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Horizon Therapeutics plc Reports Strong Third-Quarter 2019 Results

— Third-Quarter 2019 Net Sales of $335.5 Million Increased 3 Percent;

Third-Quarter 2019 GAAP Net Income of $18.2 Million; Adjusted EBITDA of $130.4 Million —

— Record Quarterly Orphan and Rheumatology Segment Net Sales of $250.4 Million, an Increase

of 14 Percent;
Segment Represents Approximately 75 Percent of Total Company Net Sales;

KRYSTEXXA® Third-Quarter 2019 Net Sales of $99.6 Million Increased 42 Percent

— Maintaining Full-Year 2019 Net Sales Guidance Range of $1.28 to $1.30 Billion;

Raising Midpoint of Full-Year 2019 Adjusted EBITDA Guidance; Range is Now

$465 Million to $475 Million;

KRYSTEXXA Full-Year 2019 Net Sales Growth Expected to Be Greater Than 25 Percent —

— Granted U.S. FDA Priority Review of Teprotumumab with March 8, 2020, PDUFA Date —

— Initiated PROTECT Trial Evaluating KRYSTEXXA to Improve Management of

Uncontrolled Gout for Adults with a Kidney Transplant — 

— Presented Phase 3 Teprotumumab Secondary Endpoint Data Demonstrating Significantly Reduced

Double Vision and Improved Quality of Life for Active Thyroid Eye Disease (TED) Patients —

— Cash Position of $884 Million; Net Leverage of 1.1 Times as of Sept. 30, 2019 —

DUBLIN–(BUSINESS WIRE)–Horizon Therapeutics plc (Nasdaq: HZNP) today announced its third-quarter 2019 financial results and raised the midpoint of its full-year 2019 adjusted EBITDA guidance.

“Our third-quarter performance underscores the strength of our commercial and R&D organizations,” said Timothy Walbert, chairman, president and chief executive officer, Horizon. “We generated record quarterly net sales in our orphan and rheumatology segment – including a record quarter for net sales of KRYSTEXXA, our medicine for uncontrolled gout – and the U.S. FDA also granted Priority Review of our BLA for teprotumumab, our biologic candidate for the treatment of active thyroid eye disease. We made great progress on all fronts during the quarter, including our market education activities related to teprotumumab, and remain excited about the prospect of being able to address the significant unmet need for patients living with active thyroid eye disease.”

Financial Highlights

(in millions except for per share amounts and percentages) Q3 19 Q3 18 % Change YTD 19 YTD 18 % Change
 
Net sales

$

335.5

$

325.3

3

 

$

936.5

 

$

852.0

 

10

Net income (loss)

 

18.2

 

33.4

(45

)

 

(19.7

)

 

(140.0

)

86

Non-GAAP net income

 

124.1

 

112.6

10

 

 

273.6

 

 

197.9

 

38

Adjusted EBITDA

 

130.4

 

149.9

(13

)

 

342.9

 

 

300.3

 

14

 
Earnings (Loss) per share – diluted

 

0.09

 

0.19

(53

)

 

(0.11

)

 

(0.84

)

87

Non-GAAP earnings per share – diluted

 

0.64

 

0.65

(2

)

 

1.44

 

 

1.16

 

24

 

Third-Quarter and Recent Company Highlights

Research and Development Programs

Orphan Disease Candidate and Program:

Rheumatology Pipeline Candidates and Programs:

Third-Quarter Financial Results

Note: For additional detail and reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, please refer to the tables at the end of this release.

Third-Quarter Segment Results

Management uses net sales and segment operating income to evaluate the performance of the Company’s two segments. While segment operating income contains certain adjustments to the directly comparable GAAP figures in the Company’s consolidated financial results, it is considered to be prepared in accordance with GAAP for purposes of presenting the Company’s segment operating results.

Orphan and Rheumatology Segment

(in millions except for percentages) Q3 19 Q3 18 % Change YTD 19 YTD 18 % Change
 
KRYSTEXXA

 

99.6

 

70.2

42

 

 

231.6

 

175.6

32

 

RAVICTI®(1)

 

60.0

 

60.4

(1

)

 

160.3

 

166.5

(4

)

PROCYSBI®

 

40.4

 

41.4

(2

)

 

121.1

 

114.7

6

 

ACTIMMUNE®

 

27.9

 

25.8

8

 

 

78.9

 

78.1

1

 

RAYOS®

 

19.3

 

17.2

13

 

 

59.1

 

41.3

43

 

BUPHENYL®(1)

 

3.0

 

4.4

(30

)

 

8.2

 

15.3

(47

)

QUINSAIRTM

 

0.2

 

0.1

67

 

 

0.6

 

0.3

59

 

LODOTRA®(1)

 

 

0.4

NM

 

 

 

2.0

NM

 

Orphan and Rheumatology Net Sales

$

250.4

$

219.9

14

 

$

659.8

$

593.8

11

 

 
Orphan and Rheumatology Segment Operating Income

$

89.8

$

91.5

(2

)

$

211.0

$

205.3

3

 

(1)

Beginning in 2019, the Company no longer recognizes revenue from RAVICTI and AMMONAPS sales outside of North America and Japan, nor from sales of LODOTRA. On Dec. 28, 2018, the Company divested the rights to RAVICTI and AMMONAPS outside of North America and Japan. AMMONAPS is known as BUPHENYL in the United States. In addition, effective Jan. 1, 2019, the RAYOS and LODOTRA license and supply agreements were amended, including the transfer of LODOTRA to Vectura Group plc. LODOTRA is known as RAYOS in the United States.

Inflammation Segment

(in millions except for percentages) Q3 19 Q3 18 % Change YTD 19 YTD 18 % Change
 
PENNSAID 2%

 

42.1

 

51.5

(18

)

 

143.7

 

125.9

14

 

DUEXIS®

 

29.9

 

34.2

(13

)

 

89.4

 

80.6

11

 

VIMOVO®

 

13.1

 

18.6

(30

)

 

41.8

 

48.9

(15

)

MIGERGOT®(1)

 

 

1.1

NM

 

 

1.8

 

2.8

(34

)

Inflammation Net Sales

$

85.1

$

105.4

(19

)

$

276.7

$

258.2

7

 

 
Inflammation Segment Operating Income

$

39.6

$

58.0

(32

)

$

130.8

$

94.3

39

 

(1)

In June 2019, the Company divested the rights to MIGERGOT.

Cash Flow Statement and Balance Sheet Highlights

2019 Guidance

The Company continues to expect full-year 2019 net sales to range between $1.28 billion and $1.30 billion. The Company now expects full-year 2019 adjusted EBITDA to range between $465 million and $475 million, versus the previous guidance range of $460 million to $475 million.

Webcast

At 8 a.m. EDT / 1 p.m. IST today, the Company will host a live webcast to review its financial and operating results and provide a general business update. The live webcast and a replay may be accessed at http://ir.horizontherapeutics.com. Please connect to the Company’s website at least 15 minutes prior to the live webcast to ensure adequate time for any software download that may be needed to access the webcast. A replay of the webcast will be available approximately two hours after the live webcast.

About Horizon

Horizon is focused on researching, developing and commercializing medicines that address critical needs for people impacted by rare and rheumatic diseases. Our pipeline is purposeful: we apply scientific expertise and courage to bring clinically meaningful therapies to patients. We believe science and compassion must work together to transform lives. For more information on how we go to incredible lengths to impact lives, please visit www.horizontherapeutics.com, follow us @HorizonNews on Twitter, like us on Facebook or explore career opportunities on LinkedIn.

Note Regarding Use of Non-GAAP Financial Measures

EBITDA, or earnings before interest, taxes, depreciation and amortization, and adjusted EBITDA are used and provided by Horizon as non-GAAP financial measures. Horizon provides certain other financial measures such as non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross profit and gross profit ratio, non-GAAP operating expenses, non-GAAP operating income, non-GAAP tax rate, non-GAAP operating cash flow, net leverage ratio and net debt, each of which include adjustments to GAAP figures. These non-GAAP measures are intended to provide additional information on Horizon’s performance, operations, expenses, profitability and cash flows. Adjustments to Horizon’s GAAP figures as well as EBITDA exclude acquisition and/or divestiture-related expenses, charges related to the discontinuation of ACTIMMUNE development for Friedreich’s ataxia, gain or loss from sale of assets, upfront, progress and milestone payments related to license and collaboration agreements, litigation settlements, loss on debt extinguishment, costs of debt refinancing, drug manufacturing harmonization costs, restructuring and realignment costs, as well as non-cash items such as share-based compensation, depreciation and amortization, non-cash interest expense, long-lived asset impairment charges and other non-cash adjustments. Certain other special items or substantive events may also be included in the non-GAAP adjustments periodically when their magnitude is significant within the periods incurred. Horizon maintains an established non-GAAP cost policy that guides the determination of what costs will be excluded in non-GAAP measures. Horizon believes that these non-GAAP financial measures, when considered together with the GAAP figures, can enhance an overall understanding of Horizon’s financial and operating performance. The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of the Company’s historical and expected 2019 financial results and trends and to facilitate comparisons between periods and with respect to projected information. In addition, these non-GAAP financial measures are among the indicators Horizon’s management uses for planning and forecasting purposes and measuring the Company’s performance. For example, adjusted EBITDA is used by Horizon as one measure of management performance under certain incentive compensation arrangements. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies. Horizon has not provided a reconciliation of its full-year 2019 adjusted EBITDA outlook to an expected net income (loss) outlook because certain items such as acquisition/divestiture-related expenses and share-based compensation that are a component of net income (loss) cannot be reasonably projected due to the significant impact of changes in Horizon’s stock price, the variability associated with the size or timing of acquisitions/divestitures and other factors. These components of net income (loss) could significantly impact Horizon’s actual net income (loss).

Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, statements related to Horizon’s full-year 2019 net sales and adjusted EBITDA guidance; expected financial performance and operating results in future periods, including potential growth in net sales of certain of Horizon’s medicines; expected impact of refinancing transactions; expected timing of clinical trials and regulatory submissions and decisions, including related to the BLA for teprotumumab; potential market opportunity for and benefits of Horizon’s medicines and medicine candidates; and business and other statements that are not historical facts. These forward-looking statements are based on Horizon’s current expectations and inherently involve significant risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks that Horizon’s actual future financial and operating results may differ from its expectations or goals; Horizon’s ability to grow net sales from existing medicines; the availability of coverage and adequate reimbursement and pricing from government and third-party payers; risks relating to Horizon’s ability to successfully implement its business strategies; risks inherent in developing novel medicine candidates, such as teprotumumab, and existing medicines for new indications; risks associated with regulatory approvals; risks in the ability to recruit, train and retain qualified personnel; competition, including potential generic competition; the ability to protect intellectual property and defend patents; regulatory obligations and oversight, including any changes in the legal and regulatory environment in which Horizon operates and those risks detailed from time-to-time under the caption “Risk Factors” and elsewhere in Horizon’s filings and reports with the SEC. Horizon undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information.

Contacts:

 

 

 

Investors:

U.S. Media:

Tina Ventura

Geoff Curtis

Senior Vice President,

Executive Vice President,

Investor Relations

Corporate Affairs & Chief Communications Officer

investor-relations@horizontherapeutics.com

media@horizontherapeutics.com

 

 

Ruth Venning

Ireland Media:

Executive Director,

Ray Gordon

Investor Relations

Gordon MRM

investor-relations@horizontherapeutics.com

ray@gordonmrm.ie

Horizon Therapeutics plc
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)
 
Three Months Ended September 30, Nine Months Ended September 30,

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

 
Net sales

$

335,466

 

$

325,311

 

$

936,484

 

$

852,027

 

Cost of goods sold

 

89,949

 

 

91,077

 

 

267,254

 

 

292,702

 

Gross profit

 

245,517

 

 

234,234

 

 

669,230

 

 

559,325

 

 
OPERATING EXPENSES:
Research and development

 

24,572

 

 

21,169

 

 

74,611

 

 

63,079

 

Selling, general and administrative

 

172,326

 

 

161,585

 

 

511,720

 

 

517,858

 

(Gain)/Loss on sale of assets

 

 

 

(12,303

)

 

10,963

 

 

(12,303

)

Impairment of long-lived assets

 

 

 

1,603

 

 

 

 

35,249

 

Total operating expenses

 

196,898

 

 

172,054

 

 

597,294

 

 

603,883

 

Operating income (loss)

 

48,619

 

 

62,180

 

 

71,936

 

 

(44,558

)

 
OTHER EXPENSE, NET:
Interest expense, net

 

(20,428

)

 

(30,437

)

 

(69,991

)

 

(91,921

)

Loss on debt extinguishment

 

(41,371

)

 

 

 

(58,835

)

 

 

Foreign exchange (loss) gain

 

(40

)

 

35

 

 

(25

)

 

(81

)

Other income (expense), net

 

890

 

 

337

 

 

(193

)

 

834

 

Total other expense, net

 

(60,949

)

 

(30,065

)

 

(129,044

)

 

(91,168

)

 
(Loss) Income before (benefit) expense for income taxes

 

(12,330

)

 

32,115

 

 

(57,108

)

 

(135,726

)

(Benefit) expense for income taxes

 

(30,564

)

 

(1,266

)

 

(37,359

)

 

4,301

 

Net income (loss)

$

18,234

 

$

33,381

 

$

(19,749

)

$

(140,027

)

 
Earnings (Loss) per ordinary share – basic

$

0.10

 

$

0.20

 

$

(0.11

)

$

(0.84

)

 
Weighted average ordinary shares outstanding – basic

 

186,470,141

 

 

167,047,104

 

 

181,949,838

 

 

166,018,603

 

 
Earnings (Loss) per ordinary share – diluted

$

0.09

 

$

0.19

 

$

(0.11

)

$

(0.84

)

 
Weighted average ordinary shares outstanding – diluted

 

194,171,967

 

 

172,485,757

 

 

181,949,838

 

 

166,018,603

 

Contacts

Investors:
Tina Ventura
Senior Vice President,
Investor Relations
investor-relations@horizontherapeutics.com

Ruth Venning
Executive Director,
Investor Relations
investor-relations@horizontherapeutics.com

U.S. Media:
Geoff Curtis
Executive Vice President,
Corporate Affairs & Chief Communications Officer
media@horizontherapeutics.com

Ireland Media:
Ray Gordon
Gordon MRM
ray@gordonmrm.ie

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