Osaka - Takeda Pharmaceutical Company Limited (TSE: 4502/ NYSE: TAK) ('Takeda') today announced financial results for the first half of fiscal year 2020 (period ended September 30, 2020).
TAKEDA PRESIDENT & CHIEF EXECUTIVE OFFICER CHRISTOPHE WEBER commented: 'Takeda's performance in the first half of FY2020 demonstrates the resilience of our business model, the depth of our portfolio and the commitment of our employees, who continue to serve patients and communities globally while overcoming challenges created by the COVID-19 pandemic.
'Our results were once again driven by underlying growth of our 14 global brands across the five key business areas, which enabled us to generate strong margins and cash flow. Our R&D Engine continued to advance our Wave 1 pipeline, with 7 new regulatory filings anticipated within the next 12 months, and we expanded our cell therapy capabilities, both of which will help drive Takeda's future growth. We also exceeded our divestiture target, with more than $11 billion of non-core disposals announced since January 2019, enabling us to continue to rapidly reduce debt.
'Takeda continues to focus on developing potential therapies to treat COVID-19 with, for example, the enrollment of the first patients in the CoVIg-19 Plasma Alliance Phase 3 clinical trial an outstanding achievement in such a short time.
'We are confirming our full-year management guidance and raising forecasts for free cash flow, reported operating profit and reported earnings per share, reflecting our confidence in Takeda's growth momentum. This is borne out by today's encouraging results, despite the challenges posed by the COVID-19 pandemic. I am proud of all that we continue to achieve at Takeda and look forward to continuing to build on our strengths in the second half of FY2020.'
Takeda delivered a resilient performance in H1 FY2020
Reported revenue, at JPY 1,590.8 billion ($15.1B)1, was impacted primarily by foreign exchange and divestitures, however Takeda delivered underlying revenue growth of 0.5% in the first half of FY2020, consistent with full year guidance of 'low-single-digit growth'.
We delivered reported operating profit of JPY 215.6 billion ($2.0B)1, which grew 97.7%, reflecting lower purchase price accounting (PPA) and integration costs. Core operating profit, which adjusts for PPA and non-recurring items, declined year-on-year to JPY 507.6 billion ($4.8B)1 owing to foreign exchange impact and divestitures. The core operating profit margin was 31.9%. Underlying core operating profit margin, which adjusts for the impact of foreign exchange and divestiture effects, grew to 31.6% year-on-year, driven by synergies and OPEX efficiencies.
Takeda's reported net profit was JPY 86.5 billion, a 15.8% increase compared with the same period in the prior year.2 This is attributable mainly to lower purchase price accounting and integration costs.
Operating cash flow increased by 14.9% to JPY 392.0 billion. Free cash flow, which also reflects capital expenditures and proceeds from asset sales, was JPY 425.5 billion ($4.0B)1, with the year-on-year growth rate impacted by the JPY 375.5 billion cash received for Xiidra in July 2019. Further de-leveraging in H1 led to a 3.7x net debt/adjusted EBITDA ratio at the end of the period.
The overall impact of the global spread of COVID-19 on Takeda's consolidated financial results for the six-month period ended September 30, 2020 was not material. An adverse effect on revenue has been observed in some of our therapeutic areas, such as Neuroscience, for reasons such as patients visiting their medical care providers less frequently for non-life-threatening and chronic diseases. However, we have seen expansion of certain products with a more convenient administration profile. Voluntary suspension of certain business activities such as business travel and events in response to COVID-19 led to lower spending, which resulted in limited impact on Takeda's profit. We continue to drive towards achieving our key deliverables in FY2020, while recognizing the potential for delays due to the pandemic, as detailed in Takeda's Quick Report for the quarter ended September 30, 2020, released today. For the latest Takeda communications regarding COVID-19, please click here to visit the COVID-19 Information Center on Takeda's website.
COMMERCIAL UPDATES ACROSS OUR FIVE KEY BUSINESS AREAS
Takeda's five key business areas - Gastroenterology, Rare Diseases, Plasma-Derived Therapies, Oncology, and Neuroscience - with JPY 1,298.9 billion of reported revenue representing approximately 82% of total H1 revenues - delivered year-on-year underlying revenue growth of 4.0%. Our 14 global brands, with reported revenue of JPY 595.9 billion in aggregate, delivered a 15.4% increase in underlying revenue growth compared to a year before.
The Gastroenterology franchise with JPY 379.8 billion in reported revenue represented 24% of sales, spearheaded by exceptional growth through expanded patient share of gut-selective ENTYVIO in the U.S., EU, and Japan.
The Rare Diseases franchise with JPY 295.4 billion in reported revenue represented 19% of sales, with the hereditary angioedema portfolio experiencing double digit growth driven by continued strong performance and successful launches of TAKHZYRO. The competitive landscape in Rare Hematology, including a -19% decline in ADVATE sales partially driven by ADYNOVATE and competitive uptake, was in line with our expectations. Additionally, Takeda is working closely with the FDA on a proposed plan to resupply NATPARA in the U.S. and anticipates that the required device modifications and product testing will likely delay availability beyond 2020.
PDT Immunology with JPY 205.9 billion in reported revenue represented 13% of sales, driven by strong Gammagard-Liquid demand in the U.S. and subcutaneous IG worldwide. Albumin sales decreased versus H1 last year (-13%) due to phasing and high FY19 H1 sales as a result of supply dynamics in China following a blackout period. However, we expect this to recover in H2, driven by demand and capacity expansion.
Oncology with JPY 210.0 billion in reported revenue represented 13% of sales as our portfolio continues to expand indications in metastatic non-small cell lung cancer, chronic myeloid leukemia, myeloma, and ovarian cancer.
Neuroscience with JPY 207.8 billion in reported revenue represented 13% of sales, with slowing momentum attributable to COVID-19 stay-at-home restrictions that reduced patient visits and diagnoses and created opportunities for discontinuing medication. A normalization of sales was noted toward the end of Q2.
About Takeda Pharmaceutical Company Limited
Takeda Pharmaceutical Company Limited (TSE:4502/NYSE:TAK) is a global, values-based, R&D-driven biopharmaceutical leader headquartered in Japan, committed to bringing Better Health and a Brighter Future to patients by translating science into highly-innovative medicines. Takeda focuses its R&D efforts on four therapeutic areas: Oncology, Rare Diseases, Neuroscience, and Gastroenterology (GI). We also make targeted R&D investments in Plasma-Derived Therapies and Vaccines. We are focusing on developing highly innovative medicines that contribute to making a difference in people's lives by advancing the frontier of new treatment options and leveraging our enhanced collaborative R&D engine and capabilities to create a robust, modality-diverse pipeline. Our employees are committed to improving quality of life for patients and to working with our partners in health care in approximately 80 countries.
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