On January 29, 2019 Merck (NYSE:MRK), known as MSD outside the United States and Canada, reported that the Board of Directors has declared a quarterly dividend of $0.55 per share of the company’s common stock for the second quarter of 2019 (Press release, Merck & Co, JAN 29, 2019, View Source [SID1234532946]). Payment will be made on April 5, 2019 to shareholders of record at the close of business on March 15, 2019.

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On January 29, 2019 Triphase Accelerator, together with its majority shareholder FACIT, reported a new strategic collaboration with Celgene for a first-in-class preclinical therapeutic targeting the WDR5 protein for the treatment of blood cancers including leukemia (Press release, Celgene, JAN 29, 2019, View Source [SID1234536469]). Triphase is a drug development company advancing novel compounds through Phase 2 proof-of-concept, including the WDR5 program.

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Under the terms of the agreement, Celgene has the option to acquire TRPH-395 from Triphase Accelerator. Celgene will pay an upfront of US$40M and upon exercise of the option, Celgene will pay up to US$940M in contingent development, regulatory and sales milestones. Additional payments for sales-based royalties are also possible.

"As with our previously announced spin outs, the Drug Discovery team at Ontario Institute for Cancer Research (OICR), led by Dr. Rima Al Awar, has yet again produced a world-class asset for patients with cancer," remarked Dr. David O’Neill, President of FACIT. FACIT seed financed Propellon Therapeutics to commercialize the preclinical asset and ran a competitive global business development process to identify strategic partners. Multiple formal offers were received from the US, Europe and Japan, reflecting the high quality of science in the program.

Dr. O’Neill continued "The quality of the team and commitment by Triphase Accelerator to engage Ontario researchers and clinical sites in its high content studies, combined with its long-standing relationship with Celgene made this partnership the most compelling path to impact patients and the local economy." While additional payments to the program are largely contingent on clinical success, the significant financial commitment will enable re-investable returns by FACIT in the Ontario innovation economy.

The WDR5 protein is critical for the formation and activities of certain protein complexes that are associated with DNA and indirectly modify genes. These processes represent an exciting new therapeutic field, referred to as epigenetics. Blood cancers like leukemia can result when WDR5-associated protein complexes are not appropriately regulated in the body. Drug compounds that can disrupt these cancer-causing cellular activities represent a novel therapeutic approach, which may also improve clinical outcomes in patients with solid tumours.

"This transaction represents a significant milestone for Triphase Accelerator as it brings together our long-standing collaboration with Celgene and a first-in-class asset from Ontario" said Dr. Ilse Treurnicht, Executive Chairperson at Triphase Accelerator. "We are excited that this transaction is another step forward to realizing the vision of the founding partners – OICR, MaRS Innovation and MaRS – and will allow Triphase to apply its unique science based, rapid, and cost-effective approach to advancing this Ontario based program toward clinical proof of concept."

"Our investment in Propellon’s technology reflects our commitment to developing first-in-class epigenetic therapies for patients with hematological cancers," remarked Dr. Jorge DiMartino, Vice President of Translational Development at Celgene. "The teams at OICR Drug Discovery, FACIT and Triphase Accelerator have together created an optimal pathway for oncology innovation and help make Ontario a strong collaborator and destination for our investment."

"This is a great day for cancer research in Ontario. Congratulations to FACIT, OICR and Triphase Accelerator," said Todd Smith, Minister of Economic Development, Job Creation and Trade. "This discovery and investment will benefit Ontario cancer patients and support industry jobs in the province. Ontario is open for business, and we welcome more innovative cancer research and trials."

"This is an exciting development for cancer research and innovation in Ontario, and I congratulate FACIT, OICR and Triphase Accelerator on their important collaboration," said Christine Elliott, Deputy Premier and Minister of Health and Long-Term Care. "It’s partnerships like these that keep Ontario open for business and are invaluable as we work toward developing a long-term transformational health care strategy guided by innovation, integration and the better use of technology."

On January 29, 2019 Asuragen, Inc., a molecular diagnostics company delivering easy-to-use products for complex testing in genetics and oncology, reported that the results of a five-site study using the QuantideX NGS RNA Lung Cancer Kit* have been published as an article in press by The Journal of Molecular Diagnostics (see View Source) (Press release, Asuragen, JAN 29, 2019, View Source [SID1234532947]). The peer-reviewed article, titled "Design, Optimization, and Multisite Evaluation of a Targeted Next-Generation Sequencing Assay System for Chimeric RNAs from Gene Fusions and Exon-Skipping Events in Non–Small Cell Lung Cancer," also describes the design and development of the assay system. This system includes controls, pre-analytical sample QC, targeted RNA-based enrichment, library clean-up and pooling, and companion bioinformatics software that analyzes the corresponding next-generation sequencing (NGS) data.

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Non-small cell lung cancer (NSCLC) accounts for more than 10% of all newly diagnosed cancers and is characterized by diverse molecular drivers ranging from point mutations and insertion-deletions to gene fusions and exon skipping events. NGS offers a multiplexed approach for detecting RNA chimera from many different fused genes and splice variants but it requires integrated reagents, controls, and interpretive software to standardize testing procedures and assure consistent results across laboratories. This study details the verification and external evaluations of the targeted RNA-seq panel across a total of >200 FFPE tumor biopsy materials representing common and rare RNA variants that are associated with NSCLC.

The QuantideX RNA Lung Cancer Kit is a cGMP manufactured, end-to-end, NGS-in-a-Box product solution that simultaneously interrogates over 100 known clinically-relevant gene fusions, 3’/5’ imbalance markers to detect rare or novel fusions, MET exon 14 skipping events, and mRNA expression levels from 23 genes in NSCLC samples. The kit is part of an integrated workflow that delivers sequencing-ready libraries in approximately half the time of comparable competitor methods and incorporates push-button analytics to standardize test results. The assay is optimized for use with low-quality and quantity samples such as FFPE and fine-needle aspirations and can generate libraries from approximately 10-20 ng RNA or total nucleic acid.

The targeted RNA-seq system was assessed for sensitivity, accuracy, alignment of results with alternative testing methods, and multi-laboratory concordance. Targeted fusions and exon skipping events were detected down to a 1% cell fraction in a wild-type background. Non-targeted fusions could be detected by 3’/5’ imbalance, with 100% of cases detected at 15% positivity and 50% at 5% positivity. Results of the Asuragen NGS assay were also compared to those generated by immunohistochemistry (IHC), fluorescent in situ hybridization (FISH), and/or the nCounter Vantage Lung Gene Fusion Panel (Nanostring Technologies) using residual clinical specimens; all results reported by the Asuragen assay were consistent with those generated by these alternative methods. Lastly, a five-site precision study was conducted to evaluate assay reproducibility. Every fusion and exon skipping event in the cohort of nearly 250 sample libraries was correctly detected across sites, consistent with the reference results.

An accompanying commentary on the study, also pending publication in the journal, described the value of targeted RNA-based assays for limited nucleic acid inputs and for their focus on clinically actionable findings. "[The authors’] efforts at standardization and streamlining the workflow process were demonstrated by good concordance across a multisite implementation… the [QuantideX NGS RNA Lung Cancer Kit] demonstrated good accuracy, reproducibility, and analytic sensitivity for detecting fusions that were specifically targeted by design," noted the commentary’s author, Lauren Ritterhouse, MD, PhD, Co-Director, Molecular Diagnostics and Clinical Genomics Laboratories at the University of Chicago. "As such, they were able to produce a comprehensive approach to targeted RNA sequencing that addressed several quality control metrics that could ease the adoption of this assay into laboratories seeking an RNA-based assay for identifying fusions and splicing events in NSCLC."

*For Research Use Only. Not for use in diagnostic procedures.

On January 29, 2019 Illumina, Inc. (NASDAQ: ILMN) reported its financial results for the fourth quarter and fiscal year 2018 (Press release, Illumina, JAN 29, 2019, View Source [SID1234532948]).

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Fourth quarter 2018 results:

Revenue of $867 million, an 11% increase compared to $778 million in the fourth quarter of 2017
GAAP net income attributable to Illumina stockholders for the quarter of $210 million, or $1.41 per diluted share, compared to $68 million, or $0.46 per diluted share, for the fourth quarter of 2017; GAAP earnings per share for the fourth quarter of 2017 included our provisional estimate of the one-time transition tax as a result of U.S. Tax Reform
Non-GAAP net income attributable to Illumina stockholders for the quarter of $197 million, or $1.32 per diluted share, compared to $212 million, or $1.44 per diluted share, for the fourth quarter of 2017 (see the table entitled "Itemized Reconciliation Between GAAP and Non-GAAP Net Income Attributable to Illumina Stockholders" for a reconciliation of these GAAP and non-GAAP financial measures)
Cash flow from operations of $300 million compared to $294 million in the fourth quarter of 2017
Free cash flow (cash flow from operations less capital expenditures) of $235 million for the quarter compared to $218 million in the fourth quarter of 2017
Gross margin in the fourth quarter of 2018 was 68.1% compared to 69.7% in the prior year period. Excluding amortization of acquired intangible assets, non-GAAP gross margin was 69.1% for the fourth quarter of 2018 compared to 70.9% in the prior year period.

Research and development (R&D) expenses for the fourth quarter of 2018 were $176 million compared to $137 million in the prior year period. Non-GAAP R&D expenses as a percentage of revenue were 20.3%, including 0.8% attributable to Helix. This compares to non-GAAP R&D expenses as a percentage of revenue of 17.4% in the prior year period, including 0.7% attributable to Helix.

Selling, general and administrative (SG&A) expenses for the fourth quarter of 2018 were $217 million compared to $175 million in the prior year period. Excluding restructuring charges and acquisition related expense, non-GAAP SG&A expenses as a percentage of revenue were 24.5%, including 1.6% attributable to Helix. This compares to 22.1% in the prior year period, including 1.2% attributable to Helix.

Depreciation and amortization expenses were $49 million and capital expenditures for free cash flow purposes were $65 million during the fourth quarter of 2018. At the close of the quarter, the company held $3.5 billion in cash, cash equivalents and short-term investments, compared to $2.1 billion as of December 31, 2017.

Fiscal year 2018 results:

Revenue of $3,333 million, a 21% increase compared to $2,752 million in fiscal 2017
GAAP net income attributable to Illumina stockholders of $826 million, or $5.56 per diluted share, compared to $726 million, or $4.92 per diluted share, in fiscal 2017; GAAP earnings per share for fiscal 2017 included the one-time transition tax referenced previously
Non-GAAP net income attributable to Illumina stockholders of $850 million, or $5.72 per diluted share, compared to $591 million, or $4.00 per diluted share, in fiscal 2017 (see the table entitled "Itemized Reconciliation Between GAAP and Non-GAAP Net Income Attributable to Illumina Stockholders" for a reconciliation of these GAAP and non-GAAP financial measures)
Cash flow from operations of $1.1 billion compared to $875 million in fiscal 2017
Free cash flow (cash flow from operations less capital expenditures) of $846 million, compared to $565 million in fiscal 2017
Gross margin for fiscal 2018 was 69.0% compared to 66.4% in the prior year. Excluding amortization of acquired intangible assets, non-GAAP gross margin was 70.1% for fiscal 2018 compared to 68.4% in the prior year period.

Research and development (R&D) expenses for fiscal 2018 were $623 million compared to $546 million in the prior year. Excluding restructuring charges, non-GAAP R&D expenses as a percentage of revenue were 18.7%, including 0.9% attributable to Helix. This compares to 19.6% in the prior year period, including 1.0% attributable to Helix and GRAIL.

Selling, general and administrative (SG&A) expenses for fiscal 2018 were $794 million compared to $674 million in the prior year period. Excluding restructuring charges, amortization of acquired intangible assets, and acquisition related expense, non-GAAP SG&A expenses as a percentage of revenue were 23.6%, including 1.3% attributable to Helix. This compares to 23.9% in the prior year period, including 1.7% attributable to Helix and GRAIL.

"With revenue growth of 21% in 2018, Illumina delivered its 20th consecutive year of growth, with increasing adoption of innovative sequencing applications across a wide range of customers and geographies," said Francis deSouza, President and CEO. "From the evolving regulatory environment for oncology diagnostics to progress in reimbursement for non-invasive prenatal and undiagnosed disease testing, genomics is accelerating on its path into clinical standard of care."

Updates since our last earnings release:

Signed a definitive agreement to acquire Pacific Biosciences to expand biological discovery and clinical insight by adding long-read sequencing technology
Launched TruSight Oncology 500 (TSO 500) pan-cancer assay broadening insights into Tumor Mutational Burden and Microsatellite Instability. TSO 500 is shipping now as a research-use-only product
Received Breakthrough Device Designation from the FDA for Illumina’s TruSight Assay, which is based on the content of TSO 500. Illumina is seeking FDA approval of the assay as a companion diagnostic
Announced a new genotyping array and scientific contribution to support the All of Us research program
Repurchased approximately $98 million of common stock in the fourth quarter under the previously announced share repurchase program
Financial outlook and guidance

The non-GAAP financial guidance discussed below reflects certain pro forma adjustments to assist in analyzing and assessing our core operational performance. Please see our Reconciliation of Non-GAAP Financial Guidance included in this release for a reconciliation of the GAAP and non-GAAP financial measures.

For fiscal 2019, the company projects revenue growth in the range of 13% to 14%, GAAP earnings per diluted share attributable to Illumina stockholders of $6.07 to $6.17 and non-GAAP earnings per diluted share attributable to Illumina stockholders of $6.50 to $6.60. This guidance excludes any impact from the pending acquisition of Pacific Biosciences, which we expect to close in mid-2019.

Quarterly conference call information

The conference call will begin at 2:00 pm Pacific Time (5:00 pm Eastern Time) on Tuesday, January 29, 2019. Interested parties may access the live teleconference through the Investor Relations section of Illumina’s website under the "company" tab at www.illumina.com. Alternatively, individuals can access the call by dialing 1 (800) 708-4539, or 1 (847) 619-6396 outside North America, both with passcode 47970793.

A replay of the conference call will be posted on Illumina’s website after the event and will be available for at least 30 days following.

Statement regarding use of non-GAAP financial measures

The company reports non-GAAP results for diluted net income per share, net income, gross margins, operating expenses, operating margins, other income, and free cash flow in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The company’s financial measures under GAAP include substantial charges such as amortization of acquired intangible assets, non-cash interest expense associated with the company’s convertible debt instruments that may be settled in cash, and others that are listed in the itemized reconciliations between GAAP and non-GAAP financial measures included in this press release. Management has excluded the effects of these items in non-GAAP measures to assist investors in analyzing and assessing past and future operating performance. Additionally, non-GAAP net income attributable to Illumina stockholders and diluted earnings per share attributable to Illumina stockholders are key components of the financial metrics utilized by the company’s board of directors to measure, in part, management’s performance and determine significant elements of management’s compensation.

The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.

On January 28, 2019 CStone Pharmaceuticals (CStone) reported that the National Medical Products Administration (NMPA) recently approved the clinical trial application (CTA) to start a Phase I clinical trial in China for BLU-554 (CS3008), an inhibitor of fibroblast growth factor receptor 4 (FGFR4) discovered by the company’s partner Blueprint Medicines (Press release, CStone Pharmaceauticals, JAN 28, 2019, View Source [SID1234532931]). CStone has exclusive rights to develop and commercialize BLU-554 in Mainland China, Hong Kong, Macau and Taiwan.

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The trial is part of a global Phase I trial for BLU-554 in patients with advanced hepatocellular carcinoma (HCC) not previously treated with a tyrosine kinase inhibitor (TKI). The aim is to assess the safety, tolerability, pharmacokinetics (PK), pharmacodynamics (PD) and preliminary efficacy of BLU-554 in this patient subset. CStone and Blueprint Medicines expect to enroll the first patient in the Phase I clinical trial in China soon.

HCC is the most common form of liver cancer. In China, HCC is the third most significant cause of cancer-related death, with approximately 466,000 new diagnoses and 422,000 deaths caused by the disease each year. It is estimated that approximately 30% of patients with HCC have tumors with aberrantly activated FGFR4 signaling. The majority of Chinese HCC patients (55%) are not diagnosed until the advanced stages of the disease. Currently, treatment options for advanced HCC patients remain limited.

BLU-554 is a potent and highly selective small-molecule inhibitor of FGFR4. Blueprint Medicines announced preliminary Phase I clinical data of BLU-554 at the European Society of Clinical Oncology (ESMO) (Free ESMO Whitepaper) 2017 Congress, as of a data cutoff date of August 18, 2017. In heavily pre-treated patients with FGFR4-driven HCC (n=38), the data showed an objective response in 6 patients (16%; 1 complete response and 1 partial response pending confirmation), while disease control was achieved by 26 patients (68%), and 18 patients (49%) had a reduced tumor burden. In 5 patients who had not previously received TKI therapy, preliminary evidence of prolonged disease control was observed. BLU-554 was well-tolerated and most adverse events reported by investigators were Grade 1 or 2.

Dr. Frank Jiang, CEO and chairman of CStone, commented: "Compared with current treatments, BLU-554 has produced encouraging data in terms of tolerability and disease control rates. We also plan to conduct a Phase I trial of BLU-554 in combination with CS1001 for the treatment of advanced HCC patients in China in the second half of 2019. Our hope is to make more effective treatment options available to HCC sufferers."

About BLU-554

BLU-554 is an oral, highly selective and irreversible inhibitor of FGFR4 developed by Blueprint Medicines, with a precise selectivity for FGFR4 that spares the paralog kinases FGFR1, FGFR2 and FGFR3. Blueprint Medicines is developing BLU-554 for the treatment of HCC caused by FGFR4 activation, estimated to account for approximately 30% of patients with HCC tumors. BLU-554 has been granted orphan drug status by the U.S. Food and Drug Administration.

In June 2018, CStone and Blueprint Medicines entered into a license and collaboration agreement in which Blueprint Medicines granted CStone exclusive rights to develop and commercialize BLU-554 in Greater China. Blueprint Medicines retains development and commercial rights for BLU-554 in the rest of the world.