On July 24, 2019 Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, reported its financial results for the second quarter ended June 29, 2019 (Press release, Thermo Fisher Scientific, JUL 24, 2019, View Source [SID1234537693]).

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Second Quarter 2019 Highlights

Second quarter revenue increased 4% to $6.32 billion.
Second quarter GAAP diluted earnings per share (EPS) increased 50% to $2.77.
Second quarter adjusted EPS increased 11% to $3.04.
Strengthened our mass spectrometry leadership with new instruments, workflows and software, highlighted by two new-generation Thermo Scientific Orbitrap systems – the Exploris 480 and Eclipse Tribrid – and a new workflow to advance biotherapeutics, called the HR Multi-Attribute Method. In genetic analysis, we launched the Applied Biosystems QuantStudio 6 and 7 Pro Real-Time PCR systems to automate qPCR workflows.
Continued to expand our bioproduction capabilities to meet customer demand for biologics, committing $50 million to add manufacturing capacity for single-use technologies at our facilities in the U.S. and Europe, and establishing a Bioprocessing Collaboration Center at our Pharma Services site in St. Louis, Missouri.
Opened Customer Experience Center in Seoul, South Korea, to showcase our depth of capabilities for life sciences applications and create a hub for customers to work with our experts and facilitate strategic partnerships within Korea’s scientific community.
Significantly expanded our CDMO capabilities for pharma and biotech customers, completing the acquisition of Brammer Bio, a leader in viral vector manufacturing for gene and cell therapy, for $1.7 billion and announcing our intent to acquire a GlaxoSmithKline site in Cork, Ireland, for the production of complex Active Pharmaceutical Ingredients (APIs).
Completed our previously announced divestiture of the Anatomical Pathology business for $1.14 billion.
Adjusted EPS, adjusted operating income, adjusted operating margin and free cash flow are non-GAAP measures that exclude certain items detailed later in this press release under the heading "Use of Non-GAAP Financial Measures."

"We’re pleased to deliver very strong second-quarter results," said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific. "Our team executed well in the quarter and we made great progress with our growth strategy to set our company up for an even stronger future.

"It was an outstanding quarter for technology innovation, and we are especially excited about the launch of two new Orbitrap systems – the Exploris 480 and Eclipse Tribrid – that extend our legacy of breakthrough mass spectrometry. In Asia-Pacific and emerging markets, we continued to capitalize on our leading position, highlighted by strong performance in China.

"We also further strengthened our value proposition for pharma and biotech customers, completing our acquisition of Brammer Bio and announcing our intent to acquire a site from GSK to expand our capacity for complex API manufacturing."

Casper added, "We’ve made excellent progress through the halfway point in the year, which positions us to achieve an outstanding 2019."

Second Quarter 2019

Revenue for the quarter grew 4% to $6.32 billion in 2019, versus $6.08 billion in 2018. Organic revenue growth was 5%; acquisitions increased revenue by 1% and currency translation decreased revenue by 2%.

As previously disclosed, in the final week of the quarter, the company experienced an outage in one of its data centers that caused delays in the processing of certain orders and shipments. This resulted in some second quarter activity shifting to the third quarter. Thermo Fisher estimates that the outage had a negative impact on total company organic revenue growth of approximately 1% in the second quarter, primarily affecting the Analytical Instruments Segment.

GAAP Earnings Results

GAAP diluted EPS in the second quarter of 2019 increased 50% to $2.77, versus $1.85 in the same quarter last year. GAAP operating income for the second quarter of 2019 grew to $1.50 billion, compared with $0.94 billion in the year-ago quarter. GAAP operating margin increased to 23.7%, compared with 15.4% in the second quarter of 2018. GAAP results for the second quarter of 2019 reflect the gain on the sale of the company’s Anatomical Pathology business during the quarter.

Non-GAAP Earnings Results

Adjusted EPS in the second quarter of 2019 increased 11% to $3.04, versus $2.75 in the second quarter of 2018. Adjusted operating income for the second quarter of 2019 grew 6% compared with the year-ago quarter. Adjusted operating margin was 23.5%, compared with 23.1% in the second quarter of 2018.

2019 Guidance Update

Thermo Fisher is raising its 2019 revenue and earnings guidance primarily to reflect stronger operational performance. The company is raising its revenue guidance to a new range of $25.30 to $25.50 billion versus its previous guidance of $25.17 to $25.47 billion. This would result in 4 to 5% revenue growth over 2018. The company is raising its adjusted EPS guidance to a new range of $12.16 to $12.26, versus its previous guidance of $12.08 to $12.22, for 9 to 10% growth year over year.

Segment Results

Management uses adjusted operating results to monitor and evaluate performance of the company’s four business segments, as highlighted below. Since these results are used for this purpose, they are also considered to be prepared in accordance with GAAP.

Life Sciences Solutions Segment

In the second quarter of 2019, Life Sciences Solutions Segment revenue grew 9% to $1.71 billion, compared with revenue of $1.57 billion in the second quarter of 2018. Segment adjusted operating margin increased to 35.6%, versus 33.3% in the 2018 quarter.

Analytical Instruments Segment

Analytical Instruments Segment revenue grew 1% to $1.32 billion in the second quarter of 2019, compared with revenue of $1.31 billion in the second quarter of 2018. Segment adjusted operating margin was 21.6%, versus 22.2% in the 2018 quarter.

Specialty Diagnostics Segment

Specialty Diagnostics Segment revenue increased 1% to $0.94 billion in the second quarter of 2019, compared with revenue of $0.93 billion in the second quarter of 2018. Segment adjusted operating margin was 25.7%, versus 27.2% in the 2018 quarter.

Laboratory Products and Services Segment

In the second quarter of 2019, Laboratory Products and Services Segment revenue grew 3% to $2.63 billion, compared with revenue of $2.55 billion in the second quarter of 2018. Segment adjusted operating margin was 13.1%, versus 13.2% in the 2018 quarter.

Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including adjusted EPS, adjusted operating income and adjusted operating margin, which exclude certain acquisition-related costs, including charges for the sale of inventories revalued at the date of acquisition and significant transaction costs; restructuring and other costs/income; and amortization of acquisition-related intangible assets. Adjusted EPS also excludes 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, the impact of significant tax audits or events and the results of discontinued operations. 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 also use a non-GAAP measure, free cash flow, which is operating cash flow, excluding net capital expenditures, and also excludes operating cash flows from discontinued operations to provide a view of the continuing operations’ ability to generate cash for use in acquisitions and other investing and financing activities. We believe that the use of non-GAAP measures helps investors to gain a better understanding of our core operating results and future prospects, consistent with how management measures and forecasts the company’s performance, especially when comparing such results to previous periods or forecasts.

For example:

We exclude costs and tax effects associated with restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to these restructuring activities are not indicative of our normal operating costs.

We exclude certain acquisition-related costs, including charges for the sale of inventories revalued at the date of acquisition and significant transaction costs. We exclude these costs because we do not believe they are indicative of our normal operating costs.

We exclude the expense and tax effects associated with the amortization of acquisition-related intangible assets because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives of 3 to 20 years. Based on acquisitions closed through the end of the second quarter of 2019, adjusted EPS will exclude approximately $3.30 of expense for the amortization of acquisition-related intangible assets. Exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies.

We also exclude certain gains/losses and related tax effects, the impact of significant tax audits or events (such as changes in deferred taxes from enacted tax rate changes or the estimated initial impacts of U.S. tax reform legislation), which are either isolated or cannot be expected to occur again with any predictability and that we believe are not indicative of our normal operating gains and losses. For example, we exclude gains/losses from items such as the sale of a business or real estate, gains or losses on significant litigation-related matters, gains on curtailments of pension plans, the early retirement of debt and discontinued operations.

We also report free cash flow, which is operating cash flow, excluding net capital expenditures, and also excludes operating cash flows from discontinued operations to provide a view of the continuing operations’ ability to generate cash for use in acquisitions and other investing and financing activities.

Thermo Fisher’s management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring the company’s core operating performance and comparing such performance to that of prior periods and to the performance of our competitors. Such measures are also used by management in their financial and operating decision-making and for compensation purposes.

The non-GAAP financial measures of Thermo Fisher’s results of operations and cash flows included in this press release are not meant to be considered superior to or a substitute for Thermo Fisher’s results of operations prepared in accordance with GAAP. Reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in the accompanying tables. Thermo Fisher does not provide GAAP financial measures on a forward-looking basis because we are unable to predict with reasonable certainty and without unreasonable effort items such as the timing and amount of future restructuring actions and acquisition-related charges as well as gains or losses from sales of real estate and businesses, the early retirement of debt and the outcome of legal proceedings. The timing and amount of these items are uncertain and could be material to Thermo Fisher’s results computed in accordance with GAAP.

Conference Call

Thermo Fisher Scientific will hold its earnings conference call today, July 24, 2019, at 8:30 a.m. Eastern time. To listen, dial (877) 273-7122 within the U.S. or (647) 689-5496 outside the U.S. You may also listen to the call live on our website, www.thermofisher.com, by clicking on "Investors." You will find this press release, including the accompanying reconciliation of non-GAAP financial measures and related information, in that section of our website under "Financial Results." An audio archive of the call will be available under "Webcasts and Presentations" through Friday, August 9, 2019.

On July 24, 2019 X4 Pharmaceuticals, Inc. (Nasdaq: XFOR), a clinical-stage biopharmaceutical company focused on the development of novel therapeutics for the treatment of rare diseases, reported that the management team is scheduled to present at the 39th Annual Canaccord Genuity Growth Conference, and to conduct one-on-one meetings at the BTIG Biotechnology Conference 2019 (Press release, X4 Pharmaceuticals, JUL 24, 2019, View Source [SID1234537710]).

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Details related to the team’s participation are as follows:

Conference:

39th Annual Canaccord Genuity Growth Conference

Location:

Boston, MA

Presentation Date & Time:

August 7th at 3 pm EDT

Conference:

BTIG Biotechnology Conference 2019

Location:

New York, NY

Date:

August 12th

On July 24, 2019 Freenome, a biotechnology company that has pioneered the most comprehensive multiomics platform for early cancer detection through a routine blood draw, reported the close of its $160 million Series B financing, bringing its total financing to $238 million to date (Press release, Freenome, JUL 24, 2019, View Source [SID1234537711]). Freenome will use the proceeds to further the development of its early cancer detection blood test powered by its platform. The Company plans to conduct a pivotal validation study and submit to the U.S. Food and Drug Administration (FDA) and Centers for Medicare & Medicaid Services (CMS) under the Parallel Review Program the first application of its platform in colorectal cancer screening and expand its laboratory infrastructure and software to support its continued growth.

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"The only way to achieve meaningful progress against cancer is to interweave normally disparate fields towards a single mission. And the leadership team at Freenome has built a world-class, multi-disciplinary team of molecular biologists, computational biologists, machine learning scientists, and engineers"

The Series B financing was led by RA Capital Management and Polaris Partners. They were joined by other new investors including Perceptive Advisors, funds and accounts advised by T. Rowe Price Associates, Inc., Roche Venture Fund, Kaiser Permanente Ventures, and the American Cancer Society’s BrightEdge Ventures. Freenome’s existing investors also participated in the financing including Andreessen Horowitz, GV (formerly Google Ventures), Data Collective Venture Capital, Section 32, and Verily Life Sciences (a subsidiary of Alphabet focused on life sciences and healthcare).

"We are fortunate to have an experienced and proven group of biotech and healthcare investors who share our mission of making early detection of cancer a routine part of patient care," said Gabe Otte, Chief Executive Officer of Freenome, "In addition, we are excited to welcome several strategic investors who are committed to our mission. Each brings insight, expertise, and partnership opportunities to accelerate our path to positively impacting patient care."

"Freenome’s work holds much promise and potential," said Bob Crutchfield, Managing Director of the American Cancer Society’s philanthropic impact fund, BrightEdge. "We hope our investment will help lead to accelerated patient access to this technology and better outcomes for cancer patients."

Mr. Otte added, "Since our founding in 2014, we have been focused on building a multi-disciplinary team to achieve our vision of a future where cancer mortality is significantly reduced through early detection matched with the right treatment informed by our blood test. We have already demonstrated promising clinical results at Digestive Disease Week this year, where our cell-free DNA (cfDNA) assay and machine learning approach enabled high sensitivity and specificity in a cohort of mostly early stage colorectal cancer patients. This funding will allow us to execute the necessary validation study for approval and reimbursement coverage of our colorectal cancer screening test, as well as expand our platform to other forms of cancer or immune-driven disease areas in the future."

Freenome’s multiomics platform detects key biological signals from a routine blood draw. The platform integrates assays for cell-free DNA, methylation, and proteins with advanced computational biology and machine learning techniques to identify additive signatures that improve the accuracy for early cancer detection given the molecular subtypes of cancer are heterogeneous in nature. This strategy incorporates a multidimensional view of both tumor- and immune-derived signatures that enables the early detection of cancer, instead of relying only on tumor-derived markers, which may miss the early signs of cancer. Freenome’s first cancer test is for the screening of colorectal cancer, the second deadliest form of cancer in the U.S. When identified early, colorectal cancer has a 90 percent five-year relative survival rate compared to 14 percent when detected at a more advanced stage according to data from the National Cancer Institute’s Surveillance, Epidemiology, and End Results Program.

"The most affordable and effective treatment for metastatic cancer is to detect it early, when the tumor is still small and local, and we can cure it with surgery. It’s with that vision that we have invested in Freenome," said Peter Kolchinsky, Managing Partner of RA Capital. "Freenome’s multiomics platform is unlike anything we’ve seen, and we believe it can unlock the promise of using blood tests to detect and treat cancer early."

"The only way to achieve meaningful progress against cancer is to interweave normally disparate fields towards a single mission. And the leadership team at Freenome has built a world-class, multi-disciplinary team of molecular biologists, computational biologists, machine learning scientists, and engineers," said Amir Nashat, Managing Partner of Polaris Partners. "Having seen the tremendous progress Freenome has made in early cancer detection, we are excited to continue charting that path together."

On July 24, 2019 ArQule, Inc. (Nasdaq: ARQL) reported it will report financial results for the second quarter of 2019 before the market opens on Wednesday, August 7, 2019 (Press release, ArQule, JUL 24, 2019, View Source [SID1234537695]). The Company will hold a conference call and webcast on the same day at 9:00 a.m. ET to discuss these results and provide a general business update.

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The live webcast can be accessed in the "Investors and Media" section of our website, www.arqule.com, under "Events & Presentations." You may also listen to the call by dialing (877) 868-1831 within the U.S. or (914) 495-8595 outside the U.S. A replay will be available two hours after the completion of the call and can be accessed in the "Investors & Media" section of our website, www.arqule.com, under "Events and Presentations."

On July 24, 2019 City of Hope reported that PD-L1 checkpoint inhibitors are a powerful and growing form of immunotherapy used to treat melanoma, kidney cancer, head and neck cancers, Hodgkin’s lymphoma and other cancers (Press release, City of Hope, JUL 24, 2019, View Source [SID1234537712]). The PD-L1 protein is expressed on tumor cells and aids the cancer by signaling to immune cells, such as T cells, to stop working against tumors.

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"We have provided a scientific explanation as to how checkpoint inhibitor therapy can work when there’s no checkpoint expressed on a patient’s cancer cells"

Checkpoint inhibitors, also called anti-PD-L1 monoclonal antibodies, block the PD-L1 protein to help the immune system and, specifically, T cells, do what they’re designed to do, eradicate cancer. However, in some instances, anti-PD-L1 antibodies show anti-tumor activity in patients whose tumors do not express PD-L1.

Now, for the first time, City of Hope scientists have discovered that natural killer (NK) cells provide one reason why anti-PD-L1 antibodies might work when tumor cells do not express PD-L1. The study, published today in Cancer Discovery, found that NK cells can also express PD-L1 in some cancer patients. PD-L1 expression on the NK cells identifies them as charged or highly activated and can demonstrate anti-tumor activity.

Further, when bound by the anti-PD-L1 antibody, the NK cells can kill the tumor cell better regardless of PD-L1 expression on the tumor cells. If an NK cell expressing PD-L1 is treated with a PD-L1 antibody, the interaction activates PD-L1+ NK cells to control the growth of tumors by killing those tumors and by the secretion of cytokines. This demonstrates a novel mechanism of action that provides a significant role for the NK cell and the anti-PD-L1 antibody in anti-tumor activity especially in instances where the tumor cell does not express PD-L1.

"We have provided a scientific explanation as to how checkpoint inhibitor therapy can work when there’s no checkpoint expressed on a patient’s cancer cells," said Jianhua Yu, Ph.D., one of the study’s senior authors, City of Hope professor in the Department of Hematology & Hematopoietic Cell Transplantation, and a Scholar of The Leukemia & Lymphoma Society. "Using checkpoint inhibitors for NK cells with PD-L1 expression can lead to stronger anti-cancer activity, providing us with another powerful therapy against even more cancers."

Michael Caligiuri, M.D., the study’s other senior author, president of City of Hope National Medical Center and Deana and Steve Campbell Physician-in-Chief Distinguished Chair, M.D., noted that NK cells comprise a group of innate immune cells that can attack cancer and viral infections. But there’s been no research on how PD-L1 and NK cells interact against cancer.

"Natural killer cells are the body’s first line of defense against cancer and viral infections," Caligiuri said. "When NK cells detect tumor or viral cells in the body, they have the potential to kill them immediately. But in those with cancer, tumors have developed mechanisms to circumvent NK cells and T cells. We believe PD-L1 expression on NK cells identifies tumors that could be susceptible to destruction by NK cells, thereby providing a new immunotherapeutic avenue to explore."

The scientists studied PD-L1+ and PD-L1- NK cells in both humans and mice with PD-L1- tumors. PD-L1+ NK cells, upon encountering and being activated by NK-susceptible tumor cells, secreted more cytokines and cytolytic granules, which both increased the immune cells’ effectiveness. PD-L1+ NK cells, which can also be generated in the laboratory by culturing with some tumor cells or with cytokines, killed more tumor cells in vitro than NK cells that were PD-L1- or than NK cells that do not see tumor cells or cytokines. These results were able to be repeated in an in vivo mouse model containing human NK cells.

Researchers also found that NK cells from a majority of 79 AML patients examined had expressed moderate to high levels of PD-L1, and those who entered a complete remission from their leukemia had a higher percentage of PD-L1+ NK cells at the time of remission when compared to diagnosis. In contrast, patients who failed to enter a complete response had no change in the percentage of PD-L1+ NK cells at remission when compared to diagnosis.

Because the percentage of PD-L1+ NK cells following chemotherapy correlated with a positive clinical response – in contrast to those AML patients whose NK cells did not express PD-L1 – the study’s authors believe a next step could be a clinical trial for particular AML patients displaying an increase in PD-L1+ NK cells at the time of remission. The trial would include anti-PD-L1 monoclonal antibodies with or without NK cell-activating cytokines, thereby exploiting a novel pathway that is independent of T cells and PD-1, the other target for checkpoint inhibitor therapy.

City of Hope is also planning similar clinical trials for patients with other cancers such as lung cancer.