Actelion announces nine months 2011 financial results

Total product sales up 8% in local currencies - Non-GAAP EBIT of CHF  470.3 million, up 11% in local currencies - Continued currency headwinds - Successful clinical pipeline progression - Outlook for 2012 product sales affected by anticipated pricing pressure and altered competitive landscape in the US

 

ALLSCHWIL/BASEL, SWITZERLAND - 20 October 2011 - Actelion Ltd (SIX: ATLN) today announced its financial results for the first nine months of 2011.

In CHF Million
(except for per share data)

Results
9M 2011

Results
9M 2010

% Variance
In CHF

% Variance
In LC

Total net revenues

1,371.7

1,476.1

(7)

7

Product sales

1,290.2

1,378.9

(6)

8

US GAAP EBIT

(85.6)

426.9

-

-

Non-GAAP EBIT

470.3

546.4

(14)

11

US GAAP EPS (fully diluted)

(1.52)

2.96

-

-

As of 30 September 2011, Actelion had cash and cash equivalents of CHF 1.5 billion. In addition, Actelion holds 12.3 million treasury shares.

Jean-Paul Clozel, M.D. and Chief Executive Officer of Actelion commented: "In the third quarter of 2011 Actelion's products have continued to perform well in a changing market place. This is very satisfactory given the pricing pressure that continues globally and the more competitive endothelin receptor antagonist market in the United States."

Jean-Paul Clozel added: "Importantly, we have made significant progress in advancing our clinical assets. In early August, ponesimod, our selective S1P1 agonist evaluated in autoimmune disorders, demonstrated a very favorable efficacy and safety profile in a Phase II multiple sclerosis study. We are now planning to commence a Phase III program in the first half of 2012. In the same time period next year the data from our induction and maintenance psoriasis study will become available. We are continuing to evaluate our approach to maximizing value for this important future growth driver."

Jean-Paul Clozel continued: "In the third quarter of 2011 we have furthermore been encouraged by the excellent safety and tolerability profile demonstrated with macitentan in the recently concluded exploratory study in patients with idiopathic pulmonary fibrosis. The 10mg dose of macitentan used in this study is the higher of two doses under evaluation in our ongoing Phase III SERAPHIN study in pulmonary arterial hypertension, which we look forward to reporting in the first half of 2012."

Jean-Paul Clozel concluded: "In 2012 Actelion will have maturing products on the market as well as promising late-stage assets in its clinical pipeline. Accordingly, in 2012 and beyond, we will make the appropriate choices on where to continue to invest into innovation and where to adapt our expenditures to an increasingly difficult economic environment."

Andrew J. Oakley, Chief Financial Officer of Actelion commented: "In Q3 2011, Actelion has continued to perform despite a very challenging environment, with both revenues and expenditures in line to deliver unchanged full-year 2011 guidance in local currencies of mid-single digit product sales growth and low-double-digit Non-GAAP EBIT growth."

Andrew J. Oakley added: "The currency environment has only slightly improved towards the end of Q3 2011. As a Swiss-based company with 99 percent of sales outside Switzerland but close to 50 percent of costs denominated in Swiss Francs, we are evaluating all possible options to mitigate the effect of currency on our reported results without hampering the support for either our marketed products or clinical development assets. Over the next twelve months we will also make appropriate capital allocation decisions based on operating performance as well as the outcome of upcoming clinical studies."

Andrew J. Oakley concluded: "As far as 2012 product sales - again in local currencies - are concerned, we currently foresee slight negative growth in the low-to-mid single digit range, mostly the result of increased pricing pressure globally and increased competitive pressure in the United States."

Revenue performance

Product sales for the first nine months of 2011 were CHF 1,290.2 million (9M 2010 CHF 1,378.9 million), an increase of 8% in local currencies, with 41% of sales coming from the United States, 39% from Europe, 10% from Japan and 10% from the rest of the world. Product sales growth was driven by patient demand, supported by price increases for Ventavis® and Zavesca® in the US.

For the first nine months of 2011 sales of Tracleer® (bosentan) amounted to CHF 1,145.2 million compared to CHF 1,235.0 million for the same period in 2010. This represents an increase of 7% in local currencies and 10% in unit growth. Tracleer sales growth was driven by Japan, Europe and emerging markets.

During the first nine months of 2011, Ventavis (iloprost) had sales in the United States of CHF 82.0 million compared to CHF 90.9 million in the first nine months of 2010. In local currencies, this represents an increase of 11%, driven by an increase in the effective net price.

Sales of Veletri® (epoprostenol for injection), launched in the United States in April 2010, amounted to CHF 10.9 million during the first nine months of 2011, with CHF 4.8 million sales generated in the third quarter, demonstrating the continued successful launch. Registration in Japan and Europe with the second generation formulation is ongoing.

Sales of Zavesca (miglustat) for the first nine months of 2011 amounted to CHF 51.2 million compared to CHF 52.0 million during the same period last year. This represents an increase of 13% in local currencies. The continued increase of Niemann-Pick Type C patients on therapy is somewhat masked by a number of Type 1 Gaucher disease patients returning to enzyme replacement therapy (ERT) following a shortage of ERT in 2010.

Otto Schwarz, Chief Operating Officer of Actelion commented: "Demand for our products remains strong with growth across all regions. The recent label change in the US for a competitor ERA product is affecting Tracleer sales. We have put several programs in place to address this changed situation, but we are currently assuming a decline in our US business in 2012."

Contract revenues for the first nine months of 2011 amounted to CHF 81.4 million, with the majority of this amount (CHF 76.5 million) resulting from the recognition of the remaining deferred revenue from the ongoing orexin collaboration with GlaxoSmithKline.

Operating expenses

Total operating expenses for the first nine months of 2011 were CHF 1,457.2 million compared to CHF 1,049.1 million for the first nine months of 2010, an increase dominated by the Asahi litigation provision of CHF 485.2 million booked in the second quarter. On 29 July 2011 Actelion announced that the court had granted Actelion's post-trial motion for offset of a previous arbitration payment, which resulted in an adjustment of the provision to CHF 430.2 million.

Non-GAAP operating expenses for the first nine months of 2011 were down 3% in Swiss Francs and up 5% in local currencies.

Research and Development (R&D) expenses in the first nine months of 2011 were down 4% to CHF 331.4 million (9M 2010: CHF 346.9 million). Non-GAAP R&D expenses for the same period, which excludes stock-based compensation expense, amortization and depreciation, were CHF 287.9 million compared to CHF 306.2 million in the first nine months of 2010, a 6% decrease in Swiss Francs.

Selling, General and Administrative expenses (SG&A) for the first nine months of 2011 were CHF 517.4 million (9M 2010: CHF 519.6 million), a slight decrease in Swiss Francs but an increase in local currencies, somewhat attributable to higher legal costs and corporate actions. Non-GAAP SG&A expenses for the first nine months of 2011, which excludes stock-based compensation expense, amortization and depreciation, were CHF 464.5 million compared to CHF 473.5 million in the first nine months of 2010.

As announced on 29 June 2011, the company recorded a provision of USD 577 million (CHF 485.2 million) in the second quarter financial statements related to the litigation with Asahi Kasei Pharmaceuticals.

On 29 July 2011, Actelion announced that the court has granted Actelion's post-trial motion for offset of a previous arbitration payment and applied a reduction of USD 70.35 million to the 4 May 2011 jury award of USD 577 million. The Swiss Franc provision recorded in the financial statements now amounts to CHF 430.2 million. In this context, the superior court is currently reviewing post-trial motions and will render its final judgment shortly. Subsequently, the company will file an appeal.

Operating loss

Operating loss for the first nine months of 2011 was CHF 85.6 million compared to an operating profit of CHF 426.9 million for the same period in 2010.

In order to better compare the company's underlying performance, Actelion continues to report Non-GAAP EBIT, which excludes stock-based compensation expense, amortization and depreciation as well as other one-off elements such as the above-mentioned litigation provision that distort comparison. Non-GAAP EBIT for the first nine months of 2011 was CHF 470.3 million (9M 2010: CHF 546.4 million), an increase of 11% in local currencies compared to the same period last year.

Net loss

Net loss for the first nine months of 2011 amounted to CHF 180.7 million (9M 2010: net income of CHF 359.5 million).

Net loss for the period includes interest income of CHF 5.5 million, interest expense of CHF 15.0 million, amortization of debt discount of CHF 14.5 million, other financial expense of CHF 29.2 million as well as an income tax expense of CHF 41.9 million.

The net loss translates into a loss per share of CHF 1.52 compared to fully diluted earnings per share of CHF 2.96 in the first nine months of 2010.

Clinical Development

Macitentan

Also in August 2011, the company announced the results of the exploratory Phase II study with macitentan in patients with idiopathic pulmonary fibrosis (IPF). While the primary endpoint of the study - forced vital capacity - was not met, the study did demonstrate a promising safety and tolerability profile for macitentan in this patient population, with no difference being observed between placebo and macitentan with regard to liver enzyme elevations.

The double-blind, randomized, placebo controlled, multicenter study evaluated the efficacy and safety of the 10 mg dose of macitentan or placebo in 178 patients with idiopathic pulmonary fibrosis. On average, patients were exposed to study drug for more than 14 months, with a maximum exposure of 24.6 months.

The 10 mg dose of macitentan used in this study is the higher of two doses under evaluation in the ongoing Phase III SERAPHIN study in pulmonary arterial hypertension.

SERAPHIN (Study with an Endothelin Receptor Antagonist in Pulmonary arterial Hypertension to Improve clinical outcome) is a Phase III study designed to evaluate the safety and efficacy of macitentan through the primary endpoint of morbidity and all-cause mortality in patients with symptomatic PAH. Global enrollment was completed in December 2009 with a total of 742 patients. Patients are randomized 1:1:1 to receive one of two different doses of macitentan (3 mg and 10 mg once daily) or placebo. The study is event-driven and based on current progress results could become available in the first half of 2012.

In addition, Actelion expects to initiate a pivotal Phase III program with macitentan in patients with ischemic digital ulcers associated with systemic sclerosis before the end of 2011.

Ponesimod

In August 2011, the company announced that its selective S1P1 receptor agonist, ponesimod, met the primary endpoint - reduction in the number of new active inflammatory lesions in the brain - in a Phase IIb dose-finding study in patients with relapsing-remitting multiple sclerosis.

The study assessed efficacy, safety and tolerability of three ponesimod doses (10 mg, 20 mg or 40 mg) versus placebo, administered orally once daily for 24 weeks. With 464 patients enrolled, this is the largest ever dose-finding study conducted in this autoimmune disorder of the central nervous system.

In this study ponesimod significantly reduced the cumulative number of new active lesions on monthly magnetic resonance imaging (MRI) brain scans performed from weeks 12 to 24, with the most effective dose at p<0.0001.

All other clinical development programs are proceeding as outlined in the company's half-year report issued on 21 July 2011.

Board of Directors

During the reporting period there were changes to the composition of Actelion's Board of Directors. In August 2011 the company reported that Joseph C. Scodari had resigned from the Board for personal reasons. In September 2011 the company announced that the Board of Directors had elected Jean-Pierre Garnier to the position of Chairman of the Board, thus ensuring a smooth transition from Robert Cawthorn, who had been Chairman since the inception of the company and who intends to retire from the Board at the 2012 Annual General Meeting.

Upcoming events

 

  • December 2011 - Olesoxime (Trophos SA) - in amyotrophic lateral sclerosis Phase III results - go/no-go decision on exercising the option to acquire Trophos SA
  • 14 February 2012 - Full-Year 2011 financial results
  • 04 May 2012 - Annual General Meeting of Shareholders

 

###

Actelion, Tracleer, Zavesca, Ventavis and Veletri are trademarks registered in the United States and other countries.

For Documentation Purposes

Full Financial Statement:

The full financial statement for the first nine months of 2011 can be found as a PDF attached to the media release. It is also available on www.actelion.com in the Investor section

http://www.actelion.com/en/investors/financial-information/finance-archive/index.page?

 

Non-GAAP to US GAAP reconciliation for 9M 2011

In CHF Million

9M 2011

9M 2010

Non-GAAP EBIT

470.3

546.4

Stock-based
compensation expenses

64.1

62.2

Amortization and depreciation

61.6

57.3

Litigation provision

430.2

-

US GAAP EBIT

(85.6)

426.9

 

Q3 2011 compared to Q3 2010

 

 

In CHF Million
(except for per share data)

Results
Q3 2011

Results
Q3 2010

% Variance
In CHF

% Variance
In LC

Total net revenues

401.8

451.2

(11)

5

Product sales

     

Posted: October 2011


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