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Ipsen Delivers Strong 2017 Results with 21.1%1 Sales Growth and Core Operating Margin Increase of 3.4 Points andExpects Significant Further Growth in Sales and Margin in 2018

15/02/2018 - 10:25

- Business Wire

Regulatory News:

Ipsen (Euronext:IPN; ADR:IPSEY), a global specialty-driven biopharmaceutical group, today announced financial results for the full year 2017.

Financial highlights

  • Full Year 2017 Group sales growth of 21.1%1 driven by Specialty Care sales growth of 25.9%1 reflecting continued Somatuline® momentum and increasing contribution from the Cabometyx® and Onivyde® launches, and Consumer Healthcare back to growth at 1.4%1.
  • Full Year 2017 Core Operating margin at 26.4%, up 3.4 points after investments for the Cabometyx® and Onivyde® launches.
  • Financial guidance for 2018 of Group sales growth greater than 16.0%1 and Core operating margin greater than 28.0% of net sales.

Extract of audited consolidated results for the full year 2017 and 2016

             
(in millions of euros)   FY 2017   FY 2016   % change
Group sales   1,908.7   1,584.6   +21.1%1
Specialty Care sales   1,591.9   1,273.0   +25.9%1
Consumer Healthcare sales   316.8   311.6   +1.4%1
Core Operating Income   503.6   363.9   +38.4%
Core operating margin (as a % net sales)   26.4%   23.0%   +3.4 pts
Core consolidated net profit   362.7   263.6   +37.6%
Core EPS – fully diluted (€)   4.36   3.18   +37.0%
             
IFRS            
Operating Income   397.2   304.7   +30.4%
Operating margin (as a % net sales)   20.8%   19.2%   +1.6 pts
Consolidated net profit   272.9   226.6   +20.5%
EPS – fully diluted (€)   3.28   2.73   +19.9%
             
Free cash flow   309.0   228.8   +35.1%

Net cash / (debt) position2

  (463.3)   68.6   NA
             

________________________

1 Year-on-year growth excluding foreign exchange impacts. Currency effects are established by recalculating net sales for the relevant period at the exchange rates used for the previous period.
2 Derivative instruments booked in financial assets and related to financial operations, cash and cash equivalents, less bank overdrafts, bank loans and other financial liabilities and excluding financial derivative instruments on commercial operations.

David Meek, Chief Executive Officer of Ipsen, stated: “Our outstanding performance in 2017 exceeded expectations with record highs for sales growth and core operating margin. Sales grew by an impressive 21.1%1 and core operating margin improved by 3.4 points year-on-year, driven by the excellent Specialty Care performance.

In 2018, we will maintain the positive momentum of the current business to deliver continued strong growth and further margin improvement, well on track to meet our 2020 financial objectives. Business development and the accelerated transformation of the R&D organization also remain top priorities to expand our innovative pipeline and sustain long-term growth.”

Review of full year 2017 results

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

Group sales reached €1,908.7 million, up 21.1% year-on-year.

Specialty Care sales reached €1,591.9 million, up 25.9%, driven by the strong growth of Somatuline® and the €108.6 million contribution from key new products Cabometyx® (mainly sales from Germany and France) and Onivyde® (consolidated since April 2017 following the acquisition from Merrimack Pharmaceuticals). Somatuline® growth of 31.9% was driven by continued positive momentum in North America (62.1% growth in the U.S.) and solid performance throughout Europe. Dysport® growth was fueled by the good performance of Galderma as well as a strong growth in the Middle East and some Eastern European countries. Decapeptyl® sales reflect good volume growth across Europe and a positive trend in China despite some continued pricing pressure.

Consumer Healthcare sales reached €316.8 million, up 1.4% (up 3.2% adjusted for the impact of the Etiasa® contractual set-up in China), driven by the good performance of Smecta® and Fortrans/Eziclen® as well as the contribution of the newly acquired products (including Prontalgine® and Buscopan®).

Core Operating Income totaled €503.6 million, up 38.4%, driven by the sales growth and after increased commercial investments for the new products Cabometyx® and Onivyde® and R&D investments to support the development of the growing pipeline.

Core operating margin reached 26.4% of net sales, up 3.4 points compared to 2016.

Core consolidated net profit was €362.7 million, compared to €263.6 million in 2016, up 37.6% and impacted by higher financial and income tax expenses.

Fully diluted core earnings per share grew by 37.0% to reach €4.36, compared to €3.18 in 2016.

IFRS Operating income was €397.2 million, up 30.4% after higher amortization of intangible assets (excl. software), restructuring and integration costs, slightly offset by lower impairment charges. Operating income margin at 20.8% is up 1.6 points compared to 2016.

IFRS Consolidated net profit was €272.9 million versus €226.6 million in 2016, up 20.5%, after higher financial and income tax expenses, mainly from the recent U.S. tax reform.

IFRS Fully diluted EPS (Earning per share) was €3.28 versus €2.73 in 2016.

Free cash flow reached €309.0 million, up by €80.2 million or 35.1%, driven by the improvement in Operating Cash Flow, partially compensated by higher restructuring and financial costs.

Closing net debt reached €463.3 million at the end of 2017, versus a net cash position of €68.6 million at the end of 2016, reflecting the acquisitions completed during the first half of 2017 for Onivyde®, the Consumer Healthcare OTC product portfolio and the equity stake in Akkadeas Pharma, as well as the additional milestones paid for Cabometyx® and Xermelo®.

Impact of U.S. tax reform

The Group booked an expense of €46.0 million related to the negative impact of the newly signed U.S. tax reform on the value of its U.S. tax losses carried forward. This expense was partly offset by the recognition of previously unrecognized deferred tax assets in the U.S. for €19.7 million.

Subject to further analysis and interpretation of the U.S. tax reform, the combined effect of our growth in the U.S. and the reduction of the Federal tax rate will lead to a reduction of the Group effective tax rate by 2 to 3 points in 2018.

Comparison of 2017 performance with financial objectives

The Group exceeded the limit of its updated guidance provided on 27 July 2017 for Specialty Care and Consumer Healthcare sales growth and for Core operating margin.

The table below shows the comparison between the financial objectives provided on 27 July 2017 and 2017 actuals.

   

Financial objectives1

  Actuals 2017
Specialty Care sales  

> +24%2

  +25.9%2
Consumer Healthcare sales   > +0.0%2   +1.4%2
Core operating margin
(as a percentage of sales)
  > 25.0%   26.4%
         

____________________________

1 2017 revised financial objectives communicated on 27 July 2017
2 Year-on-year growth excluding foreign exchange impacts. Currency effects are established by recalculating net sales for the relevant period at the exchange rates used for the previous period.

Dividend for the 2017 financial year proposed for the approval of Ipsen’s shareholders

The Ipsen S.A. Board of Directors, which met on 14 February 2018, has decided to propose at the annual shareholders’ meeting on 30 May 2018 the payment of a dividend of €1.00 per share, up from €0.85 for the 2016 financial year.

2018 Financial guidance

Consistent with its 2020 ambition, the Group has set the following financial targets for 2018:

  • Group sales growth year-on-year at constant currency greater than +16.0%, fueled by strong double-digit growth of Specialty Care and low single-digit growth of Consumer Healthcare. Based on the current level of exchange rates, sales growth at current exchange rates should be negatively impacted by approximately 4%;
  • Core operating margin greater than 28.0% of net sales.

Meeting, webcast and conference call for the press

Ipsen will host a press conference on Thursday 15 February 2018 at 9:30 a.m. (Paris time, GMT +1) at Salons de l’hôtel des Arts et Métiers – 9 bis avenue d’Iéna – 75116 Paris (France). A conference call will take place and a web conference (audio and video webcast) will be available at www.ipsen.com. Participants should enter the call approximately 5 to 10 minutes prior to its start. No reservation is required to participate in the conference call.

Standard international: +44 (0) 1452 555 566
France: +33 (0)1 76 74 24 28
UK: +44 (0)8 44 4933 800
United States: +1 646 851 2094
Conference ID: 7198548
A recording will be available for 7 days on Ipsen’s website and at the following number: +44 (0) 1452 550 000 – conference ID: 7198548

Meeting, webcast and conference call for the financial community

Ipsen will host an analyst meeting on Thursday 15 February 2018 at 2:30 p.m. (Paris time, GMT+1) at its headquarters in Boulogne-Billancourt (France). A conference call will take place and a web conference (audio and video webcast) will be available at www.ipsen.com. Participants should dial in to the call approximately 5 to 10 minutes prior to its start. No reservation is required to participate in the conference call.

France and continental Europe: +33 (0)1 76 74 24 28
UK: +44 (0)14 5255 5566
United States: + 1 631 510 7498
Conference ID: 2665077
A recording will be available for 7 days on Ipsen’s website and at the above numbers.

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, Neurosciences 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 close to €1.9 billion in 2017, 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 5,400 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 2016 Registration Document available on its website (www.ipsen.com).

Comparison of Consolidated Sales for the Fourth Quarter and Full Year 2017 and 2016:

Sales by therapeutic area and by product1

Note: Unless stated otherwise, all variations in sales are stated excluding foreign exchange impacts.

Currency effects are established by recalculating net sales for the relevant period at the exchange rates used for the previous period.

The following table shows sales by therapeutic area and by product for the fourth quarter and full year 2017 and 2016:

    4th Quarter       Full Year
                                 
(in millions euros)   2017   2016   % Variation  

% Variation

at constant

currency

      2017   2016   % Variation  

% Variation

at constant

currency

                                     
Oncology   325.2   247.3   31.5%   35.2%       1,185.2   904.9   31.0%   32.4%
Somatuline®   189.2   146.5   29.2%   33.9%       702.5   538.3   30.5%   31.9%
Decapeptyl®   89.6   88.0   1.8%   3.2%       348.7   339.8   2.6%   3.6%
Cabometyx®   20.6   7.2   NA   NA       51.7   7.2   NA   NA
Onivyde®   19.7   0.0   NA   NA       56.9   0.0   NA   NA
Other Oncology   6.2   5.7   8.0%   8.6%       25.4   19.5   30.2%   30.5%
Neurosciences   88.2   71.9   22.6%   25.4%       331.6   286.7   15.7%   14.8%
Dysport®   87.2   71.2   22.5%   25.3%       328.2   284.7   15.3%   14.5%
Rare Diseases   17.7   20.5   -13.6%   -11.8%       75.1   81.5   -7.8%   -7.1%
NutropinAq®   12.3   14.0   -12.2%   -12.1%       51.8   57.7   -10.2%   -9.9%
Increlex®   5.0   6.5   -22.7%   -17.2%       22.9   23.7   -3.5%   -1.9%
Specialty Care   431.1   339.8   26.9%   30.3%       1,591.9   1,273.0   25.1%   25.9%
Smecta®   33.3   31.6   5.6%   8.3%       115.5   111.0   4.0%   4.1%
Forlax®   10.4   10.2   1.9%   2.6%       42.1   39.3   7.1%   7.0%
Tanakan®   14.8   15.8   -6.7%   -6.6%       41.4   43.6   -4.9%   -6.0%
Fortrans/Eziclen®   8.7   7.8   11.3%   12.3%       32.1   26.8   19.8%   16.5%
Etiasa®   3.1   11.5   -72.7%   -70.8%       17.8   29.3   -39.3%   -37.2%
Other Consumer Healthcare   17.6   13.5   31.0%   28.9%       67.8   61.5   10.2%   9.8%
Consumer Healthcare   88.0   90.4   -2.6%   -1.6%       316.8   311.6   1.7%   1.4%
                                     
Group Sales   519.2   430.2   20.7%   23.6%       1,908.7   1,584.6   20.5%   21.1%
                                     

_____________________

1 New sales reporting according to main therapeutic indication of each product

Full year 2017 sales highlights

Group sales reached €1,908.7 million, up 21.1%, driven by the 25.9% growth of Specialty Care sales and 1.4% growth of Consumer Healthcare sales.

Specialty Care sales amounted to €1,591.9 million, up 25.9%. Oncology and Neurosciences sales grew by 32.4% and 14.8%, respectively, while Rare Diseases sales decreased by 7.1%. Over the period, the relative weight of Specialty Care continued to increase to reach 83.4% of Group sales, compared to 80.3% in 2016.

In Oncology, sales reached €1,185.2 million, up 32.4% year-on-year, driven by the launches of Onivyde® and Cabometyx® as well as the continued strong performance of Somatuline®. Over the period, Oncology sales represented 62.1% of total Group sales, compared to 57.1% in 2016.

Somatuline®–Sales reached €702.5 million, up 31.9% year-on-year, driven by strong volume growth in North America as well as strong performance in most European countries, notably in the UK, Germany and France. The U.S. represented 46.7% of total Somatuline® sales in 2017, with a 62.1% growth rate over 2016.

Decapeptyl® – Sales totaled €348.7 million, up 3.6% year-on-year, positively impacted by good volume growth across Europe, notably in France and Spain, and in Algeria, as well as a good sales trend in China despite some continued pricing pressure.

Cabometyx®–Sales reached €51.7 million, driven by good performance in Germany and France which accounted for the majority of sales, as well as volume growth in the Netherlands and in the UK. In the fourth quarter 2017, sales were up 44.4% versus the third quarter 2017.

Onivyde® – Sales amounted to €56.9 million, representing three quarters of sales in the U.S. following the completion of the acquisition from Merrimack in April 2017. In the fourth quarter 2017, sales were up 10.8% versus the third quarter 2017.

In Neurosciences, sales of Dysport® reached €328.2 million, up 14.5%, driven by the good performance of Galderma in North America, as well as strong growth in the Middle East and some Eastern European countries. In addition, the Good Manufacturing Practices (GMP) certificate was reissued in Brazil in January 2018. Over the period, Neurosciences sales represented 17.4% of total Group sales, compared to 18.1% in 2016.

In Rare Diseases, sales of NutropinAq®reached €51.8 million, down 9.9% year-on-year, impacted by lower volumes across Europe, especially in Germany and France. Sales of Increlex® reached €22.9 million, slightly down 1.9% year-on-year, impacted by lower prices in Poland. Over the period, Rare Diseases sales represented 3.9 % of total Group sales, compared to 5.1% in 2016.

Consumer Healthcare sales reached €316.8 million, up 1.4% year-on-year or up 3.2% adjusted for the impact of the Etiasa® contractual setup in China, driven by the good performance of Smecta® and Fortrans/Eziclen® as well as the contribution of the newly acquired OTC products (including Prontalgine® and Buscopan®).Over the period, Consumer Healthcare sales represented 16.6% of total Group sales, compared to 19.7% in 2016.

Smecta® – Sales reached €115.5 million, up 4.1% year-on-year, driven by a good volume trend in China reflecting the commercial efforts deployed to support the implementation of the OTx strategy, (partly offset by the destocking impact during the 3rd quarter of 2017) and by the Diosmectal® launch in Italy and the Smebiocta® launch in France and Eastern Europe.

Forlax® – Sales reached €42.1 million, up 7.0% year-on-year, driven by growing sales to partners.

Tanakan® – Sales reached €41.4 million, down 6.0% year-on-year, mainly impacted by a continued market slowdown in France, while performance in Russia remains in line with 2016.

Fortrans/Eziclen® – Sales reached €32.1 million, up 16.5% year-on-year, due to the good performance in China and Europe and by a favorable basis of comparison due to shortage issues in the first half of 2016.

Etiasa®– Sales reached €17.8 million, down 37.2% year-on-year, impacted by the new contractual set-up in China which started to take effect in the third quarter of 2017, and by a negative inventory impact.

Other Consumer Healthcare – Sales reached €67.8 million, up 9.8% year-on-year, supported by the new acquired products Prontalgine® and Buscopan® slightly offset by some pressure on Nisis®/Nisisco® after the January 2017 price cut.

Sales by geographical area

Group sales by geographical area in the fourth quarter and full year 2017 and 2016:

    4th Quarter       Full Year
                                     
(in million euros)   2017   2016   % Variation  

% Variation

at constant

currency

      2017   2016   % Variation  

% Variation

at constant

currency

France   64.9   61.5   5.6%   5.6%       247.7   225.5   9.8%   9.8%
Germany   43.3   31.6   37.1%   36.5%       152.1   123.2   23.5%   23.5%
Italy   22.5   18.8   19.8%   19.8%       90.7   81.2   11.8%   11.8%
United Kingdom   22.3   18.2   22.6%   24.6%       80.3   72.8   10.2%   17.9%
Spain   20.5   18.5   10.6%   10.6%       73.6   69.2   6.4%   6.4%
Major Western European countries   173.6   148.6   16.8%   17.0%       644.4   571.9   12.7%   13.7%
Eastern Europe   53.9   50.6   6.4%   4.7%       196.4   176.2   11.5%   6.3%
Others Europe   54.7   47.1   16.0%   16.7%       199.0   173.0   15.0%   15.7%
Other European Countries   108.5   97.7   11.0%   10.6%       395.3   349.2   13.2%   10.9%
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