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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  Ipsen    IPN   FR0010259150

IPSEN

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Ipsen : presents its 2019 results, provides 2020 guidance and updates 2022 financial outlook

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02/14/2020 | 08:09am EDT

Ipsen (Euronext: IPN; ADR: IPSEY), a global specialty-driven biopharmaceutical group today announced its financial results for the full year 2019.

Group sales growth of 15.8% as reported or 14.8% at constant currency and scope of consolidation1, driven by Specialty Care sales growth of 17.2%1, reflecting strong performance across all major products and geographies, while Consumer Healthcare sales were down -1.2%1

Core Operating margin at 30.4% of net sales, up 0.7 points. IFRS Operating margin at -1.3% of net sales, down 24.6 points

Setback in the palovarotene program of partial clinical hold for all patients under 14 years of age and reaching pre-specified second interim analysis futility criteria in the Phase 3 MOVE trial for fibrodysplasia ossificans progressiva (FOP), leading to a partial impairment of EUR669 million before tax

Core consolidated net profit of EUR563 million (+14.6% vs. 2018), with fully diluted Core EPS growing by 14.1% to reach EUR6.74. IFRS Consolidated net profit showing a loss of EUR50 million, with an IFRS net loss per share of EUR0.61

Sound financial structure, with a closing Net Debt of EUR1,116 million and a Net Debt to EBITDA ratio at 1.3x. Strong Free Cash Flow at EUR468 million, up 2%, mainly driven by higher Operating Cash Flow.

Continued commitment to disciplined execution of business development strategy for long-term sustainability focusing on the Group's core therapeutic areas (Oncology, Neuroscience, Rare Diseases) and across different transaction structures and various phases of drug development

Advancing solid pipeline with several significant new chemical entities and Phase 3 / registrational trials, including the initiation of pivotal Phase 3 trials for Onivyde in 1L Pancreatic Ductal Adenocarcinoma (PDAC) and 2L Small Cell Lung Cancer (SCLC) and upcoming top-line results for the Phase 3 trial of Cabometyx in combination with nivolumab in 1L Renal Cell Carcinoma (RCC)

Proposed distribution of EUR1.00 per share2 for the 2019 financial year, consistent with the prior year

2020 guidance3 of Group sales growth greater than +6.0% at constant currency and Core Operating margin around 30.0% of net sales

Updated 2022 outlook3 with Group sales greater than EUR2.8 billion and Core Operating margin greater than 28.0% of net sales

Aymeric Le Chatelier, Chief Executive Officer and Chief Financial Officer of Ipsen, stated: '2019 was another excellent year of operating performance for Ipsen with continued double-digit top-line growth and core operating margin expansion. Despite the recent palovarotene setback, the fundamentals of our business remain strong with a growing Specialty Care franchise and a sound financial structure including attractive cash flow generation. We are committed to the disciplined execution of our strategy, delivering solid mid-single digit growth in 2020 and further advancing our R&D pipeline programs. We have also updated our 2022 outlook taking into account the latest developments in the current business. We remain focused on executing our internal and external R&D strategy to strengthen our pipeline and deliver sustainable growth for years to come.'

Review of full year 2019 results

Group net sales reached EUR2,576.2 million, up 14.8%1 year-on-year.

Specialty Care sales reached EUR2,299.4 million, up 17.2%1, driven by the continued strong growth of Somatuline (lanreotide) and the EUR376.9 million contribution from the key Oncology launches of Cabometyx (cabozantinib) and Onivyde (irinotecan liposome injection). Somatuline growth of 18.3%1 was driven by continued positive momentum in North America (21.3%) and solid performance throughout Europe, including Germany. Dysport (botulinum toxin type A) growth was fueled by good performance in the therapeutics and in the aesthetics markets. Decapeptyl (triptorelin) sales reflect good volume growth across Major European countries and in Southeast Asia.

Consumer Healthcare sales reached EUR276.8 million, down -1.2%1, due to a decline in Smecta (diosmectite) sales, especially in China.

Core Operating Income reached EUR782.6 million in 2019, compared to EUR659.9 million in 2018, a growth of 18.6%, driven by the sales growth and after increased R&D investments to support the development of the growing pipeline.

Core Operating margin reached 30.4% of net sales, up 0.7 points compared to 2018.

Core consolidated net profit was EUR563.4 million in 2019, an increase of 14.6% versus EUR491.6 million in 2018, driven by higher Core Operating Income compensated by increased net financial costs, notably related to higher net debt from the Clementia acquisition.

Fully diluted Core earnings per share grew by 14.1% to reach EUR6.74, compared to EUR5.91 in 2018.

IFRS Operating Income was a loss of EUR33.4 million, mainly due to an impairment charge of EUR668.8 million on the intangible assets of palovarotene. IFRS operating margin of -1.3% was down 24.6 points compared to 2018.

IFRS Consolidated net profit was a loss of EUR50.2 million due to financial expenses resulting from the Onivyde contingent payment reevaluation, financing costs and income tax for a total of EUR244.8 million, offset by the positive impact on financial result of the revaluation of the Clementia Contingent Value Rights (CVR) and milestones, and on income tax of the tax effect from the palovarotene intangible asset impairment for a total of EUR220.0 million.

IFRS Fully diluted EPS (Earnings per share) was a net loss per share amounting to EUR0.61 versus a net profit of EUR4.68 in 2018.

Free Cash Flow reached EUR467.7 million, up by EUR9.3 million, mainly driven by higher Operating Cash Flow partly offset by higher cash out from restructuring costs, financial result and current income tax.

Closing net debt reached EUR1,115.6 million at the end of 2019, as compared to closing net debt in 2018 of EUR242.5 million. This reflects the acquisition of Clementia, other business development and milestones, the impact of the application of IFRS16, and the payment of the dividend.

Impairment loss related to palovarotene program

Ipsen recorded a 668.8 million partial impairment, before tax, on the palovarotene intangible assets at December 31, 2019 as a result of the recent developments in the palovarotene development program. This takes into account: 6 December 2019: Following discussions with the U.S. Food and Drug Administration (FDA), a partial clinical hold was issued for patients under the age of 14 for studies evaluating palovarotene for the chronic treatment of fibrodysplasia ossificans progressiva (FOP) and multiple osteochondromas (MO).

24 January 2020: Palovarotene Phase 3 MOVE trial for fibrodysplasia ossificans progressiva (FOP) reached pre-specified second interim analysis futility criteria. Ipsen paused dosing patients in FOP trials taking into consideration IDMC's recommendation to not discontinue trials based on encouraging therapeutic activity observed in preliminary post-hoc analyses.

Ipsen will continue the development of palovarotene, conduct further assessment of the MOVE dataset, address the FDA questions and define next steps for the clinical program to bring palovarotene to patients as quickly as possible.

Strategy update

During 2019, Ipsen made progress on its journey to being a leading global biopharmaceutical company focused on innovation and Specialty Care.

The three Specialty Care franchises all saw significant progress. The Oncology and Neuroscience franchises continued to demonstrate strong double-digit momentum and despite recent developments with palovarotene, Ipsen remains committed to building a successful Rare Diseases franchise and supporting patients living with FOP. In October 2019, Ipsen in-licensed BLU-782 from Blueprint Medicines, a highly selective ALK2 inhibitor in Phase 1 development for the treatment of FOP.

Ipsen is committed to continuing its business development strategy for long-term sustainability. The strategy will focus on the Group's core therapeutic areas (Oncology, Neuroscience, Rare Diseases) and across different transactions structures and various phases of drug development. The disciplined execution of this strategy will be supported by the Group's strong Free Cash Flow generation and close internal collaboration across Ipsen's teams.

In 2020 and beyond, the Group's mission to bring innovation to patients remains the same. The priorities and roadmap are clear, and Ipsen continues to execute against its objectives to maximize the portfolio while increasing the value of the pipeline.

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.

Sales growth adjusted for consolidation scope including: subsidiaries involved in the partnership between Ipsen and Schwabe Group consolidated in accordance with the equity method since 1 January 2019 and 2018 Etiasa (mesalazine) sales adjusted for the new contractual set up.

Comparison of 2019 performance with financial objectives

Distribution for the 2019 financial year proposed for the approval of Ipsen's shareholders

The Ipsen S.A. Board of Directors, which met on 12 February 2020, decided to propose at the Annual Shareholders' meeting on 29 May 2020 the distribution of EUR1.00 per share for the 2019 financial year, consistent with the prior year.

2020 Financial guidance

The Group has set the following financial targets for the current year, assuming no impact in 2020 of new somatostatin analog (SSA) generic entry:

Group sales growth year-on-year greater than +6.0% at constant currency; no impact of currency expected based on the current level of exchange rates.

Core Operating margin around 30.0% of net sales, excluding incremental investments in pipeline expansion initiatives.

Updated 2022 Outlook: The Group has updated its 2022 outlook taking into account the latest developments in its current business, mainly in the palovarotene development program: Group net sales greater than EUR2.8 billion, assuming current level of exchange rate; Core Operating margin greater than 28.0% of net sales.

The outlook has been updated assuming no approval of additional meaningful products or indications (including no contribution from palovarotene), progressive entry of additional octreotide and lanreotide generics globally from 2021 and excluding the impact of incremental investments in pipeline expansion initiatives.

Standard International: +44 (0) 2071 928 000

France and continental Europe: +33 (0) 1 76 70 07 94

UK: 08445 718 892

U.S.: (631) 510-7495

Conference ID: 8178467

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

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. Sales growth adjusted for consolidation scope including: subsidiaries involved in the partnership between Ipsen and Schwabe Group consolidated in accordance with the equity method since 1 January 2019 and 2018 Etiasa (mesalazine) sales adjusted for the new contractual set up.

Decided by the Ipsen S.A. Board of Directors, which met on 12 February 2020, to propose at the Annual Shareholders' meeting on 29 May 2020.

Assuming no impact of new somatostatin analog (SSA) generic entry in 2020 and excluding impact of incremental investments in pipeline expansion initiatives

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 EUR2.5 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).

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 Autorite des Marches Financiers. The risks and uncertainties set out are not exhaustive and the reader is advised to refer to the Group's 2018 Registration Document available on its website (www.ipsen.com)

Contact:

Tel: +33 (0)1 58 33 67 94

(C) 2020 Electronic News Publishing, source ENP Newswire

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Financials (EUR)
Sales 2019 2 608 M
EBIT 2019 775 M
Net income 2019 465 M
Debt 2019 974 M
Yield 2019 2,12%
P/E ratio 2019 8,92x
P/E ratio 2020 7,92x
EV / Sales2019 2,01x
EV / Sales2020 1,79x
Capitalization 4 268 M
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Mean consensus OUTPERFORM
Number of Analysts 16
Average target price 74,08  €
Last Close Price 51,40  €
Spread / Highest target 77,0%
Spread / Average Target 44,1%
Spread / Lowest Target 7,00%
EPS Revisions
Managers
NameTitle
Aymeric Le Chatelier Executive VP, Chief Executive & Financial Officer
Marc M. P. de Garidel Non-Executive Chairman
Aidan Murphy Executive Vice President-Technical Operations
Howard Mayer Executive Vice President-Research & Development
Steven Hildemann Chief Medical Officer & Executive Vice President
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