On July 29, 2021 Ipsen (Euronext: IPN; ADR: IPSEY), a global specialty-driven biopharmaceutical company, reported its financial results for the first half of 2021 (Press release, Ipsen, JUL 29, 2021, View Source [SID1234585319]):
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Strong financial results
Total sales growth in H1 2021 of 11.0% at CER1, or 6.5% as reported, to €1,350.3m
Q2 2021 total sales growth of 16.8% at CER1, or 12.7% as reported, to €691.8m
Core operating income of €479.8m (H1 2020: €410.2m); IFRS operating income of €412.2m (H1 2020: €249.8m)
Core operating margin2: 35.5% (H1 2020: 32.3%). IFRS operating margin: 30.5% (H1 2020: 19.7%)
Healthy balance sheet: net debt down to €336.5m, a reduction of €188.7m versus December 2020
Delivering against the strategy
Maximizing the brands:
Speciality Care sales growth in H1 2021 of 11.2%1 to €1,244.5m
Consumer Healthcare sales growth in H1 2021 of 8.6%1 to €105.9m
Strengthening the pipeline:
Good progress in external innovation: agreements announced in early and mid-stage pipeline
Regulatory submission acceptance for palovarotene in FOP3 in the U.S. and E.U.
Regulatory approval and launch of first-line renal cell carcinoma indication for Cabometyx (cabozantinib) in combination with nivolumab and positive Phase III results for Cabometyx in differentiated thyroid cancer
Driving efficiencies:
Cost savings driven by reduced face-to-face activity as a result of the pandemic, and by some efficiency gains
Ratio of SG&A expenses to total sales declined to 35.8% (H1 2020: 37.0%)
Focus on culture:
Strong momentum with Ipsen’s ambitious CSR4 agenda
Full-year guidance upgraded
Total sales growth: greater than +8.0%1 (prior guidance: greater than +4.0%1)
Core operating margin: around 32.0% (prior guidance: greater than 30.0%)
David Loew, Chief Executive Officer, commented:
"Our strong results reflected the progress we are making with our new strategy. We continued to grow our brands, with particularly strong sales in the second quarter partly a result of the gradual lifting of pandemic confinement measures. We achieved the important regulatory approval and launch of the combination of Cabometyx with nivolumab in first-line renal cell carcinoma and, while we were disappointed with the recent Phase III data readout in liver cancer, our pipeline continued to strengthen, with the positive Phase III results for Cabometyx in thyroid cancer and the regulatory submission of palovarotene in FOP. This progress was coupled with recent licensing agreements in the early and mid-stage pipeline. I was also pleased with the efficiencies achieved throughout our business, with the focus on our culture also underpinning more exciting opportunities to benefit patients and society.
Our raised expectations for our full-year results reflect the strength of our business. In the near term, we await further regulatory steps for palovarotene in the U.S. and Europe, while we continue to anticipate launches of generic lanreotide in Europe this year. I expect Ipsen to continue to deliver, driven by a clear strategy, strong fundamentals and attractive growth opportunities, reinforced by an unrelenting focus on serving patients."
Total sales growth in H1 2021 of 11.0% at CER6, or 6.5% as reported, to €1,350.3m. This included an increase in Specialty Care sales of 11.2%6 to €1,244.5m, driven by the growth of Cabometyx, Decapeptyl (triptorelin), Somatuline (lanreotide) and Dysport (botulinum toxin type A). Consumer Healthcare sales growth of 8.6%6 to €105.9m was partly a result of the reducing effects of the COVID-19 pandemic, particularly in China
Core operating income of €479.8m, up by 17.0%, partly reflected the strong growth in total sales and other revenue. The increase in SG&A costs to €483.4m was limited to 3.0%, with cost savings realized in selling expenses, a result of reduced travel, the full effect of virtual conferences and medical meetings, as well as efficiency gains from procurement savings, project prioritization, digital initiatives and manufacturing optimization
Core operating margin of 35.5%, an increase of 3.2 percentage points versus the first half of 2020
Core consolidated net profit of €359.8m, with growth of 21.2% reflecting the aforementioned increase in core operating income. Core EPS (fully diluted) grew by 21.3% to reach €4.31
IFRS operating income of €412.2m after amortization of intangible assets, impairment losses and other operating expenses. An IFRS operating income margin of 30.5% represented an increase of 11 percentage points compared to H1 2020, when an impairment loss on the intangible assets of palovarotene was recognized, following termination of the MO-Ped Phase II trial
IFRS consolidated net profit of €303.3m represented an increase of 36.2%. IFRS EPS (fully diluted) was up by 36.5% to €3.64
Free cash flow of €291.4m represented an increase of 24.9%, mainly driven by higher operating cash flow and a reduction in current income tax
Closing net debt came to €336.5m (H1 2020: €923.3m), with the improvement in H1 2021 primarily reflecting the generation of free cash flow
FY 2021 guidance
The Company today upgrades its financial guidance for FY 2021, which incorporates an assumed progressive global recovery from COVID-19 in the second half of the year. Subsequent to the July 2021 launch of generic lanreotide in Germany, further launches of generic lanreotide in Europe in the second half of the year are also assumed; Ipsen does not, however, anticipate the launch of octreotide or lanreotide generics in the U.S. in 2021.
Total sales
Growth greater than 8.0%8
Core operating margin
Around 32.0%9, excluding any potential impact of
incremental investments from external innovation
Currency impact
Based on the level of exchange rates at the end of June 2021, Ipsen anticipates an adverse impact of approximately 2% from currencies on total sales in FY 2021.
Research and development update
In May 2021, Ipsen announced that its New Drug Application for palovarotene had been accepted by the U.S. Food and Drug Administration (FDA). Palovarotene is an oral, investigational, selective RARγ agonist for the prevention of heterotopic ossification (new bone formation). The target regulatory action date assigned by the FDA under Priority Review status is 30 November 2021. Similar applications were accepted by the European Medicines Agency and Swissmedic.
During the period, Ipsen announced that it would exercise its option to collaborate with Exelixis on the COSMIC-311 Phase III pivotal trial of Cabometyx in patients with previously treated radioactive iodine-refractory differentiated thyroid cancer. Ipsen has an exclusive collaboration agreement with Exelixis for the commercialization of Cabometyx outside the U.S. and Japan.
In June 2021, Ipsen and Exelixis announced that COSMIC-312, the ongoing pivotal Phase III trial evaluating Cabometyx in combination with atezolizumab, versus sorafenib in patients with previously untreated advanced hepatocellular carcinoma, met one of the primary endpoints, demonstrating significant improvement in progression-free survival (PFS) at the planned primary analysis. A prespecified interim analysis for the second primary endpoint of overall survival (OS), conducted at the same time as the primary analysis for PFS, showed a trend favoring the combination of Cabometyx and atezolizumab, but did not reach statistical significance. Based on this preliminary OS data, it is anticipated that the probability of reaching statistical significance at the time of the final analysis is low.
Business development
Ipsen recently announced two agreements in line with its external-innovation focus on strengthening the pipeline:
– BKX-001 (Oncology)
In July 2021, Ipsen announced a licensing agreement with BAKX Therapeutics, providing Ipsen exclusive rights to develop, manufacture and commercialize BKX-001 as a potential treatment for leukemia, lymphoma and solid tumors.
– Mesdopetam (Neuroscience)
Earlier in July 2021, Ipsen also announced a licensing agreement with IRLAB, providing Ipsen exclusive development and commercial rights to mesdopetam, a novel dopamine D3-receptor antagonist, as a potential treatment option for people living with Parkinson’s disease experiencing levodopa-induced dyskinesia.
Company Social Responsibility
Ipsen’s CSR focus is on three areas: Employees, Communities and Environment. Examples of progress in the first half are shown below:
– Employees
Ipsen has established a balanced gender-target ratio for its Global Leadership Team by 2025. A similar timeframe has been established for the Executive Leadership Team at a minimum of 35% of both genders.
– Communities
The Company’s revolving credit facility (RCF) includes a key ESG10 element. Favorable results versus ESG-based targets by Ipsen are rewarded with charitable donations, one of which was recently awarded to International Health Partners, a charity supporting people in some of the world’s most challenging places to get the medicines they need.
– Environment
Ipsen is now using 100% green electricity across its sites in U.K., Ireland and France; 88% of Ipsen’s global electricity usage is now from renewable sources. The Company is also committed to the sustainable consumption of resources and will continue to increase energy efficiency within its operations.
Conference call
A conference call and webcast for investors and analysts will begin at 2:30pm Paris time today. Participants are encouraged to dial in to the call early and can register here; a recording will be available on ipsen.com, while the webcast can be accessed here. The event ID is 8026207.
Calendar
The Company intends to publish its year-to-date and third-quarter sales update on 21 October 2021.
Notes
All financial figures are in € millions (€m). The performance shown in this announcement covers the six-month period to 30 June 2021 (the first half or H1 2021) and the three-month period to 30 June 2021 (the second quarter or Q2 2021), compared to six-month period to 30 June 2020 (H1 2020) and the three-month period to 30 June 2020 (Q2 2020) respectively, unless stated otherwise. Commentary is based on the performance in H1 2021, unless stated otherwise.