Ipsen Delivers Strong Sales Growth of 18.8%1 in the First Half of 2017 and Upgrades Its Guidance for Full Year 2017

Regulatory News:

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

H1 2017 Highlights

• Strong operating performance of 18.8%¹ Group sales growth and Core Operating Income margin improvement by 1.2 points to 26.2% of sales
• Specialty Care sales growth of 23.1%¹ reflects continued Somatuline^® momentum and includes contribution of key new products Cabometyx^® and Onivyde^®
• Consumer Healthcare sales growth of 1.3%¹ including contribution of newly acquired products
• Upgraded full year 2017 guidance of Specialty Care sales growth greater than 24.0%¹, slight growth¹ of Consumer Healthcare sales, and Core Operating Income margin greater than 25.0% of sales

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¹ Year-on-year growth excluding foreign exchange impacts
² Excludes amortization of intangible assets (excluding software), gain or loss on disposal of fixed assets, restructuring costs, impairment losses and other non-core items
³ Reconciliation between the definition of Core Operating Income and the previous definition is presented on page 2
⁴ Cash and cash equivalents, less bank overdrafts, bank loans and other financial liabilities and excluding financial derivative instruments

David Meek, Chief Executive Officer of Ipsen, stated: “Our performance in the first half of 2017 exceeded expectations, leading to an improved financial outlook for the full year. Sales grew in the first half by an impressive 19% year-on-year and core operating margin improved by 1.2 points, both driven by Specialty Care performance. In the second half of the year, we expect Somatuline^® to continue along its positive growth trajectory and also an increasing contribution from our new products Cabometyx^® in Europe and Onivyde^® in the U.S. We remain focused on the successful execution of the commercial portfolio as well as the transformation of our R&D model to build an innovative and sustainable pipeline.”

Full year 2017 upgraded guidance

Following the strong performance in the first half of 2017, the Group updates its financial targets for the full year 2017:

• Specialty Care sales growth upgraded to greater than +24.0%, reflecting the strong momentum for Somatuline^® and Cabometyx^®;
• Revised slight growth of Consumer Healthcare, reflecting primarily lower sales expected in the second half for Prontalgine^® following a decree from the French Minister of Health on July 12, 2017 for all medicines containing codeine (e.g. Prontalgine^®), dextromethorphan, ethylmorphine or noscapine to be available by prescription only to prevent misuse;
• Core Operating Income margin upgraded to greater than 25.0% of sales, based on the improved sales guidance and assuming additional investments to support the Cabometyx^® and Onivyde^® launches, increased R&D spend and higher employee variable compensation.

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¹ Year-on-year growth excluding foreign exchange impacts

Definition of Core Financial Measures

Effective December 31^st, 2016, Ipsen 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.

These performance indicators do not replace IFRS indicators, and should not be relied upon as such.

Reconciliations between IFRS H1 2016/2017 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 13.

Below is a reconciliation of the Core Operating Income from the previous definition to the new reported definition:

Review of the first half 2017 results

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

Group sales reached €919.5 million, up 18.8% year-on-year.

Specialty Care sales reached €764.6 million, up 23.1%, driven by the strong growth of Somatuline^® and the contribution of €28.6 million of key new products Cabometyx^® (mainly sales from Germany and France) and Onivyde^® (with first sales booked in the second quarter following the closing of the transaction in early April 2017). Somatuline^® growth of 31.8% was driven by a continued growth in North America, and a solid performance throughout Europe. Dysport^® growth was fueled by the good performance of our partner Galderma in North America and Europe but still impacted by importation issues related to the temporary cancellation of the certificate of Good Manufacturing Practices (cGMP) in Brazil. Decapeptyl^® sales reflect good volume growth in most geographies but also some continued price pressure, notably in China.

Consumer Healthcare sales reached €154.8 million, driven by the good performance of Smecta^® thanks to the retail strategy in China and a positive sales dynamic in Russia, as well as the contribution of the recent acquisitions of new OTC products (including Prontalgine^® in France) and the new products from Akkadeas Pharma in Italy. This performance was partly offset by some continued pressure in emerging markets like Algeria and Russia.

Core Operating Income totaled €240.5 million, up 25.7%, driven by the strong Specialty Care sales growth and reflects increased commercial investments mainly for the new products Cabometyx^® and Onivyde^®.

Core operating margin reached 26.2% of sales, up 1.2 points.

Core consolidated net profit was €169.2 million, compared to €145.7 million in 2016, up 16.2% and impacted by higher financial and income tax expenses.

Fully diluted core earnings per share grew by 15.7% to reach €2.04, compared to €1.76 in 2016.

IFRS Operating income was €176.4 million, up 1.0% compared to €174.6 million in 2016 after higher amortization of intangible assets from Cabometyx^® and Onivyde^®, and costs associated primarily with Onivyde^® integration and R&D restructuring expenses. Operating income margin at 19.2% is down 3.6 points compared to the first half of 2016.

IFRS Consolidated net profit was €125.9 million versus €133.3 million in 2016 after higher financial and income tax expenses.

IFRS Fully diluted EPS (Earning per share) was €1.52 versus €1.61 in 2016.

Free cash flow reached €94.9 million, up by €21.3 million, driven by the improvement in Operating Cash Flow, partially compensated by higher restructuring costs and financial expenses.

Closing net debt reached €669.4 million at the end of June 2017, versus a cash position of €17.3 million at the end of June 2016 reflecting the acquisitions completed during the first half of 2017 for Onivyde^®, the Consumer Healthcare product portfolio and the equity stake in Akkadeas Pharma.

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.

Conference call for the financial community

Ipsen will hold a conference call Thursday 27 July 2017 at 4:00 p.m. (Paris time, GMT+1). 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 7099 3534
UK: +44 (0)20 7162 9960
United States: +1 646 851 2094
Conference ID: 962299

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: 962299

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 €1.6 billion in 2016, 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 5,100 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 second quarter and first half of 2017 and 2016:

Sales by therapeutic area and by product¹

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 quarter and first half of 2017 and 2016:

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

Sales amounted to €919.5 million, up 18.8% year-on-year, driven by 23.1% growth of Specialty Care sales, and 1.3% growth of Consumer Healthcare sales.

Sales of Specialty Care reached €764.6 million, up 23.1% year-on-year. Oncology and Neurosciences sales grew by 29.0% and 13.8%, respectively, while Rare Diseases sales decreased by 6.7%. Over the period, the relative weight of Specialty Care continued to increase to reach 83.2% of Group sales, compared to 80.3% in the previous year.

In Oncology, sales reached €560.8 million, up 29.0%, year-on-year, driven by the launch of Onivyde^® and Cabometyx^®, as well as thecontinued strong performance of Somatuline^® while Decapeptyl^® was slightly up by 2.5%. Oncology sales represented 61.0% of total Group sales, compared to 56.5% in the previous year.

Somatuline^®– Sales reached €340.4 million, up 31.8% year-on-year, driven by a strong volume and continuous market share growth in North America as well as a good performance in most European countries, notably in France, Germany, and the UK.

Decapeptyl^® – Sales reached €171.0 million, up 2.5% year-on-year, positively impacted by good sales trends in Europe, in Algeria and East Middle East, despite price pressure in China and Poland.

Cabometyx^® – Sales reached €16.9 million, mainly driven by the good performance in France and Germany, which accounted for the majority of product sales.

Onivyde^® – Sales reached €19.3 million registering first sales during the second quarter following completion of the acquisition from Merrimack in April 2017.

In Neurosciences, sales of Dysport^® reached €163.6 million, up 13.6% year-on-year, driven by the good performance of our partner Galderma in aesthetics in North America and Europe, offset by the sales decrease in Brazil due to temporary importation issues. Neurosciences sales represented 18.0% of total Group sales, compared to 18.4% in the previous year.

In Rare Diseases, sales of NutropinAq^®reached €27.1 million, down 10.4% year-on-year, impacted by lower volumes especially in Germany and France. Sales of Increlex^® reached €11.3 million, up 3.8% year-on-year, driven by the United States. Rare Diseases sales represented 4.2% of total Group sales, compared to 5.4% in the previous year.

Consumer Healthcare sales reached €154.8 million, up 1.3% year-on-year, driven by the portfolio of products acquired in May 2017, and the equity stake in Akkadeas Pharma (Italy) acquired in January 2017. Over the period, Consumer Healthcare sales represented 16.8% of total Group sales, compared to 19.7% in the previous year.

Smecta^® – Sales reached €58.8 million, up 6.6% year-on-year, driven by the favorable impact of the OTC strategy in China, the Diosmectal re-launch in Italy following the acquisition of an equity stake in Akkadeas Pharma in 2017, and a good sales dynamic in Russia, partly offset by a sales decrease in Vietnam due to an inventory build-up in early 2016 for the license renewal.

Forlax^® – Sales reached €21.3 million, up 5.0% year-on-year, supported by growing sales to partners, partly offset by importation issues in Algeria.

Tanakan^® – Sales reached €15.5 million, down 19.8% year-on-year due to a continuous market slowdown in France and Russia.

Fortrans^®/Eziclen^® – Sales reached €15.8 million, up 15.7% year-on-year helped by favorable base of comparison after Fortrans^® shortage issues in the first half of 2016.

Etiasa^® – Sales reached €9.4 million, up 2.2% year-on-year including impact of new distribution model in China.

Other Consumer Healthcare products salesreached €34.1 million (including €1.9 million for the first sales of Prontalgine^®), down 3.3% year-on-year, mainly affected by the decline and price cut of Nisis^®/Nisisco^® and by Adrovance^® underperformance, down 16.8% over the period.

Sales by geographical area

Group sales by geographical area in the second quarter and first half of 2017 and 2016 were as follows:

		2nd Quarter										6 months
(in million euros)		2017		2016		% Variation		% Variation at constant currency				2017		2016		% Variation		% Variation at constant currency
France		62.7		56.4		11.3%		11.3%				124.2		111.5		11.4%		11.4%
Germany		35.6		31.4		13.5%		13.5%				70.3		60.8		15.5%		15.5%
Italy		25.2		21.4		17.6%		17.6%				48.9		43.0		13.9%		13.9%
United Kingdom		19.6		18.6		5.3%		15.3%				38.4		37.1		3.4%		14.4%
Spain		18.3		18.0		2.0%		2.0%				35.4		34.9		1.3%		1.3%
Major Western European countries		161.6		145.9		10.8%	if (typeof visitadas === "undefined") { let cookie_now = new Date(); cookie_now.setFullYear(cookie_now.getFullYear() + 1); let visitadas = getCookie("ee_idVisited"); let idNoticia = 8522366; if (visitadas !== null) { let idVisited = JSON.parse(visitadas); if (!idVisited.includes(idNoticia)) { if(idVisited.length >= 15) idVisited.pop(); idVisited.unshift(idNoticia); document.cookie = "ee_idVisited="+JSON.stringify(idVisited)+"; expires="+cookie_now.toUTCString()+"; domain=.eleconomista.es; path=/"; } } else { let idVisited = [idNoticia]; document.cookie = "ee_idVisited=" + JSON.stringify(idVisited) +"; expires="+cookie_now.toUTCString()+"; domain=.eleconomista.es; path=/"; } } WhatsAppFacebookTwitterLinkedinBeloudBluesky