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

Idera Pharmaceuticals has filed a 10-Q – Quarterly report [Sections 13 or 15(d)] with the U.S. Securities and Exchange Commission (Filing, 10-Q, Idera Pharmaceuticals, AUG 2, 2016, View Source [SID1234514177]).

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On August 2, 2016 Compugen Ltd. (NASDAQ: CGEN), a leading predictive drug discovery company, reported financial results for the second quarter ending June 30, 2016 (Filing, Q2, Compugen, 2016, AUG 2, 2016, View Source [SID:1234514182]).

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Anat Cohen-Dayag, Ph.D., Compugen’s President and Chief Executive Officer, stated, "Our broad portfolio of novel targets for immuno-oncology is comprised of two key categories – T cell-based and myeloid cell-based immune checkpoint target candidates, with candidates in both categories identified within the tumor microenvironment of multiple types of cancers. These discoveries provide Compugen with the potential for the development of multiple transformational, first-in-class, antibody drugs for immuno-oncology. In this respect, during the past quarter we selected a lead therapeutic antibody for CGEN-15029, named COM701, which is now undergoing preclinical development activities in preparation for advancement to clinical trials, with an anticipated IND filing next year."

Dr. Cohen-Dayag continued, "In parallel with our therapeutic development activities, we are also pursuing a significant, previously undisclosed research activity, under which we have established a comprehensive in vivo validation system, based on knockout mice, where the target of interest has been genetically removed. This activity was initiated in early 2015 and was applied to the majority of the Company’s immuno-oncology target candidates, in order to further evaluate in vivo their likely clinical relevance, identify effective drug combinations, and assess the mechanisms-of-action by which our targets suppress immune response. Similar evaluations in knockout mice were a major factor driving the development of approved immuno-oncology therapies such as PD-1 and CTLA-4 inhibitors, and have been shown to be predictive of the ultimate clinical relevance of their respective target proteins."

Dr. Cohen-Dayag concluded, "Now, with our immuno-oncology target pipeline consisting of both T cell-based and myeloid cell-based immune checkpoint target candidates, we are focusing on target candidates that have the potential to complement each other, and that are expected to substantially enhance the overall value of our pipeline, particularly when taking into consideration the need for combination therapies."

Revenues for the second quarter of 2016 and six months ending June 30, 2016 were $0.5 million and $0.6 million respectively, compared with $0.2 million and $0.7 million for the comparable periods in 2015, reflecting primarily the milestone in the amount of $0.4 million achieved in the second quarter of 2016 and the non-cash amortization during these periods of the upfront payment, in both cases related to the August 2013 collaboration and license agreement with Bayer.

R&D expenses for the second quarter of 2016 and six months ending June 30, 2016 were $5.5 million and $12.2 million respectively, compared with $5.2 million and $10.1 million in the comparable periods in 2015. The increase primarily reflects expanded activities involving our pipeline program candidates, including the hiring of additional professional employees and manufacturing and regulatory consultants to support pre-clinical activities.

Net loss for the second quarter of 2016 was $6.6 million, or $0.13 per diluted share, compared with a net loss of $6.8 million, or $0.14 per diluted share, for the comparable period in 2015. Net loss for the six months ending June 30, 2016 was $15.2 million, or $0.30 per diluted share, compared with a net loss of $13.0 million, or $0.26 per diluted share, for the comparable period in 2015.

As of June 30, 2016, cash and cash related accounts totaled $74.1 million, compared with $81.4 million as of December 31, 2015. The Company has no debt.

On August 2, 2016 Foundation Medicine, Inc. (NASDAQ:FMI) reported financial and operating results for its second quarter ended June 30, 2016 (Press release, Foundation Medicine, AUG 2, 2016, View Source [SID:1234514184]). Highlights for the quarter included:

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Achieved second quarter revenue of $28.2 million, 26% year-over-year growth;
Reported 10,286 clinical tests in the second quarter, 16% year-over-year growth;
Grew FoundationCORE, the company’s molecular information knowledgebase, to nearly 90,000 patient cases;
Commercially launched FoundationACT, the company’s circulating tumor DNA (ctDNA) assay;
Presented new data at the 2016 annual meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) demonstrating that tumor mutational burden as measured by FoundationOne may predict response to cancer immunotherapies in a broad range of solid tumors;
Published 23 manuscripts in high-quality, peer-reviewed journals and delivered 30 podium and poster talks at various medical and scientific meetings.
Foundation Medicine reported total revenue of $28.2 million in the second quarter of 2016, compared to $22.5 million in the second quarter of 2015. Revenue from biopharmaceutical partners grew 88% to $18.8 million in the second quarter of 2016, compared to $10.0 million in the second quarter of 2015. The increase in revenue demonstrates the company’s leading role as an important partner in drug development for oncology-focused biopharmaceutical companies.

Revenue from clinical testing in the second quarter of 2016 was $9.4 million, compared to $12.4 million in the second quarter of 2015. The decrease in clinical revenue was driven in part by moving in-network with a large national payor for stage IV Non-Small Cell Lung Cancer (NSCLC) testing, which resulted in no longer receiving payments for other indications and also resulted in payment delays for the covered indication.

The company reported 10,286 clinical tests in the second quarter of 2016, a 16% increase from the same quarter last year. This reported volume number includes 8,864 FoundationOne tests and 1,248 FoundationOne Heme tests.

"Foundation Medicine reported a strong second quarter highlighted by continued growth in our biopharma business and robust clinical volume growth," said Michael Pellini, M.D., chief executive officer of Foundation Medicine. "We believe that our recent accomplishments, which also include our participating in both the Expedited Access Pathway with FDA and Parallel Review with FDA and CMS for FoundationOne, position our company for continued growth and further competitive differentiation, and place us at the leading edge of transforming cancer care."

The company’s molecular information knowledgebase, FoundationCORE, grew to nearly 90,000 patient cases. FoundationCORE is a unique asset and critical component of the value that Foundation Medicine delivers to its biopharmaceutical and physician customers. The increasing scale and breadth of this high quality, clinically relevant oncology data set derived from the company’s testing platform continues to enhance clinical practice and help enable improved outcomes for patients.

Total operating expenses for the second quarter of 2016 were approximately $45.5 million compared with $46.6 million for the second quarter of 2015, which included a one-time expense in April 2015 of $14.4 million in advisor fees related to the closing of the company’s strategic collaboration with Roche. Net loss was approximately $29.0 million in the second quarter of 2016, or a $0.84 loss per share. At June 30, 2016, the company held approximately $190.4 million in cash, cash equivalents and marketable securities.

Today, Foundation Medicine also secured a $100 million credit facility from Roche Finance. The facility represents a three-year line of credit, after which any outstanding balance will convert to a term loan payable over the following five years. No funds were drawn under the credit facility upon the closing. The company intends to use the proceeds for product development and commercialization, corporate development and working capital management.

Recent Enterprise Highlights

Announced acceptance of FoundationOne for review as part of the Expedited Access Pathway program with FDA and Parallel Review through FDA and CMS. If approved, FoundationOne could be the first FDA-approved comprehensive genomic profiling (CGP) assay to incorporate multiple companion diagnostics to support precision medicine in oncology and would be offered as a covered benefit to Medicare beneficiaries nationwide. View Source
Announced the first strategic initiative under a master collaboration agreement with AstraZeneca to develop a novel companion diagnostic assay for Lynparza to support its global development program.
Announced the release of a broad set of genomic profiles of adult cancers from FoundationCORE to the National Cancer Institute in support of the National Cancer Moonshot and Precision Medicine initiatives.
2016 Outlook

Foundation Medicine’s business and financial outlook for 2016 is the following:

The company expects 2016 revenue will be in the range of $110 to $120 million.
The company is increasing clinical volume guidance and now expects to deliver between 39,000 and 41,000 FoundationOne and FoundationOne Heme clinical tests in 2016.
The company expects operating expenses will be in the range of $175 and $185 million.
The company intends to expand upon reimbursement progress and work to drive additional coverage decisions.

T cells were genetically modified using DNA plasmids from the SB platform to stably express a second-generation CD19-specific CAR and selectively propagated ex vivo with activating and propagating cells (AaPCs) and cytokines (J Clin Invest. 2016 Sep 1;126(9):3363-76. doi: 10.1172/JCI86721. Epub 2016 Aug 2. View Source [SID:SID1234516349]). Twenty-six patients with advanced non-Hodgkin lymphoma and acute lymphoblastic leukemia safely underwent hematopoietic stem cell transplantation (HSCT) and infusion of CAR T cells as adjuvant therapy in the autologous (n = 7) or allogeneic settings (n = 19).
B-mediated genetic transposition and stimulation resulted in 2,200- to 2,500-fold ex vivo expansion of genetically modified T cells, with 84% CAR expression, and without integration hotspots. Following autologous HSCT, the 30-month progression-free and overall survivals were 83% and 100%, respectively. After allogeneic HSCT, the respective 12-month rates were 53% and 63%. No acute or late toxicities and no exacerbation of graft-versus-host disease were observed. Despite a low antigen burden and unsupportive recipient cytokine environment, CAR T cells persisted for an average of 201 days for autologous recipients and 51 days for allogeneic recipients.
CD19-specific CAR T cells generated with SB and AaPC platforms were safe, and may provide additional cancer control as planned infusions after HSCT. These results support further clinical development of this nonviral gene therapy approach.

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