Ipsen Delivers Strong 2018 Results and Expects Continued Sales and Profit Growth in 2019

PARIS–(BUSINESS WIRE)–Regulatory News:

Ipsen (Euronext: IPN; ADR: IPSEY), a global specialty-driven
biopharmaceutical group, today announced its financial results for the
full year 2018.

Extract of audited consolidated results for the full year 2018
and 2017

       
(in million of euros)   FY 2018   FY 2017   %

change

 

% change at

constant currency1

Group net sales   2,224.8   1,908.7   +16.6%   +20.1%
Specialty Care sales   1,924.5   1,591.9   +20.9%   +24.7%
Consumer Healthcare sales   300.3   316.8   -5.2%   -2.9%
                 
CORE                
Core Operating Income   659.9   503.6   +31.0%    
Core operating margin (as a % net sales)   29.7%   26.4%   +3.3 pts    
Core consolidated net profit   491.6   362.7   +35.5%    
Core EPS – fully diluted (€)   5.91   4.36   +35.5%    
                 
IFRS                
Operating Income   519.4   397.2   +30.8%    
Operating margin (as a % net sales)   23.3%   20.8%   +2.5 pts    
Consolidated net profit   389.1   272.9   +42.6%    
EPS – fully diluted (€)   4.68   3.28   +42.7%    
 

Financial highlights

  • Group sales growth of 16.6% as reported and 20.1% at constant exchange
    rates1, driven by Specialty Care sales growth of 24.7%1,reflecting strong performance across all major products and
    geographies, and sustained growth of Consumer Healthcare at 2.7%1,2
  • Core operating margin at 29.7% of net sales, up 3.3 points and Core
    Operating Income growth of 31.0%
    IFRS operating margin at 23.3%
    of net sales, up 2.5 points and IFRS Operating Income growth of 30.8%
  • Financial guidance for 2019 of Group sales growth greater than 13.0%
    at constant exchange rate and Core operating margin around 31.0% of
    net sales, excluding incremental investments in pipeline expansion
    initiatives

_________________________

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 Consumer Healthcare
2018 sales growth up 2.7% restated from the new contractual set-up of
Etiasa®, down 2.9% as reported

Q4 2018 pipeline highlights

  • On 15 November 2018, approval from the European Commission for
    Cabometyx® for the treatment of hepatocellular carcinoma
    (HCC) in adults who have previously been treated with sorafenib
  • On 5 December 2018, initiation with Exelixis of COSMIC-312, a Phase 3
    pivotal trial of Cabometyx® in combination with
    atezolizumab versus sorafenib in previously untreated advanced
    hepatocellular carcinoma (HCC)

David Meek, Chief Executive Officer of Ipsen, stated: “2018
was a tremendous year for Ipsen with industry-leading top-line growth
and Somatuline
® achieving blockbuster status. We also
delivered significant margin expansion while investing to advance our
R&D pipeline. The momentum of the business is strong as we enter 2019
and are on track to deliver our 2020 financial targets to exceed €2.5
billion in sales and 30% margins, one year earlier.

In 2018, we advanced our pipeline with Cabometyx®
approvals in additional indications, acceleration of key programs and
the establishment of new collaborations. We remain focused on executing
our internal and external innovation strategy to build a robust
pipeline, ensure continued growth and optimize value for patients and
shareholders. We look forward to another outstanding year of strong
industry-leading growth, expanding indications for our current medicines
and advancing several innovative new chemical entities in the clinic.”

Review of full year 2018 results

Note: Unless stated otherwise, all variations in sales are calculated
excluding foreign exchange impacts established by recalculating net
sales for the relevant period at the rate used for the previous period.

Group net sales reached €2,224.8 million, up 20.1% year-on-year.

Specialty Care sales reached €1,924.5 million, up 24.7%,
driven by the strong growth of Somatuline® and the €257.6
million contribution from the key Oncology launches of Cabometyx®
and Onivyde®. Somatuline® growth of 24.4% was
driven by continued positive momentum in North America (38.2% growth in
the U.S.) and solid performance throughout Europe. Dysport® growth
was fueled by strong performance and the resupply in Brazil, strong
volume growth in the U.S. in the therapeutics market as well as the good
performance of Galderma in the aesthetics market in Europe. Decapeptyl®
sales reflect good volume growth across Europe and a good performance in
China.

Consumer Healthcare sales reached €300.3 million, up 2.7%
year-on-year re-stated from Etiasa new contractual set-up (or down 2.9%
as reported), driven by the good performance of Smecta® and
the contribution of the products acquired in 2017.

Core Operating Income reached €659.9 million in 2018, compared to
€503.6 million in 2017, a growth of 31.0%, driven by the sales growth
and after increased commercial investments for Cabometyx® and
Onivyde®, and R&D investments to support the development of
the growing pipeline.

Core operating margin reached 29.7% of net sales, up 3.3 points
compared to 2017.

Core consolidated net profit was €491.6 million in 2018, an
increase of 35.5% versus €362.7 million in 2017, driven by higher Core
Operating Income and due to lower effective tax rate and net financing
costs.

Fully diluted Core earnings per share grew by 35.5% to reach
€5.91, compared to €4.36 in 2017.

IFRS Operating income was €519.4 million, up 30.8% after higher
amortization of intangible assets (excluding software) and impairment
charges. Operating margin of 23.3% was up 2.5 points compared to 2017.

IFRS Consolidated net profit was €389.1 million versus €272.9
million in 2017, up 42.6%.

IFRS Fully diluted EPS (Earning per share) was €4.68
versus €3.28 in 2017.

Free Cash Flow reached €458.4 million, up by €149.4 million or
48.3%, mainly driven by an improvement in Operating Cash Flow and lower
restructuring costs, partially compensated by higher financial income
and current income tax.

Closing net debt reached €242.5 million at the end of 2018, an
improvement of €220.8 million over the closing net debt in 2017 of
€463.3 million. This reflects positive Free Cash Flow generation of the
Group which allowed the payment of milestones for Cabometyx®
and dividends in June.

Comparison of 2018 performance with financial
objectives

The Group exceeded its upgraded guidance provided on 26 July 2018 for
Group sales growth and for Core operating margin.

The table below shows the comparison between the financial objectives
provided on 26 July 2018 and 2018 actuals.

    Financial objectives   2018 Actuals
Group sales growth

(at constant exchange rate)

 

> +19.0%3

 

+20.1%3

Core operating margin
(as a percentage of sales)
  around 29.0%   29.7%

_____________________

3 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.

Dividend for the 2018 financial year proposed
for the approval of Ipsen’s shareholders

The Ipsen S.A. Board of Directors, which met on 13 February 2019,
decided to propose at the Annual Shareholders’ meeting on 28 May 2019
the payment of a dividend of €1.00 per share for the 2018 financial
year, unchanged from the prior year.

2019 Financial guidance

The Group has set the following financial targets for 2019:

  • Group sales growth year-on-year at constant currency greater
    than +13.0%;
    based on the current level of exchange rates, sales
    growth at current rates would be positively impacted by around 1.0%.
  • Core operating margin around 31.0% of net sales,
    excluding incremental investments in pipeline expansion initiatives.

Conference call

Ipsen will hold a conference call Thursday, 14 February 2019 at 2:30
p.m. (Paris time, GMT+1). Participants should dial in to the call
approximately five to ten minutes prior to its start. No reservation is
required to participate in the conference call.

Standard International: +44 (0) 2071 928000
France and continental
Europe: +33 (0) 1 76 70 07 94
UK: 08-445-718-892
U.S.:
1-6315-107-495

Conference ID: 2989606

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 €2.2billion in 2018, 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 5,700 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.

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 2017 Registration Document available on its website
(www.ipsen.com).

Comparison of Consolidated Sales for the Fourth Quarter and Full Year
2018 and 2017:

Sales by therapeutic area and by product

Note: Unless stated otherwise, all variations in sales are stated
excluding foreign exchange impacts, established by recalculating net
sales for the relevant period at the rate from the previous period)

  4th Quarter   Full Year
                           
(in million euros)   2018   2017   % Variation  

% Variation at

constant

currency

2018   2017   % Variation  

% Variation

at constant

currency

                               
Oncology   414.6   325.6   27.4%   27.2% 1,503.0   1,185.6   26.8%   29.9%
Somatuline® 227.2   189.2   20.1%   19.7% 846.7   702.5   20.5%   24.4%
Decapeptyl® 100.2 89.6 11.8% 12.8% 372.6 348.7 6.9% 8.1%
Cabometyx® 47.4 20.6 130.2% 131.0% 148.2 51.7 186.5% 187.5%
Onivyde® 33.7 19.7 71.3% 68.5% 109.4 56.9 92.4% 100.8%
Other Oncology   6.2   6.6   -5.4%   -5.3% 26.0   25.8   0.9%   1.1%
Neuroscience   88.7   88.2   0.6%   5.6% 351.5   331.6   6.0%   12.8%
Dysport®   87.3   87.2   0.1%   5.0% 347.8   328.2   6.0%   12.6%
Rare Diseases   16.9   17.3   -2.4%   -3.0% 70.0   74.7   -6.4%   -5.1%
NutropinAq® 10.5 12.3 -14.9% -14.7% 45.9 51.8 -11.5% -11.3%
Increlex®   6.4   5.0   28.2%   24.9% 24.1   22.9   5.3%   8.9%
Specialty Care   520.3   431.1   20.7%   21.6% 1,924.5   1,591.9   20.9%   24.7%
Smecta®* 31.3 36.1 -13.3% -11.0% 126.5 123.8 2.2% 5.3%
Forlax® 11.2 10.4 7.3% 8.4% 39.8 42.1 -5.5% -4.4%
Tanakan® 12.1 14.8 -17.8% -15.3% 37.7 41.4 -9.1% -6.0%
Fortrans/Eziclen® 9.3 8.7 7.3% 11.3% 31.4 32.1 -2.3% 1.7%
Etiasa® 4.1 3.1 30.5% 29.3% 4.2 17.8 -76.2% -75.6%

Other Consumer

Healthcare

  16.1   14.9   7.7%   7.9% 60.7   59.5   1.9%   2.6%
Consumer Healthcare   84.1   88.0   -4.5%   -2.6% 300.3   316.8   -5.2%   -2.9%
 
Group Sales   604.4   519.2   16.4%   17.5% 2,224.8   1,908.7   16.6%   20.1%

*including Smectite sales previously recorded in Other Consumer
Healthcare

Full year 2018 sales highlights

Group sales reached €2,224.8 million, up 20.1%, driven by Specialty Care
sales growth of 24.7% and Consumer Healthcare sales growth of 2.7%
re-stated from the Etiasa® new contractual set-up (or down
2.9% as reported).

Specialty Care sales amounted to €1,924.5 million, up 24.7%.
Oncology and Neuroscience sales grew by 29.9% and 12.8%, respectively,
and Rare Diseases sales decreased by 5.1%. Over the period, the relative
weight of Specialty Care continued to increase to reach 86.5% of Group
sales compared to 83.4% in 2017.

In Oncology, sales reached €1,503.0 million, up 29.9%
year-on-year, driven by the continued strong performance of Somatuline®
as well as the launches of Cabometyx® and Onivyde®.
Over the period, Oncology sales represented 67.6% of total Group sales
compared to 62.1% in 2017.

Somatuline® – Sales reached €846.7
million, up 24.4% year-on-year, driven by continuous growth in North
America of 38.2% from strong volume growth and market share gains,
strong double-digit growth in most European countries, notably Germany,
Sweden, France and the UK, as well as the contribution from Japan
following the launch of the neuroendocrine tumor indication in 2017.

Decapeptyl® – Sales reached €372.6 million, up
8.1% year-on-year, positively impacted by volume growth in most European
countries, notably in France, Spain and the UK, as well as by good
performance in China.

Cabometyx® Sales reached €148.2
million, driven by good performance in all European countries including
Germany, France and the UK, as well as new launches in other countries
including Australia. In the fourth quarter of 2018, sales increased by
22.2% over the third quarter of 2018.

Onivyde® – Sales amounted to €109.4 million. In
the fourth quarter of 2018, sales were up 68.5% year-on-year and
increased by 22.8% over the third quarter of 2018 driven by strong sales
to ex-US partner in the fourth quarter.

In Neuroscience, sales of Dysport®
reached €347.8 million, up 12.6% driven by the resupply and strong
performance in Brazil, solid volume growth in the U.S. in the
therapeutics market as well as the good performance of Galderma in the
aesthetics market in Europe. For the Full Year 2018, Neuroscience sales
represented 15.8% of total Group sales compared to 17.4% in 2017.

In Rare Diseases, sales of NutropinAq®
reached €45.9 million, down 11.3% year-on-year, impacted by lower
volumes across Europe. Sales of Increlex®
reached €24.1 million, growing by 8.9% year-on-year, driven by the
performance in the U.S. Over the period, Rare Diseases sales represented
3.1% of total Group sales compared to 3.9% in 2017.

Consumer Healthcare sales reached €300.3 million, up 2.7%
year-on-year re-stated from the Etiasa® new contractual
set-up (or down 2.9% as reported). Sales were positively impacted by the
good performance of the Smecta® brand and the contribution
from the products acquired in 2017. Over the period, Consumer Healthcare
sales represented 13.5% of total Group sales, compared to 16.6% in 2017.

Smecta® – Sales reached €126.5 million, up 5.3%
year-on-year, driven by good growth in China (impacted by a negative
inventory effect in 2017), France as well as in Korea, Russia and
Central Asia.

Forlax® – Sales reached €39.8 million, down 4.4%
year-on-year, impacted by lower sales to partners and the importation
delay in Algeria.

Tanakan® – Sales reached €37.7 million, down
6.0% year-on-year, impacted by a continuous market slow-down in France
and the importation ban in Algeria.

Fortrans/Eziclen® – Sales reached €31.4 million, up
1.7% year-on-year, driven by good performance in China, Vietnam and
Ukraine, partly offset by the negative inventory impact and competitive
pressure in Eastern European Countries.

Etiasa® – Sales reached €4.2 million, down
75.6% year-on-year, due to the new contractual set up in China.

Other Consumer Healthcare – Sales reached €60.7 million, up 2.6%
year-on-year, supported by the contribution of products acquired in 2017
and other drug-related products, offsetting the Adrovance® erosion
in France.

Sales by geographical area

Group sales by geographical area in the fourth quarter and full year
2018 and 2017:

  4th Quarter   Full Year
                               
(in million euros)   2018   2017   % Variation  

% Variation

at constant

currency

2018   2017   % Variation  

% Variation

at constant

currency

           
France 80.8 64.9 24.5% 24.6% 282.0 247.7 13.8% 13.9%
Germany 51.1 43.3 18.1% 18.1% 184.1 152.1 21.1% 21.1%
Italy 22.9 22.5 1.8% 1.8% 101.5 90.7 11.9% 11.9%
United Kingdom 24.5 22.3 9.7% 9.8% 95.0 80.3 18.4% 19.5%
Spain   24.8   20.5   20.9%   20.9% 91.1   73.6   23.7%   23.7%
Major Western European countries   204.1   173.6   17.6%   17.6% 753.8   644.4   17.0%   17.1%
Eastern Europe 57.0 53.9 5.8% 11.7% 198.0 196.4 0.8% 6.2%
Others Europe   60.2   54.7   10.1%   15.2% 245.7   199.0   23.5%   27.4%
Other European Countries   117.2   108.5   8.0%   13.5% 443.7   395.3   12.2%   16.9%
                               
North America   176.3   127.7   38.1%   35.5% 615.6   467.0   31.8%   37.9%
Asia 56.5 55.5 2.0% 2.6% 207.3 205.7 0.8% 3.5%
Other countries in the Rest of the world   50.3   54.0   -6.9%   -2.7% 204.3   196.3   4.1%   11.3%
Rest of the World   106.8   109.4   -2.4%   0.0% 411.7   401.9   2.4%   7.3%
                               
Group Sales   604.4   519.2   16.4%   17.5% 2,224.8   1,908.7   16.6%   20.1%
 

Sales in Major Western European countries reached €753.8 million,
up 17.1% year-on-year. Over the period, sales in Major Western European
countries represented 33.9% of total Group sales compared to 33.8% in
2017.

France – Sales reached €282.0 million, up 13.9% year-on-year,
mainly driven by the Cabometyx® ramp-up, thestrong
sales of Decapeptyl® and the sustained growth of Somatuline®.

Germany – Sales reached €184.1 million, up 21.1% year-on-year,
driven by the Cabometyx® ramp-up and the strong growth of
Somatuline®.

Italy – Sales reached €101.5 million, up 11.9% year-on-year,
mainly driven by the launch of Cabometyx®, and supported by
the good performance of Decapeptyl® as well as Somatuline®.

United Kingdom – Sales reached €95.0 million, up 19.5%
year-on-year, driven by the strong performance of Cabometyx®,
Somatuline® and Decapeptyl.

Spain – Sales reached €91.1 million, up 23.7% year-on-year,
driven by the contribution of Cabometyx® and the good
performance of Somatuline® and Decapeptyl®.

Sales in Other European countries reached €443.7 million, up
16.9% year-on-year, supported by the launch of Cabometyx® in
certain countries, Onivyde® sales to Ipsen’s partner, the
strong growth of Dysport® as well as the solid performance of
Somatuline® and Decapeptyl®. Over the period,
sales in the region represented 19.9% of total Group sales compared to
20.7% in 2017.

Sales in North America reached €615.6 million, up 37.9%
year-on-year, driven by the continued strong growth of Somatuline®
as well as the Onivyde® launch contribution and the
good performance of Dysport® in the therapeutics market. Over
the period, sales in North America represented 27.7% of total Group
sales compared to 24.5% in 2017.

Sales in the Rest of the World reached €411.7 million, up 7.3%
year-on-year, driven by the resupply and strong performance of Dysport®
in Brazil, the growth of Somatuline® in Japan, partly offset
by the negative impact of the new Etiasa® contractual set-up
in China. Over the period, sales in the Rest of the World represented
18.5% of total Group sales compared to 21.1% in 2017.

Comparison of Core consolidated income statement for 2018 and 2017

Core financial measures are performance indicators. Reconciliation
between these indicators and IFRS aggregates is presented in Appendix 4
“Bridges from IFRS consolidated net profit to Core consolidated net
profit”.

(in millions of euros)   31 December 2018   31 December 2017   % change
    % of sales     % of sales  
Sales 2,224.8   100% 1,908.7   100% 16.6%
Other revenues 123.6   5.6% 103.0   5.4% 19.9%
Revenue 2,348.4   105.6% 2,011.8   105.4% 16.7%
Cost of goods sold (454.2) -20.4% (385.6) -20.2% 17.8%
Selling expenses (787.4) -35.4% (715.9) -37.5% 10.0%
Research and development expenses (302.1) -13.6% (265.8) -13.9% 13.7%
General and administrative expenses (165.7) -7.4% (140.8) -7.4% 17.7%
Other core operating income 21.1 0.9% 0.4 0.0% N.A.
Other core operating expenses (0.3)   0.0% (0.5)   0.0% -46.7%
Core Operating Income 659.9   29.7% 503.6   26.4% 31.0%
Net financing costs (5.3) -0.2% (8.1) -0.4% -34.9%
Other financial income and expense (20.1) -0.9% (18.4) -1.0% 8.7%
Core income taxes (144.1) -6.5% (115.7) -6.1% 24.5%
Share of net profit (loss) from entities accounted for using the
equity method
1.1   0.0% 1.4   0.1% -22.8%
Core consolidated net profit 491.6   22.1% 362.7   19.0% 35.5%
– Attributable to shareholders of Ipsen S.A. 491.9 22.1% 362.1 19.0% 35.9%
– Attributable to non-controlling interests (0.4) 0.0% 0.6 0.0% N.A.
               
Core EPS fully diluted – attributable to Ipsen S.A. shareholders
(in € per share)
5.91     4.36     35.5%
 

Contacts

Media
Christian Marcoux
Senior Vice President,
Corporate Global Communications
+33 (0)1 58 33 67 94
Christian.marcoux@ipsen.com

Fanny Allaire
Director, Ipsen France Hub,
Global Communications

+33 (0) 1 58 33 58 96
Fanny.allaire@ipsen.com

Financial Community
Eugenia Litz
Vice President,
Investor Relations
+44 (0) 1753 627721
eugenia.litz@ipsen.com

Myriam Koutchinsky
Investor Relations Manager
+33 (0)1
58 33 51 04
myriam.koutchinsky@ipsen.com

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