On February 2, 2017 – ARCH Venture Partners and Versant Ventures
reported the launch of Vividion Therapeutics, Inc., a biotechnology company
focused on developing innovative therapeutics that treat major unmet clinical needs
using the first platform for proteome-­wide ligand and target discovery. ARCH and
Versant co-­led today’s $50 million Series A financing and were joined by founding
investor Cardinal Partners (Press release, Vividion Therapeutics, FEB 2, 2017, View Source [SID1234520718]).

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Vividion Therapeutics has advanced a novel drug discovery platform that applies
chemical proteomics to expand the druggable proteome and address difficult targets to
bring new, transformative treatments to patients with serious illnesses. Making
accessible the broad set of proteins expressed in human cells, the company’s cutting
edge platform was spun out of the lab of Ben Cravatt, Professor at The Scripps
Research Institute in La Jolla, Calif.

In conjunction with the financing, Tom Daniel will join the Board as Executive Chairman.
"This Series A financing reflects deep commitment to Vividion Therapeutics’ approach
to transform chemical drug discovery and development," stated Dr. Daniel. "The
founders, experienced team and platform are ruthlessly focused on the accelerated
delivery of impactful drugs to serve patients. The platform expands the definition of
druggability on mechanism in serious illnesses, while delivering new routes to address
highly validated disease targets."

Vividion Therapeutics Novel Scientific Approach
Conventional drug discovery is target-­centric;; a compound library is screened using a
target-­specific assay and high-­affinity binding ligands are optimized to develop a drug
candidate. This approach is limited, as research is performed in artificial systems that
fail to account for native protein structure, context and function. Further, conventional
target-­specific assays are applied to a narrow subset of the proteome and selectivity is
assessed later in development.

In contrast, Vividion Therapeutics assesses with high precision and broad coverage
protein-­drug candidate interactions in native biological systems. This eliminates artifacts
and creates proteome-­wide drug interaction maps for simultaneous target engagement
and global selectivity profiling. Through novel chemistry, Vividion Therapeutics’ platform
allows efficient, accelerated optimization of hit fragments into drug candidates. The
company has a robust intellectual property estate that includes the assignment of
numerous, heretofore unrecognized, druggable sites in the human proteome.
"The Vividion Therapeutics’ platform allows human biology to fundamentally drive the
selection of drug targets and to create entry points for targets previously considered to
be undruggable," said Kristina Burow, Managing Director at ARCH. "The team at
Vividion Therapeutics has created a novel platform based on chemical proteomics and
modern synthetic chemistry that will radically expand the druggability of the human
proteome. We believe this will lead to innovative therapeutics that have the ability to
significantly benefit patients."

Vividion Therapeutics Co-­Founders
The Vividion Therapeutics founding team includes:
• Benjamin F. Cravatt III, Ph.D., Professor and Co-­Chair, Department of Molecular
Medicine, the Skaggs Institute for Chemical Biology at The Scripps Research
Institute
• Phil S. Baran, Ph.D., Professor, Darlene Shiley Professor of Chemistry,
Department of Chemistry, the Skaggs Institute for Chemical Biology at The
Scripps Research Institute
• Jin-­Quan Yu, Ph.D., Frank and Bertha Hupp Professor of Chemistry,
Department of Chemistry, The Scripps Research Institute
• John K. Clarke, Managing General Partner, Cardinal Partners
Vividion Therapeutics Board of Directors
The Vividion Therapeutics scientific team is complemented by a Board of Directors that
has significant experience in creating, leading and growing biopharmaceutical
companies. In addition to Dr. Cravatt and Mr. Clarke, they include:
• Tom Daniel, M.D., Executive Chairman of the Board, formerly President, Global
Research and Early Development, Celgene Corporation
• Kristina Burow, Managing Director, ARCH Venture Partners
• Tom Woiwode, Ph.D., Managing Director, Versant Ventures
• Paul Schimmel, Ph.D., Professor, Department of Cell and Molecular Biology,
Department of Chemistry, The Skaggs Institute for Chemical Biology at The
Scripps Research Institute

About Vividion Therapeutics
Vividion Therapeutics is a biotechnology company focused on developing innovative
therapeutics that treat major unmet clinical needs using the first platform for proteome-­
wide ligand and target discovery. Headquartered in San Diego, CA, Vividion
Therapeutics is a private, biotechnology company founded in 2014 with seed financing
from Cardinal Partners as a spin out from the labs of Dr. Benjamin Cravatt, Dr. Phil
Baran and Dr. Jin-­Quan Yu at TSRI. In 2017, Vividion launched with $50 million in
Series A financing from ARCH Venture Partners, Versant Ventures and founding
investor Cardinal Partners. For more information, please visit www.vividion.com.

About ARCH Venture Partners
ARCH Venture Partners, one of the largest early stage technology venture firms in the
U.S., invests in seed and early stage advanced technology companies. ARCH enjoys
special recognition as a leader in the commercialization of technologies developed at
academic institutions, corporate research labs and national laboratories. Now in its 30th
year, ARCH has over $2.5 billion in committed capital through nine venture funds, and
has co-­founded and provided initial investments for over 200 companies. For more
information, please visit View Source

About Versant Ventures
Versant Ventures is a leading healthcare investment firm committed to helping
exceptional entrepreneurs build the next generation of great healthcare companies. The
firm invests across the healthcare sector and at all stages of company development,
with an emphasis on the discovery and development of novel therapeutics. With $2.3
billion under management and offices in North America and Europe, Versant has built a
team with deep investment, operating, and scientific expertise that enables a hands-­on
approach to company building. Since the firm’s founding in 1999, more than 65 Versant
companies have achieved successful acquisitions or IPOs. For more information,
please visit www.versantventures.com.

About Cardinal Partners
Cardinal Partners, founded in 1996, is one of the leading venture capital partnerships
focused exclusively on healthcare investing. Cardinal specializes in early-­stage
financing rounds. As veteran company-­builders, over the course of their careers, the
Cardinal Partners team has invested in over 100 growth companies. Companies funded
by Cardinal have a cumulative market valuation exceeding $20 billion. Cardinal’s
investors include university endowments, foundations, pension funds, banks, and
insurance companies. Cardinal currently manages funds totaling $400 million. For more
information, please visit View Source

On February 2, 2017 QB3@953, the Bay Area’s premier life science incubator, reported the collaboration between one of its member companies, Telo Therapeutics, and one of its sponsor companies, GlaxoSmithKline (GSK) (Press release, Telo Therapeutics, FEB 2, 2017, View Source [SID1234574485]). Telo Therapeutics is a start-up biotechnology company co-founded by Joe Costello, PhD, UCSF Professor of Neurological Surgery, and Robert Bell, PhD, a former post doc in Dr. Costello’s lab. GSK’s Discovery Partnerships with Academia (DPAc) group recently extended its 2015 collaboration agreement with QB3@953, and has now formed a collaboration with Telo Therapeutics to develop a novel precision medicine with the aim to reverse cancer cell immortality.

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"We’re delighted to collaborate with GSK because of their extensive chemistry resources and drug development expertise," said Dr. Costello.

"This collaboration is a tremendous step forward for Telo, and it will accelerate our development timeline towards patient trials faster than would be possible alone," added Dr. Bell, now CEO of Telo Therapeutics.

"Telo is exactly the type of innovative target concept that we were hoping to see through our collaboration with QB3@953," said Carolyn Buser-Doepner, Head of the GSK DPAc team. "The principal scientists and their innovative, early target concept are an excellent fit for the DPAc model."

Telo first became a member of QB3@953 and then a collaborator with GSK’s DPAc team as well as the recipient of GSK’s "golden ticket" lab bench at QB3@953. The "golden ticket" is provided by QB3@953 to allow sponsor companies to select a promising Bay Area biotech company of their choice to allocate use of state-of-the-art research equipment and lab space granted to partners of QB3@953. As a "golden ticket" company, Telo Therapeutics will have access to GSK’s allocated space and equipment for one year while the two companies work together to perform a series of small molecule screens. If promising drug candidates are identified through this collaboration, a longer multi-year partnership between the parties could be established to advance the drug to the clinic.

"The formation of the collaboration between Telo Therapeutics and GSK is a great example of how QB3@953 serves as a launch pad to pair local researchers possessing great science and entrepreneurial aspirations with partner resources necessary to advance innovative programs within new companies," said Doug Crawford, QB3@953 Managing Director.

On February 1, 2017 Baxter International Inc. (NYSE:BAX) reported results for the fourth quarter ended December 31, 2016, and provided its guidance for the first quarter and full-year 2017 (Press release, Baxter International, FEB 1, 2017, View Source [SID1234517613]).

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"Baxter’s solid operational performance in 2016 was fueled by strong sales and disciplined execution across the organization," said José (Joe) E. Almeida, chairman and chief executive officer. "We’ll continue to build on this momentum in 2017 and beyond, driven by new product launches, effective portfolio management and further progress on our business transformation initiatives – all in support of delivering sustainable top-quartile results for our shareholders, and advancing our mission to save and sustain lives."

Fourth-Quarter Financial Results

Baxter reported income from continuing operations of $240 million, or $0.44 per diluted share, on a GAAP (Generally Accepted Accounting Principles) basis for the fourth quarter. These results included special items totaling $134 million ($72 million net after-tax), primarily related to business optimization initiatives and intangible asset amortization.

On an adjusted basis, excluding special items, Baxter’s fourth quarter income from continuing operations totaled $312 million, or $0.57 per diluted share, exceeding the company’s previously issued guidance of $0.49 to $0.52 per diluted share.

Baxter’s worldwide sales totaled $2.6 billion in the fourth quarter, an increase of 2 percent on both a reported and constant currency basis as compared to the prior-year period. Sales within the U.S. were $1.1 billion, advancing 5 percent, while international sales totaled $1.5 billion, representing a 1 percent decrease on a reported basis, and an increase of 1 percent on a constant currency basis. Adjusting for the impact of foreign exchange and generic competition for cyclophosphamide, Baxter’s sales increased 7 percent in the U.S. and rose 3 percent globally in the fourth quarter.

By business, Hospital Products sales of $1.6 billion in the fourth quarter increased 1 percent on a reported basis, and 1 percent on a constant currency basis. Adjusting for the impact of foreign exchange and cyclophosphamide, Hospital Products sales advanced 2 percent from the prior-year period. Hospital Products performance in the quarter benefited from strong sales of IV therapies, infusion pumps and related IV access administration sets in the U.S., along with favorable demand for anesthesia and critical care products globally. This performance was partially offset by lower sales of IV solutions internationally, as the company implements actions to optimize its global product portfolio, as well as lower manufacturing service revenues from Shire, under the company’s manufacturing and supply agreement with Baxalta.

Baxter’s Renal sales totaled $1 billion in the fourth quarter, representing a 3 percent increase on a reported basis, and a 5 percent increase on a constant currency basis. U.S. sales grew 7 percent to $222 million, and international sales totaled $793 million, representing growth of 2 percent on a reported basis, and an increase of 4 percent on a constant currency basis. Growth continued to be driven by robust sales of peritoneal dialysis products as well as increased demand for the company’s acute renal care products.

During the quarter, Baxter repurchased $247 million worth of common stock or approximately 5.4 million shares outstanding.

Summary of Full-Year 2016 Results

For full-year 2016, Baxter reported income from continuing operations of approximately $5 billion, or $9.01 per diluted share, on a GAAP basis. These results included a gain of $4.4 billion (on a pre and post-tax basis), related to the company’s disposition of its retained Baxalta shares. Partially offsetting these results were special items of $817 million ($557 million net after-tax) related to business optimization initiatives, intangible asset amortization, debt extinguishment costs, Baxalta-related spin-off costs and asset impairments.

On an adjusted basis, excluding special items, Baxter’s full-year income from continuing operations totaled $1.1 billion, or $1.96 per diluted share.

Baxter’s worldwide sales totaled $10.2 billion in 2016, an increase of 2 percent on a reported basis and 4 percent on a constant currency basis as compared to the prior year. Sales within the United States totaled $4.3 billion, improving 6 percent over the prior year. International sales totaled $5.9 billion, representing a 1 percent decrease on a reported basis, and an increase of 3 percent on a constant currency basis. Adjusting for the impact of foreign exchange and generic competition for cyclophosphamide, Baxter’s sales increased 9 percent in the U.S. and rose 5 percent globally.

Full-year sales for Hospital Products totaled $6.3 billion, reflecting growth of 2 percent on a reported basis and 4 percent at constant currency. Adjusting for the impact of foreign exchange and cyclophosphamide, sales increased 5 percent. Baxter’s Renal sales totaled $3.9 billion, increasing 2 and 5 percent on a reported and constant currency basis, respectively.

In 2016, Baxter generated $1.6 billion in operating cash flow, an increase of $371 million driven by improved operational performance and implementation of new programs focused on improving the company’s working capital. In addition, through disciplined management of expenditures Baxter reduced capital spending by $192 million to $711 million. As a result, the company generated an increase of $563 million in free cash flow to $905 million (operating cash flow less capital expenditures).

"We are extremely pleased with the significant improvements Baxter has made in free cash flow generation. Our progress in 2016 represented an increase of more than 2.5 times as compared to 2015, and further supports our ability to reinvest in the business both organically and inorganically to drive accelerated growth," said Jay Saccaro, Baxter’s chief financial officer.

Business Highlights

In 2016 Baxter continued delivering meaningful innovation for patients and expanded access to life-sustaining therapies through a combination of more than 20 new product launches, line extensions and geographic expansions, including: NUMETA G13E, the only triple-chamber commercially prepared parenteral nutrition system approved for vulnerable neonatal patients; HEMOPATCH, an advanced surgical patch; premix generic drugs such as VANCOMYCIN injection in 0.9% Sodium Chloride; new applications and features for the SIGMA SPECTRUM infusion system; and HDx therapy enabled by THERANOVA to provide high performance hemodialysis treatments.

Additionally, the company saw continued momentum with its new Automated Peritoneal Dialysis (APD) systems, AMIA in the U.S. and HOMECHOICE CLARIA outside the U.S., both featuring Baxter’s SHARESOURCE Connectivity Platform, the first and only two-way remote patient management system for home dialysis therapy.

In December, Baxter announced plans to expand its presence in the generic injectables space with the proposed acquisition of Claris Injectables Limited (Claris). The acquisition of Claris, which is expected to close in the second half of 2017, will provide Baxter with a currently marketed portfolio of molecules in anesthesia and analgesics, renal, anti-infectives and critical care in a variety of presentations including bags, vials and ampoules, along with a robust pipeline and high-quality manufacturing capabilities. This acquisition will provide Baxter with a platform to establish a leadership position in generic injectables.

Over the course of the year, the company also took actions to significantly improve its balance sheet position and return value to shareholders through the disposition of the Baxalta retained stake, a $1.6 billion debt offering to retire existing higher coupon rate bonds and pay off outstanding commercial paper, a 13 percent increase in its shareholder dividend and share repurchases of approximately $300 million.

Financial Outlook

Baxter is providing its outlook for the full-year and first quarter of 2017:

For full-year 2017, Baxter expects sales to be comparable to the prior-year period on a reported basis and to increase approximately 2 percent on a constant currency basis. Adjusting for the impact of generic cyclophosphamide competition (an estimated one percent) and selected strategic product exits the company is undertaking (an estimated one percent), Baxter expects underlying constant currency sales growth of approximately 4 percent. The company expects earnings from continuing operations, before special items, of $2.10 to $2.18 per diluted share. This guidance does not include any impact from the company’s proposed acquisition of Claris, which is expected to close in the second half of 2017.
For the first quarter, the company expects sales growth of approximately 2 to 3 percent on a reported basis, or 3 to 4 percent on a constant currency basis. Adjusting for the impact of generic cyclophosphamide competition (an estimated one-half percent) and selected strategic product exits the company is undertaking (an estimated one and a half percent), Baxter expects underlying constant currency sales growth of 5 to 6 percent. The company expects earnings from continuing operations, before special items, of $0.50 to $0.52 per diluted share.
The reconciliations between the projected 2017 adjusted diluted earnings per share and projected GAAP diluted earnings per share follows:

2017 Earnings per Share Guidance Q1 2017 FY 2017
Diluted Earnings per Share – Adjusted $0.50 – $0.52 $2.10 – $2.18
Estimated intangible asset amortization $0.04 $0.18
Estimated business optimization charges $0.05 – $0.06 $0.31 – $0.38
Estimated Baxalta separation-related expenses $0.01 $0.02
Diluted Earnings per Share – GAAP $0.39 – $0.42 $1.52 – $1.67
These estimates are based on information reasonably available at the time of this release and future events or new information may result in different actual results.

On January 31, 2017 Kyowa Hakko Kirin Co., Ltd. (Headquarters: Chiyoda-ku, Tokyo; President and CEO: Nobuo Hanai, hereinafter, "Kyowa Hakko Kirin"), reported that it has established Kyowa Kirin Frontier Co., Ltd. (hereinafter, "Kyowa Kirin Frontier") on January 18, 2017 as part of "CSV(Note 1) management based on our unique business structure," one of the core strategies set forth by Kyowa Hakko Kirin in its current Mid-term Business Plan (Press release, Kyowa Hakko Kirin, JAN 31, 2017, View Source [SID1234517604]).

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Kyowa Kirin Frontier will work toward obtaining approval to manufacture and market "Authorized version (Note 2)" of NESP, a core product of Kyowa Hakko Kirin, in Japan. Through such efforts by Kyowa Kirin Frontier, it will be possible to respond to the changes in the social environment surrounding healthcare in Japan and the diversification of the needs thereof, and to meet social demands for medical cost containment.

The Kyowa Hakko Kirin Group companies strive to contribute to the health and well-being of people around the world by creating new value through the pursuit of advances in life sciences and technologies. Note 1: CSV stands for "Creating Shared Value." It ref

On January 31, 2017 Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, reported its financial results for the fourth quarter and full year ended December 31, 2016 (Press release, Thermo Fisher Scientific, JAN 31, 2017, View Source [SID1234517606]).

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Fourth Quarter and Full Year 2016 Highlights

Fourth quarter revenue increased 6% to $4.95 billion.
Full year revenue grew 8% to $18.27 billion.
Fourth quarter GAAP diluted earnings per share (EPS) increased 6% to $1.59.
Fourth quarter adjusted EPS grew 14% to $2.41.
Full year GAAP diluted EPS increased 3% to $5.09.
Full year adjusted EPS grew 12% to $8.27.
Invested more than $750 million in R&D in 2016, and launched significant new products, including Q Exactive BioPharma mass spectrometry and Integrion chromatography systems, TSX laboratory freezers, Ion Torrent cancer assays, and new tests for drugs-of-abuse and autoimmune disease.
Strengthened capabilities in Shanghai, Seoul and Singapore during the year to build on industry-leading presence in Asia-Pacific and emerging markets and continued to deliver strong growth in the region, led by outstanding performance in China.
Deployed approximately $7 billion of capital in 2016, with $5.5 billion spent on strategic acquisitions, including FEI Company and Affymetrix, and $1.5 billion returned to shareholders through a combination of stock buybacks and dividends.
Adjusted EPS, adjusted operating income, adjusted operating margin and free cash flow are non-GAAP measures that exclude certain items detailed later in this press release under the heading "Use of Non-GAAP Financial Measures."

"I’m pleased to report that we achieved the goals we laid out for 2016, and successfully executed our strategy to deliver another excellent year," said Marc N. Casper, president and chief executive officer of Thermo Fisher Scientific.

"We effectively deployed the largest R&D budget in our industry, and launched new high-impact products across all of our technology platforms. In Asia-Pacific and emerging markets, we leveraged our industry-leading scale to drive strong growth, especially in China, where we’re capturing opportunities aligned with the new five-year plan.

"We also continued to successfully execute our capital deployment strategy to create value for our shareholders. I’m really excited about our acquisition of FEI – the third largest in our history – and look forward to the opportunities we have to leverage these complementary technologies to drive growth.

"To sum it up, with a strong 2016 behind us, we’re positioned for another great year ahead."

Fourth Quarter 2016

As previously communicated, the company’s 2016 fiscal calendar had four fewer selling days in the fourth quarter versus the fourth quarter of 2015. Consequently, revenue and organic growth results in the 2016 quarter were negatively affected by the fewer days, and operating margin benefited due to fewer days of costs. Revenue for the quarter grew 6% to $4.95 billion in 2016, versus $4.65 billion in 2015. Organic revenue growth was essentially flat; acquisitions increased revenue by 8% and currency translation reduced revenue by 1%.

GAAP Earnings Results

GAAP diluted EPS in the fourth quarter increased to $1.59, versus $1.50 in the same quarter last year. GAAP operating income for the fourth quarter of 2016 grew to $753 million, compared with $690 million in the fourth quarter of 2015. GAAP operating margin increased to 15.2%, compared with 14.8% in the fourth quarter of 2015.

Non-GAAP Earnings Results

Adjusted EPS in the fourth quarter of 2016 rose 14% to $2.41, versus $2.12 in the fourth quarter of 2015. Adjusted operating income for the fourth quarter of 2016 grew 14% compared with the year-ago quarter. Adjusted operating margin expanded 160 basis points to 24.8%, compared with 23.2% in the fourth quarter of 2015.

Full Year 2016

Revenue for the full year grew 8% to $18.27 billion in 2016, versus $16.97 billion in 2015. Organic revenue growth was 4%; acquisitions increased revenue by 4% and currency translation reduced revenue by 1%.

GAAP Earnings Results

GAAP diluted EPS for the full year increased to $5.09, versus $4.92 in 2015. GAAP operating income for 2016 grew to $2.45 billion, compared with $2.34 billion a year ago. GAAP operating margin was 13.4% in 2016, compared with 13.8% in 2015. GAAP operating results reflect acquisition-related charges in the 2016 period.

Non-GAAP Earnings Results

Adjusted EPS for the full year rose 12% to $8.27, versus $7.39 in 2015. Adjusted operating income for 2016 grew 10% compared with 2015, and adjusted operating margin expanded 60 basis points to 23.1%, compared with 22.5% a year ago.

Annual Guidance for 2017

The company will provide 2017 financial guidance on its earnings conference call this morning at 8:30 a.m. Eastern time.

Segment Results

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

Fourth quarter revenue results were negatively affected by the four fewer selling days in 2016 and fourth quarter operating margin benefited from fewer days of costs. Fourth quarter and full year results were negatively affected by the impact of foreign currency exchange rates. The impact of the fewer days in the fourth quarter and foreign exchange affects each of the segments to varying degrees.

Life Sciences Solutions Segment

In the fourth quarter of 2016, Life Sciences Solutions Segment revenue grew 10% to $1.34 billion, compared with revenue of $1.21 billion in the fourth quarter of 2015. Segment adjusted operating margin increased to 33.3%, versus 31.6% in the 2015 quarter.

For the full year 2016, Life Sciences Solutions Segment revenue rose 12% to $4.98 billion, compared with revenue of $4.44 billion in 2015. Segment adjusted operating margin increased to 30.4% in 2016, compared with 30.1% a year ago.

Analytical Instruments Segment

Analytical Instruments Segment revenue grew 32% to $1.22 billion in the fourth quarter of 2016, compared with revenue of $925 million in the fourth quarter of 2015. Segment adjusted operating margin increased to 24.5%, versus 22.1% in the 2015 quarter.

For the full year 2016, Analytical Instruments Segment revenue rose 14% to $3.67 billion, compared with revenue of $3.21 billion in 2015. Segment adjusted operating margin grew to 20.3%, versus 19.1% in 2015.

Specialty Diagnostics Segment

Specialty Diagnostics Segment revenue in the fourth quarter was $834 million in 2016, compared with revenue of $865 million in the fourth quarter of 2015. Segment adjusted operating margin increased to 27.2%, versus 26.2% in the 2015 quarter.

For the full year 2016, Specialty Diagnostics Segment revenue grew 3% to $3.34 billion, compared with revenue of $3.24 billion in 2015. Segment adjusted operating margin increased to 27.2%, versus 2015 results of 26.9%.

Laboratory Products and Services Segment

In the fourth quarter of 2016, Laboratory Products and Services Segment revenue was $1.76 billion, compared with revenue of $1.82 billion in the fourth quarter of 2015. Segment adjusted operating margin was 14.6%, versus 14.7% in the 2015 quarter.

For the full year 2016, Laboratory Products and Services Segment revenue grew 6% to $7.03 billion, compared with revenue of $6.66 billion in 2015. Segment adjusted operating margin was 15.0% in both periods.

Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including adjusted EPS, adjusted operating income and adjusted operating margin, which exclude certain acquisition-related costs, including charges for the sale of inventories revalued at the date of acquisition and significant transaction costs; restructuring and other costs/income; and amortization of acquisition-related intangible assets. Adjusted EPS also excludes certain other gains and losses that are either isolated or cannot be expected to occur again with any regularity or predictability, tax provisions/benefits related to the previous items, benefits from tax credit carryforwards, the impact of significant tax audits or events and the results of discontinued operations. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods. We also use a non-GAAP measure, free cash flow, which is operating cash flow, net of capital expenditures, and also excludes operating cash flows from discontinued operations to provide a view of the continuing operations’ ability to generate cash for use in acquisitions and other investing and financing activities. We believe that the use of non-GAAP measures helps investors to gain a better understanding of our core operating results and future prospects, consistent with how management measures and forecasts the company’s performance, especially when comparing such results to previous periods or forecasts.

For example:

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

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

We exclude the expense and tax effects associated with the amortization of acquisition-related intangible assets because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives of 5 to 20 years. In 2017, based on acquisitions closed through the end of 2016, our adjusted EPS will exclude approximately $2.53 of expense for the amortization of acquisition-related intangible assets. Exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies.

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

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

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

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