On July 25, 2018, Vericel Corporation (the "Company," "Vericel" or "we") amended its Distribution Agreement, dated May 15, 2017 (the "Distribution Agreement") by and between Orsini Pharmaceutical Services, Inc. ("Orsini") and the Company, as previously amended (the "Fourth Amendment") (Filing, 8-K, Vericel, 25 25, 2018, View Source [SID1234528399]).

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The Fourth Amendment amends certain payment terms between the parties, including as a result of termination of the Distribution Agreement. Under the Fourth Amendment, the parties agreed to eliminate Orsini’s right to serve as the Company’s exclusive distributor for MACI as the Company is moving to a limited network of distributors. Orsini remains the exclusive pharmacy supplying MACI for only an enumerated list of Payors (as defined in the Distribution Agreement). Notwithstanding the elimination of Orsini’s exclusivity, if the Company (a) does not submit a fixed number of MACI cases to Orsini prior to June 30, 2019 (and accordingly does not pay the dispensing and administrative fees for such fixed number of cases), and (b) terminates the Distribution Agreement pursuant to the terms of the Fourth Amendment, Orsini will be entitled to increased administrative fees based on such fixed number of cases. The Company will generally be required to pay an amount determined by amounts collected by Orsini and the difference between the fixed number and actual number of cases submitted to Orsini.

The revised payment terms in the Fourth Amendment apply only to a list of existing cases at the time of execution of the Fourth Amendment and any claims submitted after June 15, 2018. The Fourth Amendment includes a provision whereby the Company retains the credit and collection risk from the end customer on implants after June 15, 2018, and Orsini performs the collection activities. Pursuant to the Fourth Amendment, the Company will pay Orsini a dispensing fee on a per implant basis and an administrative fee related to Orsini’s collection performance.

On July 25, 2018 Merck (NYSE:MRK), known as MSD outside the United States and Canada, reported that the pivotal Phase 3 KEYNOTE-048 trial investigating KEYTRUDA (pembrolizumab), Merck’s anti-PD-1 therapy, for first-line treatment of recurrent or metastatic head and neck squamous cell carcinoma (HNSCC), met a primary endpoint of overall survival (OS) as monotherapy in patients whose tumors expressed PD-L1 (Combined Proportion Score (CPS) ≥20) (Press release, Merck & Co, JUL 25, 2018, View Source [SID1234527856]). Based on an interim analysis conducted by the independent Data Monitoring Committee (DMC), treatment with KEYTRUDA monotherapy in these patients resulted in significantly longer OS compared to cetuximab in combination with platinum chemotherapy (cisplatin or carboplatin) plus 5-Fluorouracil (5-FU), the current standard of care for HNSCC in the first-line treatment setting. At the time of the interim analysis, the dual-primary endpoint of progression-free-survival (PFS) for patients whose tumors expressed PD-L1 (CPS≥20) had not been reached. The safety profile of KEYTRUDA in this trial was consistent with that observed in previously reported studies involving patients with HNSCC. These results will be presented at an upcoming medical meeting and submitted to regulatory authorities worldwide.

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Based on the recommendation of the DMC, the trial will continue with no changes to evaluate KEYTRUDA monotherapy and KEYTRUDA in combination with platinum chemotherapy (cisplatin or carboplatin) plus 5-FU.

"This interim analysis of KEYNOTE-048 trial has shown that KEYTRUDA monotherapy has the potential to help patients with head and neck cancer whose tumors express high-levels of PD-L1," said Dr. Roy Baynes, senior vice president and head of global clinical development, chief medical officer, Merck Research Laboratories. "We look forward to presenting these initial results from the KEYNOTE-048 trial at an upcoming medical meeting, and are grateful to the investigators and patients for their continued involvement in this important study."

About KEYNOTE-048

KEYNOTE-048 is a Phase 3, randomized, open-label trial (ClinicalTrials.gov, NCT02358031) designed to investigate KEYTRUDA in the first-line setting as monotherapy or in combination with a platinum chemotherapy (cisplatin or carboplatin) plus 5-Fluorouracil (5-FU), compared to cetuximab with platinum chemotherapy (cisplatin or carboplatin) plus 5-FU. The dual primary endpoints were overall survival (OS) and progression-free survival (PFS)The secondary endpoints of the study were PFS (at 6 months and 12 months), Objective Response Rate (ORR), and Time to Deterioration in Quality of Life Global Health Status/Quality of Life Scales of the European Organization for Research and Treatment of Cancer (EORTC) Quality of Life Questionnaire.

The estimated study enrollment is 825 patients who were randomly assigned to receive KEYTRUDA as monotherapy (KEYTRUDA 200 mg, intravenously on day 1 of each week in 3-week cycles for up to 24 months), or:

KEYTRUDA 200 mg, intravenously on day 1 of each week in 3-week cycles for up to 24 months. plus cisplatin 100 mg/m^2 IV or carboplatin AUC 5 IV (Investigator’s choice) on Day 1 of each week in 3-week cycles (6 cycle maximum); plus 5-FU 1000 mg/m^2/day IV continuous from Day 1-4 of each 3- week cycle (6 cycle maximum); or
Cetuximab on day 1 at a dose of 400 mg/m^2 IV, and then 250 mg/m^2 IV on day 1 of each week until disease progression or unacceptable toxicity; plus cisplatin 100 mg/m^2 IV or carboplatin AUC 5 IV (investigator’s choice) on day 1 of each week in 3-week cycles (6 cycle maximum for platinum-based therapy); plus 5-FU 1000 mg/m^2/day IV continuous from day 1-4 of each 3-week cycle (6 cycle maximum).
About Head and Neck Cancer

Head and neck cancer describes a number of different tumors that develop in or around the throat, larynx, nose, sinuses and mouth. Most head and neck cancers are squamous cell carcinomas that begin in the flat, squamous cells that make up the thin surface layer of the structures in the head and neck. The leading modifiable risk factors for head and neck cancer include tobacco and heavy alcohol use. Other risk factors include infection with certain types of HPV, also called human papillomaviruses. Worldwide, there were approximately 686,000 new cases of head and neck cancer in 2012, and around 376,000 died from this disease. In the U.S., there were an estimated 63,000 new cases diagnosed in 2017.

About KEYTRUDA (pembrolizumab) Injection, 100mg

KEYTRUDA is an anti-PD-1 therapy that works by increasing the ability of the body’s immune system to help detect and fight tumor cells. KEYTRUDA is a humanized monoclonal antibody that blocks the interaction between PD-1 and its ligands, PD-L1 and PD-L2, thereby activating T lymphocytes which may affect both tumor cells and healthy cells.

Merck has the industry’s largest immuno-oncology clinical research program, which currently involves more than 750 trials studying KEYTRUDA across a wide variety of cancers and treatment settings. The KEYTRUDA clinical program seeks to understand the role of KEYTRUDA across cancers and the factors that may predict a patient’s likelihood of benefitting from treatment with KEYTRUDA, including exploring several different biomarkers.

KEYTRUDA (pembrolizumab) Indications and Dosing

Melanoma

KEYTRUDA is indicated for the treatment of patients with unresectable or metastatic melanoma at a fixed dose of 200 mg every three weeks until disease progression or unacceptable toxicity.

Lung Cancer

KEYTRUDA, as a single agent, is indicated for the first-line treatment of patients with metastatic non-small cell lung cancer (NSCLC) whose tumors have high PD-L1 expression [tumor proportion score (TPS) ≥50%] as determined by an FDA-approved test, with no EGFR or ALK genomic tumor aberrations.

KEYTRUDA, as a single agent, is also indicated for the treatment of patients with metastatic NSCLC whose tumors express PD-L1 (TPS ≥1%) as determined by an FDA-approved test, with disease progression on or after platinum-containing chemotherapy. Patients with EGFR or ALK genomic tumor aberrations should have disease progression on FDA-approved therapy for these aberrations prior to receiving KEYTRUDA.

KEYTRUDA, in combination with pemetrexed and carboplatin, is indicated for the first-line treatment of patients with metastatic nonsquamous NSCLC. This indication is approved under accelerated approval based on tumor response rate and progression-free survival. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials.

In metastatic NSCLC, KEYTRUDA is administered at a fixed dose of 200 mg every three weeks until disease progression, unacceptable toxicity, or up to 24 months in patients without disease progression.

When administering KEYTRUDA in combination with chemotherapy, KEYTRUDA should be administered prior to chemotherapy when given on the same day. See also the Prescribing Information for pemetrexed and carboplatin.

Head and Neck Cancer

KEYTRUDA is indicated for the treatment of patients with recurrent or metastatic head and neck squamous cell carcinoma (HNSCC) with disease progression on or after platinum-containing chemotherapy. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials. In HNSCC, KEYTRUDA is administered at a fixed dose of 200 mg every three weeks until disease progression, unacceptable toxicity, or up to 24 months in patients without disease progression.

Classical Hodgkin Lymphoma

KEYTRUDA is indicated for the treatment of adult and pediatric patients with refractory classical Hodgkin lymphoma (cHL), or who have relapsed after three or more prior lines of therapy. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials. In adults with cHL, KEYTRUDA is administered at a fixed dose of 200 mg every three weeks until disease progression or unacceptable toxicity, or up to 24 months in patients without disease progression. In pediatric patients with cHL, KEYTRUDA is administered at a dose of 2 mg/kg (up to a maximum of 200 mg) every three weeks until disease progression or unacceptable toxicity, or up to 24 months in patients without disease progression.

Primary Mediastinal Large B-Cell Lymphoma

KEYTRUDA is indicated for the treatment of adult and pediatric patients with refractory primary mediastinal large B-cell lymphoma (PMBCL), or who have relapsed after 2 or more prior lines of therapy. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in confirmatory trials. KEYTRUDA is not recommended for the treatment of patients with PMBCL who require urgent cytoreductive therapy.

In adults with PMBCL, KEYTRUDA is administered at a fixed dose of 200 mg every three weeks until disease progression, unacceptable toxicity, or up to 24 months in patients without disease progression. In pediatric patients with PMBCL, KEYTRUDA is administered at a dose of 2 mg/kg (up to a maximum of 200 mg) every three weeks until disease progression or unacceptable toxicity, or up to 24 months in patients without disease progression.

Urothelial Carcinoma

KEYTRUDA is indicated for the treatment of patients with locally advanced or metastatic urothelial carcinoma (mUC) who are not eligible for cisplatin-containing chemotherapy and whose tumors express PD-L1 [Combined Positive Score (CPS) ≥10], or in patients who are not eligible for any platinum-containing chemotherapy regardless of PD-L1 status. This indication is approved under accelerated approval based on tumor response rate and duration of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials.

KEYTRUDA is also indicated for the treatment of patients with locally advanced or metastatic urothelial carcinoma (mUC) who have disease progression during or following platinum-containing chemotherapy or within 12 months of neoadjuvant or adjuvant treatment with platinum-containing chemotherapy.

In locally advanced or metastatic urothelial carcinoma, KEYTRUDA is administered at a fixed dose of 200 mg every three weeks until disease progression or unacceptable toxicity, or up to 24 months in patients without disease progression.

Microsatellite Instability-High (MSI-H) Cancer

KEYTRUDA is indicated for the treatment of adult and pediatric patients with unresectable or metastatic microsatellite instability-high (MSI-H) or mismatch repair deficient (dMMR)

solid tumors that have progressed following prior treatment and who have no satisfactory alternative treatment options, or
colorectal cancer that has progressed following treatment with fluoropyrimidine, oxaliplatin, and irinotecan.
This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials. The safety and effectiveness of KEYTRUDA in pediatric patients with MSI-H central nervous system cancers have not been established.

In adult patients with MSI-H cancer, KEYTRUDA is administered at a fixed dose of 200 mg every three weeks until disease progression, unacceptable toxicity, or up to 24 months in patients without disease progression. In children with MSI-H cancer, KEYTRUDA is administered at a dose of 2 mg/kg (up to a maximum of 200 mg) every three weeks until disease progression or unacceptable toxicity, or up to 24 months in patients without disease progression.

Gastric Cancer

KEYTRUDA is indicated for the treatment of patients with recurrent locally advanced or metastatic gastric or gastroesophageal junction (GEJ) adenocarcinoma whose tumors express PD-L1 [Combined Positive Score (CPS) ≥1] as determined by an FDA-approved test, with disease progression on or after two or more prior lines of therapy including fluoropyrimidine- and platinum-containing chemotherapy and if appropriate, HER2/neu-targeted therapy. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials. The recommended dose of KEYTRUDA is a fixed dose of 200 mg every three weeks until disease progression, unacceptable toxicity, or up to 24 months in patients without disease progression.

Cervical Cancer

KEYTRUDA is indicated for the treatment of patients with recurrent or metastatic cervical cancer with disease progression on or after chemotherapy whose tumors express PD-L1 (CPS ≥1) as determined by an FDA-approved test. This indication is approved under accelerated approval based on tumor response rate and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials. The recommended dose of KEYTRUDA is a fixed dose of 200 mg every three weeks until disease progression, unacceptable toxicity or up to 24 months in patients without disease progression.

Selected Important Safety Information for KEYTRUDA

KEYTRUDA can cause immune-mediated pneumonitis, including fatal cases. Pneumonitis occurred in 94 (3.4%) of 2799 patients receiving KEYTRUDA, including Grade 1 (0.8%), 2 (1.3%), 3 (0.9%), 4 (0.3%), and 5 (0.1%) pneumonitis, and occurred more frequently in patients with a history of prior thoracic radiation (6.9%) compared to those without (2.9%). Monitor patients for signs and symptoms of pneumonitis. Evaluate suspected pneumonitis with radiographic imaging. Administer corticosteroids for Grade 2 or greater pneumonitis. Withhold KEYTRUDA for Grade 2; permanently discontinue KEYTRUDA for Grade 3 or 4 or recurrent Grade 2 pneumonitis.

KEYTRUDA can cause immune-mediated colitis. Colitis occurred in 48 (1.7%) of 2799 patients receiving KEYTRUDA, including Grade 2 (0.4%), 3 (1.1%), and 4 (<0.1%) colitis. Monitor patients for signs and symptoms of colitis. Administer corticosteroids for Grade 2 or greater colitis. Withhold KEYTRUDA for Grade 2 or 3; permanently discontinue KEYTRUDA for Grade 4 colitis.

KEYTRUDA can cause immune-mediated hepatitis. Hepatitis occurred in 19 (0.7%) of 2799 patients receiving KEYTRUDA, including Grade 2 (0.1%), 3 (0.4%), and 4 (<0.1%) hepatitis. Monitor patients for changes in liver function. Administer corticosteroids for Grade 2 or greater hepatitis and, based on severity of liver enzyme elevations, withhold or discontinue KEYTRUDA.

KEYTRUDA can cause hypophysitis. Hypophysitis occurred in 17 (0.6%) of 2799 patients receiving KEYTRUDA, including Grade 2 (0.2%), 3 (0.3%), and 4 (<0.1%) hypophysitis. Monitor patients for signs and symptoms of hypophysitis (including hypopituitarism and adrenal insufficiency). Administer corticosteroids and hormone replacement as clinically indicated. Withhold KEYTRUDA for Grade 2; withhold or discontinue for Grade 3 or 4 hypophysitis.

KEYTRUDA can cause thyroid disorders, including hyperthyroidism, hypothyroidism, and thyroiditis. Hyperthyroidism occurred in 96 (3.4%) of 2799 patients receiving KEYTRUDA, including Grade 2 (0.8%) and 3 (0.1%) hyperthyroidism. Hypothyroidism occurred in 237 (8.5%) of 2799 patients receiving KEYTRUDA, including Grade 2 (6.2%) and 3 (0.1%) hypothyroidism.

The incidence of new or worsening hypothyroidism was higher in patients with HNSCC, occurring in 28 (15%) of 192 patients with HNSCC, including Grade 3 (0.5%) hypothyroidism. Thyroiditis occurred in 16 (0.6%) of 2799 patients receiving KEYTRUDA, including Grade 2 (0.3%) thyroiditis. Monitor patients for changes in thyroid function (at the start of treatment, periodically during treatment, and as indicated based on clinical evaluation) and for clinical signs and symptoms of thyroid disorders. Administer replacement hormones for hypothyroidism and manage hyperthyroidism with thionamides and beta-blockers as appropriate. Withhold or discontinue KEYTRUDA for Grade 3 or 4 hyperthyroidism.

KEYTRUDA can cause type 1 diabetes mellitus, including diabetic ketoacidosis, which have been reported in 6 (0.2%) of 2799 patients. Monitor patients for hyperglycemia or other signs and symptoms of diabetes. Administer insulin for type 1 diabetes, and withhold KEYTRUDA and administer antihyperglycemics in patients with severe hyperglycemia.

KEYTRUDA can cause immune-mediated nephritis. Nephritis occurred in 9 (0.3%) of 2799 patients receiving KEYTRUDA, including Grade 2 (0.1%), 3 (0.1%), and 4 (<0.1%) nephritis. Monitor patients for changes in renal function. Administer corticosteroids for Grade 2 or greater nephritis. Withhold KEYTRUDA for Grade 2; permanently discontinue KEYTRUDA for Grade 3 or 4 nephritis.

Immune-mediated rashes, including Stevens-Johnson syndrome (SJS), toxic epidermal necrolysis (TEN) (some cases with fatal outcome), exfoliative dermatitis, and bullous pemphigoid, can occur. Monitor patients for suspected severe skin reactions and based on the severity of the adverse reaction, withhold or permanently discontinue KEYTRUDA and administer corticosteroids. For signs or symptoms of SJS or TEN, withhold KEYTRUDA and refer the patient for specialized care for assessment and treatment. If SJS or TEN is confirmed, permanently discontinue KEYTRUDA.

Immune-mediated adverse reactions, which may be severe or fatal, can occur in any organ system or tissue in patients receiving KEYTRUDA. While immune-mediated adverse reactions usually occur during treatment with PD-1/PD-L1 blocking antibodies, they may occur after discontinuation of treatment. For suspected immune-mediated adverse reactions, ensure adequate evaluation to confirm etiology or exclude other causes. Based on the severity of the adverse reaction, withhold KEYTRUDA and administer corticosteroids. Upon improvement to Grade 1 or less, initiate corticosteroid taper and continue to taper over at least 1 month. Based on limited data from clinical studies in patients whose immune-related adverse reactions could not be controlled with corticosteroid use, administration of other systemic immunosuppressants can be considered. Resume KEYTRUDA when the adverse reaction remains at Grade 1 or less following corticosteroid taper. Permanently discontinue KEYTRUDA for any Grade 3 immune-mediated adverse reaction that recurs and for any life-threatening immune-mediated adverse reaction.

The following clinically significant immune-mediated adverse reactions occurred in less than 1% (unless otherwise indicated) of 2799 patients: arthritis (1.5%), uveitis, myositis, Guillain-Barré syndrome, myasthenia gravis, vasculitis, pancreatitis, hemolytic anemia, sarcoidosis, and encephalitis. In addition, myelitis and myocarditis were reported in other clinical trials, including cHL, and postmarketing use.

Solid organ transplant rejection has been reported in postmarketing use of KEYTRUDA. Treatment with KEYTRUDA may increase the risk of rejection in solid organ transplant recipients. Consider the benefit of treatment with KEYTRUDA vs the risk of possible organ rejection in these patients.

KEYTRUDA can cause severe or life-threatening infusion-related reactions, including hypersensitivity and anaphylaxis, which have been reported in 6 (0.2%) of 2799 patients. Monitor patients for signs and symptoms of infusion-related reactions, including rigors, chills, wheezing, pruritus, flushing, rash, hypotension, hypoxemia, and fever. For Grade 3 or 4 reactions, stop infusion and permanently discontinue KEYTRUDA.

Immune-mediated complications, including fatal events, occurred in patients who underwent allogeneic hematopoietic stem cell transplantation (HSCT) after treatment with KEYTRUDA. Of 23 patients with cHL who proceeded to allogeneic HSCT after KEYTRUDA, 6 developed graft-versus-host disease (GVHD) (one fatal case), and 2 developed severe hepatic veno-occlusive disease (VOD) after reduced-intensity conditioning (one fatal case). Cases of fatal hyperacute GVHD after allogeneic HSCT have also been reported in patients with lymphoma who received a PD-1 receptor–blocking antibody before transplantation. Follow patients closely for early evidence of transplant-related complications such as hyperacute GVHD, Grade 3 to 4 acute GVHD, steroid-requiring febrile syndrome, hepatic VOD, and other immune-mediated adverse reactions, and intervene promptly.

In patients with a history of allogeneic HSCT, acute GVHD, including fatal GVHD, has been reported after treatment with KEYTRUDA. Patients who experienced GVHD after their transplant procedure may be at increased risk for GVHD after KEYTRUDA. Consider the benefit of KEYTRUDA vs the risk of GVHD in these patients.

In clinical trials in patients with multiple myeloma, the addition of KEYTRUDA to a thalidomide analogue plus dexamethasone resulted in increased mortality. Treatment of these patients with a PD-1 or PD-L1 blocking antibody in this combination is not recommended outside of controlled clinical trials.

Based on its mechanism of action, KEYTRUDA can cause fetal harm when administered to a pregnant woman. If used during pregnancy, or if the patient becomes pregnant during treatment, apprise the patient of the potential hazard to a fetus. Advise females of reproductive potential to use highly effective contraception during treatment and for 4 months after the last dose of KEYTRUDA.

In KEYNOTE-006, KEYTRUDA was discontinued due to adverse reactions in 9% of 555 patients with advanced melanoma; adverse reactions leading to discontinuation in more than one patient were colitis (1.4%), autoimmune hepatitis (0.7%), allergic reaction (0.4%), polyneuropathy (0.4%), and cardiac failure (0.4%). Adverse reactions leading to interruption of KEYTRUDA occurred in 21% of patients; the most common (≥1%) was diarrhea (2.5%). The most common adverse reactions with KEYTRUDA vs ipilimumab were fatigue (28% vs 28%), diarrhea (26% with KEYTRUDA), rash (24% vs 23%), and nausea (21% with KEYTRUDA). Corresponding incidence rates are listed for ipilimumab only for those adverse reactions that occurred at the same or lower rate than with KEYTRUDA.

In KEYNOTE-010, KEYTRUDA monotherapy was discontinued due to adverse reactions in 8% of 682 patients with metastatic NSCLC. The most common adverse event resulting in permanent discontinuation of KEYTRUDA was pneumonitis (1.8%). Adverse reactions leading to interruption of KEYTRUDA occurred in 23% of patients; the most common (≥1%) were diarrhea (1%), fatigue (1.3%), pneumonia (1%), liver enzyme elevation (1.2%), decreased appetite (1.3%), and pneumonitis (1%). The most common adverse reactions (occurring in at least 20% of patients and at a higher incidence than with docetaxel) were decreased appetite (25% vs 23%), dyspnea (23% vs 20%), and nausea (20% vs 18%).

In KEYNOTE-021(G1), when KEYTRUDA was administered in combination with carboplatin and pemetrexed (carbo/pem) in advanced nonsquamous NSCLC, KEYTRUDA was discontinued in 10% of 59 patients. The most common adverse reaction resulting in discontinuation of KEYTRUDA (≥2%) was acute kidney injury (3.4%). Adverse reactions leading to interruption of KEYTRUDA occurred in 39% of patients; the most common (≥2%) were fatigue (8%), neutrophil count decreased (8%), anemia (5%), dyspnea (3.4%), and pneumonitis (3.4%). The most common adverse reactions (≥20%) with KEYTRUDA compared to carbo/pem alone were fatigue (71% vs 50%), nausea (68% vs 56%), constipation (51% vs 37%), rash (42% vs 21%), vomiting (39% vs 27%), dyspnea (39% vs 21%), diarrhea (37% vs 23%), decreased appetite (31% vs 23%), headache (31% vs 16%), cough (24% vs 18%), dizziness (24% vs 16%), insomnia (24% vs 15%), pruritus (24% vs 4.8%), peripheral edema (22% vs 18%), dysgeusia (20% vs 11%), alopecia (20% vs 3.2%), upper respiratory tract infection (20% vs 3.2%), and arthralgia (15% vs 24%). This study was not designed to demonstrate a statistically significant difference in adverse reaction rates for KEYTRUDA as compared to carbo/pem alone for any specified adverse reaction.

In KEYNOTE-012, KEYTRUDA was discontinued due to adverse reactions in 17% of 192 patients with HNSCC. Serious adverse reactions occurred in 45% of patients. The most frequent serious adverse reactions reported in at least 2% of patients were pneumonia, dyspnea, confusional state, vomiting, pleural effusion, and respiratory failure. The most common adverse reactions (reported in at least 20% of patients) were fatigue, decreased appetite, and dyspnea. Adverse reactions occurring in patients with HNSCC were generally similar to those occurring in patients with melanoma or NSCLC, with the exception of increased incidences of facial edema (10% all Grades; 2.1% Grades 3 or 4) and new or worsening hypothyroidism.

In KEYNOTE-087, KEYTRUDA was discontinued due to adverse reactions in 5% of 210 patients with cHL, and treatment was interrupted due to adverse reactions in 26% of patients. Fifteen percent (15%) of patients had an adverse reaction requiring systemic corticosteroid therapy. Serious adverse reactions occurred in 16% of patients. The most frequent serious adverse reactions (≥1%) included pneumonia, pneumonitis, pyrexia, dyspnea, GVHD, and herpes zoster. Two patients died from causes other than disease progression; one from GVHD after subsequent allogeneic HSCT and one from septic shock. The most common adverse reactions (occurring in ≥20% of patients) were fatigue (26%), pyrexia (24%), cough (24%), musculoskeletal pain (21%), diarrhea (20%), and rash (20%).

In KEYNOTE-170, KEYTRUDA was discontinued due to adverse reactions in 8% of 53 patients with PMBCL, and treatment was interrupted due to adverse reactions in 15%. Twenty-five percent (25%) of patients had an adverse reaction requiring systemic corticosteroid therapy. Serious adverse reactions occurred in 26% of patients and included: arrhythmia (4%), cardiac tamponade (2%), myocardial infarction (2%), pericardial effusion (2%), and pericarditis (2%). Six (11%) patients died within 30 days of start of treatment. The most common adverse reactions (occurring in ≥20% of patients) were musculoskeletal pain (30%), upper respiratory tract infection and pyrexia (28% each), cough (26%), fatigue (23%), and dyspnea (21%).

In KEYNOTE-052, KEYTRUDA was discontinued due to adverse reactions in 11% of 370 patients with locally advanced or metastatic urothelial carcinoma. The most common adverse reactions (in ≥20% of patients) were fatigue (38%), musculoskeletal pain (24%), decreased appetite (22%), constipation (21%), rash (21%), and diarrhea (20%). Eighteen patients (5%) died from causes other than disease progression. Five patients (1.4%) who were treated with KEYTRUDA experienced sepsis which led to death, and 3 patients (0.8%) experienced pneumonia which led to death. Adverse reactions leading to interruption of KEYTRUDA occurred in 22% of patients; the most common (≥1%) were liver enzyme increase, diarrhea, urinary tract infection, acute kidney injury, fatigue, joint pain, and pneumonia. Serious adverse reactions occurred in 42% of patients, the most frequent (≥2%) of which were urinary tract infection, hematuria, acute kidney injury, pneumonia, and urosepsis.

In KEYNOTE-045, KEYTRUDA was discontinued due to adverse reactions in 8% of 266 patients with locally advanced or metastatic urothelial carcinoma. The most common adverse reaction resulting in permanent discontinuation of KEYTRUDA was pneumonitis (1.9%). Adverse reactions leading to interruption of KEYTRUDA occurred in 20% of patients; the most common (≥1%) were urinary tract infection (1.5%), diarrhea (1.5%), and colitis (1.1%). The most common adverse reactions (≥20%) in patients who received KEYTRUDA vs those who received chemotherapy were fatigue (38% vs 56%), musculoskeletal pain (32% vs 27%), pruritus (23% vs 6%), decreased appetite (21% vs 21%), nausea (21% vs 29%), and rash (20% vs 13%). Serious adverse reactions occurred in 39% of KEYTRUDA-treated patients, the most frequent (≥2%) of which were urinary tract infection, pneumonia, anemia, and pneumonitis.

In KEYNOTE-158, KEYTRUDA was discontinued due to adverse reactions in 8% of 98 patients (in Cohort E) with recurrent or metastatic cervical cancer. Serious adverse reactions occurred in 39% of patients receiving KEYTRUDA. The most frequent serious adverse reactions reported included anemia (7%), fistula, hemorrhage, and infections [except urinary tract infections] (4.1% each). The most common adverse reactions (occurring in ≥20% of patients) were fatigue (43%), musculoskeletal pain (27%), diarrhea (23%), pain and abdominal pain (22% each), and decreased appetite (21%).

It is not known whether KEYTRUDA is excreted in human milk. Because many drugs are excreted in human milk, instruct women to discontinue nursing during treatment with KEYTRUDA and for 4 months after the final dose.

There is limited experience in pediatric patients. In a study, 40 pediatric patients (16 children aged 2 years to younger than 12 years and 24 adolescents aged 12 years to 18 years) with advanced melanoma, lymphoma, or PD-L1–positive advanced, relapsed, or refractory solid tumors were administered KEYTRUDA 2 mg/kg every 3 weeks. Patients received KEYTRUDA for a median of 3 doses (range 1–17 doses), with 34 patients (85%) receiving 2 doses or more. The safety profile in these pediatric patients was similar to that seen in adults treated with KEYTRUDA. Toxicities that occurred at a higher rate (≥15% difference) in these patients when compared to adults under 65 years of age were fatigue (45%), vomiting (38%), abdominal pain (28%), hypertransaminasemia (28%), and hyponatremia (18%).

On July 25, 2018 Takeda Pharmaceutical Company Limited (TSE: 4502) reported that the global, randomized, Phase 3 ALTA-1L (ALK in Lung Cancer Trial of AP26113 in 1st Line) trial met its primary endpoint at the first pre-specified interim analysis, with ALUNBRIG (brigatinib) demonstrating a statistically significant improvement in progression-free survival (PFS) compared to crizotinib in adults with anaplastic lymphoma kinase-positive (ALK+) locally advanced or metastatic non-small cell lung cancer (NSCLC) who had not received a prior ALK inhibitor (Press release, Takeda, JUL 25, 2018, View Source [SID1234527938]). The trial was designed to assess the efficacy and safety of ALUNBRIG in comparison to crizotinib based on evaluation of the primary endpoint of PFS, or length of time from the start of treatment that a patient lives without the disease getting worse. ALUNBRIG is currently not approved as frontline therapy.

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"This represents a major milestone for the ALUNBRIG program. Our goal with ALUNBRIG is to improve the lives of patients with ALK+ NSCLC by furthering the available therapeutic options," said Jesús Gomez-Navarro, M.D., Vice President, Head of Oncology Clinical Research and Development, Takeda. "We are encouraged by the data, which demonstrated a statistically significant improvement in progression-free survival versus crizotinib in patients with ALK+ advanced NSCLC, and look forward to beginning discussions with regulatory authorities as we seek to expand ALUNBRIG’s indication into the frontline setting."

The safety profile associated with ALUNBRIG from the ALTA-1L trial was generally consistent with the existing prescribing information, with no new safety concerns.

The results from this interim analysis will be submitted for presentation at an upcoming medical meeting.

About the ALTA-1L Trial
The Phase 3 ALTA-1L (ALK in Lung Cancer Trial of AP26113 in 1st Line) trial of ALUNBRIG in adults is a global, ongoing, randomized, open-label, comparative, multicenter trial, which enrolled 275 patients with ALK+ locally advanced or metastatic NSCLC who have not received prior treatment with an ALK inhibitor. Patients received either ALUNBRIG, 180 mg once daily with seven-day lead-in at 90 mg once daily, or crizotinib, 250 mg twice daily. Independent Review Committee (IRC)-assessed progression-free survival (PFS) was the primary endpoint. Secondary endpoints included objective response rate (ORR) per RECIST v1.1, intracranial ORR, intracranial PFS, overall survival (OS), safety and tolerability. A total of approximately 198 PFS events are planned at the final analysis of the primary endpoint in order to demonstrate a minimum of six months PFS improvement over crizotinib. The trial is designed with two pre-specified interim analyses for the primary endpoint – one at 50 percent of planned PFS events and one at 75 percent of planned PFS events.

About ALK+ NSCLC
Non-small cell lung cancer (NSCLC) is the most common form of lung cancer, accounting for approximately 85 percent of the estimated 1.8 million new cases of lung cancer diagnosed each year worldwide, according to the World Health Organization. Genetic studies indicate that chromosomal rearrangements in anaplastic lymphoma kinase (ALK) are key drivers in a subset of NSCLC patients. Approximately three to five percent of patients with metastatic NSCLC have a rearrangement in the ALK gene.

Takeda is committed to continuing research and development in NSCLC to improve the lives of the approximately 40,000 patients diagnosed with this serious and rare form of lung cancer worldwide each year.

About ALUNBRIG (brigatinib)
ALUNBRIG is a targeted cancer medicine discovered by ARIAD Pharmaceuticals, Inc., which was acquired by Takeda in February 2017. In April 2017, ALUNBRIG received Accelerated Approval from the U.S. Food and Drug Administration (FDA) for ALK+ metastatic NSCLC patients who have progressed on or are intolerant to crizotinib. This indication is approved under Accelerated Approval based on tumor response rate and duration of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial.

ALUNBRIG received Breakthrough Therapy Designation from the FDA for the treatment of patients with ALK+ NSCLC whose tumors are resistant to crizotinib and was granted Orphan Drug Designation by the FDA for the treatment of ALK+ NSCLC, ROS1+ and EGFR+ NSCLC. A Marketing Authorization Application (MAA) for ALUNBRIG was submitted to the European Medicines Agency (EMA) in February 2017.

The brigatinib clinical development program further reinforces Takeda’s ongoing commitment to developing innovative therapies for people living with ALK+ NSCLC worldwide and the healthcare professionals who treat them. The comprehensive program includes the following clinical trials:

Phase 1/2 trial, which was designed to evaluate the safety, tolerability, pharmacokinetics and preliminary anti-tumor activity of ALUNBRIG
Pivotal Phase 2 ALTA trial investigating the efficacy and safety of ALUNBRIG at two dosing regimens in patients with ALK+ locally advanced or metastatic NSCLC who had progressed on crizotinib
Phase 3 ALTA-1L trial assessing the efficacy and safety of ALUNBRIG in comparison to crizotinib in patients with ALK+ locally advanced or metastatic NSCLC who have not received prior treatment with an ALK inhibitor
Phase 2 single-arm, multicenter study in Japanese patients with ALK+ NSCLC, focusing on patients who have progressed on alectinib
Phase 2 global study evaluating ALUNBRIG in patients with advanced ALK+ NSCLC who have progressed on alectinib or ceritinib
For additional information on the brigatinib clinical trials, please visit www.clinicaltrials.gov.

IMPORTANT SAFETY INFORMATION (U.S.)
WARNINGS AND PRECAUTIONS

Interstitial Lung Disease (ILD)/Pneumonitis: Severe, life-threatening, and fatal pulmonary adverse reactions consistent with interstitial lung disease (ILD)/pneumonitis have occurred with ALUNBRIG. In Trial ALTA (ALTA), ILD/pneumonitis occurred in 3.7% of patients in the 90 mg group (90 mg once daily) and 9.1% of patients in the 90→180 mg group (180 mg once daily with 7-day lead-in at 90 mg once daily). Adverse reactions consistent with possible ILD/pneumonitis occurred early (within 9 days of initiation of ALUNBRIG; median onset was 2 days) in 6.4% of patients, with Grade 3 to 4 reactions occurring in 2.7%. Monitor for new or worsening respiratory symptoms (e.g., dyspnea, cough, etc.), particularly during the first week of initiating ALUNBRIG. Withhold ALUNBRIG in any patient with new or worsening respiratory symptoms, and promptly evaluate for ILD/pneumonitis or other causes of respiratory symptoms (e.g., pulmonary embolism, tumor progression, and infectious pneumonia). For Grade 1 or 2 ILD/pneumonitis, either resume ALUNBRIG with dose reduction after recovery to baseline or permanently discontinue ALUNBRIG. Permanently discontinue ALUNBRIG for Grade 3 or 4 ILD/pneumonitis or recurrence of Grade 1 or 2 ILD/pneumonitis.

Hypertension: In ALTA, hypertension was reported in 11% of patients in the 90 mg group who received ALUNBRIG and 21% of patients in the 90→180 mg group. Grade 3 hypertension occurred in 5.9% of patients overall. Control blood pressure prior to treatment with ALUNBRIG. Monitor blood pressure after 2 weeks and at least monthly thereafter during treatment with ALUNBRIG. Withhold ALUNBRIG for Grade 3 hypertension despite optimal antihypertensive therapy. Upon resolution or improvement to Grade 1 severity, resume ALUNBRIG at a reduced dose. Consider permanent discontinuation of treatment with ALUNBRIG for Grade 4 hypertension or recurrence of Grade 3 hypertension. Use caution when administering ALUNBRIG in combination with antihypertensive agents that cause bradycardia.

Bradycardia: Bradycardia can occur with ALUNBRIG. In ALTA, heart rates less than 50 beats per minute (bpm) occurred in 5.7% of patients in the 90 mg group and 7.6% of patients in the 90→180 mg group. Grade 2 bradycardia occurred in 1 (0.9%) patient in the 90 mg group. Monitor heart rate and blood pressure during treatment with ALUNBRIG. Monitor patients more frequently if concomitant use of drug known to cause bradycardia cannot be avoided. For symptomatic bradycardia, withhold ALUNBRIG and review concomitant medications for those known to cause bradycardia. If a concomitant medication known to cause bradycardia is identified and discontinued or dose adjusted, resume ALUNBRIG at the same dose following resolution of symptomatic bradycardia; otherwise, reduce the dose of ALUNBRIG following resolution of symptomatic bradycardia. Discontinue ALUNBRIG for life-threatening bradycardia if no contributing concomitant medication is identified.

Visual Disturbance: In ALTA, adverse reactions leading to visual disturbance including blurred vision, diplopia, and reduced visual acuity, were reported in 7.3% of patients treated with ALUNBRIG in the 90 mg group and 10% of patients in the 90→180 mg group. Grade 3 macular edema and cataract occurred in one patient each in the 90→180 mg group. Advise patients to report any visual symptoms. Withhold ALUNBRIG and obtain an ophthalmologic evaluation in patients with new or worsening visual symptoms of Grade 2 or greater severity. Upon recovery of Grade 2 or Grade 3 visual disturbances to Grade 1 severity or baseline, resume ALUNBRIG at a reduced dose. Permanently discontinue treatment with ALUNBRIG for Grade 4 visual disturbances.

Creatine Phosphokinase (CPK) Elevation: In ALTA, creatine phosphokinase (CPK) elevation occurred in 27% of patients receiving ALUNBRIG in the 90 mg group and 48% of patients in the 90 mg→180 mg group. The incidence of Grade 3‑4 CPK elevation was 2.8% in the 90 mg group and 12% in the 90→180 mg group. Dose reduction for CPK elevation occurred in 1.8% of patients in the 90 mg group and 4.5% in the 90→180 mg group. Advise patients to report any unexplained muscle pain, tenderness, or weakness. Monitor CPK levels during ALUNBRIG treatment. Withhold ALUNBRIG for Grade 3 or 4 CPK elevation. Upon resolution or recovery to Grade 1 or baseline, resume ALUNBRIG at the same dose or at a reduced dose.

Pancreatic Enzyme Elevation: In ALTA, amylase elevation occurred in 27% of patients in the 90 mg group and 39% of patients in the 90→180 mg group. Lipase elevations occurred in 21% of patients in the 90 mg group and 45% of patients in the 90→180 mg group. Grade 3 or 4 amylase elevation occurred in 3.7% of patients in the 90 mg group and 2.7% of patients in the 90→180 mg group. Grade 3 or 4 lipase elevation occurred in 4.6% of patients in the 90 mg group and 5.5% of patients in the 90→180 mg group. Monitor lipase and amylase during treatment with ALUNBRIG. Withhold ALUNBRIG for Grade 3 or 4 pancreatic enzyme elevation. Upon resolution or recovery to Grade 1 or baseline, resume ALUNBRIG at the same dose or at a reduced dose.

Hyperglycemia: In ALTA, 43% of patients who received ALUNBRIG experienced new or worsening hyperglycemia. Grade 3 hyperglycemia, based on laboratory assessment of serum fasting glucose levels, occurred in 3.7% of patients. Two of 20 (10%) patients with diabetes or glucose intolerance at baseline required initiation of insulin while receiving ALUNBRIG. Assess fasting serum glucose prior to initiation of ALUNBRIG and monitor periodically thereafter. Initiate or optimize anti-hyperglycemic medications as needed. If adequate hyperglycemic control cannot be achieved with optimal medical management, withhold ALUNBRIG until adequate hyperglycemic control is achieved and consider reducing the dose of ALUNBRIG or permanently discontinuing ALUNBRIG.

Embryo-Fetal Toxicity: Based on its mechanism of action and findings in animals, ALUNBRIG can cause fetal harm when administered to pregnant women. There are no clinical data on the use of ALUNBRIG in pregnant women. Advise pregnant women of the potential risk to a fetus. Advise females of reproductive potential to use effective non-hormonal contraception during treatment with ALUNBRIG and for at least 4 months following the final dose. Advise males with female partners of reproductive potential to use effective contraception during treatment and for at least 3 months after the last dose of ALUNBRIG.

ADVERSE REACTIONS
Serious adverse reactions occurred in 38% of patients in the 90 mg group and 40% of patients in the 90→180 mg group. The most common serious adverse reactions were pneumonia (5.5% overall, 3.7% in the 90 mg group, and 7.3% in the 90→180 mg group) and ILD/pneumonitis (4.6% overall, 1.8% in the 90 mg group and 7.3% in the 90→180 mg group). Fatal adverse reactions occurred in 3.7% of patients and consisted of pneumonia (2 patients), sudden death, dyspnea, respiratory failure, pulmonary embolism, bacterial meningitis and urosepsis (1 patient each).

The most common adverse reactions (≥25%) in the 90 mg group were nausea (33%), fatigue (29%), headache (28%), and dyspnea (27%) and in the 90→180 mg group were nausea (40%), diarrhea (38%), fatigue (36%), cough (34%), and headache (27%).

DRUG INTERACTIONS
CYP3A Inhibitors: Avoid concomitant use of ALUNBRIG with strong CYP3A inhibitors. Avoid grapefruit or grapefruit juice as it may also increase plasma concentrations of brigatinib. If concomitant use of a strong CYP3A inhibitor is unavoidable, reduce the dose of ALUNBRIG.

CYP3A Inducers: Avoid concomitant use of ALUNBRIG with strong CYP3A inducers.

CYP3A Substrates: Coadministration of ALUNBRIG with CYP3A substrates, including hormonal contraceptives, can result in decreased concentrations and loss of efficacy of CYP3A substrates.

USE IN SPECIFIC POPULATIONS
Pregnancy: ALUNBRIG can cause fetal harm. Advise females of reproductive potential of the potential risk to a fetus.

Lactation: There are no data regarding the secretion of brigatinib in human milk or its effects on the breastfed infant or milk production. Because of the potential adverse reactions in breastfed infants, advise lactating women not to breastfeed during treatment with ALUNBRIG.

Females and Males of Reproductive Potential:
Contraception: Advise females of reproductive potential to use effective non-hormonal contraception during treatment with ALUNBRIG and for at least 4 months after the final dose. Advise males with female partners of reproductive potential to use effective contraception during treatment with ALUNBRIG and for at least 3 months after the final dose.

Infertility: ALUNBRIG may cause reduced fertility in males.

Pediatric Use: The safety and efficacy of ALUNBRIG in pediatric patients have not been established.

Geriatric Use: Clinical studies of ALUNBRIG did not include sufficient numbers of patients aged 65 years and older to determine whether they respond differently from younger patients. Of the 222 patients in ALTA, 19.4% were 65-74 years and 4.1% were 75 years or older. No clinically relevant differences in safety or efficacy were observed between patients ≥65 and younger patients.

Hepatic or Renal Impairment: No dose adjustment is recommended for patients with mild hepatic impairment or mild or moderate renal impairment. The safety of ALUNBRIG in patients with moderate or severe hepatic impairment or severe renal impairment has not been studied.

On July 25, 2018 LabCorp (or the Company) (NYSE: LH) reported results for the second quarter ended June 30, 2018, and updated 2018 guidance (Press release, LabCorp, JUL 25, 2018, View Source;p=RssLanding&cat=news&id=2359858 [SID1234527857]).

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"We delivered another quarter of strong growth and disciplined capital deployment across our integrated enterprise, with double-digit increases in revenue and adjusted EPS over last year," said David P. King, chairman and CEO. "The Drug Development business drove continued organic revenue growth and strong margin improvement, while winning and expanding strategic partnerships that will contribute to future study awards. The Diagnostics business expanded opportunities with key partners, and achieved solid results despite the negative impact from the implementation of PAMA. As a global leader in the expanding life sciences industry, our differentiated offering strengthens our ability to overcome segment-specific challenges, and create significant value for stakeholders now and for years to come."

Effective January 1, 2018, the Company adopted the FASB-issued converged standard on revenue recognition (ASC 606), using the full retrospective method. Unless otherwise indicated, all financial results in 2017 and comparisons to financial results in 2017 have been restated in this press release as if the Company had adopted ASC 606 on January 1, 2017.

Consolidated Results

Second Quarter Results

Revenue for the quarter was $2.87 billion, an increase of 13.4% compared to $2.53 billion in the second quarter of 2017. The increase in revenue was due to growth from acquisitions of 10.5%, organic growth of 2.1%, and the benefit from foreign currency translation of approximately 80 basis points.

Operating income for the quarter was $369.2 million, or 12.9% of revenue, compared to $329.8 million, or 13.0%, in the second quarter of 2017. The increase in operating income was primarily due to acquisitions, organic revenue growth, and the Company’s LaunchPad business process improvement initiative, partially offset by lower Medicare pricing as a result of the implementation of PAMA and personnel costs. The Company recorded restructuring charges, special items, and amortization which together totaled $94.3 million in the quarter, compared to $101.3 million during the same period in 2017. Adjusted operating income (excluding amortization, restructuring charges, and special items) for the quarter was $463.5 million, or 16.2% of revenue, compared to $431.1 million, or 17.1%, in the second quarter of 2017. The decline in adjusted operating margin was due to the implementation of PAMA, and the mix impact from the acquisition of Chiltern.

Net earnings in the quarter were $233.8 million, compared to $184.8 million in the second quarter of 2017. Diluted EPS were $2.27 in the quarter, an increase of 28.0% compared to $1.78 in the same period in 2017. Adjusted EPS (excluding amortization, restructuring charges and special items) were $2.98 in the quarter, an increase of 22.6% compared to $2.43 in the second quarter of 2017.

Operating cash flow for the quarter was $367.2 million, compared to $310.5 million in the second quarter of 2017, due to higher cash earnings and favorable working capital. Capital expenditures totaled $87.2 million, compared to $69.3 million a year ago. As a result, free cash flow (operating cash flow less capital expenditures) was $280.0 million, compared to $241.2 million in the second quarter of 2017.

At the end of the quarter, the Company’s cash balance and total debt were $221.4 million and $6.5 billion, respectively. During the quarter, the Company invested $79.1 million in acquisitions, paid down a net of $310.0 million of debt, and repurchased $75.0 million of stock representing approximately 0.5 million shares. The Company had $993.5 million of authorization remaining under its share repurchase program at the end of the quarter.

Year-To-Date Results

Revenue was $5.71 billion, an increase of 15.6% over last year’s $4.94 billion. The increase in revenue was due to growth from acquisitions of 11.9%, organic growth of 2.6%, and the benefit from foreign currency translation of approximately 110 basis points.

Operating income was $674.6 million, or 11.8% of revenue, compared to $647.9 million, or 13.1%, in the first half of 2017. The increase in operating income was primarily due to acquisitions, organic revenue growth, and the Company’s LaunchPad initiative, partially offset by the implementation of PAMA and personnel costs. The Company recorded restructuring charges, special items, and amortization which together totaled $224.7 million in the first half of the year, compared to $159.9 million during the same period in 2017. This increase was primarily due to higher amortization expense, and the payment of a one-time bonus to non-bonus-eligible employees following the implementation of the Tax Cuts and Jobs Act of 2017 (TCJA). Adjusted operating income (excluding amortization, restructuring charges, and special items) was $899.3 million, or 15.7% of revenue, compared to $807.8 million, or 16.3%, in the first half of 2017. The decline in adjusted operating margin was due to the impact from the implementation of PAMA, and the mix impact from the acquisition of Chiltern.

Net earnings in the first half of 2018 were $407.0 million, or $3.94 per diluted share, compared to $367.8 million, or $3.54 per diluted share, last year. Adjusted EPS (excluding amortization, restructuring and special items) were $5.75, an increase of 25.8% compared to $4.57 in the first half of 2017.

Operating cash flow was $522.0 million, compared to $536.4 million in the first half of 2017. The reduction in operating cash flow was due to the one-time bonus payment related to the TCJA and higher working capital to support growth, partially offset by higher cash earnings. Capital expenditures totaled $159.7 million, compared to $141.5 million during the same period in 2017. As a result, free cash flow (operating cash flow less capital expenditures) was $362.3 million, compared to $394.9 million in the first half of 2017.

***

The following segment results reflect the Company’s retrospective adoption of ASC 606 on January 1, 2017, and exclude amortization, restructuring charges, special items and unallocated corporate expenses.

Second Quarter Segment Results

LabCorp Diagnostics

Revenue for the quarter was $1.81 billion, an increase of 5.4% over $1.72 billion in the second quarter of 2017. The increase in revenue was primarily driven by acquisitions, organic volume (measured by requisitions), and the benefit from foreign currency translation of approximately 30 basis points, partially offset by the impact from the implementation of PAMA. Total volume (measured by requisitions) increased by 5.8%, of which organic volume was 2.8% and acquisition volume was 3.0%. Revenue per requisition decreased by 0.7%.

Adjusted operating income (excluding amortization, restructuring charges and special items) for the quarter was $376.0 million, or 20.7% of revenue, compared to $375.5 million, or 21.8%, in the second quarter of 2017. Operating income benefited from organic volume growth and acquisitions, which were essentially offset by the negative impact from PAMA and personnel costs. The decline in operating margin was primarily due to the negative impact from PAMA.

Covance Drug Development

Revenue for the quarter was $1.05 billion, an increase of 30.5% over $808 million in the second quarter of 2017. The increase was primarily due to acquisitions, as well as organic growth and the benefit from foreign currency translation of approximately 180 basis points.

Adjusted operating income (excluding amortization, restructuring charges and special items) for the quarter was $123.4 million, or 11.7% of revenue, compared to $88.5 million, or 11.0%, in the second quarter of 2017. The increase in operating income and margin were primarily due to organic demand, LaunchPad savings and acquisitions, partially offset by personnel costs. The Company expects to deliver $150 million of net savings from LaunchPad by the end of 2020, and $30 million of cost synergies from the integration of Chiltern by the end of 2019.

Net orders and net book-to-bill during the trailing twelve months were $4.87 billion and 1.22, respectively. Backlog at the end of the quarter was $8.97 billion, and the Company expects approximately $3.7 billion of this backlog to convert into revenue in the next twelve months.

Outlook for 2018

In the following guidance, all financial results in 2017 and comparisons to financial results in 2017 have been restated in this press release as if the Company had adopted ASC 606 on January 1, 2017. The guidance assumes foreign exchange rates effective as of June 30, 2018 for the remainder of the year, and includes capital allocation.

Revenue growth of 10.5% to 11.5% over 2017 revenue of $10.31 billion, which includes the benefit of approximately 50 basis points of foreign currency translation. This is in-line with the prior guidance of 10.0% to 12.0%, as the increased revenue guidance in Covance Drug Development is offset by the previously-announced divestiture of the Food Solutions business.
Revenue growth in LabCorp Diagnostics of 3.0% to 4.5% over 2017 revenue of $6.86 billion, which includes the negative impact of PAMA as well as the benefit of approximately 20 basis points of foreign currency translation. This is lower than the prior guidance of 3.5% to 5.5% due to the previously-announced divestiture of the Food Solutions business.
Revenue growth in Covance Drug Development of 23.0% to 26.0% over 2017 revenue of $3.45 billion, which includes the benefit of approximately 110 basis points of foreign currency translation. This is an increase over the prior guidance of 21.0% to 25.0% due to higher investigator and other pass-through revenues, partially offset by the change in foreign currency translation.
Adjusted EPS of $11.35 to $11.65, which is an increase of approximately 22.7% to 25.9% over 2017 adjusted EPS of $9.25, and a narrowing of the range compared to prior guidance of $11.30 to $11.70.
Free cash flow (operating cash flow less capital expenditures) of $1.1 billion to $1.2 billion, compared to $1.1 billion in 2017, unchanged from prior guidance.
Use of Adjusted Measures

The Company has provided in this press release and accompanying tables "adjusted" financial information that has not been prepared in accordance with GAAP, including adjusted EPS, adjusted operating income, free cash flow, and certain segment information. The Company believes these adjusted measures are useful to investors as a supplement to, but not as a substitute for, GAAP measures, in evaluating the Company’s operational performance. The Company further believes that the use of these non-GAAP financial measures provides an additional tool for investors in evaluating operating results and trends, and growth and shareholder returns, as well as in comparing the Company’s financial results with the financial results of other companies. However, the Company notes that these adjusted measures may be different from and not directly comparable to the measures presented by other companies. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the tables accompanying this press release.

The Company today is furnishing a Current Report on Form 8-K that will include additional information on its business and operations. This information will also be available in the investor relations section of the Company’s website at www.labcorp.com. Analysts and investors are directed to the Current Report on Form 8-K and the website to review this supplemental information.

A conference call discussing LabCorp’s quarterly results will be held today at 9:00 a.m. Eastern Time and is available by dialing 844-634-1444 (615-247-0253 for international callers). The access code is 8281087. A telephone replay of the call will be available through August 8, 2018 and can be heard by dialing 855-859-2056 (404-537-3406 for international callers). The access code for the replay is 8281087. A live online broadcast of LabCorp’s quarterly conference call on July 25, 2018, will be available at View Source or at View Source beginning at 9:00 a.m. Eastern Time. This webcast will be archived and accessible through July 18, 2019

On July 25, 2018 GlaxoSmithKline and 23andMe reported an exclusive four-year collaboration that will focus on research and development of innovative new medicines and potential cures, using human genetics as the basis for discovery (Press release, GlaxoSmithKline, JUL 25, 2018, View Source [SID1234640964]). The collaboration will combine 23andMe’s large-scale genetic resources and advanced data science skills, with the scientific and medical knowledge and commercialisation expertise of GSK. The goal of the collaboration is to gather insights and discover novel drug targets driving disease progression and develop therapies for serious unmet medical needs based on those discoveries.

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With over 5 million customers, 23andMe offers those with an interest in genetics the opportunity to learn more about their personal genetic profile. 23andMe customers can also choose to participate in research and contribute their information to a unique and dynamic database, which is now the world’s largest genetic and phenotypic resource.

GSK brings extensive drug discovery and development capabilities across a broad range of diseases and modalities, including small molecule, biopharmaceuticals and cell and gene therapies. It will apply its world-class technologies, including access to additional data sources, in-house target validation and genetics expertise, and utilise its manufacturing, commercial operations and scale to support partner activities across research and development.

Dr. Hal Barron, Chief Scientific Officer and President R&D, GSK, said; "We are excited about this unique collaboration as we know that drug targets with genetic validation have a significantly higher chance of ultimately demonstrating benefit for patients and becoming medicines. Partnering with 23andMe, an organisation whose vision and capabilities are transforming the understanding of how genes influence health, will help to shift our research and development organisation to be ‘driven by genetics’, and increase the impact GSK can have on patients."

Anne Wojcicki, CEO and Co-Founder of 23andMe, said; "This collaboration will enable us to deliver on what many customers have been asking for — cures or treatments for diseases. By leveraging the genetic and phenotypic information provided by consenting 23andMe customers and combining it with GSK’s incredible expertise and resources in drug discovery, we believe we can more quickly make treating and curing diseases a reality."

Together, GSK and 23andMe will focus on translating genetic and phenotypic data into R&D activities that will:

Improve target selection to allow safer, more effective ‘precision’ medicines to be discovered. Genetic data can significantly improve our understanding of diseases, their pathways and mechanisms, supporting the design and development of more targeted medicines. Use of genetic data in selecting drug targets can increase both the probability of success in a particular indication and avoid unwanted safety risks.
Support identification of patient subgroups that are more likely to respond to targeted treatments. Scale is critical for the detection of genetic effects in smaller subsets of diseases and patients. With over 80% of 23andMe’s customer base consenting to participate in research, their aggregate and de-identified data could help enable the discovery of a significant number of novel associations from a diverse range of people, which would not otherwise be possible.
Allow more effective identification and recruitment of patients for clinical studies. The ability to identify and invite patients with a particular disease, and in some case specific genetic subgroups, to participate in studies that are relevant to them could significantly shorten recruitment and reduce clinical development timelines, allowing medicines to be delivered to patients more efficiently.
Deal Terms
Under the terms of the deal, GSK and 23andMe have entered into a four-year collaboration with the option to extend for a fifth year under which GSK will become 23andMe’s exclusive collaborator for drug target discovery programmes. During this time, the companies will use 23andMe’s rich database and proprietary statistical analytics to fuel drug target discovery, with the goal of jointly discovering novel targets that can progress into development. A joint GSK-23andMe drug discovery team will use their combined resources to identify new targets and prioritise based on strength of the biological hypothesis, possibility to find a medicine, and clinical opportunity.

To allow work to commence immediately, the deal enables both companies to bring existing early stage programmes within the collaboration. 23andMe currently has a portfolio of early stage therapeutic research programmes across a wide range of disease indications, which will be assessed for inclusion. GSK will contribute its LRRK2 inhibitor, which is currently in preclinical development as a potential treatment for Parkinson’s disease. This programme is expected to significantly progress by leveraging 23andMe’s large base of consented customers who are aware of their LRRK2 variant status as a result of 23andMe’s FDA-authorised genetic health reports. Together, GSK and 23andMe are expected to more effectively target and rapidly recruit patients with defined LRRK2 mutations in order to reach clinical proof of concept.

All activities within the collaboration will initially be co-funded (50%/50%), with either company having certain rights to reduce its funding share for any collaboration programme. It is expected that this collaboration will jointly progress a number of targets per year, with either company able to independently progress additional targets identified within the collaboration. GSK will also have the right to work with 23andMe to analyse 23andMe’s database for validation of GSK’s existing therapeutic portfolio as well as leverage 23andMe’s capabilities for clinical trial recruitment. Both GSK and 23andMe will share in the proceeds from new treatments and medicines arising from the collaboration.

Additionally, GSK has made a $300M equity investment in 23andMe.

Protecting what’s important
23andMe customers are in control of their data. Participating in 23andMe’s research is always voluntary and requires customers to affirmatively consent to participate. For those who do consent, their information will be de-identified, so no individual will be identifiable to GSK.

The continued protection of customers’ data and privacy is the highest priority for both GSK and 23andMe. Both companies have stringent security protections in place when it comes to collecting, storing and transferring information about research participants. 23andMe employs software, hardware and physical security measures to protect the computers where data is stored and information will only be transferred using encryption to offer maximum security.

Scientific engagement
To ensure broader, ongoing engagement within the scientific community, GSK and 23andMe intend to publish results of research conducted within this collaboration, to allow these learnings to be used to guide future research. 23andMe will also continue to provide data and analyses to academics and researchers in areas outside of target discovery.