Ipsen Delivers Strong Results for the First Half of 2018 with Sales Growth of 21.5%1 and Upgrades Its Guidance for Full Year 2018

- Business Wire

Regulatory News:

Ipsen (Euronext: IPN; ADR: IPSEY), a global specialty-driven biopharmaceutical group, today announced financial results for the first half of 2018.

H1 2018 Key figures

David Meek, Chief Executive Officer of Ipsen, stated: "We executed very well against our objectives in the first half of 2018. We delivered outstanding Group sales growth of 21.5% and significant core operating margin improvement, leading to upgraded guidance for the full year 2018. We also continued to increase the value proposition of Cabometyx^® with approval for first-line renal cell cancer by the European Commission and the validation of the regulatory submission for second-line hepatocellular carcinoma by the EMA. In the second half of the year, we remain focused on maintaining the growth momentum of our Oncology and Neuroscience franchises and reinforcing our R&D strategy to build an innovative and sustainable pipeline."

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¹ Year-on-year growth excluding foreign exchange impacts
² Reported sales in Consumer Healthcare down 3.9%, non-restated from the new contractual set-up of Etiasa^®
3 Excludes amortization of intangible assets (excluding software), gain or loss on disposal of fixed assets, restructuring costs, impairment losses and other non-core items
⁴ Cash and cash equivalents, less bank overdrafts, bank loans and other financial liabilities and excluding financial derivative instruments

Upgraded Full Year 2018 guidance

Following the strong performance in the first half of 2018, the Group raises its financial targets for the full year 2018:

• Group sales growth of greater than +19.0%, based on the strong momentum of the Specialty Care business. Sales growth at current exchange rates should still be negatively impacted by approximately 4.0% based on the current level of exchange rates;
• Core operating margin of around 29.0% of sales

Review of the first half 2018 results
Note: Unless stated otherwise, all variations year-on-year in sales are stated excluding foreign exchange impacts.

Group sales reached €1,064.5 million, up 21.5% year-on-year.

Specialty Care sales reached €920.2 million, up 26.7%, driven by the strong growth of Somatuline^® (26.1%with a continued volume growth in North America and a solid performance throughout Europe), the contribution of new products Cabometyx^® and Onivyde^®, as well as the good performance of Dysport^® (13.0% fueled by our partner Galderma in the aesthetics market in Europe, and a strong growth in Brazil and in the U.S. therapeutics market) and Decapeptyl^® (8.9% impacted by good volume growth, notably in France, Spain and Algeria).

Consumer Healthcare sales reached €144.3 million, up 2.0%², driven by the good performance of the Smecta^® brand, which grew by 3.6%.

Core Operating Income was €322.5 million, up 34.1%, driven by the strong Specialty Care sales growth and reflecting increased commercial investments for the Oncology product launches and R&D investments to support the advancement of the pipeline.

Core operating margin reached 30.3% of sales, up 4.1 points.

Core consolidated net profit was €237.1 million, compared to €169.2 million in 2017, up 40.1%, after higher financial and income tax expenses and benefitting from a lower effective tax rate due to the U.S. tax reform.

Core earning per share fully diluted grew by 40.2% to reach €2.86, compared to €2.04 in 2017.

IFRS Operating income was €269.7 million after amortization of intangible assets, the costs of relocation of the U.S. commercial affiliate to Cambridge, Massachusetts and the termination of certain R&D studies. Operating income margin at 25.3% is up 6.2 points compared to the first half of 2017.

IFRS Consolidated net profit was €197.3 million versus €125.9 million in 2017, up 56.7% after financial and income tax expenses.

IFRS Fully diluted EPS (Earning per share) was €2.38 versus €1.52 in 2017, up 56.6%.

Free cash flow reached €164.5 million, up by €69.5 million or 73.3% versus 2017, from higher operating cash flow, lower restructuring costs and higher income tax.

Closing net debt reached €438.0 million at the end of June 2018, versus €669.4 million at the end of June 2017, reflecting positive cash flow generation of the Group over the last twelve months and after payment in June 2018 of €83.0 million in dividends.

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¹ Year-on-year growth excluding foreign exchange impacts
² Reported sales in Consumer Healthcare down 3.9%, non-restated from the new contractual set-up of Etiasa^®

The interim financial report, with regard to regulated information, is available on the Group´s website, www.ipsen.comunder the Regulated Information tab in the Investor Relations section.

The company's auditors performed a limited review of the accounts.

Conference call

Ipsen will hold a conference call Thursday, 26 July 2018 at 1:30 p.m. (Paris time, GMT+1). Participants should dial in to the call approximately five to ten minutes prior to its start. No reservation is required to participate in the conference call.

Standard International: +44 (0) 1452 555 566
France and continental Europe: + 33 (0) 1 76 74 24 28
UK: +44 (0) 8444 933 800
United States: 1-631-510-7498
Conference ID: 2791758

A recording will be available for seven days on Ipsen's website.

About Ipsen

Ipsen is a global biopharmaceutical company focused on innovation and specialty care. The group develops and commercializes innovative medicines in three key therapeutic areas - Oncology, Neuroscience 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 over €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 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 2017 Registration Document available on its website (www.ipsen.com).

Comparison of Consolidated Sales for the Second Quarter and First Half of 2018 and 2017:

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 from the previous period.

The following table shows sales by therapeutic area and by product for the second quarter and first half 2018 and 2017:

*including Smectite sales previously recorded in Other Consumer Healthcare

Group sales reached €1,064.5 million, up 21.5%, driven by Specialty Care sales growth of 26.7% and Consumer Healthcare sales growth of 2.0%².

Specialty Care sales amounted to €920.2 million, up 26.7%. Oncology and Neuroscience sales grew by 32.8% and 13.0%, respectively, and Rare Diseases sales decreased by 3.7%. Over the period, the relative weight of Specialty Care continued to increase to reach 86.4% of Group sales, compared to 83.2% in 2017.

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¹ New sales reporting according to main therapeutic indication of each product
² Reported sales in Consumer Healthcare down 3.9%, non-restated from the new contractual set-up of Etiasa^®

In Oncology, sales reached €709.7 million, up 32.8% year-on-year, driven by the continued strong performance of Somatuline^® as well as the launches of Cabometyx^® and Onivyde^®. Over the period, Oncology sales represented 66.7% of total Group sales, compared to 61.0% in 2017.

Somatuline^®â€“ Sales reached €402.6 million, up 26.1% year-on-year, driven by strong volume growth in North America and strong performance in most European countries, notably France, Germany and the UK, as well as the contribution from Japan following the launch of the neuroendocrine tumor indication in 2017.

Decapeptyl^® – Sales reached €183.3 million, up 8.9% year-on-year, positively impacted by good volume growth, notably in France, Spain and Algeria.

Cabometyx^®â€“Sales reached €62.0 million, driven by good performance in Germany, France and the UK as well as by volume growth in Spain, Italy and new launches in other European countries. In the second quarter of 2018, sales increased 19.8% over the first quarter of 2018.

Onivyde^® – Sales reached €48.9 million, as compared to €19.3 million in the first half of 2017 (including only one quarter of sales following the acquisition completed in early April 2017). In the second quarter of 2018, sales were up 43.9% year-on-year and increased by 2.7% over the first quarter of 2018, including continued double-digit growth in the U.S.

In Neuroscience, sales of Dysport^® reached €172.8 million, up 13.0%, driven by the resupply and strong performance in Brazil, as well as the good performance of Galderma in the aesthetics market in Europe. In the first half of 2018, Neuroscience sales represented 16.4% of total Group sales, compared to 18.0% in 2017.

In Rare Diseases, sales of NutropinAq^®reached €24.1 million, down 10.7% year-on-year, impacted by lower volumes across Europe. Sales of Increlex^® reached €11.8 million, growing by 13.4% year-on-year, driven by the performance in the United States. Over the period, Rare Diseases sales represented 3.4% of total Group sales, compared to 4.2% in 2017.

Consumer Healthcare sales reached €144.3 million, up 2.0%¹ year-on-year. Sales were positively impacted by the good performance of the Smecta^® brand in France and Algeria, contribution of the new products acquired in 2017, as well as higher Tanakan^® sales.Over the period, Consumer Healthcare sales represented 13.6% of total Group sales, compared to 16.8% in 2017.

Smecta^® – Sales reached €62.4 million, up 3.6% year-on-year, driven by the launch of a new formulation in France, sales growth in Algeria and Korea and the market growth in China, offset by the negative impact of inventory in the first quarter of 2017 in Russia and China.

Forlax^® – Sales reached €19.1 million, down 8.7% year-on-year, impacted by lower volumes due to an importation delay in Algeria.

Tanakan^® – Sales reached €15.9 million, up 6.7% year-on-year, positively impacted by the lower inventory in Russia in the first quarter of 2017.

Fortrans/Eziclen^® – Sales reached €14.0 million, down 7.6% year-on-year, impacted by the negative inventory impact and competitive pressure in Russia, partly offset by good performance in China.

Etiasa^®â€“ Sales reached €0.1 million, down 98.4% year-on-year due to the new contractual set-up in China which started to occur in the third quarter of 2017.

Other Consumer Healthcare – Sales reached €32.7 million, up 9.3% year-on-year, supported by the contribution of new products, higher sales of Bedelix^® in Algeria and other drug-related products.

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¹ Reported sales in Consumer Healthcare down 3.9%, non-restated from the new contractual set-up of Etiasa^®

Sales by geographical area

Group sales by geographical area in the second quarter and first half 2018 and 2017:

Sales in Major Western European countries reached €368.4 million, up 16.5% year-on-year. Over the period, sales in Major Western European countries represented 34.6% of total Group sales, compared to 34.5% in 2017.

France – Sales reached €133.7 million, up 7.7% year-on-year, mainly driven by the Cabometyx^® launch, thestrong sales of Decapeptyl^® and the sustained growth of Somatuline^®.

Germany – Sales reached €91.0 million, up 29.5% year-on-year, driven by the Cabometyx^® launch and the strong growth of Somatuline^®.

Italy – Sales reached €53.1 million, up 8.6% year-on-year, mainly driven by the launch of Cabometyx^®.

United Kingdom – Sales reached €46.5 million, up 23.9% year-on-year, driven by the strong performance of Cabometyx^® and Somatuline^®.

Spain – Sales reached €44.0 million, up 24.4% year-on-year, driven by the contribution of Cabometyx^® and the good performance of Somatuline^® and Decapeptyl^®.

Sales in Other European countries reached €220.5 million, up 17.2% year-on-year, supported by the launch of Cabometyx^® in certain countries, Onivyde^® sales to partner, the strong growth of Dysport^®, as well as the solid performance of Somatuline^® and Decapeptyl^®. Over the period, sales in the region represented 20.7% of total Group sales compared to 21.1% in 2017.

Sales in North America reached €278.1 million, up 41.1% year-on-year, driven by continued strong growth of Somatuline^®, as well as the Onivyde^® launch contribution and the good performance of Dysport^® in the therapeutics market. Over the period, sales in North America represented 26.1% of total Group sales, compared to 24.0% in 2017.

Sales in the Rest of the World reached €197.5 million, up 12.2% year-on-year, driven by the resupply and the strong performance of Dysport^® in Brazil, the volume growth in Algeria and the growth of Somatuline^® in Japan, partly offset by the negative impact of the new Etiasa^® contractual set up in China. Over the period, sales in the Rest of the World represented 18.6% of total Group sales, compared to 20.4% in 2017.

Comparison of Core consolidated income statement for 2018 and 2017

Core financial measures are performance indicators. Reconciliation between these indicators and IFRS aggregates is presented in Appendix 5 "Bridges from IFRS consolidated net profit to Core consolidated net profit".

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