On July 28, 2015 Foundation Medicine, Inc. (NASDAQ:FMI) reported the initiation of a large-scale, multi-center prospective clinical study to validate its circulating tumor DNA (ctDNA) assay for multiple, solid and hematologic tumor types (Press release, Foundation Medicine, JUL 28, 2015, View Source [SID:1234506722]). Expected to launch commercially in 2016, the ctDNA assay will complement FoundationOne for solid tumors and FoundationOne Heme for hematologic malignancies and provide healthcare practitioners with a full suite of analytically validated genomic profiling products to support the application of precision medicine and targeted therapies in cancer care.

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"Tumor tissue obtained by biopsy is the gold standard material from which we generate the requisite molecular information to guide the optimally targeted treatment of patients with cancer," said Francis Giles, M.D., Deputy Director of the Robert H. Lurie Comprehensive Cancer Center of Northwestern University. "Blood based ‘liquid biopsy’ assays offer the potential to define actionable molecular lesions in patients in whom a tissue specimen can’t be safely obtained or is otherwise unavailable. We’re delighted to be part of this rigorously designed study which we anticipate will help bring a new, less invasive diagnostic option to our patients with cancer."

Study Rationale and Objectives

The presence of ctDNA in plasma is a well-established phenomenon and has led to recent innovation in the development of non-invasive tumor sequencing assays. However, the concentration of ctDNA compared to other cell free DNA fragments can vary significantly depending on tumor type and disease stage. For many cancer patients, this means that the proportion of detectable tumor DNA in the blood is extremely low1, making the detection of therapeutically relevant genomic alterations more difficult compared with tissue-based approaches. Importantly, up to 40% of patients shed no tumor DNA into the bloodstream1 and will thus test negative using ctDNA assays.

The challenge and opportunity is to commercialize a rigorously validated ctDNA assay that provides physicians with confidence in test results and affords genomic profiling to patients in whom otherwise few or no targeted treatment options would have been identified. To address these challenges, Foundation Medicine has launched a large, multi-center study to assess the potential utility of its ctDNA assay across various cancers and stages of disease. The study will also provide the analytic validation mandated for clinical use of a commercial ctDNA assay by establishing concordance of the assay in detecting genomic alterations from circulating tumor DNA as compared to alterations detected in tissue biopsies assessed by the company’s comprehensive genomic profile for solid tumors, FoundationOne.

"Innovation in genomic profiling is incredibly important in oncology and ctDNA assays, in particular, may offer tremendous potential for patients with cancer at certain stages of disease," added Samuel Klempner, M.D., Assistant Professor, Division of Hematology/Oncology at UC Irvine Health and a co-investigator in the study. "We’re optimistic that this study with Foundation Medicine will identify a less invasive option for a population of patients with cancer and reliably identify subsequent treatment options in select patients."

Luis E. Raez, M.D., Medical Director of the Memorial Cancer Institute, Associate Professor at Florida international University (FIU) in Miami, FL and co-investigator in the study, stated, "I am very excited to be participating in this study utilizing a liquid biopsy assay for my patients when tissue specimens are not available, and because this assay is being developed to the same caliber of standards as FoundationOne and FoundationOneHeme, where validation data and methodology will be best in class and made publicly available for peer-review by the oncology community."

The study is expected to be completed next year and it will include patients who are most likely to benefit from liquid-based genomic profiling, such as patients who relapse after standard non-targeted treatment. Approximately 20% of the patients in the study will include those with earlier-stage disease, allowing the company to investigate how different types of tumors shed DNA into the bloodstream at different stages of tumor growth and metastasis.

"There are no short cuts to commercializing clinical assays that inform therapeutic treatment options," said Vincent Miller, M.D., Chief Medical Officer of Foundation Medicine. "We are applying the same analytic rigor to our ctDNA assay as we applied to FoundationOne and FoundationOne Heme, both of which are considered gold standard assays for molecular profiling. Our aim with our ctDNA assay is not to replace tissue biopsies, but rather, to identify clinical settings for utilization of this innovation, including for example, tissue-limited situations. We look forward to defining the utility of this approach through the outcomes of this study and to launching this assay in 2016."

On July 28, 2015 Laboratory Corporation of America Holdings (LabCorp or the "Company") (NYSE: LH) reported results for the quarter ended June 30, 2015 (Press release, LabCorp, JUL 28, 2015, View Source;p=RssLanding&cat=news&id=2071567 [SID:1234506723]).

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Consolidated Results

Second Quarter Results

Net revenue for the quarter was $2.22 billion, an increase of 46.3% over last year’s $1.52 billion. The acquisition of Covance contributed $620.8 million in net revenue during the quarter, driving 40.9% year over year net revenue growth. The remainder of the increase of $81.5 million, or 5.4%, was primarily due to strong organic volume growth and tuck-in acquisitions, partially offset by currency. Organic revenue growth in the quarter, excluding currency, was 5.4%, of which Beacon LBS, the Company’s technology-enabled solution providing point-of-care decision support, contributed 1.1%.

Operating income for the quarter was $321.3 million, compared to $246.7 million in the second quarter of 2014. The Company recorded restructuring charges and special items of $23.1 million during the second quarter of 2015, compared to $6.7 million during the same period in 2014. Adjusted operating income (excluding amortization of $46.6 million, restructuring and special items) for the quarter was $391.0 million, or 17.6% of net revenue, compared to $275.4 million, or 18.2%, in the second quarter of 2014. The increase in adjusted operating income was due to the Covance acquisition, organic volume growth and productivity, partially offset by currency.

The Company recorded net earnings in the quarter of $168.4 million, or $1.64 per diluted share, compared to $141.3 million, or $1.64 per diluted share, last year. Adjusted EPS (excluding amortization, restructuring and special items) were $2.09 in the quarter, compared to $1.84 in the second quarter of 2014.

"We are extremely pleased with our results this quarter, in which we began to see the power of our combined businesses," said David P. King, Chairman and Chief Executive Officer. "We delivered impressive growth, as well as record revenue, earnings and free cash flow to our shareholders. We remain focused on executing our long-term growth strategy, and delivering on our mission of improving health and improving lives."

Operating cash flow for the second quarter was $396.7 million, compared to $207.4 million in the second quarter of 2014. The increase in operating cash flow was due to the acquisition of Covance as well as improved earnings and working capital. Capital expenditures totaled $69.1 million, compared to $48.1 million in the second quarter of 2014. As a result, free cash flow (operating cash flow less capital expenditures) was $327.6 million, compared to $159.3 million in the second quarter of 2014.

At the end of the quarter, the Company’s cash balance and total debt were $619.0 million and $6.8 billion, respectively. During the quarter, the Company invested $62.2 million in tuck-in acquisitions and paid down $145.0 million of debt. The Company’s liquidity at the end of the quarter was approximately $1.6 billion, consisting of cash and available credit.

Year-To-Date Results

The following year-to-date consolidated results of the Company include Covance as of February 19, 2015; prior to February 19, 2015, these consolidated results exclude Covance.

Net revenue was $3.99 billion, an increase of 35.4% over last year’s $2.95 billion. The acquisition of Covance contributed $888.0 million from the date of closing on February 19, 2015, driving 30.1% year over year net revenue growth. The remainder of the increase of $155.9 million, or 5.3%, was due to strong organic volume growth and tuck-in acquisitions, partially offset by price, mix and currency. Organic revenue growth in the first half of the year, excluding currency, was 5.2%, of which Beacon LBS contributed 0.5%.

Operating income was $452.4 million, compared to $450.0 million in the first half of 2014. The Company recorded $161.8 million in restructuring charges and special items (costs associated with the acquisition of Covance and Project LaunchPad) during the first half of 2015, compared to $14.3 million during the same period in 2014. Adjusted operating income (excluding amortization of $79.0 million, restructuring and special items) was $693.2 million, or 17.4% of net revenue, compared to $507.3 million, or 17.2%, in the first half of 2014. The increase in adjusted operating income was due to the acquisition of Covance, organic volume growth and productivity gains, partially offset by price, mix and currency.

The Company’s earnings were reduced by restructuring and special items of $214.4 million ($161.8 million impacted operating income and $52.6 million impacted interest expense), or $154.8 million after-tax. As a result, the Company recorded net earnings in the first half of 2015 of $169.7 million, or $1.73 per diluted share, compared to $254.4 million, or $2.94 per diluted share, last year. Adjusted EPS (excluding amortization, restructuring and special items) were $3.85, compared to $3.35 in the first half of 2014.

Operating cash flow for the first half of 2015 was $309.8 million, compared to $349.7 million in the first half of 2014, as the Company’s operating cash flow was negatively impacted by $153.5 million in non-recurring items relating to the acquisition of Covance. Excluding these items, operating cash flow was $463.3 million, with the year-on-year increase driven by improved earnings, partially offset by seasonal working capital requirements. Capital expenditures totaled $102.9 million, compared to $104.6 million in the first half of 2014. As a result, free cash flow (operating cash flow less capital expenditures) was $206.9 million, compared to $245.1 million in the first half of 2014. Excluding non-recurring items, free cash flow was $360.4 million during the first half of 2015.

***

The following segment results are presented on a pro forma basis for all periods as if the acquisition of Covance closed on January 1, 2014 and exclude amortization, restructuring, special items and unallocated corporate expenses. Reconciliations of segment results to historically reported results are included in the Condensed Pro Forma Segment Information tables and notes.

Segment Results

LabCorp Diagnostics

Net revenue for the quarter was $1.58 billion, an increase of 5.4% over net revenue of $1.49 billion for the second quarter of 2014. The increase in net revenue was the result of organic volume growth, measured by requisitions, Beacon LBS and tuck-in acquisitions, partially offset by currency. The increase in net revenue of 5.4% includes the benefit from Beacon LBS of 1.1%, and unfavorable foreign currency translation of 0.7%. Total volume (measured by requisitions) increased by 4.7% (organic volume of 4.3% and acquisition volume of 0.4%). Revenue per requisition increased by 0.2%.

Adjusted operating income (excluding amortization, restructuring and special items) for the quarter was $347.1 million, or 22.0% of net revenue, compared to adjusted operating income of $308.9 million, or 20.7% of net revenue, in the second quarter of 2014. The increase was primarily due to strong volume growth and productivity. Improvement in productivity was driven, in part, by Project LaunchPad, the Company’s enterprise-wide business process improvement initiative. The Company is on track to deliver approximately $50 million of net savings in 2015 through Project LaunchPad.

Covance Drug Development

Net revenue for the quarter was $643.7 million, a decrease of 2.7% from revenue of $661.3 million for the second quarter of 2014. The strengthening U.S. Dollar negatively impacted year-over-year revenue growth by approximately 450 basis points. Excluding currency, net revenue increased 1.8% year-over-year, on increased volume, partially offset by mix.

Adjusted operating income (excluding amortization, restructuring and special items) was $89.9 million, or 14.0% of net revenue, compared to adjusted operating income of $84.7 million, or 12.8% of net revenue, in the second quarter of 2014. The increase was primarily due to higher volume, cost synergies and lower depreciation expense, partially offset by the impact of currency and mix. The Company is on track to deliver acquisition-related cost synergies in 2015 of approximately $35 million.

Net orders (gross orders less cancellations and reductions) in the quarter were $737 million, representing a net book-to-bill of 1.15. Backlog at June 30, 2015 was approximately $6.6 billion.

Outlook for 2015

The Company’s updated guidance for 2015 includes the following:

Net revenue growth (assuming foreign exchange rates effective as of June 30, 2015) of 40% to 42%, after the impact from approximately 190 basis points of negative currency. Net revenue growth in LabCorp Diagnostics of 3.5% to 5.5%, after the impact from approximately 70 basis points of negative currency. The change in net revenue in Covance Drug Development is expected to be -1.5% to 0.5% versus full year 2014 revenue after the impact of approximately 320 basis points of negative currency.

Adjusted EPS of $7.75 to $8.00, versus prior guidance of $7.55 to $7.90, and as compared to $6.80 last year.
Operating cash flow of $990 million to $1,015 million, capital expenditures of $270 million to $295 million, and free cash flow of $695 million to $745 million. The Company expects free cash flow in 2015 to be negatively impacted by approximately $120 million of net non-recurring items related to the Covance acquisition. Excluding these items, the Company expects free cash flow to be $815 million to $865 million versus $536 million last year.
Use of Adjusted Measures

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

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

On July 27, 2015 Teva Pharmaceutical Industries Ltd. (NYSE and TASE:TEVA) reported preliminary financial results for the second quarter of 2015:
Revenues of approximately $4.97 billion, down 2% compared to the second quarter of 2014 (Press release, Teva, JUL 27, 2015, View Source;p=RssLanding&cat=news&id=2071092 [SID:1234506703]). Excluding the impact of foreign exchange fluctuations and the sale of U.S. OTC plants in July 2014, revenues increased 6% compared to the second quarter of 2014.

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Non-GAAP diluted earnings per share (EPS) of $1.43 in the second quarter of 2015, up 15% compared to the second quarter of 2014.

Non-GAAP operating income of $1.6 billion, an increase of 16% compared to the second quarter of 2014.

Cash flow from operations of $1.5 billion, an increase of 41% compared to the second quarter of 2014.

Free cash flow of $1.3 billion, up 51% compared to the second quarter of 2014.

Erez Vigodman, President and CEO of Teva, said, "Our preliminary results for the second quarter further demonstrate Teva’s continuous momentum and significantly strengthened fundamentals, improved generics and specialty businesses and ability to drive organic growth. We are confident that our key franchises, along with our transformational acquisition of Allergan Generics, will enable Teva to reinforce our already strong position and continue to generate stockholder value."

Full Year 2015 EPS Guidance
Teva is raising its EPS guidance for the full year 2015, reflecting the positive momentum across the business. For the full year 2015, the Company now expects EPS to be in the range of $5.15 to $5.40, as compared to the previously provided EPS range of $5.05 to $5.35.

Teva Second Quarter 2015 Earnings Conference Call

Teva will report full second quarter 2015 financial results on Thursday, July 30, 2015. The Company will discuss its results on its quarterly earnings conference call and live webcast on the same day, at 8:00 a.m. ET.

In order to participate, please dial the following numbers (at least 10 minutes before the scheduled start time): United States 1-866-966-9439; Canada 1-866-966-0399 International +44(0) 1452 555566; passcode: 76780072. For a list of other international toll-free numbers, click here.

A live webcast of the call will also be available on Teva’s website at: www.tevapharm.com. Please log in at least 10 minutes prior to the conference call in order to download the applicable audio software.

Following the conclusion of the call, a replay of the webcast will be available within 24 hours on the Company’s website. The replay can also be accessed until August 30, 2015, 10:00 a.m. ET by calling United States 1-866-247-4222; Canada 1-866-878-9237 or International +44(0) 1452550000; passcode: 76780072.

On July 27, 2015 Celator Pharmaceuticals, Inc. (Nasdaq: CPXX), a biopharmaceutical company that is transforming the science of combination therapy and developing products to improve patient outcomes in cancer, reported that Dr. Lawrence Mayer, Founder, President and Chief Scientific Officer, will chair and present at a mini-symposia today, July 27, 2015, at 10:00am ET, at the 42nd Annual Meeting and Exposition of the Controlled Release Society (Press release, Celator Pharmaceuticals, JUL 27, 2015, View Source [SID:1234506704]).

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The mini-symposia will discuss Therapeutic Cancer Nanomedicines and Dr. Mayer’s presentation is titled, "Development of Fixed-Ratio Anticancer Drug Combination Nanomedicines That Markedly Improve Efficacy and Survival Outcomes."

On July 27, 2015 Varian Medical Systems UK Ltd reported it had signed contracts with the National Health Service to equip and service two new national NHS proton therapy centers in England with the Varian ProBeam proton therapy system (Press release, Varian Medical Systems, JUL 27, 2015, View Source [SID:1234506705]). Earlier this year, Varian announced that it was selected as the preferred supplier for two three-room NHS centers to be constructed in London and Manchester. Varian expects to book the equipment portion of the order in its fiscal fourth quarter with the remainder of the order to be booked in accordance with the company’s policies over the term of the agreements.

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The UK government is investing £250m in building and equipping the two NHS centres at UCLH (University College London Hospitals NHS Foundation Trust) in London and The Christie NHS Foundation Trust in Manchester. Varian is contracted for up to £80 million for equipment supply and service. Equipment installation is expected to take place from August 2017, with patient treatments expected to begin from 2018.

"Varian is proud to have been contracted to equip and service the national NHS proton therapy centers at UCLH and The Christie," said Dow Wilson, Varian’s chief executive officer. "ProBeam was selected after an extremely rigorous and thorough tender process that identified Varian’s technology as the most suitable for the country’s future proton therapy needs. As the leading supplier of radiotherapy equipment and software to the NHS we will be able to leverage our existing UK-based engineering and logistics infrastructure to deliver industry leading technology while meeting the NHS requirements for value for money."

"Unlike some single room facilities, the ProBeam systems here in the UK will provide a flexible solution with a total of six treatment rooms, all with a full 360 degrees of gantry rotation which means the tumor can be targeted from more directions," added David Scott, regional sales director for Varian Medical Systems. "The ProBeam system also leverages much of the technological advances already employed on the TrueBeam linear accelerator, providing high patient throughput combined with high precision image-guided treatment. The result is an easily upgradeable platform designed for long-term viability that should enable the NHS to meet capacity projections for patients that may benefit from proton therapy, without compromise, today and into the future."

Proton therapy makes it possible to treat certain types of cancer more precisely and with potentially fewer side effects than is possible with conventional radiation therapy. With proton therapy, the risk of damage to healthy tissues and potential side effects are reduced because proton beams can be controlled so that they deposit their energy within the tumor site rather than passing all the way through the patient. In pediatric patients the risk of developing a new, radiation-induced cancer later in life may be reduced.

Varian’s ProBeam system with Dynamic Peak Scanning is uniquely capable of high-speed intensity modulated proton therapy (IMPT) which is the most precise form of proton therapy available. ProBeam technology is being used to treat patients at the Scripps Proton Therapy Center in San Diego, the Rinecker Proton Therapy Center in Munich, and the Paul Scherrer Institute in Switzerland. Varian also has contracts for system installations at 10 other sites around the world.

"In the 18 months since the first ProBeam room at Scripps was commissioned, we have completed three new software releases that were designed to increase the efficiency of operations while enhancing functionality and patient comfort," said Moataz Karmalawy, general manager of Varian’s particle therapy business. "And we’ve been able to make the upgrades to the system without causing downtime or negatively impacting clinical operations. Varian’s commitment to ongoing partnership with customers and continual improvement of the systems we provide, are, I believe, major factors in our having been selected to equip the national NHS centers in the UK."

In keeping with historical practice, Varian will not recognize revenues for the two UK projects until commencement of production of the systems. Revenues for Varian Particle Therapy are recognized based on the percentage of completion of the manufacture, installation and commissioning of the systems.