Daiichi Sankyo Announces Two Lancet Oncology Publications of Phase 1 Dose Expansion Results of [Fam-] Trastuzumab Deruxtecan in HER2 Positive Metastatic Breast and Gastric Cancer

On April 29, 2019 Daiichi Sankyo Company, Limited (hereafter, Daiichi Sankyo) and AstraZeneca reported the publication of two manuscripts in The Lancet Oncology reporting long-term phase 1 safety and efficacy results of [fam-] trastuzumab deruxtecan (DS-8201) (Press release, Daiichi Sankyo, APR 29, 2019, https://www.prnewswire.com/news-releases/daiichi-sankyo-announces-two-lancet-oncology-publications-of-phase-1-dose-expansion-results-of-fam–trastuzumab-deruxtecan-in-her2-positive-metastatic-breast-and-gastric-cancer-300840146.html [SID1234535446]). The investigational HER2 targeting antibody drug conjugate (ADC) was evaluated in heavily pretreated patients with HER2 positive metastatic breast cancer and gastric cancer.

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HER2 Positive Breast Cancer Results
The first manuscript reports efficacy results for 115 patients who received at least one dose of [fam-] trastuzumab deruxtecan, of which 111 were evaluable for confirmed response. These patients with HER2 positive metastatic breast cancer previously treated with ado-trastuzumab emtansine (T-DM1) received [fam-] trastuzumab deruxtecan at a recommended expansion dose of 5.4 or 6.4 mg/kg in the dose escalation or dose expansion parts of the phase 1 study. Patients enrolled in this part of the study had a median of seven prior anticancer regimens, including T-DM1 and trastuzumab, and in 86 percent of cases, pertuzumab.

A confirmed objective response rate of 59.5 percent [95 percent CI: 49.7-68.7] and a disease control rate of 93.7 percent [95 percent CI: 87.4-97.4] was observed with [fam-] trastuzumab deruxtecan. Median duration of response was 20.7 months (range 0.0-21.8), median progression-free survival was 22.1 months (range 0.8-27.9), and median overall survival has not yet been reached in the study. Fifty-five (48 percent) patients remain on treatment with [fam-] trastuzumab deruxtecan, as of data cut-off on August 10, 2018.

"For patients with HER2 positive metastatic breast cancer that progresses after trastuzumab, pertuzumab, and T-DM1, optimal treatment is not clearly defined and choices may be limited," said Kenji Tamura, MD, PhD, Department of Breast and Medical Oncology National Cancer Center Hospital, Tokyo, Japan, and lead author on the study. "These results demonstrate preliminary clinically meaningful response rates with an impressive duration of response, supporting further development and suggesting a potential role for [fam-] trastuzumab deruxtecan as a HER2 targeted therapy option in this setting."

Safety results for 115 patients with HER2 positive metastatic breast cancer, who received at least one dose of [fam-] trastuzumab deruxtecan 5.4 or 6.4 mg/kg in part one or part two of the study also were reported. The most common adverse events (≥30 percent, any grade) included nausea, decreased appetite, vomiting, alopecia, fatigue, anemia, diarrhea, and constipation. Fifty (50.0) percent of patients experienced an adverse event grade ≥3, and 19.0 percent had a serious adverse event, including two previously reported cases of grade 5 drug-related pneumonitis. Any reported cases of interstitial lung disease (ILD)/pneumonitis in the [fam-] trastuzumab deruxtecan clinical development program are evaluated by an independent adjudication committee, and a formal monitoring and management program is in place with ongoing analyses to help optimally characterize the risk. A presentation of ILD risk characterization at the San Antonio Breast Cancer Symposium in December 2018 in patients with metastatic breast cancer treated at the recommended dose of 5.4 mg/kg showed an overall incidence of 5.6 percent, with the majority of cases being grades 1 and 2, and 1.1 percent grade 3 and above, including one (1) case of grade 5 (Poster # P6-17-06).1

Summary of Results

Total evaluablei

(n=114)

Confirmed Objective Response Rate (ORR)ii, iii

(95% CI)

59.5%

(49.7-68.7)

Disease Control Rate (DCR)ii, iv

(95% CI)

93.7%

(87.4-97.4)

Duration of Response (DOR)v

Median in months

(95% CI)vi

20.7

(0.0-21.8)vi

Progression Free Survival (PFS)

Median in months

(95% CI)vi

22.1

(0.8 – 27.9)vi

i The activity evaluable set included all patients who received at least one dose of trastuzumab deruxtecan at 5·4 mg/kg or 6·4 mg/kg and for whom both baseline and post-treatment activity data were available.

ii There were 111 patients who had two or more post baseline scans, had progressive disease, or discontinued treatment for any reason before second postbaseline scan and were considered evaluable for confirmed response.

iii Objective response was calculated as the proportion of patients showing complete response or partial response for a minimum of 5 weeks from the first dosing date.

iv Disease control was calculated as the proportion of patients demonstrating complete response, partial response, or stable disease for a minimum of 5 weeks from the first dosing date.

v Duration of response was measured from the time at which complete response or partial response criteria are first met until the first date of objectively documented progressive disease.

vi Censored observation indicated with plus (+).

HER2 Positive Gastric Cancer Results
The second manuscript reports results for 44 patients with HER2 positive advanced gastric or gastro-esophageal junction cancer previously treated with trastuzumab who received [fam-] trastuzumab deruxtecan at a recommended expansion dose of 5.4 or 6.4 mg/kg in the dose escalation or dose expansion parts of the study. These patients had a median of three prior anticancer regimens including trastuzumab.

A confirmed objective response rate of 43.2 percent [95 percent CI: 28.3, 59.0] and a disease control rate of 79.5 percent [95 percent CI: 64.7-90.2] were seen with [fam-] trastuzumab deruxtecan. The median duration of response was 7.0 months (range 4.4-16.6), median progression free survival was 5.6 months [95 percent CI: 3.0-8.3], and median overall survival was 12.8 months (range 1.4-25.4). Three (3) patients remain on treatment with [fam-] trastuzumab deruxtecan as of data cut-off on August 10, 2018.

"These results are encouraging given the limited options for patients with advanced HER2 positive gastric cancer that progresses after initial treatment regimens including trastuzumab," said lead study author Kohei Shitara, MD, National Cancer Center Hospital East, Chiba, Japan. "There are no other anti-HER2 therapies approved for gastric cancer beyond trastuzumab, and these data support further study of [fam-] trastuzumab deruxtecan in these patients."

Safety results for the 44 patients with HER2 positive gastric or gastro-esophageal junction cancer who received at least one dose of [fam-] trastuzumab deruxtecan 5.4 or 6.4 mg/kg in part one or part two of the study also were presented. The most common adverse events (≥30 percent, any grade) included nausea, decreased appetite, white blood cell count decrease, anemia, platelet count decrease, and constipation. Sixty-four (64.0) percent of patients experienced an adverse event grade ≥3, and 25.0 percent had a serious adverse event. There were two deaths due to TEAEs, (one due to pneumonia and one due to progression of disease), and neither were considered drug-related.

Summary of Results

Total evaluablevii

(n=44)

Confirmed Objective Response Rate (ORR)viii

(95% CI)

43.2%

(28.3-59.0)

Disease Control Rate (DCR)ix

(95% CI)

79.5%

(64.7-90.2)

Duration of Response (DOR)x

Median in months

(95% CI)xi

7.0

(4.4-16.6)xi

Progression Free Survival (PFS)

Median in months

(95% CI)xi

5.6

(3.0-8.3)xi

Overall Survival (OS)

Median in months

(95% CI)xi

12.8

(1.4-25.4)xi

vii The activity evaluable set included all patients who received at least one dose of trastuzumab deruxtecan at 5·4 mg/kg or 6·4 mg/kg and for whom both baseline and post-treatment activity data were available.

viii Objective response is calculated as the proportion of patients showing complete response or partial response for a minimum of 5 weeks from the first dosing date.

ix Disease control was calculated as the proportion of patients showing complete response, partial response, or stable disease for a minimum of 5 weeks from the first dosing date.

x Duration of response was measured from the time at which complete response or partial response criteria are first met until the first date of objectively documented progressive disease.

xi Censored observation indicated with plus (+).

"These long-term phase 1 results support our ongoing pivotal development program with [fam-] trastuzumab deruxtecan in HER2 positive metastatic breast and gastric cancers, where significant unmet treatment needs remain," said Gilles Gallant, BPharm, PhD, FOPQ, Vice President, DS-8201 Global Team Leader, Oncology Research and Development, Daiichi Sankyo. "Our pivotal phase 2 DESTINY-Breast01 study has completed enrollment and our phase 3 DESTINY-Breast02 and DESTINY-Breast03 trials are underway to further evaluate [fam-] trastuzumab deruxtecan in HER2 positive metastatic breast cancer. We also are enrolling patients with advanced HER2 positive gastric cancer previously treated with trastuzumab in the pivotal phase 2 DESTINY-Gastric01 study."

"These results reinforce our belief that [fam-] trastuzumab deruxtecan could become a transformative new medicine for the treatment of HER2 positive breast and gastric cancers," said Hesham Abdullah, Vice President, Head of Late-Stage Immuno-Oncology Development, Research and Development, Oncology, AstraZeneca. "The encouraging response rates and quality of the duration of response in this heavily pretreated and difficult-to-treat setting demonstrate the value this potential treatment can bring to patients with unmet medical needs."

About HER2
HER2 is a tyrosine kinase receptor growth-promoting protein found on the surface of some cancer cells that is associated with aggressive disease and poorer prognosis.2,3 To be considered HER2 positive, tumor cancer cells are usually tested by one of two methods: immunohistochemistry (IHC) or fluorescent in situ hybridization (FISH). IHC test results are reported as: 0, IHC 1+, IHC 2+, or IHC 3+. A finding of IHC 3+ is considered HER2 positive, and a finding of IHC 2+ is borderline and typically is confirmed by a positive FISH test.5

Unmet Need in HER2 Positive Breast and Gastric Cancer
Approximately one in five breast and gastric cancers (20 percent) are HER2 positive.4,5 Several unmet treatment needs remain today in HER2 positive metastatic breast cancer. Many HER2 positive breast cancers eventually advance to the point where no currently approved HER2 targeting therapy continues to control the disease;6 after treatment with trastuzumab, pertuzumab, and T-DM1, optimal treatment is less clearly defined and choices may be limited.7

HER2 expressing gastric cancer also is an area of unmet medical need, where treatment advances have been limited, largely due to the genetic complexity and heterogeneity of the disease.8 Currently, there are no approved HER2 targeting therapies for patients with HER2-positive advanced gastric cancer that progresses after treatment with a trastuzumab regimen.

About the [Fam-] Trastuzumab Deruxtecan Phase 1 Study
An open-label, two-part phase 1 study is currently evaluating [fam-] trastuzumab deruxtecan in patients with advanced/unresectable or metastatic solid tumors that are refractory or intolerant to standard treatment, or for whom no standard treatment is available. The primary objectives of the dose escalation part of the study were to assess the safety, tolerability, and activity of [fam-] trastuzumab deruxtecan and determine the recommended dose for expansion. These data were published in The Lancet Oncology.9

In the dose expansion part of the study, [fam-] trastuzumab deruxtecan is being evaluated at two recommended doses (5.4 mg/kg and 6.4 mg/kg) in five patient cohorts, including HER2 positive advanced or metastatic breast cancer and gastric cancer, HER2 low expressing breast cancer, and other HER2 expressing solid tumors. Enrollment for patients with HER2 positive breast cancer and HER2 positive gastric/gastro-esophageal cancer has completed. Overall, 292 patients have been enrolled into this phase 1 study of [fam-] trastuzumab deruxtecan. For more information about the study, visit ClinicalTrials.gov.

About [Fam-] Trastuzumab Deruxtecan
[Fam-] trastuzumab deruxtecan (DS-8201; [fam-] trastuzumab deruxtecan in U.S. only; trastuzumab deruxtecan in other regions of world) is the lead product in the investigational ADC Franchise of the Daiichi Sankyo Cancer Enterprise and the most advanced program in AstraZeneca’s ADC Scientific platform.

ADCs are targeted cancer medicines that deliver cytotoxic chemotherapy ("payload") to cancer cells via a linker attached to a monoclonal antibody that binds to a specific target expressed on cancer cells. Designed using Daiichi Sankyo’s proprietary DXd ADC technology, [fam-] trastuzumab deruxtecan is comprised of a humanized HER2 antibody attached to a novel topoisomerase I inhibitor payload by a tetrapeptide-based linker. It is designed to target and deliver chemotherapy inside cancer cells and reduce systemic exposure to the cytotoxic payload (or chemotherapy), compared to the way chemotherapy is commonly delivered.

A broad and comprehensive development program with [fam-] trastuzumab deruxtecan is underway in North America, Europe, and Asia, including five pivotal studies. [Fam-] trastuzumab deruxtecan is in pivotal phase 3 development in previously treated HER2 low expressing metastatic breast cancer versus investigator’s choice (DESTINY-Breast04); phase 3 development in HER2 positive metastatic breast cancer versus ado-trastuzumab emtansine (T-DM1) (DESTINY-Breast03); and phase 3 development in HER2 positive metastatic breast cancer versus investigator’s choice post T-DM1 (DESTINY-Breast02). [Fam-] trastuzumab deruxtecan also is in pivotal phase 2 development for HER2 positive metastatic breast cancer resistant or refractory to T-DM1 (DESTINY-Breast01); pivotal phase 2 development for HER2 positive advanced gastric cancer resistant or refractory to trastuzumab (DESTINY-Gastric01); phase 2 development for HER2 expressing advanced colorectal cancer; phase 2 development for non-squamous HER2 overexpressing or HER2 mutated metastatic NSCLC; and, phase 1 development in combination with nivolumab for HER2 expressing metastatic breast and bladder cancer.

[Fam-] trastuzumab deruxtecan has been granted Breakthrough Therapy designation for the treatment of patients with HER2 positive, locally advanced or metastatic breast cancer who have been treated with trastuzumab and pertuzumab and have disease progression after T-DM1, and Fast Track designation for the treatment of HER2 positive unresectable and/or metastatic breast cancer in patients who have progressed after prior treatment with HER2 targeted therapies, including T-DM1 by the U.S. Food and Drug Administration (FDA). [Fam-] trastuzumab deruxtecan has received SAKIGAKE Designation for the treatment of HER2 positive advanced gastric or gastroesophageal junction cancer by the Japan Ministry of Health, Labour and Welfare (MHLW).

[Fam-] trastuzumab deruxtecan is an investigational agent that has not been approved for any indication in any country. Safety and efficacy have not been established.

About the Collaboration between Daiichi Sankyo and AstraZeneca
In March 2019, Daiichi Sankyo and AstraZeneca entered into a global collaboration to jointly develop and commercialize [fam-] trastuzumab deruxtecan as a medicine worldwide, except in Japan where Daiichi Sankyo will maintain exclusive rights. Daiichi Sankyo will be solely responsible for manufacturing and supply.

About Daiichi Sankyo Cancer Enterprise
The mission of Daiichi Sankyo Cancer Enterprise is to leverage our world-class, innovative science and push beyond traditional thinking to create meaningful treatments for patients with cancer. We are dedicated to transforming science into value for patients, and this sense of obligation informs everything we do. Anchored by three pillars including our investigational Antibody Drug Conjugate Franchise, Acute Myeloid Leukemia Franchise and Breakthrough Science, we aim to deliver seven distinct new molecular entities over eight years during 2018 to 2025. Our powerful research engines include two laboratories for biologic/immuno-oncology and small molecules in Japan, and Plexxikon Inc., our small molecule structure-guided R&D center in Berkeley, CA. Compounds in pivotal stage development include: [fam-] trastuzumab deruxtecan, an antibody drug conjugate (ADC) for HER2 expressing breast, gastric and other cancers; quizartinib, an oral selective FLT3 inhibitor, for newly-diagnosed and relapsed/refractory FLT3-ITD acute myeloid leukemia (AML); and pexidartinib, an oral CSF1R inhibitor, for tenosynovial giant cell tumor (TGCT). For more information, please visit: www.DSCancerEnterprise.com.

WuXi AppTec Announces Strong First-Quarter 2019 Results

On April 29, 2019 WuXi AppTec Co., Ltd. (stock code: 603259.SH / 02359.HK), a leading global pharmaceutical and medical device open-access capability and technology platform company with global operations, reported its financial results for first quarter 2019 (Press release, WuXi AppTec, APR 29, 2019, View Source [SID1234535445]).

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All financials disclosed in this press release are prepared in accordance with International Financial Reporting Standards (or "IFRS").

The 2019 First Quarterly Report of the Company has not been audited.

Financial Highlights

Strong revenue growth of 29.3% year-over-year to RMB2,769 million.
Gross profit grew 27.2% year-over-year to RMB1,055 million. Gross profit margin was 38.1%.[2]
Net profit attributable to owners of the Company increased 33.0% year-over-year to RMB386 million.
Adjusted non-IFRS net profit attributable to owners of the Company grew 28.3% year-over-year to RMB519 million.
Diluted EPS and adjusted non-IFRS EPS increased by 6.5% and 4.7%, respectively.[3]
Management Comment

"We are off to a solid start in 2019 with strong growth momentum," said Dr. Ge Li, Chairman and CEO of WuXi AppTec. "Our strong revenue growth was broad-based across all business segments, especially our clinical research and other CRO services. While achieving good revenue growth, we continuously invested in new capabilities and capacities, including talent, laboratories, manufacturing facilities and technologies."

"In the first quarter of 2019, our subsidiary WuXi STA’s new drug product manufacturing facility in Shanghai, since its inception at the end of 2018, has passed its first GMP inspection by the European Medical Products Agency (MPA). In addition, three of our Laboratory Testing Division’s facilities, Drug Safety Testing, Bioanalytical Services and Medical Device Testing, completed regulatory inspections by the US FDA (Food and Drug Administration), OECD (Organization for Economic Co-operation and Development), and CNAS (China National Accreditation Service for Conformity Assessment), all with excellent results. Moreover, our newly built Qidong research and development center began operation, and will become an extension of our Shanghai headquarter in the future."

"We believe these investments will build on our solid foundation sustaining our growth. At WuXi AppTec, we will continue to relentlessly enhance our platform with the most comprehensive and cutting-edge technologies so we can fulfill our dream that ‘every drug can be made and every disease can be treated’." Dr. Li concluded.

First-Quarter 2019 Results

First-quarter 2019 revenue increased 29.3% year-over-year to RMB2,769 million. We experienced strong revenue growth across all business segments, especially for our clinical research and other CRO services.
First-quarter 2019 gross profit increased 27.2% year-over-year to RMB1,055 million. Gross profit margin was 38.1%, slightly lower than 38.7% in first-quarter 2018[4] primarily given we continued to enhance capabilities and build capacity. We also paid more incentives, including share-based compensation, to our employees, to sustain talent.
First-quarter 2019 net profit attributable to owners of the Company increased 33.0% year-over-year to RMB386 million. We experienced significant synergies across business segments and increased customer conversion rate by fully leveraging the strength of our "integrated end-to-end" R&D services platform.
First-Quarter 2019 Non-IFRS Results

First-quarter 2019 non-IFRS net profit attributable to owners of the Company increased 32.0% year-over-year to RMB523 million. This adjusts for RMB32 million share-based payments, RMB99 million foreign exchange-related effects and RMB5 million amortization of intangible assets acquired.
First-Quarter 2019 Adjusted Non-IFRS Results

Excluding a further RMB10 million realized and unrealized gains from our venture investments and RMB6 million losses from our joint ventures, first-quarter 2019 adjusted non-IFRS net profit attributable to owners of the Company increased 28.3% year-over-year to RMB519 million.

EirGenix, Inc. Enters Into Global License Agreement for the Commercialization of its Biosimilar Drug EG12014

On April 29, 2019 EirGenix, Inc. reported that it has entered into a license agreement with global generic and biosimilar drug manufacturer Sandoz AG, granting an exclusive license to Sandoz for right of commercialization of EirGenix ‘s breast cancer biosimilar drug, EG12014 (Trastuzumab Biosimilar to Roche / Genentech’s Herceptin) globally with the exception of Taiwan and mainland China (Press release, EirGenix, APR 29, 2019, View Source [SID1234535444]). According to the terms of the agreement, EirGenix will receive an upfront payment, milestone payments, and is entitled to receive profit share payments for sales in the territory. The signing of this agreement is one of the most significant achievements for EirGenix’s product development business since the company’s establishment, and represents an exciting moment for Taiwan’s biotech industry.

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Sandoz is a Novartis division, and a global leader in generic pharmaceuticals and biosimilars and a pioneer in the emerging field of prescription digital therapeutics. Sandoz has a long history and extensive experience in the development and commercialization of biosimilar and cancer drugs in markets such as Europe and the United States. The collaboration between EirGenix and Sandoz will leverage the combined strength of EirGenix ‘s R&D of biosimilar drugs, with Sandoz’s substantial experience in global drug sales and advantages in market access. This collaboration will be conducive to EirGenix ‘s market development and expansion in the pharmaceutical market and will be extremely positive for EirGenix ‘s financial and business development as the collaboration will enhance the visibility and competitiveness of its products in the global market, which would thereby improve the company’s overall operating scale and profitability. With the successful market entry of EG12014, HER2-positive breast cancer patients will benefit from more treatment options.

EG12014 (Trastuzumab biosimilar) has entered a global Phase 3 clinical trial (Study No.: EGC002) which has been to date approved to conduct such trial by ten regulatory authorities including the U.S. FDA, Taiwan TFDA, as well as the authorities in Russia, Belarus, Ukraine, South Africa, Georgia, South Korea, India and Chile. A total of 800 breast cancer patients will be enrolled for this Phase 3 clinical trial, and the primary endpoint analysis is expected to be completed in the second half of 2020 to support the product registration. According to Roche’s 2018 annual report, Herceptin’s global sales amounted to 6.982 billion Swiss Francs. Herceptin tops the list in drug spending by Taiwan’s National Health Insurance, with an annual expenditure of nearly NT$3 billion.

EirGenix, Inc. has utilized reverse engineering technology in developing its four biosimilar products. In addition to the two antibody biosimilars for the treatment of HER2-positive breast cancers, there are two other anti-angiogenesis biosimilar drugs in development. EirGenix recently opened its commercial mass production facility in Zhubei, Taiwan, and aims to complete multiple batches of commercial-scale productions in 2019. In terms of CDMO business, it already reached break-even point in the first-half of 2016 and the revenue grew more than 35 fold since 2013 and is expected to steadily drive its revenue growth in the coming year. It is without a doubt that through its diligent pursuit of rapid business innovation, EirGenix has become one of the fastest growing companies in Taiwan’s biotech/pharmaceutical industry.

Beam Therapeutics Presents Data on Multiplex Base Editing for Engineered CAR-T Cells at American Society of Gene and Cell Therapy 22nd Annual Meeting

On April 29, 2019 Beam Therapeutics, a biotechnology company developing precision genetic medicines through base editing, reported the presentation of preclinical data from the company’s base editing platform at the American Society of Gene and Cell Therapy (ASGCT) (Free ASGCT Whitepaper) 22nd Annual Meeting being held April 29 – May 2, 2019 in Washington, D.C (Press release, Beam Therapeutics, APR 29, 2019, View Source [SID1234535443]).

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In the experiment, the base editor BE4 demonstrated high efficiency multiplex base editing of three cell surface targets in primary human T cells (TRAC, B2M, and PD-1), knocking out expression of each gene in 95%, 95% and 88% of cells, respectively, in a single electroporation. Editing each of these genes may be useful in the creation of CAR-T cell therapies with improved therapeutic properties. Each of the genes was silenced by a single targeted base change (C to T) without the creation of double strand breaks. As a result, the BE4-treated cells also did not have any measurable translocations (large-scale genomic rearrangements), whereas cells receiving the same three edits with a nuclease did show detectable genomic rearrangements.

"Beam is actively applying base editing across a wide range of serious genetic diseases using both ex vivo and in vivo delivery approaches, and we are pleased to begin sharing some of the research progress in our therapeutic programs," said John Evans, chief executive officer of Beam. "The data presented today underscore one of the exciting emerging applications of base editing technology, which is to enable multiplex editing of CAR-T cells without genomic rearrangements. For advanced cellular therapies requiring a large number of simultaneous edits, base editing represents an important new technology that could open up new options for patients with cancer and other immune-mediated diseases."

Presentation Details:
Title: (#140) Base editors generate allogeneic CAR-T cells with no detectable genomic rearrangements and reduced genotoxicity
Session: CAR T Cell Therapies for Cancer
Date/time: Monday April 29, 2019, 4:00-4:15 p.m.
Room: IBR West

Medpace Holdings, Inc. Reports First Quarter 2019 Results

On April 29, 2019 Medpace Holdings, Inc. (Nasdaq: MEDP) ("Medpace") reported financial results for the first quarter ended March 31, 2019 (Press release, Medpace, APR 29, 2019, View Source [SID1234535442]).

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First Quarter 2019 Financial Results

Revenue for the three months ended March 31, 2019 increased 23.1% to $200.7 million, compared to $163.1 million for the comparable prior-year period. On a constant currency organic basis, revenue for the first quarter of 2019 increased 23.7% compared to the first quarter of 2018.

Backlog as of March 31, 2019 grew 21.8% to $1.1 billion from $909.5 million as of March 31, 2018. Net new business awards were $248.7 million, representing a net book-to-bill ratio of 1.24x for the first quarter of 2019, as compared to $200.7 million for the comparable prior-year period. The Company calculates the net book-to-bill ratio by dividing net new business awards by revenue.

For the first quarter of 2019, total direct costs were $145.7 million, compared to total direct costs of $117.3 million in the first quarter of 2018. Selling, general and administrative (SG&A) expenses were $21.3 million, compared to SG&A expenses of $16.0 million in the first quarter of 2018.

GAAP net income for the first quarter of 2019 was $19.2 million, or $0.51 per diluted share, versus GAAP net income of $14.6 million, or $0.40 per diluted share, for the first quarter of 2018. This resulted in a net income margin of 9.6% and 8.9% for the first quarter of 2019 and 2018, respectively.

EBITDA for the first quarter of 2019 increased 12.7% to $33.4 million, or 16.7% of revenue, compared to $29.7 million, or 18.2% of revenue, for the comparable prior-year period. On a constant currency basis, EBITDA for the first quarter of 2019 increased 9.2% from the first quarter of 2018.

Adjusted Net Income for the first quarter of 2019 increased 18.9% to $23.8 million compared to $20.0 million for the comparable prior-year period. Adjusted Net Income per diluted share for the first quarter of 2019 was $0.64, representing an increase of 16.4%, compared to Adjusted Net Income per diluted share of $0.55 for the comparable prior-year period.

A reconciliation of the Company’s non-GAAP financial measures, including EBITDA, EBITDA margin, Adjusted Net Income, and Adjusted Net Income per diluted share to the corresponding GAAP measures is provided below.

Balance Sheet and Liquidity

The Company’s Cash and cash equivalents were $30.1 million at March 31, 2019, and the Company generated $34.0 million in cash flow from operating activities during the first quarter of 2019.

In February 2016, the Financial Accounting Standards Board issued ASU 2016-02, "Leases (Topic 842)" ("ASC 842"). The guidance in ASC 842 supersedes the lease recognition requirements in ASC Top 840, Leases (FAS 13). The objective of ASC 842 is to increase transparency and comparability among organizations by requiring the recognition of Right of use assets and Lease liabilities on the balance sheet. ASC 842 became effective for the Company in the first quarter of 2019. The impact of the adoption of ASC 842 as of January 1, 2019 is as follows:

Financial Guidance

The Company forecasts 2019 revenue in the range of $813.0 million to $837.0 million, representing growth of 15.4% to 18.8% over 2018 revenue of $704.6 million. GAAP net income for full year 2019 is forecasted in the range of $85.2 million to $89.2 million. Additionally, full year 2019 EBITDA is expected in the range of $137.0 million to $145.0 million.

Based on forecasted 2019 revenue of $813.0 million to $837.0 million and GAAP net income of $85.2 million to $89.2 million, diluted earnings per share (GAAP) is forecasted in the range of $2.27 to $2.38. Adjusted Net Income for 2019 is forecasted in the range of $97.0 million to $101.0 million, compared to Adjusted Net Income of $95.5 million for 2018. Furthermore, Adjusted Net Income per diluted share for 2019 is expected in the range of $2.58 to $2.69 per share.

Conference Call Details

Medpace will host a conference call at 8:30 a.m. ET, Tuesday, April 30, 2019, to discuss its first quarter 2019 results.

To participate in the conference call, dial 800-219-7113 (domestic) or 574-990-1030 (international) using the passcode 8067378.

To access the conference call via webcast, visit the "Investors" section of Medpace’s website at medpace.com. The webcast replay of the call will be available at the same site approximately one hour after the end of the call.

A supplemental slide presentation will also be available at the "Investors" section of Medpace’s website prior to the start of the call.

A recording of the call will be available at 12:00 p.m. ET on Tuesday, April 30, 2019 until 12:00 p.m. ET on Tuesday, May 14, 2019. To hear this recording, dial 855-859-2056 (domestic) or 404-537-3406 (international) using the passcode 8067378.