On February 13, 2020 LabCorp (or the Company) (NYSE: LH) reported results for the fourth quarter and year ended December 31, 2019, and provided 2020 guidance (Press release, LabCorp, FEB 13, 2020, View Source [SID1234554265]).

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"We had a strong finish to 2019, a year where we delivered solid revenue growth, adjusted EPS, and free cash flow," said Adam H. Schechter, president and CEO of LabCorp. "We start 2020 with a clear strategy that leverages our science, technology, and delivery focused on our customers to improve health and improve lives. We are well positioned to drive continued growth and shareholder value in 2020 and beyond."

Consolidated Results

Fourth Quarter Results

Revenue for the quarter was $2.95 billion, an increase of 6.0% over $2.79 billion in the fourth quarter of 2018. The increase in revenue was due to acquisitions of 4.5% and organic growth of 2.3% (which includes the negative impact from lower Medicare and Medicaid pricing as a result of PAMA of 0.9%), partially offset by the disposition of businesses of 0.6% and negative foreign currency translation of 0.2%.

Operating income for the quarter was $336.4 million, or 11.4% of revenue, compared to $307.7 million, or 11.0%, in the fourth quarter of 2018. The increase in operating income and margin was primarily due to acquisitions, organic growth, and LaunchPad savings, partially offset by the negative impact from PAMA and higher personnel costs. The Company recorded restructuring charges, special items, and amortization, which together totaled $85.6 million in the quarter, compared to $87.2 million during the same period in 2018. Adjusted operating income (excluding amortization, restructuring charges, and special items) for the quarter was $422.0 million, or 14.3% of revenue, compared to $394.9 million, or 14.2%, in the fourth quarter of 2018. Excluding the negative impact from PAMA, adjusted operating income and margin grew $53.3 million and 90 basis points, respectively, over last year.

Net earnings for the quarter were $227.1 million, compared to $157.9 million in the fourth quarter of 2018. Diluted EPS were $2.32 in the quarter, an increase of 48.7% compared to $1.56 in the same period in 2018. During the fourth quarter of 2019, the Company recorded $19.0 million in net gains on venture fund investments, partially offset by losses of $1.4 million on the disposition of businesses and a cost of $3.1 million related to debt refinancing. In the fourth quarter of 2018, the Company recorded a $24.6 million loss on the disposition of its U.S. forensics laboratory testing business, a non-cash pension settlement charge of $7.5 million, and a loss of $5.2 million on a venture fund investment. Adjusted EPS (excluding amortization, restructuring charges, and special items) were $2.86 in the quarter, an increase of 13.5% over $2.52 in the fourth quarter of 2018.

Operating cash flow for the quarter was $569.8 million, compared to $486.4 million in the fourth quarter of 2018, which was negatively impacted by approximately $105 million from the net tax payment in the fourth quarter of 2018 related to the disposition of businesses. The increase in operating cash flow was primarily due to higher cash earnings, partially offset by increased working capital to support growth. Capital expenditures totaled $128.2 million, compared to $122.2 million a year ago. As a result, free cash flow

(operating cash flow less capital expenditures) was $441.6 million, compared to $364.2 million in the fourth quarter of 2018.

At the end of the quarter, the Company’s cash balance and total debt were $337.5 million and $6.2 billion, respectively. During the quarter, the Company invested $23.1 million in acquisitions, repurchased $50.0 million of stock, representing approximately 0.3 million shares, and paid down $402.7 million of debt. As of December 31, 2019, the Company had $900.0 million of authorization remaining under its share repurchase program.

Full Year Results

Revenue was $11.55 billion, an increase of 2.0% over last year’s $11.33 billion. The increase in revenue was due to growth from acquisitions of 2.3% and organic growth of 1.6% (which includes the negative impact from PAMA of 0.9%), partially offset by the disposition of businesses of 1.4% and negative foreign currency translation of 0.5%.

Operating income was $1,330.2 million, or 11.5% of revenue, compared to $1,325.7 million, or 11.7%, in 2018. The Company recorded restructuring charges, special items, and amortization which together totaled $380.6 million, compared to $397.6 million during the same period in 2018. Adjusted operating income (excluding amortization, restructuring charges, and special items) was $1,710.8 million, or 14.8% of revenue, compared to $1,723.3 million, or 15.2%, in 2018. The decrease in operating income and margin was primarily due to the negative impact from PAMA, higher personnel costs, disposition of businesses, cybersecurity investments, and a favorable one-time legal settlement in 2018, partially offset by organic growth, the Company’s LaunchPad initiatives, and acquisitions. Excluding the negative impact from PAMA, adjusted operating income and margins grew $94.5 million and 40 basis points, respectively, over last year.

Net earnings in 2019 were $823.8 million, or $8.35 per diluted share, compared to $883.7 million, or $8.61 per diluted share, last year. During 2019, the Company recorded net gains of $20.9 million on venture fund investments, partially offset by losses of $13.3 million on the disposition of businesses and a cost of $3.1 million related to debt refinancing. During 2018, the Company recorded a net gain of $184.8 million on the disposition of businesses, partially offset by a charge of $45.0 million due to the implementation of the Tax Cuts and Jobs Act of 2017 (TCJA), a non-cash pension settlement charge of $7.5 million, and a $5.2 million loss on a venture fund investment.

Adjusted EPS (excluding amortization, restructuring, and special items) were $11.32, an increase of 2.7% compared to $11.02 in 2018.

Operating cash flow was $1,444.7 million, compared to $1,305.4 million in 2018, which was negatively impacted by approximately $105 million from the net tax payment in the fourth quarter of 2018 related to the disposition of businesses. The increase in operating cash flow was due to higher cash earnings, partially offset by increased working capital to support growth. Capital expenditures totaled $400.2 million, compared to $379.8 million in 2018. As a result, free cash flow (operating cash flow less capital expenditures) was $1,044.5 million, compared to $925.6 million in 2018.

During the year, the Company invested $876.0 million in acquisitions and repurchased $450.0 million of stock representing approximately 2.9 million shares.

The following segment results exclude amortization, restructuring charges, special items, and unallocated corporate expenses.

Fourth Quarter Segment Results

LabCorp Diagnostics
Revenue for the quarter was $1.76 billion, an increase of 3.7% over $1.69 billion in the fourth quarter of 2018. The 3.7% increase in revenue was due to acquisitions of 3.5% and organic growth of 0.8%, partially offset by the negative impact from the disposition of businesses of 0.5%. The organic revenue increase of 0.8% includes the negative impact from PAMA of 1.5%.

Total volume (measured by requisitions), excluding the disposition of businesses, increased by 2.6%, as acquisition volume contributed 1.8% and organic volume increased by 0.8%. Organic volume includes the negative impact from managed care contract changes and lower consumer genetics demand, which largely offset the benefit of one additional revenue day. Excluding the disposition of businesses, revenue per requisition increased by 1.6% due to acquisitions and favorable mix, partially offset by the negative impact from PAMA and the nonrenewal of the BeaconLBS – UnitedHealthcare contract pertaining to the Florida market.

Adjusted operating income (excluding amortization, restructuring charges, and special items) for the quarter was $277.1 million, or 15.8% of revenue, compared to $279.3 million, or 16.5%, in the fourth quarter of 2018. The $2.2 million decline in adjusted operating income and 70 basis point decline in adjusted operating margin were primarily due to the negative impact from PAMA of $26.2 million and 130 basis points, higher personnel costs, and cybersecurity investments, partially offset by LaunchPad savings, organic growth, and acquisitions. The Company remains on track to deliver approximately $200 million of net savings from its three-year Diagnostics LaunchPad initiative by the end of 2021.

Covance Drug Development
Revenue for the quarter was $1.20 billion, an increase of 9.3% over $1.10 billion in the fourth quarter of 2018. The increase in revenue was due to acquisitions of 6.0% and organic growth of 4.6%, partially offset by the disposition of the Covance Research Products business of 0.9% and negative foreign currency translation of 0.4%. Excluding pass-throughs, organic revenue grew mid-to-high single digits.

Adjusted operating income (excluding amortization, restructuring charges, and special items) for the quarter was $183.2 million, or 15.2% of revenue, compared to $153.5 million, or 14.0%, in the fourth quarter of 2018. The $29.7 million increase in adjusted operating income and 130 basis point increase in adjusted operating

margin were primarily due to LaunchPad savings, acquisitions, and organic growth, partially offset by higher personnel costs. The Company remains on track to deliver approximately $150 million of net savings from its three-year Drug Development LaunchPad initiative by the end of 2020.

Net orders and net book-to-bill during the trailing twelve months were $5.91 billion and 1.29, respectively. Backlog at the end of the quarter was $11.30 billion, compared to $10.71 billion last quarter, and the Company expects approximately $4.2 billion of its backlog to convert into revenue in the next twelve months.

Outlook for 2020

The following guidance assumes foreign exchange rates effective as of December 31, 2019 for the full year. Enterprise level guidance includes the estimated impact from currently anticipated capital allocation, including acquisitions and share repurchases.

Revenue growth of 4.0% to 6.0% over 2019 revenue of $11.55 billion, which includes the negative impact from the disposition of business of approximately 0.2% as well as the benefit from foreign currency translation of 0.4%.

Revenue growth in LabCorp Diagnostics of 0.5% to 2.5% over 2019 revenue of $7.00 billion, which includes the negative impact from PAMA of approximately 1.3% as well as the benefit from one additional revenue day of 0.4% and foreign currency translation of 0.1%.

Revenue growth in Covance Drug Development of 7.0% to 9.5% over 2019 revenue of $4.58 billion, which includes the negative impact from the disposition of business of approximately 0.5% as well as the benefit from foreign currency translation of 0.7%.

Adjusted EPS of $11.75 to $12.15, an increase of 3.8% to 7.3% over 2019 adjusted EPS of $11.32.

Free cash flow (operating cash flow less capital expenditures) of $950 million to $1.05 billion, compared to $1.04 billion in 2019.

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 net income, adjusted EPS (or adjusted net income per share), adjusted operating income, adjusted operating margin, 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 provide 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 and an identification of the components that comprise "special items" used for certain adjusted financial information are included in the tables accompanying this press release.

The Company today is providing an investor relations presentation with additional information on its business and operations, which is available in the investor relations section of the Company’s website at View Source." target="_blank" title="View Source." rel="nofollow">View Source Analysts and investors are directed to the website to review this supplemental information.

A conference call discussing LabCorp’s quarterly results will be held today at 9:00 a.m. EST and is available by dialing 844-634-1444 (615-247-0253 for international callers). The access code is 8663007. A telephone replay of the call will be available through Feb. 27, 2020, and can be heard by dialing 855-859-2056 (404-537-3406 for international callers). The access code for the replay is 8663007. A live online broadcast of LabCorp’s quarterly conference call on Feb. 13, 2020, will be available at View Source or at View Source beginning at 9:00 a.m. EST. This webcast will be archived and accessible through Jan. 29, 2021.

On February 13, 2020 Genocea Biosciences, Inc. (NASDAQ: GNCA), a biopharmaceutical company developing next-generation neoantigen immunotherapies, reported its operating and financial results for the fourth quarter and fiscal year ended December 31, 2019 (Press release, Genocea Biosciences, FEB 13, 2020, View Source [SID1234554264]).

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Genocea presented new inhibigen (inhibitory antigen) data at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) 2019 in National Harbor, Maryland. In one presentation, preclinical data demonstrated that the presence of an inhibigen reversed anti-tumor responses of an otherwise protective neoantigen vaccine, confirming the importance of excluding inhibigens from neoantigen cancer immunotherapies. A separate presentation showed data suggesting that the ratio of a patient’s inhibigens to stimulatory (anti-tumor) neoantigens may predict response to immune checkpoint inhibitor (ICI) therapy. Only Genocea’s proprietary neoantigen discovery platform, ATLAS, can systematically find inhibigens. As previously disclosed, GEN-009 immunogenicity data confirm that ATLAS identifies neoantigens optimized both to patients’ T cell responses and their tumors. These new data offer an additional dimension to the advantages of ATLAS for neoantigen selection.

The company also completed patient dosing in Part A of its GEN-009 neoantigen vaccine phase 1/2a trial with no disease recurrence in vaccinated study participants to date. GEN-009 was highly immunogenic and well-tolerated by the entire cohort. Genocea has begun dosing patients for Part B, testing GEN-009 in combination with standard-of-care ICI therapy, with preliminary clinical results expected in Q2/Q3 2020.

Genocea also made important progress developing a robust manufacturing process for GEN-011, an adoptive T cell therapy using T cells derived from peripheral blood against ATLAS-identified neoantigens. The company intends to file an Investigational New Drug Application (IND) for GEN-011 in Q2 2020 with preliminary clinical results expected in 1H 2021.

"Genocea made critical scientific and clinical progress in the last quarter," said Chip Clark, President and Chief Executive Officer, Genocea. "The discovery and understanding of inhibigens has the potential to transform the process of antigen discovery for cancer immunotherapies, and even the therapeutic landscape for cancer. The GEN-009 immunogenicity results are unprecedented in neoantigen vaccines. Meanwhile, GEN-011 is progressing rapidly toward the clinic. We look forward to continuing – and capitalizing on – this strong progress in 2020."

Genocea also appointed Gisela Schwab, M.D., President, Product Development and Medical Affairs and Chief Medical Officer of Exelixis to its board of directors effective February 14, 2020. "I am delighted to welcome Gisela to our board. Her broad oncology drug development expertise and her proven company-building track record will provide us valued counsel and insights in the coming years," said Clark.

Fourth Quarter 2019 Financial Results

Cash position: As of December 31, 2019, cash and cash equivalents were $40.1 million versus $26.4 million as of December 31, 2018.

Research and Development (R&D) expenses: R&D expenses were $6.8 million for the quarter ended December 31, 2019, compared to $6.3 million for the same period in 2018.

General and Administrative (G&A) expenses: G&A expenses were $3.0 million for the quarter ended December 31, 2019, compared to $2.6 million for the same period in 2018.

Net income/loss: Net loss was $9.4 million for the quarter ended December 31, 2019, compared to a net income of $0.4 million for the same period in 2018.

Guidance
Genocea expects that its existing cash and cash equivalents are sufficient to support its operations into the first quarter of 2021.

Conference Call
Genocea will host a conference call and webcast today at 8:30 a.m. EST. Interested participants may access the conference call by dialing (844) 826-0619 (domestic) or (315) 625-6883 (international) and referring to conference ID number 7319557. To join the live webcast, please visit the presentation page of the investor relations section of the Genocea website at View Source A webcast replay of the conference call will be available on the Genocea website beginning approximately two hours after the event and will be archived for 90 days.

On February 13, 2020 Acorda Therapeutics, Inc. (Nasdaq: ACOR) reported its financial results for the fourth quarter and full year ended December 31, 2019 (Press release, Acorda Therapeutics, FEB 13, 2020, View Source [SID1234554263]).

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"INBRIJA’s launch was an important milestone for Acorda in 2019. It is the first and only approved inhalation therapy for the treatment of OFF periods in Parkinson’s disease. In 2020, our focus will be on increasing awareness of and driving demand for INBRIJA among people with Parkinson’s," said Ron Cohen, M.D., Acorda’s President and Chief Executive Officer.

Dr. Cohen added, "Another top priority for 2020 is continuing to strengthen our capital structure and balance sheet. In December 2019 we successfully restructured the great majority of our convertible debt, and we have also reduced expenses significantly. We are working to identify additional opportunities to manage costs. These actions have helped position Acorda to deliver long-term value for our shareholders."

Fourth Quarter 2019 Financial Results

For the fourth quarter ended December 31, 2019, the Company reported AMPYRA net revenue of $40.8 million compared to $64.2 million for the same quarter in 2018 and INBRIJA net revenue of $6.1 million.

Research and development (R&D) expenses for the quarter ended December 31, 2019 were $9.0 million, including $0.6 million of share-based compensation, compared to $27.1 million, including $1.2 million of share-based compensation, for the same quarter in 2018.

Sales, general and administrative (SG&A) expenses for the quarter ended December 31, 2019 were $41.2 million, including $2.0 million of share-based compensation, compared to $36.8 million, including $3.8 million of share-based compensation, for the same quarter in 2018.

Benefit from income taxes for the quarter ended December 31, 2019 was $0.8 million, compared to a benefit from income taxes of $63.1 million for the same quarter in 2018.

The Company reported GAAP net income of $65.7 million for the quarter ended December 31, 2019, or $1.38 per diluted share. GAAP net income in the same quarter of 2018 was $9.6 million, or $0.20 per diluted share.

Non-GAAP net loss for the quarter ended December 31, 2019 was $7.1 million, or $0.15 per diluted share. Non-GAAP net income in the same quarter of 2018 was $21.5 million, or $0.45 per diluted share. This quarterly non-GAAP net (loss) income measure, more fully described below under "Non-GAAP Financial Measures," excludes share-based compensation charges, non-cash interest charges on our debt, restructuring expenses, changes in the fair value of acquired contingent consideration, goodwill impairment charges, gain on extinguishment of debt, and gain on sale of assets. A reconciliation of the GAAP financial results to non-GAAP financial results is included with the attached financial statements.

Full Year Ended December 31, 2019 Financial Results

For the full year ended December 31, 2019, the Company reported AMPYRA net revenue of $163.2 million compared to $455.1 million for the full year 2018 and INBRIJA net revenue of $15.3 million.

Research and development (R&D) expenses for the full year ended December 31, 2019 were $60.1 million, including $2.8 million of share-based compensation, compared to $106.4 million, including $5.6 million of share-based compensation for the full year 2018.

Sales, general and administrative (SG&A) expenses for the full year ended December 31, 2019 were $192.8 million, including $10.8 million of share-based compensation, compared to $172.3 million, including $15.7 million of share-based compensation for the full year 2018.

Benefit from income taxes for the full year ended December 31, 2019 was $1.3 million, compared to a benefit from income taxes of $13.3 million for the full year 2018.

For the full year ended December 31, 2019, the Company reported GAAP net loss of $273.0 million, or $5.75 per diluted share. GAAP net income for the full year 2018 was $33.7 million, or $0.71 per diluted share.

Non-GAAP net loss for the full year ended December 31, 2019 was $81.8 million, or $1.72 per diluted share. Non-GAAP net income for the full year ended December 31, 2018 was $103.4 million, or $2.18 per diluted share. This full year non-GAAP net (loss) income measure, more fully described below under "Non-GAAP Financial Measures," excludes share-based compensation charges, non-cash interest charges on our debt, restructuring expenses, changes in the fair value of acquired contingent consideration, goodwill impairment charges, gain on extinguishment of debt, and gain on sale of assets. A reconciliation of the GAAP financial results to non-GAAP financial results is included with the attached financial statements.

At December 31, 2019, the Company had cash, cash equivalents, investments and restricted cash of $168.9 million. Restricted cash includes $42.7 million in escrow related to the 6% semi-annual interest portion, payable in cash or stock, of the convertible note exchange completed in December 2019. If the Company elects to pay interest due in stock, the restricted cash will be released from escrow.

2020 Financial Guidance

Total product net revenue for the full year 2020 is expected to be $120 – $150 million, with total revenue expected to be $130 – $160 million. Product revenue excludes royalty revenue, primarily Fampyra royalty revenue obligations owed to Healthcare Royalty Partners.
INBRIJA net revenue for the full year 2020 is expected to be $35 – $40 million.
Expected INBRIJA U.S. annual peak sales has been revised to $300 – $500 million
AMPYRA net revenue for the full year 2020 is expected to be $85 – $110 million.
Operating expenses for the full year 2020 are expected to be $170 – $180 million, reduced from previous guidance of $180 – $190 million. This guidance is a non-GAAP projection that excludes restructuring costs and share-based compensation as more fully described below under "Non-GAAP Financial Measures."
Fourth Quarter 2019 Highlights

In December 2019, the Company successfully exchanged $276 million notional value of 2021 convertible notes, at a 5% discount, for $207 million of December 2024 secured convertible notes, convertible at a significant premium, and $55 million of cash.
In October 2019, the Company announced a corporate restructuring and 25% headcount reduction; more than $21 million in expected annualized cost savings expected.
Webcast and Conference Call

The Company will host a conference call and webcast in conjunction with its fourth quarter/year end 2019 update and financial results today at 8:30 a.m. ET. To participate in the conference call, please dial (833) 236-2756 (domestic) or (647) 689-4181 (international) and reference the access code 4665685. The presentation will be available on the Investors section of www.acorda.com.

A replay of the call will be available from 11:30 a.m. ET on February 13, 2020 until 11:59 p.m. ET on March 12, 2020. To access the replay, please dial (800) 585-8367 (domestic) or (416) 621-4642 (international); reference code 4665685. The archived webcast will be available in the Investor Relations section of the Acorda website at www.acorda.com.

On February 13, 2020 Replimune Group Inc. (Nasdaq: REPL), a biotechnology company developing oncolytic immuno-gene therapies derived from its Immulytic platform, reported a corporate update, highlighting the progress of its key programs (Press release, Replimune, FEB 13, 2020, View Source [SID1234554262]).

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"Based on the early data in our lead indication of CSCC, we believe there is a high probability of success in our ongoing randomized registration-directed clinical trial of RP1 in combination with Libtayo compared to Libtayo alone, and we are also looking forward to starting an additional trial to test RP1 as a monotherapy in solid organ transplant recipients with CSCC. This is a patient population for whom immune checkpoint blockade is contraindicated due to the substantial risk of rejection of the transplanted organ and for whom the incidence of CSCC is particularly high," said Philip Astley-Sparke, Chief Executive Officer of Replimune. "Deaths from CSCC in the US approach the levels of those from melanoma, suggesting a significant initial commercial opportunity. In addition to reporting further data from our lead indications and initial clinical data with RP2 during 2020, we look forward to announcing the expansion of the clinical development plan for RP1 into additional indications as we continue to execute upon our mission to make our oncolytic immuno-gene therapies a cornerstone of cancer treatment."

Program Highlights

Replimune is currently developing three oncolytic immuno-gene therapies derived from its Immulytic platform. RP1 is Replimune’s first clinical product candidate and is based on a proprietary new strain of herpes simplex virus armed with a gene encoding a potent fusogenic protein (GALV-GP-R), intended to enhance tumor killing potency, immunogenic cell death and the activation of systemic anti-tumor immune responses, and with a gene encoding the cytokine GM-CSF. RP2 is a version of RP1 that in addition to expressing GALV-GP-R and GM-CSF also expresses a genetically encoded anti-CTLA-4 antibody intended to block the inhibition of the initiation of immune response caused by CTLA-4. RP3 is a further armed oncolytic immuno-gene therapy which expresses two immune co-stimulatory activating ligands – CD40L and 4-1BBL – together with anti-CTLA-4 and GALV-GP-R-. CD40L activates CD40, with the goal of achieving broad activation of both innate and adaptive immunity, and 4-1BBL activates 4-1BB (CD137), intended to promote the expansion of cellular and memory immune responses.

RP1 in combination with Libtayo in CSCC: Enrollment in the 240-patient registration-directed Phase 2, randomized, controlled clinical trial is ongoing and is expected to take approximately 18 to 24 months with enrollment intended in the US, Australia, Canada, United Kingdom and European Union.
RP1 in combination with Opdivo in melanoma, non-melanoma skin cancers, metastatic bladder cancer, and MSI-H/dMMR tumors: The Phase 2 part of the Phase 1/2 clinical trial of RP1 in combination with Opdivo remains on track with initial data from completely enrolled or ongoing skin cancer cohorts expected in mid-2020 with further data from all four cohorts expected to be available by year-end.
RP1 in combination with Opdivo in anti-PD-1 refractory melanoma patients: The Company has initiated recruitment in a new registration-directed 125-patient cohort in the Phase 2 clinical trial of RP1 in combination with Opdivo in anti-PD-1 refractory melanoma patients.
RP1 as monotherapy in solid organ transplant recipients with CSCC: The Company remains on track to initiate a 30 patient Phase 1/2 clinical trial to assess the safety and efficacy of RP1 in liver and kidney transplant recipients with recurrent CSCC in the first half of 2020.
RP2 alone and in combination with Opdivo: The ongoing Phase 1 clinical trial evaluating the safety, tolerability, and optimal dose for further development of RP2 alone and in combination with Opdivo remains on track with initial data from this all-comers clinical trial expected by the end of 2020.
RP3 alone and in combination with anti-PD-1 therapy: The Phase 1 clinical trial of RP3 alone and in combination with anti-PD-1 therapy remains on track to initiate in 2020.
Corporate Highlights

Organization transitioning into a late-stage clinical development company and preparing for commercialization. Replimune continues to grow and evolve its leadership team as it transitions into a late-stage clinical development company with the recent appointment of Jean Franchi as Chief Financial Officer and the transition of Robert Coffin, Ph.D. from Chief Executive Officer into the newly created role of President and Chief Research & Development Officer. As previously announced, Philip Astley-Sparke has moved from part-time Executive Chairman to now full-time Chief Executive Officer, and together with Robert Coffin will co-lead the company going forward.
Completed building manufacturing facility to support late-stage development and commercialization. The 63,000-square-foot facility in Framingham, MA is intended to provide multi-product manufacturing capabilities for Replimune’s product candidates with sufficient capacity to support full commercialization. The facility is now fully operational and technology transfer activities are underway.
Financial Highlights

Replimune strengthened the balance sheet in the quarter closing with $180.9 million in cash, cash equivalents and short-term investments, compared with $134.8 million as of March 31, 2019, an increase of $46.1 million. Our increased cash operating expenses were offset by $99.7 million of net proceeds from financing activities.

Based on our current operating plan, we expect our current cash, cash equivalents, and short-term investments will be sufficient to fund operating expenses and capital expenditure requirements into the second half of calendar year 2022.

Research and development expenses for the quarter ended December 31, 2019 were $11.9 million compared with $7.9 million for the same period in the prior year. The increase was driven by increased headcount and services supporting advancement of our lead program RP1 into phase II trials, additional trials, and initiating work in RP2 and RP3.

General and administrative expenses were $4.7 million for the quarter ended December 31, 2019 compared with $2.3 million for the same period in the prior year. The increase was primarily driven by increased headcount and related expense, professional fees, and facility expansion.

Replimune reported a net loss of $16.2 million for the quarter ended December 31, 2019 compared with $7.7 million for the same period in the prior year.

On February 13, 2020 Karyopharm Therapeutics Inc. (Nasdaq:KPTI), an oncology-focused pharmaceutical company, reported financial results for the fourth quarter and full year ended December 31, 2019 (Press release, Karyopharm, FEB 13, 2020, View Source [SID1234554261]). In addition, Karyopharm highlighted select corporate milestones, including details regarding the ongoing U.S. commercial launch of XPOVIO (selinexor), and provided an overview of its key clinical development programs.

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"2019 was a year of significant progress for Karyopharm as we successfully transitioned into an integrated commercial organization following the accelerated approval of oral XPOVIO, the first and only nuclear export inhibitor approved in the U.S., indicated for patients with heavily pretreated multiple myeloma. Our XPOVIO commercial launch efforts have yielded a strong positive reception from prescribing physicians and patients, with approximately 1,400 prescriptions filled in 2019," said Michael G. Kauffman, MD, PhD, Chief Executive Officer of Karyopharm. "Our pipeline efforts also continued to advance with the top-line Phase 3 BOSTON study results expected before the end of April, which if positive, could support future regulatory submissions and dramatically increase the eligible multiple myeloma patient population for XPOVIO. And importantly, we ended the year with the submission of our supplemental New Drug Application (sNDA) in the U.S. based on our SADAL study for selinexor requesting accelerated approval for patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL), a disease with significant patient unmet need."

Fourth Quarter 2019 Highlights and Recent Progress

XPOVIO (selinexor) in Multiple Myeloma

XPOVIO U.S. Commercial Launch Continues Momentum. Oral XPOVIO became commercially available to patients in the U.S on July 9, 2019 and generated net product sales of $17.7 million in the fourth quarter and $30.5 million for the full year 2019. As of December 31, 2019, approximately 1,400 XPOVIO prescriptions have been filled, driven by strong demand from both academic and community-based oncologists. XPOVIO has been prescribed by more than 550 unique physicians and healthcare accounts. Net product sales increased by approximately 38% in the fourth quarter of 2019 as compared to the third quarter of 2019 with prescription demand (defined as prescriptions shipped from Karyopharm’s distribution partners to individual patients and prescribing healthcare accounts) increasing by approximately 65% in the fourth quarter as compared to the third quarter of 2019.

Increased fourth quarter net revenues were primarily driven by a combination of new patient starts and prescription refills. Broad insurance coverage for XPOVIO has been a key contributor to its commercial success with XPOVIO being added to numerous national commercial and Medicare formularies and coverage policies. Based on prescription fulfillment data through the specialty pharmacy channel, Karyopharm estimates that approximately 55% of XPOVIO prescriptions have been dispensed to patients with Medicare coverage, 40% to patients with commercial insurance, and the remaining patients having either Medicaid or another form of prescription coverage.

22 Abstracts Presented at the American Society of Hematology (ASH) (Free ASH Whitepaper) 2019 Annual Meeting. Multiple data presentations highlighting selinexor at the ASH (Free ASH Whitepaper) 2019 Annual Meeting held December 7-10, 2019, continue to reinforce the potential clinical utility of selinexor as a new therapeutic option for patients with relapsed or refractory multiple myeloma. This included one oral presentation which provided updated data from the Phase 1b/2 STOMP study evaluating the all oral regimen of selinexor in combination with Pomalyst (pomalidomide) and low-dose dexamethasone (dex) (SPd) in patients with relapsed or refractory multiple myeloma. Patients with Pomalyst-naïve and Revlimid (lenalidomide)-relapsed or -refractory myeloma achieved a 56% overall response rate (ORR) and a 12.2-month progression free survival (PFS) on the SPd regimen. A separate poster presentation detailed results for the Kyprolis (carfilzomib) arm of the Phase 1b/2 STOMP study which showed a 71% ORR and a 21% complete response rate (CR) in patients with heavily pretreated Kyprolis-naïve multiple myeloma. New data from patients treated with selinexor-based regimens after their myeloma had progressed following experimental CAR-T (chimeric antigen receptor modified T cell) therapy was also highlighted in a poster and demonstrated promising early responses from six of seven patients, reinforcing the potential therapeutic activity of selinexor in patients with advanced refractory disease.

Decision from European Medicines Agency (EMA) for Marketing Authorization Application (MAA) Now Expected in Mid-2020. In January 2019, Karyopharm submitted an MAA to the EMA requesting conditional approval for selinexor, in combination with dexamethasone, as a new treatment for patients with heavily pretreated multiple myeloma based on the results of the Phase 2b STORM study. In January 2020, Karyopharm was granted a three-month extension from the EMA’s Committee for Medicinal Products for Human Use to provide additional time to respond to the outstanding questions related to the MAA. The Company now expects a decision on the selinexor MAA in mid-2020.

Pivotal Phase 3 BOSTON Study Remains On Track. Top-line data are expected before the end of April 2020 contingent upon the occurrence of PFS events, the primary endpoint of the study. The BOSTON study is evaluating 100mg of selinexor dosed once weekly in combination with the proteasome inhibitor Velcade (bortezomib) (once weekly) and low dose dexamethasone (SVd), compared to standard twice weekly Velcade and low dose dexamethasone (Vd) in patients with multiple myeloma who have had one to three prior lines of therapy. Data from the BOSTON study, if positive, are expected to be used to support regulatory submissions to the U.S. Food and Drug Administration (FDA) and EMA requesting the use of selinexor in combination with Velcade and dexamethasone in patients with multiple myeloma who have received at least one prior therapy.
Selinexor in Diffuse Large B-Cell Lymphoma (DLBCL)

sNDA Submitted in December 2019. Following the positive results from the Phase 2b SADAL study that were first presented at the ASH (Free ASH Whitepaper) 2018 Annual Meeting and then updated in June 2019 at the 2019 International Conference on Malignant Lymphoma, Karyopharm submitted a sNDA to the FDA in December 2019 requesting accelerated approval for selinexor as a treatment for patients with relapsed or refractory DLBCL after at least two prior multi-agent therapies and who are ineligible for stem cell transplantation including CAR-T therapy. The Company also expects to submit an MAA to the EMA in 2020 requesting conditional approval for selinexor in the same indication. In addition to orphan drug designation, selinexor was granted fast track designation for this indication by the FDA in 2018.
Selinexor in Solid Tumors

Ongoing Phase 3 Portion of the Phase 2/3 SEAL Study in Liposarcoma. Karyopharm previously reported positive results from the Phase 2 portion of the randomized, blinded Phase 2/3 SEAL study evaluating single-agent selinexor versus placebo in patients with previously treated, advanced unresectable dedifferentiated liposarcoma. Enrollment is currently ongoing in the Phase 3 portion of the SEAL study. Top-line data from the Phase 3 portion of the SEAL study are anticipated in 2020. Assuming a positive outcome on the primary endpoint of PFS, the Company intends to use the data from the SEAL study to support NDA and MAA submissions requesting approval for selinexor for patients with advanced unresectable dedifferentiated liposarcoma.
Other Pipeline Updates

Five New Clinical Trials Expected to Start in 2020 to Investigate Karyopharm Drug Candidates Across Both Hematologic Malignancies and Solid Tumors:

DLBCL: XPORT-DLBCL-030 is a Phase 2/3 trial expected to serve as a confirmatory study for the accelerated approval requested in DLBCL based on the SADAL study. This trial will study selinexor or a matching placebo given with the standard combination immunochemotherapy R-GDP (rituximab, gemcitabine, dexamethasone, cisplatin) to patients with at least one prior therapy and ineligible for high dose chemotherapy and stem cell transplantation (or CAR-T). The primary endpoint of the study is PFS.

DLBCL: XPORT-DLBCL-025 is a multi-arm Phase 1/2 trial of selinexor in combination with commonly used and approved agents for the treatment of DLBCL. This study will inform the clinical development of selinexor with a variety of additional agents for the treatment of DLBCL.

Colorectal Cancer and Lung Cancer: XPORT-STP-027 is a Phase 1/2 trial designed to study selinexor in combination with pembrolizumab in colorectal cancer and separately in combination with docetaxel in non-small cell lung cancer.

Glioblastoma (GBM): XPORT-GBM-029 is a Phase 1/2 trial designed to study selinexor in combination with active anti-cancer agents in both newly diagnosed and patients with recurrent disease.

Myelodysplastic Syndromes (MDS): Based on positive data from an ongoing Phase 1 / 2 trial of single-agent eltanexor presented at ASH (Free ASH Whitepaper) 2019, we plan to evaluate the combination of eltanexor with cedazuridine-decitabine (ASTX727) in patients with newly diagnosed MDS.

Encouraging Pre-Clinical Data Highlighting Potential Role of KPT-9274 Published in Nature Cancer: In January 2020, results from a study conducted by researchers at the University of California, Los Angeles (UCLA) Jonsson Comprehensive Cancer Center were published in Nature Cancer. Researchers concluded that inhibiting the kinase PAK4 improves the effectiveness of PD-1 blockade immunotherapy in melanoma cells. KPT-9274, Karyopharm’s investigational dual PAK4 and NAMPT inhibitor, was given in an animal model of melanoma in combination with anti-PD-1 immunotherapy, effectively slowing the growth of melanomas more than either drug alone. Finding novel molecular targets that could improve and overcome resistance to PD-1 blockade therapy remains a key priority in current cancer research and the results from this study support future clinical development of KPT-9274 in combination with anti-PD-1 therapy.
Corporate and Financial Updates

Executed Licensing Agreement with Neopharm Group to Commercialize XPOVIO in Israel. In February 2020, Karyopharm and Promedico, a fully-owned Neopharm LTD company, entered into an exclusive distribution agreement for the commercialization of XPOVIO in Israel and the Palestinian Authority. Karyopharm will receive certain prespecified payments and is eligible to receive additional payments if prespecified regulatory and commercial milestones are achieved by Promedico. Karyopharm is also eligible to receive double-digit royalties on future net sales in the territory. Promedico is responsible for all regulatory filings and obligations required for registering XPOVIO. Karyopharm has retained exclusive production rights and will supply finished product for commercial use in the territory.
Full Year and Fourth Quarter 2019 Financial Results

Net product revenue: Net product revenue for the fourth quarter of 2019 was $17.7 million and $30.5 million for the year ended December 31, 2019. Karyopharm did not have net product revenue during the year ended December 31, 2018.

License and other revenue: License and other revenue for the fourth quarter of 2019 was $0.4 million, compared to $0.2 million for the fourth quarter of 2018. License and other revenue for the year ended 2019 was $10.4 million, compared to $30.3 million for the year ended 2018.

Cost of sales: Karyopharm began U.S. sales of XPOVIO in the third quarter of 2019. Cost of sales were $1.4 million for the fourth quarter of 2019, and $2.4 million for the year ended December 31, 2019. Cost of sales reflects the costs of XPOVIO units sold and third-party royalties on net product revenue.

Research and development expenses: Research and development expense for the fourth quarter of 2019 was $31.6 million, compared to $38.9 million for the fourth quarter of 2018. Research and development expense for the year ended 2019 was $122.3 million, compared to $161.4 million for the year ended 2018.

Selling, general and administrative expenses: For the fourth quarter 2019, selling, general and administrative expense was $28.4 million, compared to $18.8 million for the fourth quarter 2018. For the year ended December 31, 2019, selling, general and administrative expense was $105.4 million, compared to $48.8 million for the year ended December 31, 2018. The increase in selling, general and administrative expenses compared to the prior year was due primarily to the hiring of the Karyopharm commercial team and related activities to support the U.S. commercial launch of XPOVIO.

Interest expense: Interest expense for the fourth quarter and for the year ended December 31, 2019 was $6.5 million and $15.6 million, respectively, compared to $2.5 million for both the fourth quarter 2018 and the year ended December 31, 2018. The increase in interest expense is attributable to the imputed interest on the deferred royalty obligation Karyopharm has with HealthCare Royalty Partners (HCR).

Net loss: Karyopharm reported a net loss of $48.6 million, or $0.76 per share, for the fourth quarter 2019, compared to a net loss of $58.2 million, or $0.96 per share, for the fourth quarter 2018. Net loss includes non-cash stock-based compensation expense of $3.6 million and $3.9 million for the 2019 and 2018 quarters, respectively. Karyopharm reported a net loss of $199.6 million, or $3.22 per share, for the year ended 2019, compared to a net loss of $178.4 million, or $3.14 per share, for the year ended 2018. Net loss includes non-cash stock-based compensation expense of $15.3 million and $17.3 million for the years ended 2019 and 2018, respectively.

Cash position: Cash, cash equivalents, restricted cash and investments as of December 31, 2019 totaled $265.8 million, compared to $330.9 million as of December 31, 2018.

2020 Financial Outlook

Based on its current operating plans, Karyopharm expects its non-GAAP R&D and SG&A expenses, which excludes stock-based compensation expense, for the full year 2020 to be in the range of $240 million to $260 million.

The Company expects that its existing cash, cash equivalents and investments, and the revenue it expects to generate from XPOVIO product sales, will be sufficient to fund its planned operations into the middle of 2021.

Non-GAAP Financial Information

Karyopharm uses a non-GAAP financial measure, non-GAAP operating expense, to provide operating expense guidance. Non-GAAP operating expense excludes stock-based compensation expense. Karyopharm believes this non-GAAP financial measure is useful to investors because it provides greater transparency regarding Karyopharm’s operating performance as it excludes non-cash stock compensation expense. Karyopharm has not reconciled the full year 2020 outlook for non-GAAP operating expenses to full year 2020 outlook for GAAP operating expenses because Karyopharm cannot reliably predict without unreasonable efforts the timing or amount of the factors that substantially contribute to the projection of stock compensation expense, which is excluded from the full year 2020 outlook for non-GAAP operating expenses. This non-GAAP financial measure should not be considered a substitute or an alternative to GAAP total operating expense and should not be considered a measure of Karyopharm’s liquidity. Instead, non-GAAP operating expense should only be used to supplement an understanding of Karyopharm’s operating results as reported under GAAP.

Conference Call Information

Karyopharm will host a conference call today, Thursday, February 13, 2020, at 8:30 a.m. Eastern Time, to discuss the fourth quarter and full year 2019 financial results, recent accomplishments, clinical developments and business plans. To access the conference call, please dial (855) 437-4406 (local) or (484) 756-4292 (international) at least 10 minutes prior to the start time and refer to conference ID 4367549. A live audio webcast of the call will be available under "Events & Presentations" in the Investor section of the Company’s website, View Source An archived webcast will be available on the Company’s website approximately two hours after the event.

IMPORTANT SAFETY INFORMATION

Thrombocytopenia

XPOVIO can cause thrombocytopenia, leading to potentially fatal hemorrhage. Thrombocytopenia was reported as an adverse reaction in 74% of patients, and severe (Grade 3-4) thrombocytopenia occurred in 61% of patients treated with XPOVIO. The median time to onset of the first event was 22 days. Bleeding occurred in 23% of patients with thrombocytopenia, clinically significant bleeding occurred in 5% of patients with thrombocytopenia and fatal hemorrhage occurred in <1% of patients.

Monitor platelet counts at baseline, during treatment, and as clinically indicated. Monitor more frequently during the first two months of treatment. Institute platelet transfusion and/or other treatments as clinically indicated. Monitor patients for signs and symptoms of bleeding and evaluate promptly. Interrupt and/or reduce dose, or permanently discontinue based on severity of adverse reaction.

Neutropenia

XPOVIO can cause neutropenia, potentially increasing the risk of infection. Neutropenia was reported as an adverse reaction in 34% of patients, and severe (Grade 3-4) neutropenia occurred in 21% of patients treated with XPOVIO. The median time to onset of the first event was 25 days. Febrile neutropenia was reported in 3% of patients.

Obtain neutrophil counts at baseline, during treatment, and as clinically indicated. Monitor more frequently during the first two months of treatment. Monitor patients for signs and symptoms of concomitant infection and evaluate promptly. Consider supportive measures including antimicrobials for signs of infection and use of growth factors (e.g., G-CSF). Interrupt and/or reduce dose, or permanently discontinue based on severity of adverse reaction.

Gastrointestinal Toxicity

Gastrointestinal toxicities occurred in patients treated with XPOVIO.

Nausea/Vomiting

Nausea was reported as an adverse reaction in 72% of patients, and Grade 3 nausea occurred in 9% of patients treated with XPOVIO. The median time to onset of the first nausea event was 3 days.

Vomiting was reported in 41% of patients, and Grade 3 vomiting occurred in 4% of patients treated with XPOVIO. The median time to onset of the first vomiting event was 5 days.

Provide prophylactic 5-HT3 antagonists and/or other anti-nausea agents, prior to and during treatment with XPOVIO. Manage nausea/vomiting by dose interruption, reduction, and/or discontinuation. Administer intravenous fluids and replace electrolytes to prevent dehydration in patients at risk. Use additional anti-nausea medications as clinically indicated.

Diarrhea

Diarrhea was reported as an adverse reaction in 44% of patients, and Grade 3 diarrhea occurred in 6% of patients treated with XPOVIO. The median time to onset of diarrhea was 15 days.

Manage diarrhea by dose modifications and/or standard anti-diarrheal agents; administer intravenous fluids to prevent dehydration in patients at risk.

Anorexia/Weight Loss

Anorexia was reported as an adverse reaction in 53% of patients, and Grade 3 anorexia occurred in 5% of patients treated with XPOVIO. The median time to onset of anorexia was 8 days.

Weight loss was reported as an adverse reaction in 47% of patients, and Grade 3 weight loss occurred in 1% of patients treated with XPOVIO. The median time to onset of weight loss was 15 days.

Monitor patient weight at baseline, during treatment, and as clinically indicated. Monitor more frequently during the first two months of treatment. Manage anorexia and weight loss with dose modifications, appetite stimulants, and nutritional support.

Hyponatremia

XPOVIO can cause hyponatremia; 39% of patients treated with XPOVIO experienced hyponatremia, 22% of patients experienced Grade 3 or 4 hyponatremia. The median time to onset of the first event was 8 days.

Monitor sodium level at baseline, during treatment, and as clinically indicated. Monitor more frequently during the first two months of treatment. Correct sodium levels for concurrent hyperglycemia (serum glucose >150 mg/dL) and high serum paraprotein levels. Treat hyponatremia per clinical guidelines (intravenous saline and/or salt tablets), including dietary review. Interrupt and/or reduce dose, or permanently discontinue based on severity of adverse reaction.

Infections

In patients receiving XPOVIO, 52% of patients experienced any grade of infection. Upper respiratory tract infection of any grade occurred in 21%, pneumonia in 13%, and sepsis in 6% of patients. Grade ≥3 infections were reported in 25% of patients, and deaths resulting from an infection occurred in 4% of patients. The most commonly reported Grade ≥3 infections were pneumonia in 9% of patients, followed by sepsis in 6%. The median time to onset was 54 days for pneumonia and 42 days for sepsis. Most infections were not associated with neutropenia and were caused by non-opportunistic organisms.

Neurological Toxicity

Neurological toxicities occurred in patients treated with XPOVIO.

Neurological adverse reactions including dizziness, syncope, depressed level of consciousness, and mental status changes (including delirium and confusional state) occurred in 30% of patients, and severe events (Grade 3-4) occurred in 9% of patients treated with XPOVIO. Median time to the first event was 15 days.

Optimize hydration status, hemoglobin level, and concomitant medications to avoid exacerbating dizziness or mental status changes.

Embryo-Fetal Toxicity

Based on data from animal studies and its mechanism of action, XPOVIO can cause fetal harm when administered to a pregnant woman. Selinexor administration to pregnant animals during organogenesis resulted in structural abnormalities and alterations to growth at exposures below those occurring clinically at the recommended dose.

Advise pregnant women of the potential risk to a fetus. Advise females of reproductive potential and males with a female partner of reproductive potential to use effective contraception during treatment with XPOVIO and for 1 week after the last dose.

ADVERSE REACTIONS

The most common adverse reactions (incidence ≥20%) are thrombocytopenia, fatigue, nausea, anemia, decreased appetite, decreased weight, diarrhea, vomiting, hyponatremia, neutropenia, leukopenia, constipation, dyspnea, and upper respiratory tract infection.

The treatment discontinuation rate due to adverse reactions was 27%; 53% of patients had a reduction in the XPOVIO dose, and 65.3% had the dose of XPOVIO interrupted. The most frequent adverse reactions requiring permanent discontinuation in 4% or greater of patients who received XPOVIO included fatigue, nausea, and thrombocytopenia. The rate of fatal adverse reactions was 8.9%.