On February 6, 2018 Allergan plc (NYSE: AGN) reported its fourth quarter and full-year 2017 continuing operations performance (Press release, Allergan, FEB 6, 2018, View Source [SID1234523753]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

Total fourth quarter net revenues were $4.33 billion, a 12.0 percent increase from the prior year quarter, driven by BOTOX Cosmetic, BOTOX Therapeutic, JUVÉDERM Collection, ALLODERM, CoolSculpting and new products, including VRAYLAR, NAMZARIC and VIBERZI. The increase was partially offset by lower revenues from products losing patent exclusivity, and the continuing decline in ACZONE and NAMENDA XR. For the full year 2017, Allergan reported total net revenues of $15.94 billion, a 9.4 percent increase versus the prior year, driven by continued strong growth across key therapeutic areas and key products, and the addition of Regenerative Medicine products and CoolSculpting.

"2017 was a pivotal year for Allergan and we delivered solid results. We powered strong revenue growth of our top products and in each of our regions. We acquired, integrated and grew two new businesses and continued to advance our R&D pipeline. Allergan also continued to execute our capital deployment plan by completing a $15 billion share repurchase program, instituting a dividend and paying down debt in 2017," said Brent Saunders, Chairman and CEO of Allergan. "I believe that Allergan has a strong future and I am especially proud of our Allergan colleagues who continue to be Bold for Life by delivering treatments that make a difference for patients around the world."

Fourth Quarter 2017 Performance
GAAP operating loss from continuing operations in the fourth quarter 2017 was $90.5 million, including the impact of amortization, in-process research and development (R&D) impairments and charges associated with the December 2017 restructuring program announced on January 3, 2018 (herein referred to as the "December 2017 restructuring program"). Non-GAAP adjusted operating income from continuing operations in the fourth quarter of 2017 was $2.17 billion, an increase of 16.4 percent versus the prior year quarter. Cash flow from operations for the fourth quarter of 2017 increased to approximately $2.05 billion.

Full-Year 2017 Performance
GAAP operating loss from continuing operations for the full year 2017 was $5.92 billion, compared with $1.83 billion in 2016 primarily due to impairment charges recognized in the third quarter of 2017 of $3.2 billion related to RESTASIS and $646.0 million related to ACZONE. Non-GAAP adjusted operating income from continuing operations for the full year 2017 was $7.65 billion, an increase of 5.6 percent versus prior year. GAAP Cash flow from operations for the full year of 2017 increased to approximately $5.87 billion, compared to $1.45 billion in 2016, which was negatively impacted by cash taxes paid in connection with the gain recognized on the businesses sold to Teva Pharmaceuticals Industries, Ltd ("Teva").

Operating Expenses
Total GAAP Selling, General and Administrative (SG&A) Expense was $1.27 billion for the fourth quarter 2017, compared to $1.28 billion in the prior year quarter. Included within GAAP SG&A in the fourth quarter and full year 2017 were charges related to the December 2017 restructuring program of $80.0 million. Total non-GAAP SG&A expense increased to $1.13 billion for the fourth quarter 2017, compared to $1.07 billion in the prior year period, primarily due to costs associated with the addition of the Regenerative Medicine and CoolSculpting businesses. GAAP R&D investment for the fourth quarter of 2017 was $408.2 million, compared to $913.3 million in the fourth quarter of 2016. Non-GAAP R&D investment for the fourth quarter 2017 was $405.7 million, a decrease of 4.7 percent over the prior year quarter, due to reprioritization of on R&D programs and tight expense management.

Asset Sales & Impairments, Net and In-Process R&D Impairments
The Company recorded impairment charges of $238.5 million and $456.0 million in the three months ended December 31, 2017 and 2016, respectively. The Company excludes asset sales and impairments, net and in-process research and development impairments from its Non-GAAP performance net income attributable to shareholders as well as Adjusted EBITDA and Adjusted Operating Income.

Amortization, Other Income (Expense) Net, Tax and Capitalization
Amortization expense from continuing operations for the fourth quarter 2017 was $1.92 billion, compared to $1.64 billion in the fourth quarter of 2016.

The Company’s GAAP continuing operations tax rate benefit in the fourth quarter of 2017, was primarily attributable to discrete income tax benefits recognized as a result of the Tax Cuts and Jobs Act ("TCJA"). The Company’s non-GAAP adjusted continuing operations tax rate was 11.4 percent in the fourth quarter 2017. As of December 31, 2017, Allergan had cash and marketable securities of $6.45 billion and outstanding indebtedness of $30.1 billion.

Provisional Estimates of the Impact of U.S. Tax Reform
Allergan recorded a net provisional benefit of approximately $2.8 billion related to the TCJA. This amount includes a $730 million provisional expense representing the U.S. tax payable on deemed repatriated earnings of non-U.S. subsidiaries offset by a $3.5 billion net reduction of U.S. deferred tax liabilities due to the lower enacted U.S. tax rate and the change in assertion regarding permanently reinvested earnings as a result of the transition to a territorial tax system. These provisional estimates are based on the Company’s initial analysis and current interpretation of the legislation. Given the complexity of the TCJA, anticipated guidance from the U.S. Treasury, and the potential for additional guidance from the Securities and Exchange Commission or the Financial Accounting Standards Board, these estimates may be adjusted during 2018.

Discontinued Operations and Continuing Operations
As a result of the divestiture of the Company’s generics business and the divestiture of the Company’s Anda Distribution business in 2016, the financial results of those businesses have been reclassified to discontinued operations for all periods presented in our consolidated financial statements up through the date of the divestitures.

Included within (loss) from discontinued operations for the three months ended December 31, 2017 was a charge to settle certain Teva related matters, net of tax of $387.4 million.

Included in segment revenues in the twelve months ended December 31, 2016 are product sales that were sold by the Anda Distribution business once the Anda Distribution business had sold the product to a third-party customer. These sales are included in segment results and are excluded from total continuing operations revenues through a reduction to Corporate revenues. Cost of sales for these products in discontinued operations is equal to our average third-party cost of sales for third-party branded products distributed by Anda Distribution.

U.S. Specialized Therapeutics net revenues in the fourth quarter of 2017 were $1.9 billion, an increase of 19.8 percent versus the prior year quarter, driven primarily by the addition of the Regenerative Medicine and CoolSculpting businesses, as well as growth in BOTOX and JUVÉDERM Collection, offset by decreased revenues in Medical Dermatology.

Eye Care
RESTASIS net revenues in the fourth quarter of 2017 were $400.3 million, an increase of 1.8 percent versus the prior year quarter.
The Glaucoma franchise experienced a modest decline with ALPHAGAN/COMBIGAN net revenues in the fourth quarter of 2017 remaining stable at $101.8 million, while LUMIGAN/GANFORT net revenues decreased 5.9 percent versus the prior year quarter to $80.9 million in the fourth quarter of 2017, primarily impacted by lower volume.
OZURDEX net revenues in the fourth quarter of 2017 increased 16.8 percent from the prior year quarter to $26.4 million, driven by continued strong demand.

Medical Aesthetics
The Facial Aesthetics franchise continues to deliver strong growth with revenues increasing 14.1 percent versus the prior year quarter.
BOTOX Cosmetic net revenues in the fourth quarter of 2017 were $228.4 million, up 14.5 percent versus the prior year quarter, reflecting continued strong demand growth.
JUVÉDERM Collection (defined as JUVÉDERM, VOLUMA and other fillers) net revenues in the fourth quarter of 2017 were $139.5 million, up 14.7 percent versus the prior year quarter, driven by continued strong demand and market share gains.
Regenerative Medicine
ALLODERM net revenues in the fourth quarter of 2017 were $97.9 million.
STRATTICE net revenues were $27.3 million in the fourth quarter of 2017.
Body Contouring
CoolSculpting net revenues (including both CoolSculpting Systems/Applicators and Consumables) in the fourth quarter of 2017 were $94.4 million.
Plastic Surgery
Breast implant net revenues in the fourth quarter of 2017 were $69.0 million, an increase of 21.5 percent versus the prior year quarter, driven by higher demand following the launch of INSPIRA breast implants.
Skin Care
SkinMedica net revenues in the fourth quarter of 2017 were $24.7 million, a decrease of 7.8 percent versus the prior year quarter, due in part to supply disruptions.

Medical Dermatology
ACZONE net revenues in the fourth quarter of 2017 were $38.0 million, a decrease of 37.9 percent versus the prior year quarter, primarily due to generic pressure on the branded acne category, the loss of exclusivity for ACZONE 5% and higher discounts for formulary coverage.
TAZORAC net revenues in the fourth quarter of 2017 were $14.1 million compared with $27.5 million in the prior year quarter, primarily due to continued generic competition.

Neurosciences & Urology
BOTOX Therapeutic net revenues in the fourth quarter of 2017 were $367.2 million, an increase of 17.1 percent versus the prior year quarter, primarily driven by continued growth in the chronic migraine, overactive bladder and adult spasticity indications.

U.S. Specialized Therapeutics gross margin for the fourth quarter of 2017 was 92.2 percent, negatively impacted by the addition of the Regenerative Medicine and CoolSculpting businesses. SG&A expenses in the segment for the fourth quarter 2017 were $387.6 million. Selling and marketing expenses in the segment for the fourth quarter 2017 were $328.8 million, an increase of 12.5 percent versus the prior year quarter mainly attributed to the addition of the Regenerative Medicine and CoolSculpting businesses, offset, in part by reduced promotional spending. General and administrative expenses at the segment level for the fourth quarter 2017 were $58.8 million, an increase of 23.0 percent versus the prior year quarter, attributed in part to the addition of the Regenerative Medicine and CoolSculpting businesses. Segment contribution for the fourth quarter 2017 remained strong at $1.35 billion, an increase of 16.7 percent versus the prior year quarter.

U.S. General Medicine net revenues in the fourth quarter 2017 were $1.5 billion, remaining stable versus the prior year quarter, driven by strong growth from LINZESS, VRAYLAR, NAMZARIC and Lo LOESTRIN, offset by lower revenues from MINASTRIN and ASACOL due to generic competition, and to the continued decline in NAMENDA XR .

Central Nervous System
NAMENDA XR net revenues in the fourth quarter of 2017 were $97.8 million, a decrease of 30.7 percent versus the prior year quarter, driven primarily by lower demand and generic pressure.
NAMZARIC net revenues in the fourth quarter of 2017 increased to $36.8 million from $19.5 million in the prior year quarter driven by increased demand.
VRAYLAR net revenues in the fourth quarter of 2017 were $87.7 million, compared with $43.2 million in the prior year quarter, driven by continued strong demand growth.
VIIBRYD/FETZIMA net revenues in the fourth quarter of 2017 were $89.0 million, compared with $89.7 million in the prior year quarter.
SAPHRIS net revenues in the fourth quarter of 2017 were $37.7 million, a decrease of 12.7 percent versus the prior year quarter, primarily due to lower demand.

Gastrointestinal
LINZESS net revenues in the fourth quarter of 2017 were $194.8 million, an increase of 12.2 percent versus the prior year quarter, driven by continued strong demand growth.
VIBERZI net revenues in the fourth quarter of 2017 were $42.9 million, an increase of 12.9 percent versus the prior year quarter, driven by higher average selling prices.
ASACOL/DELZICOL net revenues in the fourth quarter of 2017 were $42.8 million, a decrease of 32.0 percent versus the prior year quarter, impacted by generic entry for ASACOL HD and a decline in demand for DELZICOL.
ZENPEP net revenues in the fourth quarter of 2017 were $58.5 million, an increase of 5.2 percent versus the prior year quarter, driven by higher average selling prices.
CARAFATE/SULCRATE net revenues in the fourth quarter of 2017 were $59.2 million, a decrease of 3.4 percent versus the prior year quarter.

Women’s Health
Lo LOESTRIN net revenues in the fourth quarter of 2017 were $126.5 million, an increase of 17.7 percent versus the prior year quarter, driven by strong demand growth and higher average selling prices. Lo LOESTRIN remains the number one prescribed branded oral contraceptive.
ESTRACE Cream net revenues in the fourth quarter were $101.5 million, compared to $103.0 million in the prior year quarter.
MINASTRIN 24 net revenues in the fourth quarter of 2017 were $5.3 million, compared to $78.4 million in the prior year quarter, impacted by loss of patent exclusivity for MINASTRIN 24 in March 2017.
TAYTULLA net revenues were $27.4 million in the fourth quarter of 2017 following the launch of this new oral contraceptive soft gel product in November 2016.
Anti-Infectives
TEFLARO net revenues in the fourth quarter of 2017 were $29.2 million, a decrease of 7.9 percent versus the prior year quarter, primarily impacted by generic pressure in the category.
AVYCAZ net revenues in the fourth quarter of 2017 were $18.5 million versus $9.2 million in the fourth quarter of 2016, when product supply was disrupted.
DALVANCE net revenues in the fourth quarter of 2017 were $13.0 million compared to $12.6 million in the prior year quarter.

Diversified Brands and Other Products
Diversified Brands net revenues in the fourth quarter of 2017 were $319.4 million, a decrease of 2.6 percent versus the prior year quarter.
Within Diversified Brands, BYSTOLIC/BYVALSON net revenues in the fourth quarter of 2017 were $157.5 million, compared to $159.8 million in the prior year quarter.

U.S. General Medicine gross margin for the fourth quarter of 2017 increased to 85.5 percent. SG&A expenses in the segment were $293.4 million in the fourth quarter of 2017. Selling and marketing expenses in the segment were $245.8 million, a decrease of 13.1 percent versus the prior year quarter, due to a decrease in promotional expenses and sales force reductions due to previous restructurings. General and administrative expenses were $47.6 million, an increase of 1.9 percent versus the prior year quarter. Segment contribution for the fourth quarter 2017 was $1.01 billion.

International net revenues in the fourth quarter of 2017 were $915.9 million, an increase of 16.8 percent versus the prior year quarter excluding foreign exchange impact, driven by growth in Facial Aesthetics, BOTOX Therapeutic, Eye Care and the addition of CoolSculpting.

Medical Aesthetics
Facial Aesthetics
BOTOX Cosmetic net revenues in the fourth quarter of 2017 were $155.0 million, an increase of 20.1 percent versus the prior year quarter excluding foreign exchange impact, driven by continued strong growth across all regions.
JUVÉDERM Collection net revenues in the fourth quarter of 2017 were $154.7 million, an increase of 27.8 percent versus the prior year quarter excluding foreign exchange impact, reflecting continued strong demand growth across all regions.
Plastic Surgery
Breast implant net revenues in the fourth quarter of 2017 were $40.1 million, an increase of 2.4 percent versus the prior year quarter, excluding foreign exchange impact.

Body Contouring
CoolSculpting net revenues (including both CoolSculpting Systems/Applicators and Consumables) in the fourth quarter of 2017 were $27.0 million.

Eye Care
LUMIGAN/GANFORT and ALPHAGAN/COMBIGAN net revenues in the fourth quarter of 2017 were $99.7 million and $46.7 million, respectively, reflecting continued stable performance.
OZURDEX net revenues in the fourth quarter of 2017 were $60.9 million, up 17.4 percent versus the prior year quarter excluding foreign exchange impact, reflecting continued strong demand across all regions.
OPTIVE net revenues in the fourth quarter of 2017 were $30.6 million, up 11.1 percent versus the prior year quarter excluding foreign exchange impact, reflecting strong demand in Europe and Latin America/Canada.

Botox Therapeutic
BOTOX Therapeutic net revenues in the fourth quarter of 2017 were $96.9 million, an increase of 11.2 percent versus the prior year quarter excluding foreign exchange impact, reflecting strong demand in Europe and Latin America/Canada.

International gross margin for the fourth quarter of 2017 was 85.0 percent. SG&A expenses in the segment were $274.7 million in the fourth quarter of 2017. Selling and marketing expenses in the segment were $240.6 million, an increase of 11.2 percent versus prior year excluding foreign exchange impact, in line with higher sales and the addition of CoolSculpting. General and administrative expenses were $34.1 million, an increase of 5.9 percent versus the prior year quarter excluding foreign exchange impact. Segment contribution was $504.1 million.

Corporate Function
Included within our corporate function are shared costs, including above site and unallocated costs associated with running our global manufacturing facilities, corporate general and administrative expenses and corporate initiatives.

Pipeline Update
Allergan R&D continues to deliver on its pipeline. Key development highlights included:

U.S. and International Branded Product Approvals
Allergan received approval from the U.S. Food and Drug Administration (FDA) for the use of VRAYLAR (cariprazine) for the maintenance treatment of adults with schizophrenia. VRAYLAR is also approved in the U.S. for the treatment of schizophrenia in adults and acute treatment of manic or mixed episodes associated with bipolar I disorder in adults.
Allergan received FDA approval for AVYCAZ (ceftazidime and avibactam) for the treatment of patients with hospital-acquired bacterial pneumonia and ventilator-associated Bacterial Pneumonia (HABP/VABP). This marks the third approved indication for AVYCAZ, in addition to complicated intra-abdominal infections and complicated urinary tract infections.
Allergan’s CoolSculpting treatment received clearance from the FDA for the improved appearance of lax tissue in conjunction with submental fat, or double chin, treatments. CoolSculpting is also FDA-cleared in the U.S. for the treatment of visible fat bulges in the submental area, thigh, abdomen and flank, along with bra fat, back fat, underneath the buttocks and upper arm.
Allergan received an Imported Drugs License (IDL) from the Chinese Food and Drug Administration (CFDA) to market Ozurdex (dexamethasone intravitreal implant 0.7 mg) for the treatment of adult patients with macular edema following either Branch Retinal Vein Occlusion (BRVO) or Central Retinal Vein Occlusion (CRVO).
Allergan received approval from the FDA for BOTOX Cosmetic for the temporary improvement in the appearance of moderate to severe forehead lines associated with frontalis muscle activity in adults. This marks the third approved indication for BOTOX Cosmetic, in addition to crow’s feet and glabellar lines.

Regulatory Milestones & Clinical Updates

Allergan announced that the FDA has accepted a New Drug Application (NDA) for Seysara (sarecycline) for the treatment of moderate to severe acne vulgaris in patients 9 years of age and older.
Allergan announced that VISTABEL (botulinum toxin type A) received a Positive Opinion from the Agence Nationale de Sécurité du Médicament et des Produits de Santé (ANSM) for the temporary improvement in the appearance of moderate to severe forehead lines in adults when the severity of the facial lines has an important psychological impact. This is an important step toward VISTABEL securing national licenses in the 28 countries of the European Union as well as Norway and Iceland.
Allergan announced positive topline results for a phase 3 study of cariprazine for the treatment of adults with major depressive episodes associated with bipolar I disorder (bipolar I depression). This is the second positive pivotal trial of cariprazine for this investigational use. The Company plans to submit a supplemental New Drug Application (sNDA) to the FDA in the 2nd half of 2018.

Fourth Quarter and Full-Year 2017 Conference Call and Webcast Details
Allergan will host a conference call and webcast today, Tuesday, February 6, at 8:30 a.m. Eastern Time to discuss its fourth quarter and full-year 2017 results. The dial-in number to access the call is U.S./Canada (877) 251-7980, International (706) 643-1573, and the conference ID is 67779395. A taped replay of the conference call will also be available beginning approximately two hours after the call’s conclusion, and will remain available through 11:30 p.m. Eastern Time on March 6, 2018. The replay may be accessed by dialing (855) 859-2056 and entering the conference ID 67779395. From international locations, the replay may be accessed by dialing (404) 537-3406 and entering the same conference ID.

To access the live webcast, please visit Allergan’s Investor Relations Web site at View Source A replay of the webcast will also be available.

On February 6, 2018 Sierra Oncology, Inc. (Nasdaq: SRRA), a clinical stage drug development company focused on advancing next generation DNA Damage Response (DDR) therapeutics for the treatment of patients with cancer, reported it will host a Program Update on Tuesday, February 27th from 10:00 a.m. – 12:00 p.m. Eastern Time (ET) at the Lotte New York Palace in New York, NY (Press release, Sierra Oncology, FEB 6, 2018, View Source [SID1234523747]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

During the event, the senior management team from Sierra Oncology will present a strategic update on the development programs for its two DDR drug candidates: SRA737, a highly selective, orally bioavailable Chk1 inhibitor; and SRA141, a highly selective, orally bioavailable Cdc7 inhibitor. The company will be joined by Dr. Udai Banerji, Chief Investigator for Sierra’s ongoing SRA737 Phase 1/2 clinical studies, and Dr. Alan D’Andrea, a member of Sierra’s DDR Advisory Committee.

Dr. Udai Banerji is the Cancer Research UK Reader in Molecular Cancer Pharmacology at The Institute of Cancer Research, London, and a Consultant Medical Oncologist at The Royal Marsden NHS Foundation Trust. He leads the Clinical Pharmacology and Trials team at The Institute of Cancer Research (ICR) and is the Deputy Director of the Drug Development Unit at the ICR and The Royal Marsden.

Dr. Alan D’Andrea is the Fuller-American Cancer Society Professor of Radiation Oncology at Harvard Medical School and the Director of the Center for DNA Damage and Repair at the Dana-Farber Cancer Institute. Dr. D’Andrea is internationally known for his research in the area of DNA damage and DNA repair, and participates in a wide range of clinical trials, largely focused on ovarian, breast, prostate, and bladder cancers.
Event registration and webcast information are available through the Sierra Oncology website at www.sierraoncology.com. An archive of the presentation will be accessible after the event through the Sierra Oncology website.

BIO CEO & Investor Conference in New York
Dr. Nick Glover, President and Chief Executive Officer, will present an overview of the company, scheduled for 11:30 a.m. ET on Monday, February 12th at the BIO CEO & Investor Conference being held in New York, NY. A live audio webcast and archive of the presentation will be accessible through the Sierra Oncology website at www.sierraoncology.com.

On February 6, 2018 MannKind Corporation (NASDAQ:MNKD) reported that David M. Kendall, MD, will join the company as Chief Medical Officer and assume full responsibility for leading MannKind’s scientific research, clinical development, regulatory, and medical affairs activity, effective February 12 (Press release, Mannkind, FEB 6, 2018, View Source [SID1234523746]). Dr. Kendall will report directly to Michael Castagna, Pharm.D., Chief Executive Officer, and will join the company’s executive leadership team. He will be based out of MannKind’s Westlake Village, California headquarters.

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"David is a world renowned diabetes expert and represents an important addition to our executive leadership team," said Castagna, Chief Executive Officer of MannKind. "His extensive experience in diabetes research, development, and clinical care in both U.S. and international markets, will be instrumental in helping us achieve the growth potential that we believe Afrezza clearly possesses."

Dr. Kendall’s career includes over 30 years of experience in diabetes and metabolism research, clinical management, research, and policy advocacy. Most recently, he served as Research Physician and Vice President of Global Medical Affairs for Lilly Diabetes, and during that time was responsible for all medical affairs activities and guided research and development strategy across multiple geographies. In this role, he worked to re-establish Lilly Diabetes as a world class medical organization — and added to his extensive experience with both injected and mealtime insulins, as well as devices and continuous glucose monitors. Prior to joining Eli Lilly, Dr. Kendall served as Chief Scientific and Medical Officer at the American Diabetes Association, where he was responsible for all medical affairs, medical education, research, outcomes, and medical policy activities. Earlier in his career, Dr. Kendall served as Medical Director at the International Diabetes Center, and the Park Nicollet Clinic, as well as at Amylin Pharmaceuticals. He received his M.D. and completed his Post Graduate Medical Training at the University of Minnesota, and earned a B.A. in Biology from St. Olaf College.

"The research and clinical response to Afrezza as a mealtime insulin supports ongoing efforts to establish this product as the standard of care for those living with type 1 or type 2 diabetes," said Dr. Kendall. "Afrezza is the only inhaled fast-acting mealtime insulin on the market, and offers the right patients a flexible, safe, and effective treatment option. I’m thrilled to join MannKind, and look forward to being part of a company that has the potential to transform the lives of so many people that are living with diabetes."

On February 6, 2018 LabCorp (or the Company) (NYSE: LH) reported results for the fourth quarter and year ended December 31, 2017, and provided 2018 guidance (Press release, LabCorp, FEB 6, 2018, View Source [SID1234523745]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"We achieved outstanding full year results, highlighted by revenue over $10 billion, adjusted EPS at the high end of our guidance range, and free cash flow in excess of $1.1 billion," said David P. King, chairman and CEO. "Our performance in the quarter demonstrated our multi-faceted growth platform, as our Diagnostics and Drug Development businesses each delivered excellent performance through a combination of strategic acquisitions, organic initiatives, and margin improvement. We are well positioned for another year of strong performance in 2018 driven by momentum in our businesses, expansion of our capabilities and talent base, broadened geographic presence, and delivery of innovative solutions that only LabCorp can offer."

Consolidated Results

Fourth Quarter Results
Net revenue for the quarter was $2.70 billion, an increase of 13.2% compared to $2.39 billion in the fourth quarter of 2016. The increase in net revenue was due to growth from acquisitions of 10.0%, organic growth (net revenue growth less revenue from acquisitions for the first twelve months after the close of each acquisition) of 2.6%, and the benefit from foreign currency translation of approximately 60 basis points.

Operating income for the quarter was $354.2 million, or 13.1% of net revenue, compared to $323.4 million, or 13.5%, in the fourth quarter of 2016. The increase in operating income was primarily due to acquisitions, organic revenue growth, and the Company’s LaunchPad business process improvement initiative. The decline in operating margin was primarily due to restructuring charges, special items, and amortization which together totaled $102.0 million in the quarter, compared to $64.4 million during the same period in 2016. Adjusted operating income (excluding amortization of $62.9 million, as well as restructuring charges and special items of $39.1 million) for the quarter was $456.2 million, or 16.9% of net revenue, compared to $387.8 million, or 16.2%, in the fourth quarter of 2016.

Net earnings in the quarter were $706.8 million, compared to $184.4 million in the fourth quarter of 2016. Diluted EPS were $6.81 in the quarter, compared to $1.75 in the same period in 2016. During the quarter, the Company recorded a net benefit of $519.0 million in net earnings, or $5.00 per diluted share, due to the implementation of the Tax Cuts and Jobs Act of 2017 (TCJA), which resulted in a favorable re-valuation of deferred taxes, partially offset by the deemed repatriation tax. Given the significant changes resulting from the TCJA, the estimated financial impact in the quarter is provisional and subject to further clarification, which could result in changes to these estimates during 2018.

Adjusted EPS (excluding tax reform, amortization, restructuring charges and special items) were $2.45 in the quarter, an increase of 14.0% compared to $2.15 in the fourth quarter of 2016.

Operating cash flow for the quarter was $564.0 million, compared to $448.9 million in the fourth quarter of 2016. The increase in operating cash flow was due to higher cash earnings and improved working capital. Capital expenditures totaled $96.1 million, compared to $74.3 million a year ago. As a result, free cash flow (operating cash flow less capital expenditures) was $467.9 million, compared to $374.6 million in the fourth quarter of 2016.

At the end of the quarter, the Company’s cash balance and total debt were $316.7 million and $6.8 billion, respectively. During the quarter, the Company invested $83.3 million in acquisitions, paid down $443.0 million of debt, and repurchased $40.0 million of stock representing approximately 0.3 million shares. The Company had $407.4 million of authorization remaining under its share repurchase program at the end of the quarter.

Full Year Results
Net revenue was $10.21 billion, an increase of 8.2% over last year’s $9.44 billion. The increase in net revenue was due to growth from acquisitions of 5.8%, and organic growth of 2.4%.

Operating income was $1.4 billion, or 13.4% of net revenue, compared to $1.3 billion, or 13.9%, in 2016. The increase in operating income was primarily due to acquisitions, organic revenue growth, and the LaunchPad business process improvement initiative, partially offset by higher personnel costs. The decline in operating margin was primarily due to higher amortization, restructuring charges, and special items. Adjusted operating income (excluding amortization of $216.5 million, as well as restructuring charges and special items of $150.7 million) for the year was $1.7 billion, or 17.0% of net revenue, compared to $1.6 billion, or 16.9%, last year.

Net earnings for 2017 were $1.3 billion, or $12.21 per diluted share, compared to $732.1 million, or $7.02 per diluted share, in 2016. As previously noted, the Company recorded a provisional net benefit of $519.0 million in net earnings in the fourth quarter, or $5.00 per diluted share, due to the implementation of the TCJA. Adjusted EPS (excluding tax reform, amortization, restructuring charges and special items) were $9.60, an increase of 8.7% compared to $8.83 in 2016.

Operating cash flow was $1.5 billion, compared to $1.2 billion in 2016, due to higher cash earnings and improved working capital. Capital expenditures totaled $312.9 million, compared to $278.9 million a year ago. As a result, free cash flow (operating cash flow less capital expenditures) was $1,146.5 million, compared to $897.0 million in 2016.

During the year, the Company invested approximately $1.9 billion in acquisitions, and repurchased $338.1 million of stock representing approximately 2.4 million shares.

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

Fourth Quarter Pro Forma Segment Results

LabCorp Diagnostics
Net revenue for the quarter was $1.82 billion, an increase of 8.6% over $1.67 billion in the fourth quarter of 2016. The increase in net revenue was driven by acquisitions, organic volume (measured by requisitions excluding those from acquisitions for the first twelve months after the close of each acquisition), and the benefit from foreign currency translation of approximately 30 basis points. Total volume (measured by requisitions) increased by 6.6%, of which organic volume was 2.9% and acquisition volume was 3.7%. Revenue per requisition increased by 1.8%.

Adjusted operating income (excluding amortization, restructuring charges and special items) for the quarter was $356.5 million, or 19.6% of net revenue, compared to $317.8 million, or 19.0%, in the fourth quarter of 2016. The increase in operating income and margin were primarily due to strong revenue growth and LaunchPad savings.

Covance Drug Development
Net revenue for the quarter was $886.1 million, an increase of 23.8% over $715.6 million in the fourth quarter of 2016. The increase was primarily due to the acquisition of Chiltern, as well as organic growth and the benefit from foreign currency translation of approximately 140 basis points.

Adjusted operating income (excluding amortization, restructuring charges and special items) for the quarter was $134.9 million, or 15.2% of net revenue, compared to $106.5 million, or 14.9%, in the fourth quarter of 2016. The increase in operating income and margin were primarily due to the acquisition of Chiltern, organic revenue growth,
and LaunchPad savings, partially offset by higher personnel costs. The Company remains on track to deliver cost synergies from the integration of Chiltern of $30 million within three years of the acquisition.

Net orders and net book-to-bill during the trailing twelve months were $4.14 billion and 1.36, respectively. Backlog at the end of the quarter was $7.13 billion, and the Company expects approximately $2.8 billion of this backlog to convert into revenue in the next twelve months.

The Company commenced the LaunchPad initiative in Covance Drug Development in mid-2017, focused on right-sizing the business, re-engineering Covance’s drug development solutions, integrating new tools and technology, and sustainably enhancing the employee and customer experience. The Company expects the initiative to achieve additional net savings of $130 million over the three-year period ending in 2020.

Outlook for 2018

The following guidance includes the estimated impact from adoption of the new revenue recognition accounting standard (ASC 606) as of January 1, 2018, the implementation of the TCJA, and currently anticipated capital allocation. The following guidance also assumes foreign exchange rates effective as of December 31, 2017 for the full year. In addition, to support the comparison of year-on-year results, the Company has provided a preliminary reconciliation that restates revenue in 2017 to show the impact of the new revenue recognition accounting standard for illustrative purposes. This calculation will be finalized upon adoption in the first quarter of 2018 and the amounts are therefore subject to change.

Revenue growth of 9.5% to 11.5% over 2017 restated revenue of $10.42 billion, which includes the benefit of approximately 60 basis points of foreign currency translation and equates to constant currency revenue growth of 8.9% to 10.9%.

Revenue growth in LabCorp Diagnostics of 3.0% to 5.0% over 2017 restated revenue of $6.86 billion, which includes the negative impact of the Protecting Access to Medicare Act (PAMA) as well as the benefit of approximately 20 basis points of foreign currency translation. This outlook equates to constant currency revenue growth of 2.8% to 4.8%.

Revenue growth in Covance Drug Development of 20.0% to 24.0% over 2017 restated revenue of $3.56 billion, which includes the benefit of approximately 140 basis points of foreign currency translation and equates to constant currency revenue growth of 18.6% to 22.6%.

Adjusted EPS of $11.30 to $11.70, an increase of approximately 17.7% to 21.9% as compared to $9.60 in 2017. The expected growth in adjusted EPS includes the benefit of an assumed lower tax rate in 2018 of 25%, contributing approximately $1.30 in adjusted EPS over 2017.

Free cash flow (operating cash flow less capital expenditures) of $1.1 billion to $1.2 billion, compared to $1.1 billion in 2017.

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 relations 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.

A conference call discussing LabCorp’s quarterly results will be held today at 9:00 a.m. Eastern Time and is available by dialing 844-634-1444 (615-247-0253 for international callers). The access code is 3587888. A telephone replay of the call will be available through February 20, 2018 and can be heard by dialing 855-859-2056 (404-537-3406 for international callers). The access code for the replay is 3587888. A live online broadcast of LabCorp’s quarterly conference call on February 6, 2018 will be available at View Source or at View Source beginning at 9:00 a.m. Eastern Time. This webcast will be archived and accessible through February 1, 2019.

On February 6, 2018 Incyte Corporation (Nasdaq:INCY) reported that it will present at the 2018 RBC Capital Markets Global Healthcare Conference on Wednesday, February 21, 2018 at 11:00 am (ET) in New York (Press release, Incyte, FEB 6, 2018, View Source;p=RssLanding&cat=news&id=2330505 [SID1234523744]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

The presentation and Q&A session will be webcast live and can be accessed at www.incyte.com in the Investors section under "Events and Presentations." Investors interested in listening to the live webcast should log on before the start time in order to download any software required.