (a) will make an upfront payment of $25.0 million within thirty (30) days after the Effective Date, (b) waives a one-time milestone payment of $18.0 million otherwise payable by AVEO upon AVEO obtaining marketing approval for tivozanib in the U.S., (c) will make milestone payments to AVEO of up to an aggregate of $390.7 million upon the successful achievement of certain development and sales milestones of tivozanib in non-oncology indications, and (d) will make tiered royalty payments to AVEO on net sales of tivozanib in non-oncology indications in the AVEO Territory, which range from high single digit to low double digits as a percentage of net sales. The royalty rate escalates within this range based on increasing tivozanib sales, subject to certain adjustments. KKC’s royalty payment obligations in a particular country in the AVEO Territory begin on the date of the first commercial sale of tivozanib in that country, and end on the later of the expiration date of the last valid claim of a patent application or patent owned by KKC covering tivozanib or 10 years after the date of first commercial sale of tivozanib in non-oncology indications in that country. If KKC sublicenses any of its non-oncology rights to tivozanib to a third party, KKC is required to pay AVEO a percentage of amounts KKC receives from its sublicensees related to the AVEO Territory, including upfront license fees, milestone payments and royalties, but excluding amounts KKC receives in respect of research and development reimbursement payments or equity investments, subject to certain limitations.

The foregoing summary of the Amendment does not purport to be complete and is qualified in its entirety by the full text of the Amendment, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Corcept Therapeutics Announces Second Quarter 2019 Financial Results and Provides Corporate Update

On August 1, 2019 Corcept Therapeutics Incorporated (NASDAQ: CORT), a commercial-stage company engaged in the discovery and development of drugs to treat severe metabolic, oncologic and psychiatric disorders by modulating the effects of the stress hormone cortisol, reported its results for the quarter ended June 30, 2019 (Press release, Corcept Therapeutics, AUG 1, 2019, https://ir.corcept.com/news-releases/news-release-details/corcept-therapeutics-announces-second-quarter-2019-financial [SID1234538008]).

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Financial Highlights

Revenue of $72.3 million, a 16 percent increase from second quarter 2018
GAAP net income of $0.17 per share, compared to $0.14 per share in second quarter 2018
Non-GAAP net income of $0.25 per share, compared to $0.20 per share in second quarter 2018
Cash and investments of $225.7 million, compared to $215.7 million at March 31, 2019
Reaffirmed 2019 revenue guidance of $285 – $315 million
Corcept reported quarterly revenue of $72.3 million, compared to $62.3 million in the second quarter of 2018. Second quarter GAAP net income was $20.2 million, compared to $18.2 million in the same period last year. Excluding non-cash expenses related to stock-based compensation and the utilization of deferred tax assets, together with related income tax effects, non-GAAP net income in the second quarter was $31.0 million, compared to $25.4 million in the second quarter of 2018. A reconciliation of GAAP to non-GAAP net income is included below.

The company reaffirmed its 2019 revenue guidance of $285 – $315 million.

Second quarter operating expenses were $47.6 million, compared to $41.7 million in the second quarter of 2018, primarily due to growth in the number of research and development personnel, increased spending to advance new compounds, and increased spending to formulate and manufacture the selective cortisol modulators relacorilant, exicorilant and miricorilant.

Cash and investments were $225.7 million at June 30, 2019, an increase of $10.0 million from March 31, 2019. This increase was after the expenditure of $17.4 million in the second quarter to repurchase 1.6 million shares of common stock pursuant to Corcept’s stock repurchase program.

"Our Cushing’s franchise had a strong quarter," said Joseph K. Belanoff, MD, Corcept’s Chief Executive Officer. "As they have every year, patients taking Korlym successfully overcame the insurance reauthorization hurdles many of them face in the first quarter. These obstacles do not interrupt their care, because we provide them with free Korlym. They do, however, temporarily reduce our revenue. Meanwhile, our business grew as the number of patients receiving Korlym and the number of physicians prescribing the medication continued to increase."

Clinical Highlights

"It is gratifying to work on development programs that may benefit so many patients," said Andreas Grauer, MD, Corcept’s Chief Medical Officer. "We are advancing our proprietary, selective cortisol modulators in Cushing’s syndrome, solid tumors and metabolic diseases. Our clinical trials in these areas are progressing and we plan to start important new trials later this year and in 2020."

Cushing’s Syndrome

Dosing continues in Phase 3 trial ("GRACE") of relacorilant in patients with Cushing’s syndrome
Placebo-controlled trial of relacorilant to treat patients with less severe Cushing’s syndrome
to begin late this year
GRACE seeks to confirm relacorilant’s positive Phase 2 results and to provide the basis for its approval in the United States and Europe as a treatment for Cushing’s syndrome.1 Patients in relacorilant’s Phase 2 trial exhibited meaningful improvements in glucose control and hypertension – two of Cushing’s syndrome’s most common and pernicious manifestations. The trial also met a wide range of secondary endpoints, including weight loss, liver function, coagulopathy, insulin resistance, cognitive function, mood and quality of life. These results were achieved without instances of Korlym’s significant off-target effects – vaginal bleeding, endometrial thickening and low potassium.2

In the fourth quarter, Corcept plans to start a double-blind, placebo-controlled trial of relacorilant in patients whose Cushing’s syndrome is caused by an adrenal adenoma – an etiology where the effect of medical treatment has not been extensively studied. A controlled study is possible in these patients because their symptoms, while serious, are usually less severe than those experienced by patients with other etiologies of the disorder. The trial will enroll approximately the same number of patients as the GRACE trial at sites in the United States and Europe. Most of these sites are also participating in GRACE.

Metabolic Disease

Phase 1b trial underway in reduction of antipsychotic-induced weight gain; results expected late this year
Phase 2 trial in reversal of recent antipsychotic-induced weight gain planned to start late this year
Corcept’s Phase 1b trial in the reduction of weight-gain caused by antipsychotic medication is on track to produce results late this year. Approximately 60 healthy subjects will receive olanzapine (Eli Lily’s Zyprexa) and either miricorilant or placebo for two weeks, with the primary endpoint being change in weight. "We modeled this trial on the successful placebo-controlled studies3 we conducted with Korlym," said Dr. Grauer. "Unfortunately, Korlym’s off-target effects preclude its development for such a common disorder. Miricorilant is a better potential medication because it does not bind to the progesterone receptor. Activity at the progesterone receptor is what causes Korlym’s off-target effects. We look forward to completing this trial and starting one double-blind, placebo-controlled Phase 2 trial in patients later this year and another in 2020."

Corcept is also advancing miricorilant as a treatment for NASH, a serious and widespread liver disorder, and plans to start a double-blind, placebo-controlled Phase 2 trial in 2020.

Solid Tumors

Phase 3 trial of relacorilant plus nab-paclitaxel in patients with metastatic pancreatic cancer planned
to start late this year
European Medicines Agency Committee for Orphan Medicinal Products (COMP) recommends orphan drug designation for relacorilant to treat metastatic pancreatic cancer
"At the American Society of Clinical Oncologists (ASCO) (Free ASCO Whitepaper) meeting this June, we presented data from our Phase 1/2 study of relacorilant plus the taxane nab-paclitaxel (Celgene’s Abraxane)," said Dr. Grauer. "Seven of 25 patients with metastatic, pancreatic cancer and five of 11 patients with advanced ovarian cancer achieved "durable disease control," meaning their tumors either shrank or ceased growing for a period of 16 weeks or longer. Tumor response in two patients with pancreatic disease persisted for more than 50 weeks. One patient’s ovarian tumor disappeared completely; another’s responded for 65 weeks.4Any response to treatment in patients with such advanced disease is surprising. That is especially true in these patients, whose tumors had progressed during multiple lines of prior therapy, including treatments with nab-paclitaxel or another taxane.

"We hope to confirm these findings in larger, more definitive studies. Our 180-patient, placebo-controlled Phase 2 trial in ovarian cancer is enrolling patients. We plan to start a Phase 3 trial in metastatic pancreatic cancer later this year and are seeking FDA guidance regarding the fastest path to approval in that indication. Relacorilant’s designation as an orphan drug for pancreatic cancer in the United States and the European Union will be helpful as our program advances."

On July 18, 2019, the COMP recommended orphan designation of relacorilant for the treatment of pancreatic cancer. The COMP’s letter stated that "relacorilant has the potential to restore tumour sensitivity to taxane therapy. This was demonstrated by non-clinical and clinical results, i.e. the achievement of durable partial responses or disease control in some patients, despite previously failed treatment regimens. The COMP considered that the preliminary clinical data submitted by the sponsor supported the claim [of] significant benefit for the purpose of an initial orphan designation."

The European Commission is expected to adopt the COMP’s recommendation later this year. The FDA designated relacorilant an orphan drug for the treatment of pancreatic cancer in September 2018.

Conference Call

We will hold a conference call on August 1, 2019, at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). To participate, dial 1-888-394-8218 from the United States or 1-323-794-2590 internationally approximately ten minutes before the start of the call (passcode 9712194). A replay will be available through August 15, 2019 at 1-888-203-1112 in the United States and 1-719-457-0820 internationally (passcode 9712194).

Hypercortisolism

Hypercortisolism, often referred to as Cushing’s syndrome, is caused by excessive activity of the hormone cortisol. Endogenous Cushing’s syndrome is an orphan disease that most often affects adults aged 20-50. In the United States, an estimated 20,000 patients have Cushing’s syndrome, with about 3,000 new patients diagnosed each year. Symptoms vary, but most people with Cushing’s syndrome experience one or more of the following manifestations: high blood sugar, diabetes, high blood pressure, upper-body obesity, rounded face, increased fat around the neck, thinning arms and legs, severe fatigue and weak muscles. Irritability, anxiety, cognitive disturbances and depression are also common. Hypercortisolism can affect every organ system in the body and can be lethal if not treated effectively.

KIYATEC Assay Hits the Mark in Study to Predict Patient Response to First Line Ovarian Cancer Drugs

On August 1, 2019 KIYATEC, Inc. reported that results from its prospective, multi-center pilot study, to investigate their assay’s predictive accuracy and correlation to outcome among newly diagnosed ovarian cancer patients, have been published in Scientific Reports. Study findings represent both a preliminary clinical validation for the company’s ovarian cancer assay and a significant developmental milestone for the assay’s technology platform, known as Ex Vivo 3D Cell Culture (EV3D) (Press release, KIYATEC, AUG 1, 2019, View Source [SID1234538040]).

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"For ovarian cancer patients and their physicians, this study represents an important step in demonstrating our ability to deliver a robust predictive assay with the potential to positively support therapeutic decision-making and improve patient outcomes," said Matthew Gevaert, CEO of KIYATEC. "Our mission is to optimize and leverage our EV3D cell culture technology to develop response-predictive clinical assays across a range of solid tumor types and make a difference in the future of cancer care."

In the study, primary tissue from 92 newly diagnosed ovarian cancer patients were prospectively collected and tested for response to National Comprehensive Cancer Network (NCCN)-recommended frontline chemotherapy drugs at KIYATEC’s central laboratory. Assay results were successfully generated for 83 (90%) patient samples. All 92 patients received standard of care chemotherapy (80% adjuvant, 20% neoadjuvant) independent of the KIYATEC drug response prediction test result.

A total of 44 patients (of the 83 patients tested) met minimum follow-up time of 6 months post-chemotherapy for inclusion in this publication. The KIYATEC assay successfully predicted responders (i.e. platinum sensitive) and non-responders (i.e. platinum resistant) with an accuracy of 89% (39/44, p<0.0001).

Investigators also assessed assay accuracy and correlation to outcome among the 35 of 44 (80%) patients who received adjuvant chemotherapy. In this cohort, the KIYATEC assay correctly predicted responders and non-responders with 89% accuracy (31/35, p=0.0004). From date of surgical debulk, progression free survival (PFS) among test subjects predicted to respond to the first line chemotherapy they received was over 20 months v. 9 months for patients predicted not to respond (p=0.01).

"At present, clinicians have no way of knowing, prior to treatment, which of our newly diagnosed or relapsed ovarian cancer patients will respond or not to approved drug therapies," said Larry Maxwell, MD, Chairman of Obstetrics and Gynecology and co-director of Inova’s Women’s Health Integrated Research Center (WHIRC), and an author of the study. "To predict a complex future result with very high accuracy is a meaningful achievement, especially given that sometimes these outcomes take months to define. Similar test performance in larger, follow-on studies would establish this as a go-to tool in cancer drug selection that should help improve patient outcomes in ovarian cancer."

Based on these promising findings, KIYATEC has opened a prospective, pivotal clinical study, 3D-PREDICT (NCT03561207), in 500 patients to further validate EV3D-enabled clinical assays for newly diagnosed and recurrent ovarian cancer (8-drug panel) and glioblastoma (12-drug panel). The study is currently open to enrollment.

IDEXX Laboratories Announces Second Quarter Results

On August 1, 2019 IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in veterinary diagnostics, veterinary practice software and water microbiology testing, reported revenues of $620 million for the second quarter of 2019, an increase of 7% compared to the prior year period on a reported basis, and 9% on an organic basis (Press release, IDEXX Laboratories, AUG 1, 2019, View Source [SID1234538056]).

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Second quarter results were driven by CAG Diagnostics recurring revenue growth of 9% reported and 11% organic, net of an estimated 0.5% growth headwind related to Brexit order timing and equivalent day effects. Global results reflected 10% reported and 13% organic growth in IDEXX VetLab consumables, continued strong double-digit gains in U.S. reference laboratory diagnostic and consulting services revenues, and 8% reported and 9% organic revenue growth in rapid assay products revenues. High IDEXX VetLab consumables revenue growth was supported by a 21% year-over-year increase in Catalyst chemistry analyzer installed base, benefiting from 761 placements at new and competitive accounts in international markets, a 39% year-over-year increase, and 486 Catalyst placements in North America, an 8% year-over-year increase. Overall organic revenue growth results in the second quarter were moderated by comparisons to very strong prior year period instrument placement levels, and flat organic growth in livestock, poultry and dairy ("LPD") revenue, including declines in swine diagnostic testing related to the African swine fever epidemic in China.

Earnings per diluted share ("EPS") was $1.43 for the second quarter, representing reported EPS growth of 16% and comparable constant currency EPS growth of 19%. These results reflected continued strong CAG Diagnostics recurring revenue gains, which supported a higher than projected 140 basis point improvement in operating margins on a reported basis and 120 basis points on a constant currency basis.

The Company is refining its full year 2019 revenue growth outlook to 7.5% – 9% on a reported basis and 9.5% – 10.5% on an organic basis. This reflects adjustments to our reported revenue growth outlook related to updated projections for foreign exchange rate impacts, and a 0.5% reduction to the high end of previous organic growth guidance, incorporating second quarter results. The Company is refining its full year reported revenue growth guidance for CAG Diagnostics recurring revenues to 9% – 10.5% and reinforcing its organic revenue growth guidance of 11% – 12%, consistent with strong year-to-date trends. The Company is raising its 2019 EPS guidance range by $0.05 per share at mid-point to $4.82 – $4.92, reflecting $0.04 per share in benefit from a lower projected effective tax rate from higher share-based compensation tax benefits and $0.02 per share in operational improvement from raised expectations for full year operating margin improvement of 100 – 125 basis points on a constant currency basis and lower interest expense projections. These benefits are partially offset by a $0.01 per share negative impact related to updated foreign exchange rate assumptions. Our updated EPS guidance is for 13% – 15% in reported EPS growth, or 17% – 20% on a comparable constant currency basis, aligned with our long-term performance goals.

"IDEXX business momentum remained strong in the second quarter driven by high organic growth in CAG Diagnostics recurring revenues. The solid performance we continue to deliver is the result of a deep and talented global team, an unrelenting commitment to innovation, a unique multi-modal strategy and our durable recurring revenue business model. We’re well positioned to build on this foundation through the expansion of key initiatives like IDEXX Preventive Care, which is building momentum as a driver of increased diagnostic testing, supporting faster growth for engaged IDEXX customers," said Jay Mazelsky, the Company’s Interim President and Chief Executive Officer.

Second Quarter Performance Highlights

Companion Animal Group

The Companion Animal Group generated 8% reported and 10% organic revenue growth for the quarter, supported by CAG Diagnostics recurring revenue growth of 9% reported and 11% organic.

IDEXX VetLab consumables generated 10% reported and 13% organic revenue growth, net of a combined 1% negative growth impact related to Brexit related stocking orders which benefited the first quarter and reversed in the second quarter, and equivalent day impacts from international holiday timing. IDEXX VetLab consumables growth was supported by ongoing expansion of our global premium instrument installed base, as well as continued strong customer retention, increases in testing utilization and moderate price gains.
Reference laboratory diagnostic and consulting services generated 8% reported and 10% organic revenue growth. These results were driven by continued strong double-digit organic growth in the U.S., reflecting volume gains with existing customers, moderate net price realization and benefits from net customer additions. Global organic revenue growth rates were moderated by consistent mid single-digit revenue gains in international markets.
Rapid assay products generated 8% reported and 9% organic revenue growth, driven by continued volume gains in SNAP 4Dx Plus Tests, supported by planned promotional programs, increasing customer retention rates and moderate net price gains.
Veterinary software, services and diagnostic imaging systems revenue growth increased 9% on a reported basis and 7% on an organic basis, driven by growth in subscription-based service revenues, including continued expansion of our practice management platforms.

Water

Water achieved revenue growth of 6% on a reported basis and 10% on an organic basis in the second quarter, supported by continued strong growth in international markets and mid single-digit gains in the U.S.

Livestock, Poultry and Dairy ("LPD")

LPD revenue declined 5% on a reported basis and was flat on an organic basis for the second quarter, supported by growth in herd health screening and solid increases in pregnancy and poultry testing. These gains were offset by significant declines in swine diagnostic testing related to African swine fever outbreaks in China, and moderate declines in European disease eradication programs.

Gross Profit and Operating Profit

Gross profits increased 8% year-over-year, and gross margin was 57.7%, an increase of 50 basis points compared to prior year period results on a reported basis and 30 basis points on a constant currency basis. Gross margin improvement was driven by mix benefits from strong growth in IDEXX VetLab consumable and rapid assay revenues and lower relative IDEXX VetLab instrument revenue growth, and continued moderate CAG Diagnostics recurring revenue net price gains. Gains in these areas were partially offset by increased investments in reference laboratory capacity and systems, and expanded field software support resources.

Operating margin was 26.5% in the quarter, 140 basis points higher than the prior year period results on a reported basis and 120 basis points on a constant currency basis, supported by gross margin gains and operating expense leverage on high revenue growth. Operating expenses increased 4% on a reported basis and 6% on a constant currency basis, driven by increases in our CAG segment’s sales and marketing costs and research and development spending, with overall expense increases moderated by low constant currency growth in general and administrative costs.

2019 Financial Outlook

The following guidance for 2019 reflects the assumptions that for the remainder of 2019, the value of foreign currencies will remain at the following rates in U.S. dollars:

the euro at $1.11;
the British pound at $1.23;
the Canadian dollar at $0.75; and
the Australian dollar at $0.68;
and relative to the U.S. dollar:

the Japanese yen at ¥110.00;
the Chinese renminbi at RMB 6.97; and
the Brazilian real at R$3.85.
Outlook for 2019

We are refining our 2019 revenue outlook to $2,380 million – $2,410 million, reflecting expectations for reported revenue growth of 7.5% – 9% and organic revenue growth of 9.5% – 10.5%. At mid-point, the updated revenue outlook is $10 million below our previous guidance, including $5 million of impact related to updated foreign exchange estimates and $5 million in operational refinements related to our second quarter results, resulting in a 0.5% reduction to the high end of our earlier organic revenue growth guidance. Our outlook reflects expectations for CAG Diagnostics recurring reported revenue growth of 9% – 10.5% and consistent expectations for organic revenue growth of 11% – 12%. At the foreign exchange rate assumptions in 2019 noted above, we estimate that the effect of the stronger U.S. dollar will reduce full year 2019 reported revenue growth by approximately 1.5% to 2%.

We are updating our 2019 EPS outlook to $4.82 – $4.92 per share, reflecting an increase of $0.05 per share at mid-point, reflecting $0.04 per share of improvement related to updated estimates for share-based compensation tax benefits and $0.02 per share of benefit from improved expectations for full year operating performance supported by higher projected operating margin gains of 100 – 125 basis points on a constant currency basis and lower projected interest expense. For the full year, we now expect a foreign exchange headwind of $0.04 per share, a $0.01 higher impact compared to previously projected impact, net of projected hedge gains of approximately $11.5 million in 2019. The updated outlook represents EPS growth of 13% – 15% on a reported basis, and 17% – 20% on a comparable constant currency growth basis.

The Company continues to project free cash flow at approximately 60% – 65% of net income in 2019, including an estimated $70 million of capital spending related to the completion of our Westbrook, Maine headquarters expansion and the relocation and expansion of our core laboratory in Germany. For 2019, the Company projects capital spending of approximately $160 million – $175 million.

We now expect an effective tax rate of approximately 19.5% – 20%, incorporating expectations for a benefit from share-based compensation accounting of $12 million – $14 million or approximately 250 basis points. We are now projecting a reduction in weighted average shares outstanding of approximately 1%, and interest expense, net of interest income, of approximately $34 million reflecting current and projected borrowings.

Conference Call and Webcast Information

IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (Eastern) to discuss its second quarter 2019 results and management’s outlook. To participate in the conference call, dial 1-800-230-1093 or 1-612-288-0337 and reference confirmation code 470018. Replay of the conference call will be available through Thursday, August 8, 2019 by dialing 1-800-475-6701 or 1-320-365-3844 and referencing replay code 470018. Individuals can access a live webcast of the conference call through a link on the IDEXX website, www.idexx.com/investors. An archived edition of the webcast will be available after 1:00 p.m. (Eastern) on that day via the same link and will remain available for one year.

Intrexon to Announce Second Quarter and First Half 2019 Financial Results on August 8th

On August 1, 2019 Intrexon Corporation (NASDAQ: XON), a leader in the engineering and industrialization of biology to improve the quality of life and health of the planet, reported it will release second quarter and first half 2019 financial results after the market closes on Thursday, August 8th, 2019 (Press release, Intrexon, AUG 1, 2019, View Source [SID1234537985]). The Company will host a conference call that day at 5:30 PM ET to discuss the results and provide a general business update.

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The conference call may be accessed by dialing 1-888-317-6003 (Domestic US), 1-866-284-3684 (Canada), and 1‑412-317-6061 (International) and providing the number 4443860 to join the Intrexon Corporation Call. Participants may also access the live webcast through Intrexon’s website in the Investors section at View Source