Paris (France), 30 July 2020 – Ipsen (Euronext: IPN; ADR: IPSEY), a global specialty-driven biopharmaceutical group, today announced financial results for the first half of 2020.
- Resilient H1 financial performance:
- Group sales growth of 3.1% as reported and at constant currency, driven by Specialty Care sales growth of 5.9%[1], led by Somatuline® (lanreotide) (up 16.4%1). Consumer Healthcare sales were down 21.1%1. Q2 2020 Group sales decreased by 2.2%1, adversely impacted by COVID-19.
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- Core Operating margin at 32.3% of net sales, up 0.8 points, driven by Specialty Care sales growth and postponed or cancelled expenditures mainly due to COVID-19. IFRS Operating margin at 19.7% of net sales, down 6.1 points.
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- Core consolidated net profit of €297 million and fully diluted Core EPS of €3.55 (up 5.0%). IFRS Consolidated net profit of €223 million and fully diluted IFRS EPS of €2.66 (up 1.0%).
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- Robust balance sheet, with closing Net Debt of €923 million and strong Free Cash Flow at €233 million, up €132 million versus 2019, mainly driven by higher Operating Cash Flow.
- Negative COVID-19 impact: As anticipated, the Specialty Care portfolio showed overall resilience in Q2 2020, although Oncology sales were impacted by destocking in some European countries and Neuroscience sales were affected by treatment center closures. Consumer Healthcare sales, notably Smecta® (diosmectite), continued to be impacted across geographies despite a slow recovery in China in Q2 2020.
- 2020 guidance: Ipsen has reinstated full year guidance and now expects Group sales growth greater than +2.0% at constant currency and Core Operating margin greater than 30.0% of net sales. Guidance takes into account the high level of uncertainty regarding COVID-19 and assumes only a gradual recovery from the pandemic as well as no impact of any new somatostatin analog (SSA) generic entry.
- Significant R&D pipeline progress including (1) Cabometyx® (cabozantinib) positive top-line results from Phase 3 CheckMate -9ER trial in combination with nivolumab for 1L RCC2[2], (2) Cabometyx participation in the ongoing Phase 3 trials in combination with atezolizumab for 2L NSCLC3 and 2L CRPC4, (3) Onivyde® (irinotecan liposome injection) received Fast Track designation from the FDA for 1L PDAC5, (4) Dysport® (botulinum toxin type A) approval in China for glabellar lines and updated indication in the U.S. for the treatment of spasticity in children, (5) IRICoR option agreement in collaboration with the University of Montreal for a discovery-stage oncology program.
David Loew, Chief Executive Officer of Ipsen, stated: “I’m honored since July 1st to lead Ipsen, an exciting global biopharma business with solid business fundamentals, a strong purpose to serve patients and attractive growth opportunities. I am encouraged by the exceptional levels of talent and engagement I have encountered across the organization, as well as the exciting recent clinical data on Cabometyx, and I look forward to helping the Group build on these strong foundations. In my first half-year update, I am pleased to report that, despite the unprecedented backdrop of COVID-19, Ipsen delivered top-line growth and margin improvement. As a result, we are reinstating guidance for 2020 and planning for the future with confidence.”
Review of half year 2020 results
Review of the first half 2020 results
Group sales reached €1,268.3 million, up 3.1% year-on-year.
Specialty Care sales reached €1,167.1 million, up 5.9%, driven by growth in Oncology sales of 9.5%, including the continued momentum of Somatuline in major geographies.
Consumer Healthcare sales were €101.2 million, down 21.1%. Smecta was negatively impacted by COVID-19, implementation of hospital central procurement in China and lower sales in France.
Core Operating Income was €410.2 million, up 5.9%, driven by the growth of Specialty Care sales. Significant cost savings were realized in selling expenses, resulting from digital sales detailing, lower travel throughout the Group and the conversion to virtual conference and medical meetings.
Core Operating margin reached 32.3% of sales, up 0.8 points versus the first half of 2019.
Core consolidated net profit was €297.0 million, compared to €283.0 million in 2019, up 5.0%, reflecting increased Other financial expenses and lower core effective tax rate (22.5% versus 23.6% in H1 2019).
Core earnings per share fully diluted grew by 5.0% to reach €3.55, compared to €3.38 in 2019.
IFRS Operating Income was €249.8 million after amortization of intangible assets, impairment losses and other operating expenses. Operating Income margin of 19.7% was down 6.1 points compared to 2019, after amortization of intangible assets for Cabometyx and an impairment loss on the intangible assets of palovarotene following termination of the MO-Ped program.
IFRS Consolidated net profit was €222.7 million versus €220.6 million in 2019, up 1.0%
IFRS Fully diluted EPS (Earnings per share) was €2.66 versus €2.64 in 2019, up 1.0%.
Free Cash Flow of €233.3 million was up 131% versus €101.0 million in 2019, mainly driven by higher Operating Cash Flow.
Closing net debt came to €923.3 million, a €576.2m improvement compared with net debt at June 30 2019 of €1,499.5 million, due mainly to strong Free Cash Flow over the period.
The company’s auditors performed a limited review of the accounts.
The interim financial report, with regard to regulated information, is available on the Group’s website, under the Regulated Information tab in the Investor Relations section.
COVID-19 Impact
In the second quarter of 2020, the business was negatively impacted by COVID-19. While the Specialty Care portfolio of differentiated products for critical conditions remained relatively resilient, Oncology sales were negatively impacted by destocking after a higher level of orders at the end of the first quarter in some European countries. Neuroscience sales were more impacted due to the closure of treatment centers in both the therapeutics and aesthetics markets. Consumer Healthcare sales, notably Smecta, continued to be negatively impacted across geographies despite a slow recovery in China in the second quarter of 2020.
Significant cost savings in selling expenses were realized in the first half of 2020, resulting from digital sales detailing, lower travel throughout the Group and the conversion to virtual conference and medical meetings.
Ipsen continues to operate all of its manufacturing sites. There are adequate inventory levels, with no supply chain issues, for the provision of medicines to patients. There is also limited impact to date on clinical trials, with minimal disruption to investigational drug supply for ongoing patients, despite a general slowdown in the recruitment of new patients as well as new site activations in ongoing trials across Europe and the U.S.
Ipsen remains focused on ensuring that patients continue to have access to their treatments and on addressing the impact of this pandemic in their communities. Ipsen employees around the world, including those at central functions and manufacturing and distribution sites, are gradually returning to the office, and the commercial organization is beginning to resume more normal operations.
2020 Financial guidance reinstated
The Group has reinstated the following financial targets for the current year
- Group sales growth greater than +2.0% at constant currency, with an expected negative impact of 0.5% from currencies based on the current level of exchange rates.
- Core Operating margin greater than 30.0% of net sales, excluding incremental investments in pipeline expansion initiatives.
Guidance takes into account the high level of uncertainty regarding COVID-19 and assumes only a gradual recovery from the pandemic as well as no impact of any new somatostatin analog (SSA) generic entry.
Palovarotene:
In the last few months, Ipsen has made progress on advancing the palovarotene program. There is an ongoing dialogue with the FDA on the appropriate patient population eligible for treatment and a potential regulatory path forward for palovarotene for the treatment of fibrodysplasia ossificans progressiva (FOP).
Ipsen has taken the decision to terminate the multiple osteochondromas (MO) indication due to the lack of efficacy signals in the analysis of the Phase 2 MO-Ped trial. As a consequence, the Group recognized an impairment loss of €57.8 million before tax on the palovarotene intangible asset and a financial income of €45.0 million related to the Contingent Value Rights (CVR) and milestones reevaluation.
R&D update:
Cabometyx: On April 20, Ipsen announced that CheckMate -9ER, a pivotal Phase 3 trial evaluating Cabometyx in combination with Opdivo (nivolumab) compared to sunitinib in previously untreated advanced or metastatic renal cell carcinoma (RCC), met its primary endpoint of progression-free survival (PFS) at final analysis, as well as the secondary endpoints of overall survival (OS) at a pre-specified interim analysis, and objective response rate (ORR).
The detailed results of CheckMate -9ER were accepted for presentation at the upcoming European Society of Medical Oncology (ESMO) Virtual Congress 2020, during the Presidential Symposium II on September 20, 2020.
In addition, on July 2, Ipsen announced it will join the Exelixis and Roche clinical collaboration of the recently initiated CONTACT-01 and CONTACT-02 global Phase 3 pivotal trials. CONTACT-01 is evaluating the safety and efficacy of Cabometyx in combination with atezolizumab in patients with metastatic non-small cell lung cancer (NSCLC) who have been previously treated with an immune checkpoint inhibitor and platinum-containing chemotherapy. CONTACT-02 is evaluating the safety and efficacy of Cabometyx in combination with atezolizumab versus a second novel hormonal therapy (NHT) in men with metastatic castration-resistant prostate cancer (CRPC) who have previously been treated with one NHT.
Onivyde: On June 17, Ipsen announced that the FDA had granted Fast Track designation for the investigational use of Onivyde in combination with 5- fluorouracil/leucovorin (5-FU/LV) and oxaliplatin (OX) for patients with previously untreated, unresectable, locally advanced and metastatic pancreatic ductal adenocarcinoma (PDAC).
Dysport: On June 5, Dysport received approval in China for the treatment of glabellar lines.
On July 9, Dysport received FDA approval to treat both upper and lower limb spasticity in pediatric patients two years of age and older, including spasticity caused by cerebral palsy.
Portfolio prioritization: As a result of prioritization decisions, in the second quarter, the Group is discontinuing development of the fast-acting neurotoxin rBoNT/E (IPN 10360) and the oncology asset IPN 60090 licensed from MD Anderson Cancer Center. Separately, development of Dysport in Hallux Valgus has been discontinued on efficacy grounds.
Early-stage pipeline: On May 4, Ipsen entered into an option agreement with IRICoR, a pan-Canadian research commercialization center focused on drug discovery, and the University of Montreal for a discovery-stage oncology program under which Ipsen would acquire a licence for worldwide rights.
Conference call
Watch the replay: https://engage.vevent.com/rt/ipsen/index.jsp?seid=3047
[1] Year-on-year growth excluding foreign exchange impact established by recalculating net sales for the relevant period at the rate used for the previous period.
[2] 1L RCC: First line Renal Cell Carcinoma; 333 2L NSCLC: Second line Non-Small Cell Lung Cancer; 4 2L CRPC: Second line Castration-Resistant Prostate Cancer; 5 1L PDAC: First line Pancreatic ductal adenocarcinoma
