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Ipsen Presents Its Half Year 2020 Results and Reinstates Guidance for Full Year 2020

Published : Wednesday, July 29, 2020, 10:00 pm
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PARIS--(BUSINESS WIRE)--Regulatory News:


Ipsen (Euronext: IPN; ADR: IPSEY), a global specialty-driven biopharmaceutical group, today announced financial results for the first half of 2020.

  • Resilient H1 financial performance:
    • Group sales growth of 3.1% as reported and at constant currency, driven by Specialty Care sales growth of 5.9%1, led by Somatuline® (lanreotide) (up 16.4%1). Consumer Healthcare sales were down 21.1%1. Q2 2020 Group sales decreased by 2.2%1, adversely impacted by COVID-19.
    • Core Operating margin at 32.3% of net sales, up 0.8 points, driven by Specialty Care sales growth and postponed or cancelled expenditures mainly due to COVID-19. IFRS Operating margin at 19.7% of net sales, down 6.1 points.
    • Core consolidated net profit of €297 million and fully diluted Core EPS of €3.55 (up 5.0%). IFRS Consolidated net profit of €223 million and fully diluted IFRS EPS of €2.66 (up 1.0%).
    • Robust balance sheet, with closing Net Debt of €923 million and strong Free Cash Flow at €233 million, up €132 million versus 2019, mainly driven by higher Operating Cash Flow.
  • Negative COVID-19 impact: As anticipated, the Specialty Care portfolio showed overall resilience in Q2 2020, although Oncology sales were impacted by destocking in some European countries and Neuroscience sales were affected by treatment center closures. Consumer Healthcare sales, notably Smecta® (diosmectite), continued to be impacted across geographies despite a slow recovery in China in Q2 2020.
  • 2020 guidance: Ipsen has reinstated full year guidance and now expectsGroup sales growth greater than +2.0% at constant currency and Core Operating margin greater than 30.0% of net sales. Guidance takes into account the high level of uncertainty regarding COVID-19 and assumes only a gradual recovery from the pandemic as well as no impact of any new somatostatin analog (SSA) generic entry.
  • Significant R&D pipeline progress including (1) Cabometyx® (cabozantinib) positive top-line results from Phase 3 CheckMate -9ER trial in combination with nivolumab for 1L RCC2, (2) Cabometyx participation in the ongoing Phase 3 trials in combination with atezolizumab for 2L NSCLC3 and 2L CRPC4, (3) Onivyde® (irinotecan liposome injection) received Fast Track designation from the FDA for 1L PDAC5, (4) Dysport® (botulinum toxin type A) approval in China for glabellar lines and updated indication in the U.S. for the treatment of spasticity in children, (5) IRICoR option agreement in collaboration with the University of Montreal for a discovery-stage oncology program.

David Loew, Chief Executive Officer of Ipsen, stated: “I’m honored since July 1st to lead Ipsen, an exciting global biopharma business with solid business fundamentals, a strong purpose to serve patients and attractive growth opportunities. I am encouraged by the exceptional levels of talent and engagement I have encountered across the organization, as well as the exciting recent clinical data on Cabometyx, and I look forward to helping the Group build on these strong foundations. In my first half-year update, I am pleased to report that, despite the unprecedented backdrop of COVID-19, Ipsen delivered top-line growth and margin improvement. As a result, we are reinstating guidance for 2020 and planning for the future with confidence.”

1 Year-on-year growth excluding foreign exchange impact established by recalculating net sales for the relevant period at the rate used for the previous period.

2 1L RCC: First line Renal Cell Carcinoma; 3 2L NSCLC: Second line Non-Small Cell Lung Cancer; 4 2L CRPC: Second line Castration-Resistant Prostate Cancer; 5 1L PDAC: First line Pancreatic ductal adenocarcinoma

Review of half year 2020 results

Extract of audited consolidated results for the first half year 2020 and 2019

 

 

 

 

(in million euros)

H1 2020

H1 2019

%

change

% change at
constant currency

Group net sales

1,268.3

1,229.6

+3.1%

+3.1%

Specialty Care sales

1,167.1

1,100.0

+6.1%

+5.9%

Consumer Healthcare sales

101.2

129.6

-21.9%

-21.1%

 

 

 

 

 

CORE

 

 

 

 

Core Operating Income

410.2

387.5

+5.9%

 

Core Operating margin (as a % net sales)

32.3%

31.5%

+0.8pts

 

Core consolidated net profit

297.0

283.0

+5.0%

 

Core EPS – fully diluted (€)

3.55

3.38

+5.0%

 

 

 

 

 

 

IFRS

 

 

 

 

Operating Income

249.8

317.8

-21.4%

 

Operating margin (as a % net sales)

19.7%

25.8%

-6.1pts

 

Consolidated net profit

222.7

220.6

+1.0%

 

EPS – fully diluted (€)

2.66

2.64

+1.0%

 

Review of the first half 2020 results

Group sales reached €1,268.3 million, up 3.1% year-on-year.

Specialty Care sales reached €1,167.1 million, up 5.9%, driven by growth in Oncology sales of 9.5%, including the continued momentum of Somatuline in major geographies.

Consumer Healthcare sales were €101.2 million, down 21.1%. Smecta was negatively impacted by COVID-19, implementation of hospital central procurement in China and lower sales in France.

Core Operating Income was €410.2 million, up 5.9%, driven by the growth of Specialty Care sales. Significant cost savings were realized in selling expenses, resulting from digital sales detailing, lower travel throughout the Group and the conversion to virtual conference and medical meetings.

Core Operating margin reached 32.3% of sales, up 0.8 points versus the first half of 2019.

Core consolidated net profit was €297.0 million, compared to €283.0 million in 2019, up 5.0%, reflecting increased Other financial expenses and lower core effective tax rate (22.5% versus 23.6% in H1 2019).

Core earnings per share fully diluted grew by 5.0% to reach €3.55, compared to €3.38 in 2019.

IFRS Operating Income was €249.8 million after amortization of intangible assets, impairment losses and other operating expenses. Operating Income margin of 19.7% was down 6.1 points compared to 2019, after amortization of intangible assets for Cabometyx and an impairment loss on the intangible assets of palovarotene following termination of the MO-Ped program.

IFRS Consolidated net profit was €222.7 million versus €220.6 million in 2019, up 1.0%

IFRS Fully diluted EPS (Earnings per share) was €2.66 versus €2.64 in 2019, up 1.0%.

Free Cash Flow of €233.3 million was up 131% versus €101.0 million in 2019, mainly driven by higher Operating Cash Flow.

Closing net debt came to €923.3 million, a €576.2m improvement compared with net debt at June 30 2019 of €1,499.5 million, due mainly to strong Free Cash Flow over the period.

The company’s auditors performed a limited review of the accounts.

The interim financial report, with regard to regulated information, is available on the Group's website, under the Regulated Information tab in the Investor Relations section.

COVID-19 Impact

In the second quarter of 2020, the business was negatively impacted by COVID-19. While the Specialty Care portfolio of differentiated products for critical conditions remained relatively resilient, Oncology sales were negatively impacted by destocking after a higher level of orders at the end of the first quarter in some European countries. Neuroscience sales were more impacted due to the closure of treatment centers in both the therapeutics and aesthetics markets. Consumer Healthcare sales, notably Smecta, continued to be negatively impacted across geographies despite a slow recovery in China in the second quarter of 2020.

Significant cost savings in selling expenses were realized in the first half of 2020, resulting from digital sales detailing, lower travel throughout the Group and the conversion to virtual conference and medical meetings.

Ipsen continues to operate all of its manufacturing sites. There are adequate inventory levels, with no supply chain issues, for the provision of medicines to patients. There is also limited impact to date on clinical trials, with minimal disruption to investigational drug supply for ongoing patients, despite a general slowdown in the recruitment of new patients as well as new site activations in ongoing trials across Europe and the U.S.

Ipsen remains focused on ensuring that patients continue to have access to their treatments and on addressing the impact of this pandemic in their communities. Ipsen employees around the world, including those at central functions and manufacturing and distribution sites, are gradually returning to the office, and the commercial organization is beginning to resume more normal operations.

2020 Financial guidance reinstated

The Group has reinstated the following financial targets for the current year

  • Group sales growth greater than +2.0% at constant currency, with an expected negative impact of 0.5% from currencies based on the current level of exchange rates.
  • Core Operating margin greater than 30.0% of net sales, excluding incremental investments in pipeline expansion initiatives.

Guidance takes into account the high level of uncertainty regarding COVID-19 and assumes only a gradual recovery from the pandemic as well as no impact of any new somatostatin analog (SSA) generic entry.

Palovarotene:

In the last few months, Ipsen has made progress on advancing the palovarotene program. There is an ongoing dialogue with the FDA on the appropriate patient population eligible for treatment and a potential regulatory path forward for palovarotene for the treatment of fibrodysplasia ossificans progressiva (FOP).

Ipsen has taken the decision to terminate the multiple osteochondromas (MO) indication due to the lack of efficacy signals in the analysis of the Phase 2 MO-Ped trial. As a consequence, the Group recognized an impairment loss of €57.8 million before tax on the palovarotene intangible asset and a financial income of €45.0 million related to the Contingent Value Rights (CVR) and milestones reevaluation.

R&D update:

Cabometyx: On April 20, Ipsen announced that CheckMate -9ER, a pivotal Phase 3 trial evaluating Cabometyx in combination with Opdivo (nivolumab) compared to sunitinib in previously untreated advanced or metastatic renal cell carcinoma (RCC), met its primary endpoint of progression-free survival (PFS) at final analysis, as well as the secondary endpoints of overall survival (OS) at a pre-specified interim analysis, and objective response rate (ORR).

The detailed results of CheckMate -9ER were accepted for presentation at the upcoming European Society of Medical Oncology (ESMO) Virtual Congress 2020, during the Presidential Symposium II on September 20, 2020.

In addition, on July 2, Ipsen announced it will join the Exelixis and Roche clinical collaboration of the recently initiated CONTACT-01 and CONTACT-02 global Phase 3 pivotal trials. CONTACT-01 is evaluating the safety and efficacy of Cabometyx in combination with atezolizumab in patients with metastatic non-small cell lung cancer (NSCLC) who have been previously treated with an immune checkpoint inhibitor and platinum-containing chemotherapy. CONTACT-02 is evaluating the safety and efficacy of Cabometyx in combination with atezolizumab versus a second novel hormonal therapy (NHT) in men with metastatic castration-resistant prostate cancer (CRPC) who have previously been treated with one NHT.

Onivyde: On June 17, Ipsen announced that the FDA had granted Fast Track designation for the investigational use of Onivyde in combination with 5- fluorouracil/leucovorin (5-FU/LV) and oxaliplatin (OX) for patients with previously untreated, unresectable, locally advanced and metastatic pancreatic ductal adenocarcinoma (PDAC).

Dysport: On June 5, Dysport received approval in China for the treatment of glabellar lines.

On July 9, Dysport received FDA approval to treat both upper and lower limb spasticity in pediatric patients two years of age and older, including spasticity caused by cerebral palsy.

Portfolio prioritization: As a result of prioritization decisions, in the second quarter, the Group is discontinuing development of the fast-acting neurotoxin rBoNT/E (IPN 10360) and the oncology asset IPN 60090 licensed from MD Anderson Cancer Center. Separately, development of Dysport in Hallux Valgus has been discontinued on efficacy grounds.

Early-stage pipeline: On May 4, Ipsen entered into an option agreement with IRICoR, a pan-Canadian research commercialization center focused on drug discovery, and the University of Montreal for a discovery-stage oncology program under which Ipsen would acquire a licence for worldwide rights.

Conference call

Ipsen will hold a conference call Thursday, 30 July 2020 at 2:30 p.m. (Paris time, GMT+1). Participants should dial in to the call approximately 15 minutes prior to its start. No reservation is required to participate in the conference call.

Participants can register for the call on the link below:
https://emea.directeventreg.com/registration/3653767

Conference ID: 3653767

A recording will be available for seven days on Ipsen’s website.

About Ipsen

Ipsen is a global specialty-driven biopharmaceutical group focused on innovation and Specialty Care. The Group develops and commercializes innovative medicines in three key therapeutic areas – Oncology, Neuroscience and Rare Diseases. Its commitment to oncology is exemplified through its growing portfolio of key therapies for prostate cancer, neuroendocrine tumors, renal cell carcinoma and pancreatic cancer. Ipsen also has a well-established Consumer Healthcare business. With total sales over €2.5 billion in 2019, Ipsen sells more than 20 drugs in over 115 countries, with a direct commercial presence in more than 30 countries. Ipsen’s R&D is focused on its innovative and differentiated technological platforms located in the heart of the leading biotechnological and life sciences hubs (Paris-Saclay, France; Oxford, UK; Cambridge, US). The Group has about 5,800 employees worldwide. Ipsen is listed in Paris (Euronext: IPN) and in the United States through a Sponsored Level I American Depositary Receipt program (ADR: IPSEY). For more information on Ipsen, visit www.ipsen.com.fr

Forward Looking Statement

The forward-looking statements, objectives and targets contained herein are based on the Group’s management strategy, current views and assumptions. Such statements involve known and unknown risks and uncertainties that may cause actual results, performance or events to differ materially from those anticipated herein. All of the above risks could affect the Group’s future ability to achieve its financial targets, which were set assuming reasonable macroeconomic conditions based on the information available today. Use of the words "believes", "anticipates" and "expects" and similar expressions are intended to identify forward-looking statements, including the Group’s expectations regarding future events, including regulatory filings and determinations. Moreover, the targets described in this document were prepared without taking into account external growth assumptions and potential future acquisitions, which may alter these parameters. These objectives are based on data and assumptions regarded as reasonable by the Group. These targets depend on conditions or facts likely to happen in the future, and not exclusively on historical data. Actual results may depart significantly from these targets given the occurrence of certain risks and uncertainties, notably the fact that a promising product in early development phase or clinical trial may end up never being launched on the market or reaching its commercial targets, notably for regulatory or competition reasons. The Group must face or might face competition from generic products that might translate into a loss of market share. Furthermore, the Research and Development process involves several stages each of which involves the substantial risk that the Group may fail to achieve its objectives and be forced to abandon its efforts with regards to a product in which it has invested significant sums. Therefore, the Group cannot be certain that favorable results obtained during pre-clinical trials will be confirmed subsequently during clinical trials, or that the results of clinical trials will be sufficient to demonstrate the safe and effective nature of the product concerned. There can be no guarantees a product will receive the necessary regulatory approvals or that the product will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements. Other risks and uncertainties include but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of pharmaceutical industry regulation and health care legislation; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the Group's ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the Group’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions. The Group also depends on third parties to develop and market some of its products which could potentially generate substantial royalties; these partners could behave in such ways which could cause damage to the Group’s activities and financial results. The Group cannot be certain that its partners will fulfil their obligations. It might be unable to obtain any benefit from those agreements. A default by any of the Group’s partners could generate lower revenues than expected. Such situations could have a negative impact on the Group’s business, financial position or performance. The Group expressly disclaims any obligation or undertaking to update or revise any forward-looking statements, targets or estimates contained in this press release to reflect any change in events, conditions, assumptions or circumstances on which any such statements are based, unless so required by applicable law. The Group’s business is subject to the risk factors outlined in its registration documents filed with the French Autorité des Marchés Financiers. The risks and uncertainties set out are not exhaustive and the reader is advised to refer to the Group’s 2019 Universal Registration Document available on its website (www.ipsen.com)

Comparison of Consolidated Sales for the Second Quarter and First Half 2020 and 2019

Sales by therapeutic area and by product

2nd Quarter

6 Months

 

 

 

 

 

 

 

 

(in million euros)

2020

2019

% Variation

% Variation at
constant
currency1

2020

2019

% Variation

% Variation at
constant
currency1

 

 

 

 

 

 

 

 

 

Oncology

474.9

458.4

3.6%

3.7%

967.5

879.1

10.1%

9.5%

Somatuline®

276.8

243.5

13.7%

13.3%

562.3

478.9

17.4%

16.4%

Decapeptyl®

97.0

109.6

-11.6%

-10.7%

193.6

198.4

-2.4%

-2.0%

Cabometyx®

64.4

57.9

11.3%

12.9%

136.8

111.8

22.3%

23.2%

Onivyde®

31.3

39.8

-21.2%

-22.6%

62.5

74.4

-16.0%

-18.2%

Other Oncology

5.4

7.6

-29.5%

-29.3%

12.4

15.6

-20.8%

-20.8%

Neuroscience

77.1

93.4

-17.5%

-14.5%

170.5

187.7

-9.2%

-7.5%

Dysport®

76.6

92.5

-17.2%

-14.2%

169.5

186.3

-9.0%

-7.4%

Rare Diseases

12.6

17.3

-27.4%

-27.5%

29.1

33.1

-12.1%

-12.5%

NutropinAq®

8.1

11.4

-29.0%

-28.6%

19.2

21.9

-12.2%

-11.9%

Increlex®

4.5

6.0

-24.4%

-25.4%

9.9

11.3

-12.0%

-13.5%

Specialty Care

564.5

569.1

-0.8%

-0.2%

 

1,167.1

1,100.0

6.1%

5.9%

Smecta®

19.9

28.0

-28.8%

-26.4%

37.8

57.9

-34.7%

-33.7%

Forlax®

9.9

10.6

-6.0%

-4.8%

19.8

19.1

3.8%

4.3%

Tanakan®

9.2

8.2

12.5%

17.2%

19.4

17.6

10.5%

12.2%

Fortrans/Eziclen®

5.0

8.9

-43.7%

-42.0%

11.8

16.7

-29.2%

-28.7%

Other Consumer Healthcare

5.1

7.7

-34.3%

-33.8%

12.3

18.4

-32.9%

-32.7%

Consumer Healthcare

49.1

63.3

-22.4%

-20.2%

101.2

129.6

-21.9%

-21.1%

 

 

 

 

 

 

 

 

 

Group Sales

613.6

632.4

-3.0%

-2.2%

1,268.3

1,229.6

3.1%

3.1%

First half 2020 sales highlights

Group sales reached €1,268.3 million, up 3.1%1, driven by Specialty Care sales growth of 5.9%1, while Consumer Healthcare sales decreased by 21.1%1.

Specialty Care sales amounted to €1,167.1 million, up 5.9%1. Oncology sales grew by 9.5%1 while Neuroscience and Rare Diseases sales decreased by 7.5%1 and 12.5%1, respectively. Over the period, the relative weight of Specialty Care reached 92.0% of total Group sales, compared to 89.5% in 2019.

In Oncology, sales reached €967.5 million, up 9.5%1 year-on-year with a limited impact from COVID-19, driven by the good performance of Somatuline and Cabometyx across most major geographies but negatively impacted by lower Onivyde sales to Ipsen’s ex-U.S. partner and lower Decapeptyl sales in China. Second quarter sales were impacted by destocking after a high level of orders due to COVID-19 in the first quarter. Over the period, Oncology sales represented 76.3% of total Group sales, compared to 71.5% in 2019.

Somatuline – Sales reached €562.3 million, up 16.4%1 year-on-year, driven by a 20.2%1 increase in North America sales primarily from volume growth despite COVID-19 impact, along with continued market share gains in most other geographies and a limited impact from the octreotide generic launch in Europe.
Decapeptyl – Sales reached €193.6 million, down 2.0%1 year-on-year, mainly due to lower sales in China as a result of COVID-19 and competitive pressure despite solid volume growth in major Western European countries and in Algeria.
Cabometyx – Sales reached €136.8 million, up 23.2%1 year-on-year, driven by strong performance across most geographies.
Onivyde – Sales reached €62.5 million, down 18.2%1, impacted by a significant decline in sales to Ipsen’s ex-U.S. partner despite demand growth in the U.S.

______________________
1
Year-on-year growth excluding foreign exchange impact established by recalculating net sales for the relevant period at the rate used for the previous period.

1Year-on-year growth excluding foreign exchange impact established by recalculating net sales for the relevant period at the rate used for the previous period.

In Neuroscience, sales of Dysport reached €169.5 million, down 7.4%1, impacted in most geographies by closure of treatment centers in both the therapeutics and aesthetic markets resulting from COVID. Over the period, Neuroscience sales represented 13.4% of total Group sales, compared to 15.3% in 2019.

In Rare Diseases, sales of NutropinAq reached €19.2 million, down 11.9%1 year-on-year, mainly due to lower volumes in France and Germany. Sales of Increlex reached €9.9 million, down 13.5%1 year-on-year mainly due to lower demand in the U.S. Over the period, Rare Diseases sales represented 2.3% of total Group sales, compared to 2.7% in 2019.

Consumer Healthcare sales reached €101.2 million, down 21.1%1, with a decrease in Smecta sales of 33.7%1 impacted by COVID-19, the implementation of hospital central procurement in China and the lower performance in France. Fortrans/Eziclen sales were dow

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