On August 2, 2016 Xencor, Inc. (NASDAQ: XNCR), a clinical-stage biopharmaceutical company developing engineered monoclonal antibodies for the treatment of autoimmune diseases, asthma and allergic diseases and cancer, reported financial results for the second quarter ended June 30, 2016 and provided a review of pipeline and corporate highlights (Filing, 8-K, Xencor, AUG 2, 2016, View Source [SID:1234514196]).

"In the second quarter, we strengthened our internal development pipeline with the addition of two new bispecific oncology candidates, XmAb18087 for the treatment of neuroendocrine tumors and XmAb20717, for the treatment of multiple cancers. We also entered into a strategic collaboration with Novartis, in which we jointly develop XmAb14045 and XmAb13676 for the treatment of acute myeloid leukemia and B-cell malignancies, respectively, while retaining U.S. commercialization rights to both compounds," said Bassil Dahiyat, Ph.D., president and chief executive officer of Xencor. "Taken together, we now expect to have 13 wholly-owned or partnered XmAb antibodies in the clinic by 2018, including four XmAb bispecific antibodies. With $168.8 million in cash, cash equivalents and marketable securities at the end of the second quarter, coupled with the $150 million upfront payment received from Novartis in the third quarter, we remain well-financed to advance the development of our clinical programs and platform."

Pipeline Highlights:

XmAb5871: XmAb5871 is a first-in-class monoclonal antibody that targets CD19 with its variable domain and that uses Xencor’s XmAb immune inhibitor Fc domain to target FcγRIIb, a receptor that inhibits B-cell function. XmAb5871 is currently in Phase 2 clinical studies for the treatment of IgG4-Related Disease (IgG4-RD) and system lupus erythematosus (SLE).

· Phase 1 trial with subcutaneous formulation started in Q3 2016; initial data expected in 2017
· Initial data from IgG4-RD Phase 2 trial expected in 1H17
· Initial data from SLE Phase 2 trial expected in 2018

XmAb7195: XmAb7195 is a first-in-class monoclonal antibody that targets IgE with its variable domain and uses Xencor’s XmAb Immune Inhibitor Fc domain to target FcγRIIb, resulting in three distinct mechanisms of action for reducing IgE levels.

· Initiation of Phase 1 trial with subcutaneous formulation expected in 2016; initial data expected in 1H17

In May 2016, Xencor announced complete data results from its Phase 1a trial of XmAb7195, which showed a swift and extensive depletion of serum IgE at all doses tested, including in high IgE subjects. XmAb7195 was generally well tolerated, with transient, asymptomatic thrombocytopenia reported at doses > 2.0 mg/kg. Moderate urticaria was reported in some treated patients with an apparent correlation of dose frequency with occurrence. Results of this study support further development in a multiple ascending dose study with subcutaneous administration, which will evaluate safety, tolerability and immunogenicity, and will measure IgE levels. These data were presented at the American Thoracic Society 2016 International Conference (A6476: Poster Board Number 407).

Bispecific Oncology Pipeline: Xencor’s initial bispecific programs are tumor-targeted antibodies that contain both a tumor antigen binding domain and a cytotoxic T-cell binding domain. These bispecific antibodies activate T cells for highly potent and targeted killing of malignant cells. Their XmAb Fc domains confer long circulating half-lives, stability and ease of manufacture.

· Initiation of clinical trial for XmAb14045 in acute myeloid leukemia (AML) expected in 2016; initial data expected in 2017
· Initiation of clinical trial for XmAb13676 in B-cell malignancies expected in 2016; initial data expected in 2018
· Initiation of pre-clinical development of XmAb18087, a SSTR2 x CD3 bispecific antibody for the treatment of neuroendocrine tumors, announced in June 2016; Phase 1 clinical trial is expected to begin in 2017
·

Xencor has initiated development of its first bispecific antibody that simultaneously engages two T-cell checkpoint targets to activate T cells against multiple tumor types. These dual checkpoint bispecific antibodies have the potential to improve on combination checkpoint therapies by improving selectivity and eliminating the need for multiple checkpoint antibodies.

· Initiation of pre-clinical development of XmAb20717, a PD-1 x CTLA-4 bispecific antibody for potential use in multiple oncology indications, announced in June 2016; Phase 1 clinical trial is expected to begin in 2017

In June 2016, Xencor entered into a collaboration with Novartis to develop and commercialize lead bispecific oncology candidates XmAb14045 and XmAb13676. Under the terms of the agreement, Xencor and Novartis will share worldwide development costs for the two compounds, with Xencor maintaining U.S. commercial rights and Novartis having commercial rights in the rest of the world. Novartis will also receive worldwide rights to Xencor’s bispecific technology to develop and commercialize four additional targets selected by Novartis, one of which Xencor may elect to co-detail in the U.S. The bispecific collaboration will include molecular engineering by Xencor. Additionally, Novartis will receive a worldwide non-exclusive license to use Xencor’s other XmAb Fc technologies in up to ten molecules. Xencor received a $150 million upfront payment and is eligible to receive up to $2.41 billion in future clinical, regulatory and sales milestone payments and royalties on sales.

Partnered XmAb Programs: Nine pharmaceutical companies and the National Institutes of Health (NIH) are advancing novel drug candidates either discovered at Xencor or that rely on Xencor’s proprietary XmAb technology. Seven such programs are currently undergoing clinical testing.

As part of the June 2016 collaboration with Novartis, Xencor announced that its XmAb bispecific Fc domains will also be applied to four Novartis programs, one of which Xencor may elect to share in costs and U.S. profits in lieu of royalties and to co-detail in the U.S. Novartis will also receive a non-exclusive license to use Xencor’s other XmAb Fc technologies in up to ten molecules.

Second Quarter Ended June 30, 2016 Financial Results

Cash, cash equivalents and marketable securities totaled $168.8 million as of June 30, 2016, compared to $193.3 million on December 31, 2015. The decrease reflects the net spending for the six months ended June 30, 2016. In July 2016, we received a $150 million upfront payment in connection with our Novartis collaboration.

Revenues for the second quarter ended June 30, 2016 were $66.0 million compared to $1.0 million for the same period of 2015. Revenues for the six months ended June 30, 2016 were $73.3 million, compared to $2.5 million for the same period in 2015. Revenues in the three and six month period ended June 30, 2016 included revenue from our Novartis and Amgen collaborations, compared to revenues for the same period in 2015, which were earned primarily from our Novo Nordisk and Alexion collaborations.

Research and development expenditures for the second quarter ended June 30, 2016 were $14.4 million, compared to $7.5 million for the same period in 2015. Total research and development expenses for the six month period ended June 30, 2015 were $24.4 million, compared to $12.7 million for the same period in 2015. The increased spending for research and development for the three and six months ended June 30, 2016 is primarily due to increased spending in our clinical programs including our XmAb5871 program and our initial bispecific clinical programs XmAb14045 and XmAb13676.

General and administrative expenses in the second quarter ended June 30, 2016 were $3.0 million compared to $2.5 million for the same period in 2015. Total general and administrative expenses for the first six months of 2016 were $7.0 million, compared to $5.3 million in the first six months of 2015. Increased spending on general and administration area reflects additional stock-based compensation expenses.

Non-cash, share based compensation expense for the first six months of 2016 was $4.0 million compared to $2.3 million for the first six months of 2015.

Net income for the second quarter ended June 30, 2016 was $47.2 million, or $1.13 on a fully diluted per share basis, compared to a net loss of $8.9 million, or $(0.22) on a fully diluted per share basis, for the same period in 2015. For the six months ended June 30, 2016, net income was $40.8 million or $0.98 on a fully diluted per share basis, compared to net loss of $15.3 million, or $(0.41) on a fully diluted per share basis, for the same period in 2015. The income for the three and six months ended June 30, 2016 over the loss reported for the same periods in 2015 is primarily due to the income recognized under our Novartis and Amgen collaborations.

The total shares outstanding was 40, 944,080 as of June 30, 2016, compared to 40,460,091 shares outstanding as of June 30, 2015.

Financial Guidance

Based on current operating plans, Xencor expects to have cash to fund research and development programs and operations through at least the end of 2019.

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On August 2, 2016 Cardinal Health reported fourth-quarter fiscal year 2016 revenues of $31.4 billion, an increase of 14 percent from the fourth quarter last year, and fiscal 2016 revenues of $121.5 billion, an increase of 19 percent from the same period last year (Filing, Q4/Annual, Cardinal Health, 2016, AUG 2, 2016, View Source [SID:1234514197]).

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For the quarter, the company reported growth in GAAP operating earnings of 11 percent to $620 million and in non-GAAP operating earnings of 5 percent to $643 million. GAAP operating earnings for fiscal year 2016 were $2.5 billion, an increase of 14 percent, and non-GAAP operating earnings for the fiscal year were $2.9 billion, an increase of 17 percent from the prior fiscal year.
For the quarter, GAAP diluted earnings per share from continuing operations2 (EPS) increased 16 percent to $1.02, while non-GAAP diluted EPS increased 14 percent to $1.14. GAAP diluted EPS for fiscal year 2016 increased 20 percent to $4.32, and non-GAAP diluted EPS increased 20 percent to $5.24.
"We finished fiscal 2016 having generated the highest revenues, the largest GAAP and non-GAAP operating earnings, and the greatest operating cash flow in our company’s history. Our teams worked incredibly hard this past year while never losing sight of the ultimate goal – serving patients and their families," said George Barrett, chairman and CEO of Cardinal Health, Inc. "The Cardinal Health team is well-positioned to adapt, innovate and lead during a time of great change in the healthcare industry."

Q4 and Fiscal Year Summary

Q4 FY16

Q4 FY15

Y/Y

FY16

FY15

Y/Y
Revenue
$
31.4
billion

$
27.5
billion

14%

$
121.5
billion

$
102.5
billion

19%
GAAP Operating Earnings
$
620
million

$
558
million

11%

$
2,459
million

$
2,161
million

14%
Non-GAAP Operating Earnings
$
643
million

$
611
million

5%

$
2,895
million

$
2,472
million

17%
GAAP Earnings from Continuing Operations2
$
333
million

$
293
million

14%

$
1,427
million

$
1,212
million

18%
Non-GAAP Earnings from Continuing Operations2
$
372
million

$
333
million

12%

$
1,732
million

$
1,469
million

18%
GAAP Diluted EPS from Continuing Operations2
$
1.02

$
0.88

16%

$
4.32

$
3.61

20%
Non-GAAP Diluted EPS from Continuing Operations2
$
1.14

$
1.00

14%

$
5.24

$
4.38

20%
SEGMENT RESULTS
Pharmaceutical Segment
Fourth-quarter revenue for the Pharmaceutical segment increased 14 percent to $28.2 billion due to growth from existing and net new Pharmaceutical Distribution customers and, to a lesser extent, performance from the Specialty business. Segment profit for the quarter increased 1 percent to $542 million due to contributions from acquisitions, largely offset by the loss of a large customer contract, which expired on March 31, 2016.
For the full year, revenue for the Pharmaceutical segment increased 20 percent to $109.1 billion, and segment profit increased 19 percent to $2.5 billion.

Q4 FY16

Q4 FY15

Y/Y

FY16

FY15

Y/Y
Revenue
$
28.2
billion

$
24.7
billion

14%

$
109.1
billion

$
91.1
billion

20%
Segment Profit
$
542
million

$
535
million

1%

$
2.5
billion

$
2.1
billion

19%

Cardinal Health
Page 2

Medical Segment
Fourth-quarter revenue for the Medical segment increased 12 percent to $3.2 billion primarily due to contributions from acquisitions, and, to a lesser extent, growth from Cardinal Health Brand products. Segment profit increased 19 percent to $122 million due to contributions from acquisitions and Cardinal Health Brand products.
Full-year revenue for the Medical segment increased 9 percent to $12.4 billion, and segment profit increased 6 percent to $457 million.

Q4 FY16

Q4 FY15

Y/Y

FY16

FY15

Y/Y
Revenue
$
3.2
billion

$
2.9
billion

12%

$
12.4
billion

$
11.4
billion

9%
Segment Profit
$
122
million

$
103
million

19%

$
457
million

$
433
million

6%

OUTLOOK

The company does not provide GAAP EPS outlook, because it is unable to reliably forecast most of the items that are excluded from GAAP EPS to calculate non-GAAP EPS. These items could cause EPS to differ materially from non-GAAP EPS. See "Use of Non-GAAP Measures" following the attached schedules for additional explanation.

The company’s fiscal year 2017 guidance range for non-GAAP diluted EPS from continuing operations is $5.48 to $5.73, representing growth of approximately 5 to 9 percent from the prior year.

Cardinal Health typically does not provide quarterly earnings guidance. However, the company expects a year-over-year decline in its non-GAAP earnings per share for the first-quarter of fiscal year 2017 in the high-single- to low-double-digit-percent range. This expectation is largely due to an anticipated first-quarter decline in Pharmaceutical segment profit in a percentage range from the high teens to low twenties with full-year Pharmaceutical segment profit expected to be essentially flat to fiscal year 2016.

The expected first-quarter fiscal 2017 Pharmaceutical segment decline is largely based upon two factors: 1) less year-over-year incremental contribution from its generics program; and 2) a previously mentioned Pharmaceutical Distribution large customer loss, the impacts of which will continue through the third-quarter of fiscal year 2017.

More details can be found on the accompanying earnings presentation slides as well as on the company’s conference call.

SELECTED YEAR-END AND RECENT HIGHLIGHTS
•
Increased quarterly dividend by 16 percent to $0.4489 per share, or $1.80 on an annualized basis, and authorized new share repurchase program
•
Appointed Pamela O. Kimmet Chief Human Resources Officer following the retirement of Carole Watkins
•
Committed nearly $2 million in multi-year patient safety grants to help improve the effectiveness, efficiency and excellence of patient care
•
Announced distribution agreement with Biosensors enabling Cordis to sell Biosensors’ coronary stent portfolio in select countries in Europe, the Middle East, Africa, Australia and New Zealand
•
Convened 26th annual Retail Business Conference, presenting a record-setting 9,300 attendees with the industry’s largest lineup of continuing education opportunities, buying opportunities, and access to a broad array of Cardinal Health solutions to help diversify and improve their businesses
•
Demonstrated Cardinal Health’s commitment to the community by:
◦
Recognizing the essential contributions of medical laboratory professionals to patient care with the Cardinal Health urEssential Award
◦
Donating 11 million yen to Save the Children Japan to assist with restoration efforts for those families affected by the earthquakes earlier this year
◦
Contributing more than $85,000 in cash and health care products to aid those affected by the wildfires in Fort McMurray, Alberta, Canada

AWARDS AND RECOGNITIONS

Over the past year, Cardinal Health was recognized for the company’s culture and its commitment to diversity and sustainability. These accolades include:

•
Named on the 2016 "World’s Most Admired Companies" list by Fortune
•
Designated a 2016 Top Green Company in the U.S. by Newsweek
•
Named to the Human Rights Campaign (HRC) "Best Places to Work for LGBT Equality" for fourth consecutive year based on ratings in HRC’s 2016 Corporate Equality Index
•
Included in Becker’s Healthcare 150 Great Places to Work in Healthcare 2016 listing

Cardinal Health
Page 3

•
Named among the 2016 Best Companies for Leaders by Chief Executive
•
Included in the Dow Jones Sustainability North American Company Index for the 10th year in a row

On August 1, 2016 FUJIFILM Medical Systems U.S.A., Inc., a leading provider of diagnostic imaging products and medical informatics solutions, reported that it will have a major presence at the American Healthcare Radiology Administrators (AHRA) annual meeting held July 31-August 3, 2016, at The Gaylord Opryland Resort & Convention Center in Nashville, TN (Press release, Fujifilm, AUG 1, 2016, View Source [SID:1234514160]).

In addition to showcasing its comprehensive portfolio of digital radiography products and women’s imaging solutions, Fujifilm will sponsor the keynote presentation on Tuesday, August 2nd as well as lead an educational symposium on DR and the impact of the Consolidated Appropriations Act of 2016 on Wednesday, August 3rd.

"Our participation at AHRA 2016 will extend well beyond the walls of our booth, offering radiology professionals valuable information, insights and experience that they can take back to their facilities to improve department processes and patient outcomes." said Rob Fabrizio, director of strategic marketing, Digital Radiography and Women’s Health, FUJIFILM Medical Systems U.S.A., Inc.

Select highlights from Fujifilm’s comprehensive DR portfolio include:

FDR D-EVO GL – Begins shipping in the United States this month is the world’s first long length DR detector. It is designed to acquire long-length radiography for scoliosis and/or long leg exams with a simple, low dose, fast, single exposure. Featuring a huge 17×49" field of view, the FDR D-EVO GL saves time, enhances efficiency, image quality and dose for upright long-length radiography exams. It simplifies long length exams reducing chances for patient movement artifacts with faster setup and less chance for anatomy cut off due to a wider field of view compared to conventional multi-exposure DR. Compared to CR, the detector uses less dose and eliminates CR reader processing steps. The wait for a single exposure long length DR is over and the benefits far exceed conventional solutions available.

Virtual Grid – Also releasing this month is Fujifilm’s second generation grid simulation image processing. Virtual Grid intelligently interprets and corrects the effects of scatter radiation, adapting contrast to improve image quality for exams acquired without a grid. Virtual Grid brings valuable benefits to imaging, enhancing patient comfort; eliminating bulky grids, simplifying technologist productivity; making the detector lighter and faster to position, and lowering dose as much as 50% compared to exams performed with a grid. Virtual Grid can be used with both DR and CR, all anatomy, including long length images.

Focus on Education
Fujifilm’s ongoing commitment to education will be evident at AHRA 2016. On Tuesday, August 2nd at 9:45am, Fujifilm will sponsor the general session keynote speaker, Scott Steinberg, as he delivers his presentation, "Leading with Innovation: How to Future-Proof Yourself, Fearlessly Innovate, and Succeed in the New Normal." A celebrated speaker, author, futurist and strategic innovation consultant, Steinberg has earned a reputation for helping professionals and organizations cultivate competitive advantages.

On Wednesday, August 3rd from 7:15am-8:15am, Fujifilm will deliver an educational symposium titled "Navigating the New Consolidated Appropriations Act of 2016: Challenging Problems…DR Solutions." Led by Rob Fabrizio the session will cover the business and reimbursement impact of the new legislation on radiology departments. The session will also explore the benefits of a CR-to-DR transition including a variety of improvements to the domains of care as well as a facility’s bottom line. Attendees will have an opportunity to ask questions and will receive 1 ASRT approved credit.

For more information about Fujifilm, please visit: www.fujifilmhealthcare.com.

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On August 1, 2016 Varian Medical Systems (NYSE: VAR) reported the creation of an interactive online group in which clinicians can share RapidPlan models for treating cancer patients using radiotherapy or radiosurgery (Press release, InfiMed, AUG 1, 2016, View Source [SID:1234514161]). Hosted on the OncoPeer Cloud Community, the RapidPlan Model Sharing group www.oncopeer.com is open to Varian customers, and allows clinicians to share RapidPlan models that can improve the efficiency and quality of treatment models and cancer care across multiple institutions.

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The first RapidPlan model shared on OncoPeer is a stereotactic body radiotherapy (SBRT) treatment of lung cancer that comes from the Beatson West of Scotland Cancer Centre in Glasgow, U.K. RapidPlan knowledge-based planning provides clinicians with models that have been shown to enhance the quality and speed of developing treatment plans for many types of external beam radiotherapy and allows clinicians to build and improve models.

"RapidPlan has positively increased the efficiency and quality of our treatment plan development," said Garry Currie, head of Radiotherapy Physics at the center in Glasgow. "By sharing our RapidPlan models on OncoPeer, we have the opportunity to share our knowledge and contribute to the collective understanding of high-quality treatment plan development around the world. Also, we create the opportunity to learn from others in the community so that we can continue to increase the quality of our plans here in Scotland."

Launched in 2015, OncoPeer enables users to initiate threaded discussions, form open or closed groups, share and comment about uploaded files, create events, monitor trending keywords within the community and sort information by keyword.

"We are very pleased with the growth of OncoPeer over the past year and the creation of new knowledge sharing groups like this one for RapidPlan, are testament to the desire of clinicians around the world to learn from each other in this fight against cancer," said Sukhveer Singh, vice president Oncology Continuum Solutions at Varian. "We will continue to expand this important knowledge sharing resource."

For more information on OncoPeer, visit: View Source

On August 1, 2016 Varian reported that Cancer patients in Ethiopia will gain access to modern radiotherapy treatments for the first time with the announcement that Varian Medical Systems (NYSE: VAR) has been selected to supply advanced medical linear accelerators to six hospitals in the country (Press release, InfiMed, AUG 1, 2016, View Source [SID:1234514162]). The Clinac iX treatment systems will be the first such devices offering treatments to cancer patients in a country of more than 90 million people.

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The first phase of a cancer plan being rolled out by the Ethiopian government will see Varian supplying the treatment systems to Ethiopian university hospitals in the cities of Harar, Mek’ele, Jima, Hawasa, Gondar, and the capital Addis Ababa. The first of these projects is intended to start offering clinical treatments by the end of this year. The order for the six treatment machines was received by Varian in June.

"This is a well-considered plan by the Ethiopian government and Varian is delighted to be able to contribute by extending advanced care to an area of the world that is severely under-equipped," says Tom Duffy, Varian’s senior manager of Channel Management & Nile Delta Sales.

The Clinac iX systems will be capable of delivering fast and precise RapidArc treatments with image-guidance tools on each system. Each site will have an Eclipse system for treatment planning and 3 ARIA oncology information management workstations, and each hospital will have two radiotherapy bunkers to enable future expansion. Varian and Elsmed, one of its local representatives, are also working with the Ethiopian government to establish clinical education and training resources in the country.

"More than 70% of cancer patients require radiotherapy as part of their treatment and precise radiotherapy delivery requires image-guided treatments on modern machines, which is why a modern linear accelerator will be so important for our center," added Dr. Mathewos Assefa Woldegeorgis, of Black Lion University Hospital in Addis Ababa. "This machine will also help in the training of health professionals such as radiation oncologists, radiotherapists and medical physicists."

Udi Baruch, managing director of Israel-based Elsmed, said, "We will support this ambitious project through maintenance of the systems, intensive training programs for operators and also an ongoing knowledge sharing program between leading oncology institutes in Israel and the centers in Ethiopia in order to ensure the highest level of treatment in the most efficient and latest techniques."