Ipsen: 2015 Half-Year Results

Regulatory News:

The Board of Directors of Ipsen (Euronext: IPN; ADR: IPSEY), chaired by Marc de Garidel, met on 30 July 2015 to approve the financial statements for the first half 2015, published today. The interim financial report, with regard to regulated information, is available on the Group´s website, www.ipsen.com, under the Regulated Information tab in the Investor Relations section. The 2015 half year financial statements are subject to a limited review by statutory auditors.

* As of 30 June 2014, net closing cash included € 80m withdrawn from the syndicated credit facility

Commenting on the first half 2015 performance, Marc de Garidel, Chairman and Chief Executive Officer of Ipsen, stated: "Ipsen posted a strong specialty care performance in the first half 2015. Dysport^® continues to benefit from solid performance in aesthetics while Somatuline^® posted double digit growth across all geographies, with a remarkable growth in North America. The good Somatuline^® momentum following the launch in neuroendocrine tumors (NET) allows us to raise our specialty care sales and profitability objectives for 2015.” Marc de Garidel added: "We are pleased with the recent FDA approval of Dysport^® in adult upper limb spasticity, which is a key step in our ambition to become global leaders in the treatment of spasticity”.

¹ Year-on-year sales growth excluding foreign exchange impacts

Review of the first half 2015 results

Note: unless stated otherwise, all variations in sales are stated excluding foreign exchange impacts and are computed by restating the H1 2014 sales with the H1 2015 exchange rates.

In the first half 2015, Group sales reached €713.9 million, up 7.9% year-on-year. Specialty care sales reached €548.9 million, up 12.0%, driven by:

• The strong performance of Somatuline^® in Europe and North America;
• The solid growth of Dysport^®, driven by product supply to Galderma for aesthetic use;

Decapeptyl^® sales grew 0.8% over the period, negatively impacted in the second quarter in China by a market slowdown and price pressure in some regions.

In the first half 2015, primary care reached €165.0 million, down 3.7% year-on-year. Sales declined 7.7% in France, and 2.3% internationally, affected by the setup of a new commercial model in Algeria (where Ipsen now supplies the active ingredient instead of the finished product) and by Smecta^® and Tanakan^® sales decrease in China and Russia.

Core Operating Income totaled €167.6 million in the first half of 2015, up 3.5%. Core operating margin reached 23.5%, down 1.9 points compared to the first half 2014, mainly impacted by the dilutive effect resulting from the setup of an oncology sales force and the marketing and medical investments necessary to promote Somatuline^® Depot^® (lanreotide) 120 mg Injection in the United States in the treatment of gastrointestinal and pancreatic neuroendocrine tumors (GEP NETs).

As of 30 June 2015, the Group recorded a €57 million impairment loss to fully impair the intangible asset related to tasquinimod following the decision to stop all clinical trials with the product as publicly announced on 16 April, 2015.

Consolidated net profit was down 13.4% over the period. Core earnings per share (see Appendix 4) grew 7.0% year-on-year to reach €1.50 as of 30 June 2015, compared to €1.40 as of 30 June 2014.

Net operating cash-flow generated over the first half 2015 reached €36.2 million, compared to €54.7 million over the first half 2014, driven by an increase of the working capital requirement for operating activities of €106.8 million in the first half 2015, compared to an increase of €73.3 million in the first half 2014.

Closing cash reached €87.8 million over the period, after dividend payment for €70.0 million, external growth for €37.3 million with the acquisitions of OctreoPharm Sciences and Canbex Therapeutics, and share buyback for €3.9 million. As of 30 June 2014, closing cash reached €129.0 million, which included €80 million drawn from the Group´s syndicated credit line.

2015 objectives

The Group revises its objectives for 2015:

• Upgrade of the Specialty care sales growth guidance at or above 14.0% year-on-year, driven by the strong performance of Somatuline^® following the launch in neuroendocrine tumors in the US and Europe;
• Confirmation of the Primary care sales decline guidance between -3.0% and 0.0% year-on-year;

As a result, the Group expects sales to grow above 9.5%.

• Upgrade of the Core Operating margin guidance at or above 22.0% of Group sales, reflecting the growth of specialty care and the investments required to support the global launch of Somatuline^® and that of Dysport^® in the US.

Sales objectives are set at constant currency and drug-related sales (active substances and raw materials) are from now on recorded in the Primary Care sales line.

Update on the share buyback program initiated on 3 June 2015

The board of Directors held on 30 July 2015 decided that the free share plans could be covered not only through issuance of new shares but also through the acquisition of existing shares. As a result, the 500 000 shares, or about 0.60% of the share capital, to be purchased within the share buyback program initiated on 3 June 2015⁽¹⁾, which were originally intended for cancellation to compensate dilution, will now be allocated to cover the aforementioned free share plans. The shares purchased within this program by 30 July 2015 will be cancelled.

⁽¹⁾ Mandate granted to Natixis, initiated on 3 June 2015 and expiring 31 December 2015 (Press release issued on 3 June 2015)

Meeting, webcast and Conference Call (in English) for the financial community

Ipsen will host an analyst meeting on Friday 31 July 2015 at 2:30 p.m. (Paris time, GMT+1) at its headquarters in Boulogne-Billancourt (France). A web conference (audio and video webcast) and conference call will take place simultaneously. The web conference will be available at www.ipsen.com. Participants in the conference call should dial in approximately 5 to 10 minutes prior to its start. No reservation is required to participate. The conference ID is 954323. No access code is required. Phone numbers to call in order to connect to the conference are: from France and continental Europe +33 (0)17 0993 209, from UK +44 (0)207 1312 711 and from the United States +1 646 461 1757. A recording will be available shortly after the call. Phone numbers to access the replay of the conference are: from France and continental Europe +33 (0)17 0993 529, from UK +44 (0)207 031 4064 and from the United States +1 954 334 0342 and access code is 954323. This replay will be available for one week following the meeting.

About Ipsen

Ipsen is a global specialty-driven biotechnological group with total sales exceeding €1.2 billion in 2014. Ipsen sells more than 20 drugs in more than 115 countries, with a direct commercial presence in 30 countries. Ipsen’s ambition is to become a leader in specialty healthcare solutions for targeted debilitating diseases. Its development strategy is supported by 3 franchises: neurology, endocrinology and urology-oncology. Ipsen’s commitment to oncology is exemplified through its growing portfolio of key therapies improving the care of patients suffering from prostate cancer, bladder cancer and neuro-endocrine tumors. Ipsen also has a significant presence in primary care. Moreover, the Group has an active policy of partnerships. Ipsen´s R&D is focused on its innovative and differentiated technological platforms, peptides and toxins, located in the heart of the leading biotechnological and life sciences hubs (Les Ulis, France; Slough/Oxford, UK; Cambridge, US). In 2014, R&D expenditure totaled close to €187 million, representing about 15% of Group sales. The Group has more than 4,500 employees worldwide. Ipsen’s shares are traded on segment A of Euronext Paris (stock code: IPN, ISIN code: FR0010259150) and eligible to the “Service de Règlement Différé” (“SRD”). The Group is part of the SBF 120 index. Ipsen has implemented a Sponsored Level I American Depositary Receipt (ADR) program, which trade on the over-the-counter market in the United States under the symbol IPSEY. For more information on Ipsen, visit www.ipsen.com.

Ipsen 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 favourable 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 2014 Registration Document available on its website (www.ipsen.com).

Comparison of consolidated sales for the second quarters and first halves 2015 and 2014:

Sales by therapeutic area and by product

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

The following table shows sales by therapeutic area and by product for the second quarters and first halves 2015 and 2014:

* From January 2015 onwards, Drug-related sales (active ingredients and raw materials) are recorded within Primary care sales.

In the second quarter 2015, sales of Specialty care products reached €283.2 million, up 9.7% year-on-year. In the first half 2015, sales amounted to €548.9 million, up 12.0%. Sales in urology-oncology, endocrinology, and neurology grew by respectively 1.0%, 26.0% and 7.4%. In the first half 2015, the relative weight of specialty care products continued to increase to reach 76.9% of total Group sales, compared to 74.0% the previous year.

In Urology-oncology, sales of Decapeptyl^® reached €86.3 million in the second quarter 2015, down 6.1% year-on-year, affected by a sales decrease in China, in a context of market slowdown and price pressure in some regions. In the first half 2015, sales amounted to €169.2 million, up 0.8%, in a declining European pharmaceutical market affected by a more frequent use of co-payment in Southern Europe and continued price reductions, notably an 11.0% cut as of 1^st January 2015 in Greece and a 3.0% cut as of 1^st February 2015 in France and more than 20% in Algeria. In the first half 2015, sales of Hexvix^® amounted to €8.8 million, up 4.6% compared to the previous year, driven by solid performance in France and Germany, where customer demand was strong in the second quarter. Germany represented around 70% of this product’s sales. Over the period, sales in Urology-oncology represented 24.9% of total Group sales, compared to 26.4% the previous year.

In Endocrinology, sales reached €120.1 million in the second quarter 2015, up 29.1% year-on-year. In the first half 2015, sales amounted to €229.8, up 26.0%, and represented 32.2% of total Group sales, compared to 27.4% the previous year.

Somatuline^® – In the second quarter 2015, sales reached €98.9 million, up 32.9% year-on-year. In the first half 2015, sales of Somatuline^® amounted to €188.2 million, up 29.1%, with strong growth in Europe and in North America, driven by the launch in neuroendocrine tumors. The product also registered good performance in Europe, notably in Germany, the UK, Spain and France.

NutropinAq^® – In the second quarter 2015, sales reached €15.9 million, up 4.5% year-on-year. In the first half 2015, sales of NutropinAq^® amounted to €31.7 million, up 1.7%, compared to the previous year.

Increlex^® – In the second quarter 2015, sales reached €5.3 million, up sharply compared to the same period in 2014. In the first half 2015, sales of Increlex^® amounted to €9.9 million, benefitting from a favorable comparison base with a low first half 2014 following the shortage situation that started mid-June 2013 in the United States and in August 2013 in Europe. Supply gradually resumed in Europe in early 2014 and in the United States in June 2014.

In Neurology, Dysport^® sales reached €72.0 million in the second quarter 2015, up 3.8% year-on-year. Second quarter 2015 growth was affected by a slowdown of pharmaceutical market in Brazil. In the first half 2015, sales amounted to €140.6 million, up 7.0%, driven by product supply to Galderma for aesthetic use and by the solid performance in Russia and Mexico. Neurology sales represented 19.8% of total Group sales in the first half 2015, compared to 20.1% a year earlier.

In the second quarter 2015, sales of Primary care products reached €80.6 million, down 10.2% year-on-year, mainly affected by Smecta^® sales decrease in China, Russia, Algeria (where Ipsen now supplies the active ingredient instead of the finished product) and Vietnam (where most of the first half sales were anticipated in the first quarter ahead of the import license renewal). In the first half 2015, sales amounted to €165.0 million, down 3.7%, penalized by the 7.7% decline in French sales, affected by the price cut on Smecta^® in July 2014 and by the continued erosion of Tanakan^® sales. Internationally, sales decreased 2.3%, affected by Smecta^® and Tanakan^® sales decrease in China and Russia. Primary care sales in France accounted for 25.3% of the Group’s total primary care sales, compared to 27.2% the previous year.

In Gastroenterology, sales reached €54.6 million in the second quarter 2015, down 13.4% year-on-year. In the first half 2015, sales amounted to €113.8 million euros, down 3.3%.

Smecta^® – In the second quarter 2015, sales reached €26.4 million, down 20.6% year-on-year. In the first half 2015, sales amounted to €62.3 million euros, down 5.1%. Sales were negatively impacted by a significant destocking effect in China’s distribution channel in the second quarter, in a context of price pressure in some regions. Moreover, sales growth in Vietnam only partially offset the termination of direct sales in Algeria, now replaced by sales of the active principle to a local manufacturer, which are recorded in “Drug-related sales”. Sales were also affected in France by a 7.5% price cut implemented in July 2014.

Forlax^® – In the second quarter 2015, sales reached €9.7 million, down 9.5% year-on-year, affected by a continued decline in France, where it still suffers from the “Tiers-Payant¹” regulation. In the first half 2015, sales amounted to €18.8 million euros, down 2.0%, supported by growing sales to our partners marketing the generic versions of the product and from the good performance in Algeria and in Russia.

In the cognitive disorders area, sales of Tanakan^®reached €13.7 million euros in the second quarter 2015, down 7.6% year-on-year. Sales in the first half 2015 amounted to €24.2 million euros, down 17.4%, affected by the performance in Russia due to greater competition and declining local sales, and in France, where the product suffers from heavy competitive pressure.

In the cardiovascular area, sales reached €4.4 million euros in the second quarter 2015, down 25.0% year-on-year. In the first half 2015, sales amounted to €9.4 million euros, down 16.9%, mainly impacted by the decline of Nisis^® / Nisisco^® sales, which faced an additional 40.0% price cut in February 2015.

¹ With the “Tiers-Payant” regulation, the patient now pays upfront for a branded drug and is reimbursed only later on

Sales of Other primary care productsreached €2

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