Actelion announces first quarter 2014 financial results

GlobeNewswire Europe

ALLSCHWIL/BASEL, SWITZERLAND - 17 April 2014 - Actelion Ltd (ATLN.VX) today announced financial results for the first three months of 2014.

OPERATING HIGHLIGHTS

  • Opsumit - Strong launch momentum in US, Germany, and Switzerland
  • Tracleer - Solid volume growth in non-Opsumit markets
  • Selexipag in PAH - Morbidity/Mortality Phase III topline results expected Q2 2014
  • Cadazolid - FDA grants Qualified Infectious Disease Product (QIDP) designation

FINANCIAL HIGHLIGHTS

  • Product sales of CHF 469 million, up 13% at Constant Exchange Rates (CER), 9% excluding US rebate reversals
  • Core earnings of CHF 189 million, up 19% at CER, 9% excluding US rebate reversals
  • Core EPS of CHF 1.46, an increase of 29% at CER 
    Variance
CHF million
(except for per share data)
3M 2014 3M 2013 CHF % CER(1) %
Product sales 469 433 8 13
US-GAAP Operating income 153 124 23 33
Core earnings (Core operating income) 189 169 12 19
US-GAAP EPS (fully diluted) 1.09 0.85 28 38
Core EPS (fully diluted) 1.46 1.23 19 29

As of 31 March 2014, Actelion had cash and cash deposits of CHF 966 million. In addition, Actelion holds 9.1 million treasury shares.

(1) CER percentage changes are calculated by reconsolidating both the Q1 2014 and Q1 2013 results at constant currencies (the average monthly exchange rates for Q1 2013).

Jean-Paul Clozel, MD, Chief Executive Officer, commented: "I am very pleased with Actelion`s good start into 2014. The launch momentum for Opsumit, our new lead product in Pulmonary Arterial Hypertension (PAH), is very strong in all markets. Further launches throughout Europe are forthcoming, as well as a regulatory filing for Opsumit in Japan."

Opsumit(macitentan) is currently available in the United States, in Germany, Austria, Switzerland, Denmark, Norway and Canada. Sales for the first quarter of 2014 amounted to CHF 15 million. This number does not reflect underlying demand as the company continues to offer a Patient Access program in the US, so patients can access this improved therapy as quickly as possible.

Otto Schwarz, Chief Operating Officer, commented: "Opsumit is quickly becoming the drug of choice for new Endothelin Receptor Agonist patients, in all markets where we have launched. By the end of March 2014, there were already more than 2,300 patients on therapy, mostly in the United States. In non-Opsumit markets, Tracleer is also performing well, with overall volumes up by three percent."

Jean-Paul Clozel continued: "Our pipeline is advancing as well. Data collection for the Phase III morbidity/mortality study with selexipag in PAH is ongoing as planned and we expect top-line results in the next few weeks."

André C. Muller, Chief Financial Officer, commented: "We have started the year well, with core earnings growth of nine percent - excluding the impact of US rebate reversals -, with good product sales. Costs - as planned - only increased modestly in a time when Actelion is launching new products and is continuing to invest into innovation."

Jean-Paul Clozel concluded: "Based on this good start to the year, Actelion will be well positioned to review its guidance for core earnings growth by mid-year."

In February, Actelion issued 2014 core earnings guidance, expecting then core earnings growth in the low-single digit range. For 2015, the company expects core earnings to grow in the single-digit percentage range.

PRODUCT SALES REVIEW

Product sales for the first quarter of 2014 amounted to CHF 469 million, an increase of 13% at CER compared to the first quarter of 2013. Excluding the impact of US rebate reversals (Medicaid/Managed Medicaid) of CHF 18 million, product sales increased by 9% at CER.

     Variance
CHF million 3M 2014 3M 2013 CHF % CER %
Opsumit 15 - - -
Tracleer 383 375 2 7
Ventavis 28 27 1 5
Veletri 15 7 118 134
Zavesca 26 23 11 16
Valchlor 1 0 - -
Others 1 1 - -
Total Product sales 469 433 8 13

PAH franchise

Opsumit (macitentan) sales for the first quarter of 2014 amounted to CHF 15 million. This number does not reflect underlying demand as the company continues to offer a Patient Access program in the US, so patients can access this improved therapy as quickly as possible. In the US, Actelion has made significant progress with Opsumit in increasing reimbursement coverage. Formulary inclusion has been obtained with many leading health care insurers, with some of these positive coverage decisions already published or expected shortly. Outside of the United States, Opsumit was successfully introduced into markets in Germany, Austria and Switzerland.

Tracleer® (bosentan) sales amounted to CHF 383 million for the first quarter of 2014, an increase of 7% at CER compared to the same period in 2013. This increase was partially the result of a US rebate reversal and US price increases. Nevertheless, in markets where Opsumit is not available yet, Tracleer demand remained strong, driven by the Digital Ulcer indication in Europe and by strong growth in Japan, augmented by unchanged pricing following the regular bi-annual price review.

Ventavis® (iloprost) had sales in the US of CHF 28 million for the first quarter of 2014, an increase of 5% at CER. This increase is driven entirely by price and rebate reversals as competitive pressures continue to erode volume sales.

Veletri® (epoprostenol for injection) sales amounted to CHF 15 million for the first quarter of 2014, an increase of 134% at CER compared to the same period in 2013. This increase was driven by Japan, where demand continues to grow following the launch in June 2013. At the beginning of March, the price has been reduced as part of the bi-annual price review.

Specialty Products

Zavesca® (miglustat) sales amounted to CHF 26 million for the first quarter of 2014, an increase of 16% at CER compared to the same period in 2013. This performance was driven predominantly by strong ex-US patient demand in the Niemann-Pick Type C indication and positive price movement in the US.

Valchlor(TM) sales for the first quarter of 2014 amounted to CHF 1 million. The product was launched in November 2013 to CTLC Centers of Excellence only, and will be more widely available to US prescribers later in spring 2014.

CLINICAL DEVELOPMENT UPDATE

Actelion provided a clinical pipeline update in the Annual Report, published on
11 February 2014. All programs are on track with the following updates:

Selexipag is being evaluated in the Phase III GRIPHON, (Prostacyclin (PGI2) Receptor agonist In Pulmonary arterial HypertensiON) trial. GRIPHON is a multicenter, double-blind, placebo-controlled trial evaluating the efficacy and safety of oral selexipag in patients with pulmonary arterial hypertension. In February 2014, the study reached the total number of primary endpoint events required to close the study. As a result Actelion is on-track to deliver final study results by mid-2014.

The novel antibiotic cadazolid in patients suffering from Clostridium difficile-associated diarrhea is in Phase III clinical development. On 27 February, the US Food and Drug Administration (FDA) designated cadazolid as both a Qualified Infectious Disease Product (QIDP) and a Fast Track development program for the treatment of Clostridium difficile-associated diarrhea (CDAD).

The COMPASS-2 study evaluated efficacy and safety of the use of the dual endothelin receptor antagonist bosentan in combination with a phosphodiesterase type 5 inhibitor, sildenafil. On 17 March, Actelion announced that the COMPASS-2 did not meet the primary endpoint of time to first morbidity or mortality event.

CORE OPERATING EXPENSES

    Variance
CHF million 3M 2014 3M 2013 CHF %  CER %
   Core cost of sales 51 49 4 8
   Core R&D 82 80 2 4
   Core SG&A 147 135 9 14
Core operating expenses 280 264 6 10

Cost of sales for the first quarter of 2014 amounted to CHF 51 million, an increase of 8% at CER compared to the same period in 2013, in-line with higher product sales.

Core R&D expenses, which exclude stock-based compensation expense, amortization and depreciation, were CHF 82 million for the first quarter of 2014, an increase of 4% at CER compared to the same period of 2013 as clinical development expenses increased slightly.

Core SG&A expenses, which exclude stock-based compensation expense, amortization, depreciation and the impact of doubtful debt provisions, were CHF 147 million compared to CHF 135 million in the first quarter of 2013, an increase of 14% at CER as the company is launching Opsumit, Valchlor and Veletri in various markets around the globe.

CORE EARNINGS

    Variance
CHF million 3M 2014 3M 2013 CHF %  CER %
Product sales 469 433 8 13
Core operating expenses 280 264 6 10
Core earnings (operating income) 189 169 12 19

Core earnings amounted to CHF 189 million for the first quarter of 2014 compared to 

CHF 169 million during the same period in 2013, an increase of 19% at CER driven by solid underlying operational performance. Excluding the impact of US rebate reversals, core earnings increased by 9%.

CORE NET INCOME AND CORE EARNINGS PER SHARE

CORE NET INCOME

    Variance
CHF million 3M 2014 3M 2013 CHF %  CER %
Core operating income 189 169 12 19
Core financial expense (1) 1 - -
Core tax expense (18) (29) - -
Core net income 170 141 21 31
Number of shares (million) 116.6 114.9 - -
Core EPS - fully diluted (CHF) 1.46 1.23 19 29

A full reconciliation between US GAAP and core results is available from www.actelion.com.

The core financial result is composed of the interest expense on the CHF 235 million bond of CHF 3 million as well as a net gain of CHF 1.7 million from hedging and valuation positions.

Core tax expense of CHF 18 million translates into a core tax rate of 9.4%, reflecting the impact of the tax loss incurred in connection with the Asahi litigation.

Fully diluted core earnings per share were CHF 1.46 for the first quarter of 2014, an increase of 29% at constant exchange rates compared to the same period of 2013. Core EPS for the first quarter of 2013 was recalculated to apply the prevailing tax rate for each adjustment (formerly CHF 1.26 using an average blended rate).

US GAAP RESULTS

    Variance
CHF million, except for per share data 3M 2014 3M 2013 CHF %  CER %
Revenues 469 433 8 13
Operating income 153 124 23 33
Net income 128 98 30 40
Fully diluted earnings per share 1.09 0.85 28 38

 

US GAAP operating income includes the following items excluded from core earnings:

- Depreciation and amortization of CHF 25 million (3M 2013: CHF 19 million).
- Stock-based compensation expenses of CHF 10 million (3M 2013: CHF 14 million).
-  Reversal of doubtful debt allowance of CHF 1 million
(3M 2013: CHF 0)
- Accretion expenses of CHF 2 million related to the Valchlor contingent consideration
- 3M 2013 included an arbitration settlement of CHF 13 million

 

US GAAP net income includes the following items excluded from core net income:

- Interest on the concluded Asahi litigation of CHF 10 million
- Tax effect on non-core operating expenses CHF 3 million (3M 2013: CHF 12 million)

 

CASH FLOW RECONCILED WITH NET CASH POSITION

CASH FLOW ANALYSIS (in CHF million) 3M 2014 3M 2013
Operating cash flow (excluding litigation settlement)  96  95
Acquisition of tangible, intangible and current assets           (6)             (8)
Litigation settlement       (458) -
Restricted cash for litigation  609  (250)
Cash returned to shareholders       (272)           (17)
Proceeds from exercises of Stock-Options  116  6
Other items 3             7
Free cash flow  88         (167)

As announced in March 2014, the California Supreme Court denied Actelion`s petition for review of the Court of Appeal`s decision affirming the final judgment entered against Actelion in November 2011, in Asahi Kasei Pharma Corp. v. Actelion Ltd., et al.
Accordingly, Actelion paid CHF 458 million out of restricted cash and the remainder has been released.  

ABBREVIATED BALANCE SHEET

Balance Sheet (in CHF million) 31 Mar 2014 31 Dec 2013 CHF
Variance
Gross cash position (1) - Unrestricted  966  878  88
Gross cash position - Restricted  -    613  (613)
Trade and other receivables, net  409  406  3
Other current assets  109  123  (13)
Tangible assets  374  381  (8)
Intangible assets  448  465  (17)
Goodwill  126  126  ()
Other non-current assets  36  38  (2)
Total assets  2,467  3,030  (562)
Litigation provision  -    456  (456)
Other current liabilities  438  516  (78)
Financial debt  235  235  ()
Other non-current liabilities  101  114  (12)
Total liabilities  774  1,321  (547)
Share capital and accumulated reserves  2,284  2,252  32
Treasury shares  (591)  (543)  (48)
Total shareholders` equity  1,693  1,709  (16)
Total liabilities and shareholders` equity  2,467  3,030  (562)

 

(1)Gross cash position includes cash, cash equivalents and short term deposits

 

UPCOMING EVENTS

 

  • Annual General Meeting - 8 May 2014
  • Selexipag Phase III results - Mid-2014
  • HY 2014 results - 22 July 2014

  

###

 

NOTES TO EDITORS

 

ABOUT ACTELION LTD.

Actelion Ltd. is a leading biopharmaceutical company focused on the discovery, development and commercialization of innovative drugs for diseases with significant unmet medical needs.

Actelion is a leader in the field of pulmonary arterial hypertension (PAH). Our portfolio of PAH treatments covers the spectrum of disease, from WHO Functional Class (FC) II through to FC IV, with oral, inhaled and intravenous medications. Although not available in all countries, Actelion has treatments approved by health authorities for a number of specialist diseases including Type 1 Gaucher disease, Niemann-Pick type C disease, Digital Ulcers in patients suffering from systemic sclerosis, and mycosis fungoides in patients with cutaneous T-cell lymphoma.

Founded in late 1997, with now over 2,400 dedicated professionals covering all key markets around the world including the US, Japan, China, Russia and Mexico, Actelion has its corporate headquarters in Allschwil / Basel, Switzerland.

Actelion shares are traded on the SIX Swiss Exchange (ticker symbol: ATLN) as part of the Swiss blue-chip index SMI (Swiss Market Index SMI®). All trademarks are legally protected.

 

For further information please contact:

Roland Haefeli
Senior Vice President, Head of Investor Relations & Public Affairs
Actelion Pharmaceuticals Ltd, Gewerbestrasse 16, CH-4123 Allschwil
+41 61 565 62 62
+1 650 624 69 36
www.actelion.com

 

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Source: Actelion Pharmaceuticals Ltd via GlobeNewswire

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