Regulatory News:
Ipsen (Euronext: IPN; ADR: IPSEY), a global specialty-driven pharmaceutical group, today announced financial results for the full year 2016.
| Extract of audited consolidated results for the full year 2016 and 2015 | |||||||
| (in millions of euros) | FY 2016 | FY 2015 | % change | ||||
| Group sales | 1,584.6 | 1,443.9 | +11.8%1 | ||||
| Specialty Care sales | 1,273.0 | 1,114.2 | +16.1%1 | ||||
| Primary Care sales | 311.6 | 329.7 | -2.7%1 | ||||
| Core Operating Income2;3 | 363.9 | 327.7 | +11.1% | ||||
| Core operating margin (as a % net sales) | 23.0% | 22.7% | +0.3 pts | ||||
| Core consolidated net profit2;4 | 263.6 | 233.8 | +12.8% | ||||
| Core EPS – fully diluted (€)2;4 | 3.18 | 2.82 | +13.0% | ||||
| IFRS operating income | 304.7 | 244.0 | +24.8% | ||||
| Operating margin (as a % net sales) | 19.2% | 16.9% | +2.3 pts | ||||
| IFRS consolidated net profit | 226.6 | 190.7 | +18.8% | ||||
| IFRS EPS – fully diluted (€) | 2.73 | 2.30 | +18.7% | ||||
| Free cash flow | 228.8 | 176.3 | +29.8% | ||||
| Closing net cash5 | 68.6 | 186.9 | -63.3% | ||||
Commenting on the 2016 full year performance, David Meek, Chief Executive Officer of Ipsen, said: “The strong operating performance in 2016 serves as a solid foundation for the company in this new era of accelerated momentum and transformation. Sales grew by nearly 12% year-on-year, a record high for Ipsen, and core operating margin improved despite additional investments for the Cabometyx® launch in Europe.”
David Meek added: “2016 was a very productive year for Ipsen with the Cabometyx® approval and launch for second line renal cell carcinoma in Europe, the launch of new indications for Dysport® in the U.S., a new corporate governance structure implemented, and most recently, the acquisition of Onivyde®, which reinforces our specialty oncology strategy. The focus for 2017 will be on building upon the strong momentum of the current business and the successful launch of Cabometyx®, which combined with the expected addition of Onivyde® and the new Primary Care products, will significantly contribute to the growth and profitability of the company in the coming years.”
New definition of Core Financial Measures
Ipsen has updated its definition of Core financial measures (Core Operating income, Core consolidated net profit, Core EPS) to exclude the amortization of intangible assets (excluding software) and the gain or loss on disposal of fixed assets.
Core financial measures are the key performance indicators for understanding and measuring the performance of the Group. Ipsen believes that the updated financial indicators reflect with better clarity the Group’s underlying business trends and enable more meaningful comparisons year on year, as they exclude non-core items which may vary significantly.
These performance indicators do not replace IFRS indicators, and should not be relied upon as such.
Reconciliations between IFRS 2015/2016 results and the newly defined Core financial measures are presented in Appendix 4 and in the “Reconciliation from Core consolidated net profit to IFRS consolidated net profit” table on page 12.
Review of the full year 2016 results
Note: Unless stated otherwise, all variations in sales are stated excluding foreign exchange impacts.
In 2016, Group sales reached €1,584.6 million, up 11.8% year-on-year.
Specialty Care sales reached €1,273.0 million, up 16.1%, driven by the strong growth of Somatuline® in North America, as well as a solid performance throughout Europe.
Dysport® good sales performance in aesthetics in the U.S. through Galderma, and in Russia and the Middle East was offset by importation issues in Brazil that occurred in the second half of the year due to a temporary cancellation of the certificate of Good Manufacturing Practices (cGMP). Decapeptyl® sales reflect good volume growth in Europe and China offset by price pressure in the region. The Group booked during the fourth quarter the first sales of Cabometyx® in Europe, mainly in Germany, Austria and France following the product approval by EMA in September.
Primary Care sales reached €311.6 million, down 2.7%, impacted by lower sales in Russia for Tanakan® and other Primary Care products, while Smecta® sales were slightly up driven by the implementation of the new OTx6 commercial model.
Core Operating Income totaled €363.9 million, up 11.1%. Core operating margin reached 23.0%, up 0.3 points compared to 2015, mainly driven by strong business performance, partially offset by investments for the Cabometyx® launch and the adverse impact of foreign currencies.
Core consolidated net profit was €263.6 million, up 12.8% over the period, compared to €233.8 million in 2015.
Core earnings per share - fully diluted (see Appendix 4) grew by 13.0% year-on-year to reach €3.18 for 2016, compared to €2.82 in 2015.
Free cash flow generated in 2016 reached €228.8 million, up by €52.5 million, driven by the strong operating performance and a good management of working capital and capital expenditures.
Closing net cash reached €68.6 million at the end of the period, compared to €186.9 million in 2015, notably after payments to Exelixis for the original cabozantinib license and subsequent extension to Canada, as well as regulatory and commercial milestones, for a total of €257.3 million in 2016.
IFRS Operating Income totaled €304.7 million, up 24.8% from €244.0 million in 2015, impacted by lower impairment charge, with an Operating margin at 19.2%, up 2.3 points compared to 2015.
IFRS Consolidated net profit was €226.6 million, up 18.8% over the period, compared to €190.7 million in 2015 and fully diluted EPS at €2.73 in 2016, was up 18.7% from €2.30 in 2015.
Comparison of 2016 performance with financial objectives
The Group exceeded the raised guidance provided on 26 October 2016 for Specialty Care sales and Core operating margin and came in at the favorable end of revised guidance for Primary Care sales.
The table below shows the comparison between the financial objectives provided on 26 October 2016 and 2016 actuals, both including the amortization of intangible assets.
| Financial objectives7 | Actuals 2016 | ||||
| Specialty Care sales | ≥+15%8 | +16.1%2 | |||
| Primary Care sales | [-5% ; -3%]2 | -2.7%2 | |||
| Core operating margin | Around 22.0% | 22.5% | |||
Below is a reconciliation of the Core Operating Income from the previous definition to the new reported definition:
| (in millions of euros) | FY 2016 | FY 2015 | % change | ||||
| Core operating income (including amortization of intangible assets) | 355.9 | 322.5 | +10.3% | ||||
| Margin (as a % net sales) | 22.5% | 22.3% | +0.2 pts | ||||
| Amortization of intangible assets (excluding | 7.7 | 4.7 | +63.8% | ||||
| Gain or loss on disposal of fixed assets | 0.3 | 0.5 | -33.6% | ||||
| Core operating income | 363.9 | 327.7 | +11.1% | ||||
| Core operating margin (as a % net sales) | 23.0% | 22.7% | +0.3 pts | ||||
Dividend for the 2016 financial year proposed for the approval of Ipsen’s shareholders
The Ipsen S.A. Board of Directors, which met on 22 February 2017, has decided to propose at the annual shareholders’ meeting on 7 June 2017 the payment of a dividend of €0.85 per share, stable year-on-year.
2017 Financial objectives
The Group has set the following financial targets for 2017 assuming a successful closing of the Onivyde® transaction with Merrimack by the end of the first quarter 2017, and of the Consumer Healthcare transaction with Sanofi in the second quarter of 2017:
- Specialty Care sales growth year-on-year greater than +18.0%;
- Primary Care sales growth year-on-year greater than +4.0%;
- Core operating margin (excluding amortization of intangible assets) greater than 24% of net sales.
Sales objectives are set at constant currency.
Meeting, webcast and conference call for the press (in English)
Ipsen will host a press conference on Thursday 23 February 2017 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 in 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 70 99 35 34
UK: +44 (0)20 7162 9960
United States: +1 646 851 2094
Conference ID: 961391
A recording will be available for 7 days on Ipsen’s website and at the following numbers:
France and continental Europe: +33 (0)1 70 99 35 29
UK: +44 (0)20 7031 4064
United States: +1 954 334 0342
Conference ID: 961391
Meeting, webcast and conference call (in English) for the financial community
Ipsen will host an analyst meeting on Thursday 23 February 2017 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 70 99 32 08
UK: +44 (0)20 7162 0077
United States: +1 646 851 2407
Conference ID: 961277
A recording will be available for 7 days on Ipsen’s website and at the following numbers:
France and continental Europe: +33 (0)1 70 99 35 29
UK: +44 (0)20 7031 4064
United States: +1 954 334 0342
Conference ID: 961277
About Ipsen
Ipsen is a global specialty-driven pharmaceutical group with total sales close to €1.6 billion in 2016. Ipsen sells more than 20 drugs in more than 115 countries, with a direct commercial presence in more than 30 countries. Ipsen’s ambition is to become a leader in specialty healthcare solutions for targeted debilitating diseases. Its fields of expertise cover oncology, neurosciences and endocrinology (adult & pediatric). Ipsen’s commitment to oncology is exemplified through its growing portfolio of key therapies improving the care of patients suffering from prostate cancer, neuro-endocrine tumors, renal cell carcinoma and pancreatic cancer. 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/Paris-Saclay, France; Slough/Oxford, UK; Cambridge, US). In 2016, R&D expenditures exceeded €200 million. The Group has more than 4,900 employees worldwide. Ipsen’s shares are traded on segment A of Euronext Paris (stock code: IPN, ISIN code: FR0010259150) and are 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 trades on the over-the-counter market in the United States under the symbol 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 2015 Registration Document available on its website (www.ipsen.com).
Comparison of Consolidated Sales for the Fourth Quarter and Full Year 2016 and 2015:
Sales by therapeutic area and by product9
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 fourth quarter and full year 2016 and 2015:
| 4th Quarter | 12 Months | ||||||||||||||||
| (in millions of euros) | 2016 | 2015 | % | % | 2016 | 2015 | % | % | |||||||||
| Oncology | 247.3 | 197.4 | 25.3% | 27.0% | 904.8 | 752.8 | 20.2% | 22.1% | |||||||||
| Somatuline® | 146.5 | 110.0 | 33.1% | 34.1% | 538.3 | 401.6 | 34.0% | 35.5% | |||||||||
| Decapeptyl® | 88.0 | 83.2 | 5.8% | 8.5% | 339.8 | 334.0 | 1.7% | 4.2% | |||||||||
| Cabometyx® | 7.2 | 0.0 | N/A | N/A | 7.2 | 0.0 | N/A | N/A | |||||||||
| Other Oncology | 5.7 | 4.3 | 33.8% | 34.6% | 19.5 | 17.2 | 13.6% | 14.0% | |||||||||
| Neurosciences | 71.9 | 71.2 | 1.1% | -1.2% | 286.7 | 280.7 | 2.1% | 4.3% | |||||||||
| Dysport® | 71.2 | 70.7 | 0.7% | -1.6% | 284.7 | 279.5 | 1.9% | 4.0% | |||||||||
| Endocrinology | 20.5 | 21.1 | -2.9% | -2.2% | 81.5 | 80.7 | 1.0% | 1.7% | |||||||||
| NutropinAq® | 14.0 | 14.7 | -4.8% | -3.8% | 57.7 | 60.3 | -4.2% | -3.5% | |||||||||
| Increlex® | 6.5 | 6.4 | 1.6% | 1.5% | 23.7 | 20.4 | 16.4% | 16.9% | |||||||||
| Specialty Care | 339.8 | 289.7 | 17.3% | 17.8% | 1,273.0 | 1,114.2 | 14.2% | 16.1% | |||||||||
| Gastroenterology | 63.7 | 59.8 | 6.6% | 9.6% | 219.1 | 227.2 | -3.6% | 0.0% | |||||||||
| Smecta® | 31.6 | 25.7 | 22.9% | 25.5% | 111.0 | 114.8 | -3.3% | 0.6% | |||||||||
| Forlax® | 10.2 | 10.9 | -5.9% | -4.9% | 39.3 | 39.7 | -0.8% | 0.5% | |||||||||
| Etiasa® | 11.5 | 8.9 | 29.3% | 38.6% | 29.3 | 26.0 | 12.7% | 19.5% | |||||||||
| Fortrans® | 7.3 | 7.5 | -2.1% | -0.4% | 23.2 | 23.9 | -2.7% | 2.7% | |||||||||
| Cognitive disorders | 15.8 | 15.1 | 5.1% | 7.1% | 43.6 | 52.0 | -16.3% | -14.3% | |||||||||
| Tanakan® | 15.8 | 15.1 | 5.1% | 7.1% | 43.6 | 52.0 | -16.3% | -14.3% | |||||||||
| Other Primary Care | 5.4 | 5.0 | 8.3% | 8.3% | 23.5 | 26.2 | -10.1% | -10.0% | |||||||||
| Drug-related sales | 5.4 | 6.0 | -9.4% | -11.6% | 25.5 | 24.3 | 4.9% | 4.9% | |||||||||
| Primary Care | 90.4 | 85.8 | 5.3% | 7.6% | 311.6 | 329.7 | -5.5% | -2.7% | |||||||||
| Group Sales | 430.2 | 375.5 | 14.6% | 15.5% | 1,584.6 | 1,443.9 | 9.7% | 11.8% | |||||||||
In the fourth quarter of 2016, sales reached €430.2 million, up 15.5%, led by the 17.8% growth of Specialty Care sales, while Primary Care sales grew by 7.6%. In 2016, sales amounted to €1,584.6 million, up 11.8%, driven by the 16.1% growth of Specialty Care sales, while Primary Care sales declined by 2.7%.
In the fourth quarter of 2016, sales of Specialty Care products of €339.8 million, were up 17.8% year-on-year driven by Oncology sales growth of 27.0%. In 2016, sales of Specialty Care products of €1,273.0 million, were up 16.1% fueled by Oncology sales growth of 22.1%, Neurosciences sales growth of 4.3%, and Endocrinology sales growth of 1.7%. Over the period, the relative weight of Specialty Care continued to increase to reach 80.3% of Group sales, compared to 77.2% in 2015.
In Oncology, sales reached €247.3 million in the fourth quarter of 2016, up 27.0% year-on-year, driven by the continued growth of Somatuline® in the United States and in Europe. In 2016, Oncology sales amounted to €904.8 million, up 22.1% and represented 57.0% of total Group sales, compared to 52.1% in 2015.
Somatuline®–In the fourth quarter of 2016, sales reached €146.5 million, up 34.1%. In 2016, sales amounted to €538.3 million, up 35.5%. Somatuline®’s improved performance was driven by strong volumeand market share growth in North America and by a strong performance in most European countries, notably in the United Kingdom, France and Germany.
Decapeptyl® – In the fourth quarter of 2016, sales totaled €88.0 million, up 8.5% year-on-year. In 2016, sales amounted to €339.8 million, up 4.2%. Decapeptyl®’s good performance across Europe, notably in France, Spain and UK was negatively impacted by price pressure in China which offset local volume growth.
Cabometyx®–In the fourth quarter of 2016, sales reached €8.3 million, including sales recognized in France under the Cabometyx® Managed Access Program (ATU or Temporary Use Authorization).
Other Oncology – In the fourth quarter of 2016, Hexvix® sales amounted to €4.5 million, up 6.6% year-on-year. In 2016, sales of Hexvix® reached €18.3 million, up 7.1%, mainly driven by the good performance in Germany, which accounts for the majority of product sales. The Group also registered first sales of Cometriq® of €1.2 million in the fourth quarter 2016.
In Neurosciences, sales of Dysport® reached €71.2 million in the fourth quarter of 2016, down 1.6% year-on-year. Despite strong volume growth in the aesthetics business in North America with Galderma, and in Russia and the Middle East, sales were negatively impacted by importation issues in Brazil due to a temporary cancellation of the certificate of Good Manufacturing Practices (cGMP). An exceptional import license has been secured for the public market. For the private market, Ipsen is working closely with regulatory authorities on obtaining an exceptional import license. The company expects a new GMP certificate to be issued in the coming months. In 2016, sales amounted to €284.7 million, up 4.0%, driven by the good performance in Russia, the Middle East and in Germany as well as by the strong aesthetics business in North America and in Europe with Ipsen’s partner Galderma and despite the negative impact of importation issues in Brazil that arose in the second half of 2016. Over the period, Neurosciences sales represented 18.1% of total Group sales, compared to 19.4% in 2015.
In Endocrinology, sales of NutropinAq®reached €14.0 million in the fourth quarter of 2016, down 3.8% year-on-year. In 2016, sales amounted to €57.7 million, down 3.5%, impacted by lower volumes, especially in Germany, Italy and the UK, and partly offset by a good performance in France. In the fourth quarter of 2016, sales of Increlex® reached €6.5 million, up 1.5% year-on-year, mostly driven by the United States. In 2016, sales amounted to €23.7 million, up 16.9%. Over the period, Endocrinology sales represented 5.1% of total Group sales, compared to 5.6% in 2015.
In the fourth quarter of 2016, Primary Care sales reached €90.4 million, up 7.6% year-on-year, driven by the good performance of Smecta® and Etiasa®. In 2016, sales amounted to €311.6 million, down 2.7%, impacted by lower Tanakan® sales in Russia. Over the period, Primary Care sales represented 19.6% of total Group sales, compared to 22.8% in 2015.
In the fourth quarter of 2016, Gastroenterology sales reached €63.7 million, up 9.6% year-on-year led by Smecta®. In 2016, sales amounted to €219.1 million, in line with 2015, driven by higher Smecta® sales in Russia and France but offset by negative inventory trends in Asia and the delisting of Bedelix® in Algeria.
Smecta® – In the fourth quarter of 2016, sales reached €31.6 million, up 25.5% year-on-year, driven by a favorable basis of comparison in China. In 2016, sales amounted to €111.0 million, up 0.6% with a good performance in Russia and France, driven by the implementation of the OTC commercial model, and slightly offset by the negative stocking impact in China.
Etiasa®– In the fourth quarter of 2016, sales reached €11.5 million up 38.6% year-on-year. In 2016, sales amounted to €29.3 million, up 19.5%.
Forlax® – In the fourth quarter of 2016, sales reached €10.2 million, down 4.9% year-on-year. In 2016, sales amounted to €39.3 million, up 0.5%, supported by a good performance in France, Russia and China, as well as by Ipsen’s partners who distribute Macrogol®, the generic version of Forlax®, and offset by the sales decline in Algeria and in Italy.
Fortrans®– In the fourth quarter of 2016, sales reached €7.3 million, down 0.4% year-on-year. In 2016, sales amounted to €23.2 million, up 2.7% due to the good performance in China.
In the Cognitive Disorders area, sales of Tanakan®reached €15.8 million in the fourth quarter of 2016, up 7.1% year-on-year, driven by a rebound in Russia. Sales in 2016 amounted to €43.6 million, down 14.3%, impacted by continued market challenges in Russia and the market decrease in France.
Sales of Other Primary Care productsreached €5.4 million in the fourth quarter of 2016, up 8.3% year-on-year. In 2016, sales amounted to €23.5 million, down 10.0%, mainly affected by the underperformance of Adrovance®, which was down 15.5% over the period.
In the fourth quarter of 2016, Drug-related Sales (active ingredients and raw materials) reached €5.4 million, down 11.6% year-on-year, mostly affected by import difficulties in Algeria. In 2016, sales amounted to €25.5 million, up 4.9% driven by solid sales to the Group partner Schwabe.
Sales by geographical area
Group sales by geographical area in the fourth quarter and full year 2016 and 2015:
| 4th Quarter | 12 Months | ||||||||||||||||||
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