On February 12, 2020 Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) reported results for the year and the quarter ended December 31, 2019 (Filing, 8-K, Teva, FEB 12, 2020, View Source [SID1234554197]).

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Full-Year 2019 and Q4 2019 Highlights:

Revision of prior period financial statements with respect to the distribution business in our International Markets segment, decreasing sales by $165 million in Q4 2019, and $642 million in 2019, with an offsetting decrease in cost of sales. No impact on gross profit, operating income, earnings per share or cash flows for the related periods.

Met all components of 2019 business outlook
Achieved spend base reduction target of $3 billion
AUSTEDO rapid growth continues
AJOVY launched in Europe; auto-injector approved in U.S. and E.U.
Launch of TRUXIMA, Teva’s first U.S. biosimilar
2020 business outlook:
Revenues are expected to be $16.6 – $17.0 billion
Non-GAAP EPS is expected to be $2.30 – $2.55
Free cash flow is expected to be $1.8 – $2.2 billion
"In 2019, we made great strides towards positioning Teva for renewed growth by completing our two-year restructuring plan, reducing our cost base by more than $3 billion, and reducing our net debt by more than $9 billion, all while maintaining our global leadership in generics, serving around 200 million patients every day," said Mr. Kåre Schultz, Teva’s President and CEO.

"Our key growth products met major milestones in 2019, including the launch of AJOVY in Europe, continued strong growth for AUSTEDO, and the successful launch of our first biosimilar TRUXIMA in North America. In 2020, we expect to see continued growth for AJOVY, AUSTEDO and our biosimilars."

Mr. Schultz continued, "Looking ahead, we will further transform our manufacturing network, improve our profitability, and generate cash, which will further reduce our debt. We will enhance our biopharmaceutical offerings, and expand our key assets with additional indications and geographies."

Revision of Previously Reported Consolidated Financial Statements

In connection with the preparation of Teva’s consolidated financial statements for the fiscal year ended December 31, 2019, Teva determined that in the full years and interim periods of fiscal years 2017 and 2018, and the first three quarters of fiscal year 2019, it had an immaterial error in the presentation of distribution revenues from its Israeli distribution business. This business is part of the International Markets reporting segment and facilitates distribution of Teva and third party products to pharmacies, hospitals and other organizations in Israel.

Specifically, the Company concluded that it presented revenue from its Israeli distribution business on a gross basis, although it should have reported such revenue on a net basis. Because Teva has no discretion in establishing prices for any specifies goods or services, limited inventory risk and is not primarily responsible for contract fulfillment, Teva does not meet the criteria for reporting revenues from such business as a principal (on a gross basis), as opposed to as an agent (on a net basis).

The Company evaluated the cumulative impact of this item on its previously issued annual financial statements for 2017 and 2018, and the interim financial statements for 2017, 2018 and the first three quarters of 2019, and concluded that, for the reasons mentioned below, the revisions were not material, individually or in the aggregate, to any of its previously-issued interim or annual financial statements. Teva has revised its presentation of net revenue and cost of sales in the historical consolidated financial statements to reflect the change in this item, as described in more detail below.

The impact of this revision is a decrease in net revenues with an offsetting decrease in cost of sales. There is no impact on gross profit, operating income or earnings per share. In addition, there is no impact on Teva’s balance sheet or statement of cash flows for the related periods.

The following table summarizes the impact of the revision on net revenues and non-GAAP cost of sales in the consolidated statements of income in the relevant periods:

As reported
The following items presented in this press release have been adjusted to reflect the revision described above:

2018 and 2019 annual and fourth quarter revenues
2018 and 2019 annual and fourth quarter cost of sales
2018 and 2019 fourth quarter International Markets segment revenues
2018 and 2019 fourth quarter International Markets segment cost of sales
2019 Annual Consolidated Results

Revenues in 2019 were $16,887 million, a decrease of 8%, or 5% in local currency terms, compared to 2018, mainly due to generic competition to COPAXONE, a decline in revenues from our U.S. generics business, BENDEKA/TREANDA and Japan, partially offset by higher revenues from AUSTEDO, AJOVY and QVAR in the United States. The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See "Revision of Previously Reported Consolidated Financial Statements" above.

Exchange rate movements between 2019 and 2018 negatively impacted our revenues by $402 million, our GAAP operating income by $135 million and our non-GAAP operating income by $154 million.

GAAP gross profit was $7,537 million in 2019, a decrease of 9% compared to 2018. GAAP gross profit margin was 44.6% in 2019, compared to 45.4% in 2018. Non-GAAP gross profit was $8,702 million in 2019, a decrease of 9% compared to 2018. Non-GAAP gross profit margin was 51.5% in 2019, compared to 52.2% in 2018. The decrease in both GAAP and non-GAAP gross profit was mainly due to lower revenues from COPAXONE in North America.

GAAP Research and Development (R&D) expenses in 2019 were $1,010 million, a decrease of 17% compared to 2018. Non-GAAP R&D expenses in 2019 were $1,004 million, or 5.9% of revenues, compared to $1,102 million, or 6.0% of revenues, in 2018. The decrease in R&D expenses resulted primarily from pipeline optimization and efficiencies realized as part of our restructuring plan.

GAAP Selling and Marketing (S&M) expenses in 2019 were $2,614 million, a decrease of 10% compared to 2018. Non-GAAP S&M expenses were $2,438 million, or 14.4% of revenues, in 2019, compared to $2,718 million, or 14.9% of revenues, in 2018. The decrease was mainly due to cost reductions and efficiency measures as part of the restructuring plan.

GAAP General and Administrative (G&A) expenses in 2019 were $1,192 million, a decrease of 8% compared to 2018. Non-GAAP G&A expenses were $1,145 million in 2019, or 6.8% of revenues, compared to $1,228 million, or 6.7% of revenues, in 2018. The decrease was mainly due to cost reductions and efficiency measures as part of the restructuring plan.

GAAP other income in 2019 was $76 million, compared to $291 million in 2018. The other income in 2019 was mainly related to the sale of activities in our International Markets segment. Non-GAAP other income in 2019 was $27 million, compared to $225 million in 2018. Non-GAAP other income in 2018 was mainly due to Section 8 recoveries from multiple cases in Canada and recovery of lost profits in cases in which U.S. patent infringement litigation had previously prevented the sale of certain products.

GAAP Operating loss was $443 million in 2019, compared to operating loss of $1,637 million in 2018. The decrease was mainly due to higher impairment charges recorded in 2018, partially offset by higher provisions in connection with legal settlements and loss contingencies in 2019, as well as lower profit in our North America segment. Non-GAAP operating income was $4,142 million, a decrease of 12% compared to $4,723 million in 2018.

Adjusted EBITDA (non-GAAP operating income, which excludes amortization and certain other items, and excluding depreciation expenses) in 2019 was $4,685 million, compared to $5,319 million in 2018.

In 2019, GAAP financial expenses were $822 million, compared to $959 million in 2018. Non-GAAP financial expenses were $824 in 2019, compared to $893 in 2018.

In 2019, we recognized a GAAP tax benefit of $278 million, or 22%, on a pre-tax loss of $1,265 million. In 2018, we recognized a tax benefit of $195 million, or 8%, on a pre-tax loss of $2,596 million. Our tax rate for 2018 was lower than in 2019 due to one-time legal settlements and divestments that had a low corresponding tax effect.

Non-GAAP income taxes for 2019 were $597 million on non-GAAP pre-tax income of $3,317 million. Non-GAAP income taxes in 2018 were $519 million on non-GAAP pre-tax income of $3,830 million. The non-GAAP tax rate for 2019 was 18%, compared to 14% in 2018. Our annual non-GAAP effective tax rate for 2019 was higher than our non-GAAP effective tax rate for 2017 and 2018 primarily due to a lower tax shield on finance expenses.

In the future, both our GAAP and non-GAAP effective tax rates are expected to remain similar to the 2019 rate.

GAAP net loss attributable to Teva’s ordinary shareholders and GAAP diluted loss per share in 2019 were $999 million and $0.91, respectively, compared to net loss of $2,399 million and diluted loss per share of $2.35 in 2018. Non-GAAP net income attributable to ordinary shareholders for calculating diluted EPS and non-GAAP diluted EPS in 2019 were $2,627 million and $2.40, respectively, compared to $2,985 million and $2.92 in 2018.

The weighted average diluted shares outstanding used for the fully diluted share calculation on a GAAP basis for 2019 and 2018 were 1,091 million and 1,021 million shares, respectively. The weighted average outstanding shares used for the fully diluted EPS calculation on a non-GAAP basis for 2019 and 2018 were 1,094 million and 1,024 million shares, respectively.

As of December 31, 2019 and 2018, the fully diluted share count for purposes of calculating our market capitalization was approximately 1,108 million and 1,100 million shares, respectively.

Non-GAAP information: Net non-GAAP adjustments in 2019 were $3,625 million. Non-GAAP net income and non-GAAP EPS for the year were adjusted to exclude the following items:

An impairment of intangible and fixed assets of 1,778 million, mainly related to the acquisition of Actavis Generics;
Legal settlements and loss contingencies of $1,178 million, mainly related to the reserve in connection with the opioids cases;
Amortization of purchased intangible assets totaling $1,113 million, of which $973 million is included in cost of goods sold and the remaining $139 million in selling and marketing expenses;
Restructuring expenses of $199 million;
Equity compensation expenses of $123 million;
Contingent consideration of $59 million;
Other non-GAAP items of $132 million;
Minority interest adjustment of $82; and
Related tax effect of $875 million.
Teva believes that excluding such items facilitates investors’ understanding of its business. For further information see the tables below for a reconciliation of the U.S. GAAP results to the adjusted non-GAAP figures and the information under "Non-GAAP Financial Measures." Investors should consider non-GAAP financial measures in addition to, and not as replacement for, or superior to, measures of financial performance prepared in accordance with GAAP.

Cash flow generated from operating activities in 2019 was $748 million, a decrease of $1,698 million, or 69%, compared to 2018. This decrease was mainly due to the working capital adjustment with Allergan and the Rimsa settlement in 2018, and lower profit in our North America segment during 2019.

Free cash flow (Cash flow generated from operating activities in 2019, net of cash used for capital investments and beneficial interest collected in exchange for securitized trade receivables) was $2,053 million in 2019, compared to $3,679 million in 2018. The decrease in 2019 resulted mainly from the lower cash flow generated from operating activities.

As of December 31, 2019, our debt was $26,908 million, compared to $28,916 million as of December 31, 2018. The decrease was mainly due to senior notes repaid at maturity or prepaid with cash generated during the year. The portion of total debt classified as short-term as of December 31, 2019 was 9%, compared to 8% as of December 31, 2018, due to a decrease in our total debt. Our average debt maturity was approximately 6.4 years as of December 31, 2019, compared to 6.8 years as of December 31, 2018.

Annual Report on Form 10-K

Teva will file its Annual Report on Form 10-K with the SEC in the coming days. The report will include a complete analysis of the financial results for 2019 and will be available on Teva’s website, View Source, as well as on the SEC’s website: View Source

Fourth Quarter 2019 Consolidated Results

Revenues in the fourth quarter of 2019 were $4,468 million, an increase of 1%, or 2% in local currency terms, compared to the fourth quarter of 2018, mainly due to an increase in sales of AUSTEDO, AJOVY and certain respiratory products, partially offset by lower revenues from COPAXONE in North America.

Exchange rate differences between the fourth quarter of 2019 and the fourth quarter of 2018 negatively impacted our revenues and GAAP operating income by $47 million and $27 million, respectively. Our non-GAAP operating income was negatively impacted by $29 million.

GAAP gross profit was $1,958 million in the fourth quarter of 2019, a decrease of 1% compared to the fourth quarter of 2018. GAAP gross profit margin was 43.8% in the fourth quarter of 2019, compared to 44.6% in the fourth quarter of 2018. Non-GAAP gross profit was $2,262 million in the fourth quarter of 2019, a decrease of 3% compared to the fourth quarter of 2018. Non-GAAP gross profit margin was 50.6% in the fourth quarter of 2019, compared to 52.7% in the fourth quarter of 2018. The decrease in non-GAAP gross profit margin in the fourth quarter of 2019 resulted primarily from a decline in revenues from COPAXONE.

GAAP Research and Development (R&D) expenses in the fourth quarter of 2019 were $232 million, a decrease of 21% compared to the fourth quarter of 2018. Non-GAAP R&D expenses were $237 million, or 5.3% of quarterly revenues, in the fourth quarter of 2019, compared to $289 million, or 6.5% of quarterly revenues, in the fourth quarter of 2018. The decrease in R&D expenses in the fourth quarter of 2019 resulted primarily from pipeline optimization and efficiencies realized as part of our restructuring plan.

GAAP Selling and Marketing (S&M) expenses in the fourth quarter of 2019 were $706 million, a decrease of 11% compared to the fourth quarter of 2018. Non-GAAP S&M expenses were $665 million, or 14.9% of quarterly revenues in the fourth quarter of 2019, compared to $768 million, or 17.4% of quarterly revenues in the fourth quarter of 2018. The decrease in S&M expenses in 2019 was mainly due to cost reduction and efficiency measures as part of the restructuring plan.

GAAP General and Administrative (G&A) expenses in the fourth quarter of 2019 were $318 million, a decrease of 7% compared to the fourth quarter of 2018. Non-GAAP G&A expenses were $309 million in the fourth quarter of 2019, or 6.9% of quarterly revenues in the fourth quarter of 2019, compared to $330 million, or 7.5% of quarterly revenues in the fourth quarter of 2018. The decrease was mainly due to cost reduction and efficiency measures as part of the restructuring plan.

GAAP other income in the fourth quarter of 2019 was $47 million, compared to other loss of $43 million in the fourth quarter of 2018. Non-GAAP other income in the fourth quarter of 2019 was $9 million, compared to $5 million in fourth quarter of 2018.

GAAP operating income in the fourth quarter of 2019 was $148 million, compared to a loss of $3,164 million in the fourth quarter of 2018. Non-GAAP operating income in the fourth quarter of 2019 was $1,061 million, an increase of 12% compared to the fourth quarter of 2018. Non-GAAP operating margin was 23.8% in the fourth quarter of 2019 compared to 21.4% in the fourth quarter of 2018.

EBITDA (non-GAAP operating income, which excludes amortization and certain other items, as well as depreciation expenses) was $1,204 million in the fourth quarter of 2019, an increase of 10% compared to $1,091 million in the fourth quarter of 2018.

GAAP financial expenses for the fourth quarter of 2019 were $186, compared to $223 million in the fourth quarter of 2018. Non-GAAP financial expenses were $198 million in the fourth quarter of 2019, compared to $216 million in the fourth quarter of 2018.

In the fourth quarter of 2019, we recognized a GAAP tax benefit of $119 million on a pre-tax GAAP loss of $38 million. In the fourth quarter of 2018, we recognized a GAAP tax benefit of $139 million on a pre-tax GAAP loss of $3,387 million. Non-GAAP income taxes for the fourth quarter of 2019 were $155 million, or 18%, on pre-tax non-GAAP income of $863 million. Non-GAAP income taxes in the fourth quarter of 2018 were $96 million, or 13%, on pre-tax non-GAAP income of $730 million.

GAAP net income attributable to ordinary shareholders and GAAP diluted earnings per share in the fourth quarter of 2019 were $110 million and $0.10, respectively, compared to GAAP net loss attributable to ordinary shareholders and GAAP diluted loss per share of $2,940 million and $2.85, respectively, in the fourth quarter of 2018. Non-GAAP net income attributable to ordinary shareholders and non-GAAP diluted EPS in the fourth quarter of 2019 were $683 million and $0.62, respectively, compared to $543 million and $0.53, respectively, in the fourth quarter of 2018.

For the fourth quarter of 2019, the weighted average outstanding shares for the fully diluted EPS calculation on a GAAP basis was 1,094 million shares, compared to 1,031 million shares in the fourth quarter of 2018. The weighted average outstanding shares for the fully diluted EPS calculation on a non-GAAP basis was 1,094 million shares in the fourth quarter of 2019, compared to 1,034 million shares in the fourth quarter of 2018.

Non-GAAP information: Net non-GAAP adjustments in the fourth quarter of 2019 were $573 million. Non-GAAP net income and non-GAAP EPS for the fourth quarter were adjusted to exclude the following items:

An impairment of intangible and fixed assets of $477 million mainly related to the acquisition of Actavis Generics;
Amortization of purchased intangible assets totaling $290 million, of which $256 million is included in cost of goods sold and the remaining $34 million in selling and marketing expenses;
Restructuring expenses of $59 million;
Contingent consideration of $55 million;
Equity compensation expenses of $19 million;
Other non-GAAP items of $1 million;
Minority interest adjustment of $54 million; and
Related tax effect of $274 million.
Teva believes that excluding such items facilitates investors’ understanding of its business. See the attached tables for a reconciliation of the GAAP results to the adjusted non-GAAP figures. Investors should consider non-GAAP financial measures in addition to, and not as replacement for, or superior to, measures of financial performance prepared in accordance with GAAP.

Cash flow generated from operations during the fourth quarter of 2019 was $538 million, compared to $367 million in the fourth quarter of 2018. The increase was mainly due to active management of inventory levels.

Free cash flow (Cash flow generated from operating activities, net of cash used for capital investments and beneficial interest collected in exchange for securitized trade receivables) was $974 million in the fourth quarter of 2019, compared to $522 million in the fourth quarter of 2018. The increase in 2019 resulted mainly from the higher cash flow generated from operating activities and sell of real-estate assets.

Segment Results for the Fourth Quarter of 2019

North America Segment

Our North America segment includes the United States and Canada.

The following table presents revenues, expenses and profit for our North America segment for the three months ended December 31, 2019 and 2018:

* Segment profit does not include amortization and certain other items.

§ Represents an amount less than 0.5%.

Revenues from our North America segment in the fourth quarter of 2019 were $2,373 million, an increase of $135 million, or 6%, compared to the fourth quarter of 2018, mainly due to the launch of TRUXIMA (a biosimilar to Rituxan), higher revenues from respiratory products, AUSTEDO and Anda, partially offset by lower revenues from COPAXONE.

Revenues in the United States, our largest market, were $2,218 million in the fourth quarter of 2019, an increase of $116 million, or 6%, compared to the fourth quarter of 2018.

Revenues by Major Products and Activities

The following table presents revenues for our North America segment by major products and activities for the three months ended December 31, 2019 and 2018:

* Does not include revenues from the ProAir authorized generic, which are included under generic products.

Generic products revenues in our North America segment in the fourth quarter of 2019 increased by 3% to $1,137 million, compared to the fourth quarter of 2018, mainly due to new generic product launches, including the launch of TRUXIMA in November 2019, partially offset by price and volume erosion due to additional competition to our product portfolio.

In the fourth quarter of 2019, we led the U.S. generics market in total prescriptions and new prescriptions, with approximately 388 million total prescriptions (based on trailing twelve months), representing 10.5% of total U.S. generic prescriptions according to IQVIA data.

COPAXONE revenues in our North America segment in the fourth quarter of 2019 decreased by 26% to $264 million, compared to the fourth quarter of 2018, mainly due to generic competition in the United States.

BENDEKA and TREANDA combined revenues in our North America segment in the fourth quarter of 2019 decreased by 11% to $125 million, compared to the fourth quarter of 2018, mainly due to lower volumes resulting from Eagle Pharmaceuticals, Inc.’s launch of a ready-to-dilute bendamustine hydrochloride in June 2018.

ProAir revenues in our North America segment in the fourth quarter of 2019 increased by 77% to $80 million, compared to the fourth quarter of 2018, mainly due to higher sales reserves recorded in the fourth quarter of 2018 in anticipation of generic competition to the short-acting beta-agonist class of drugs. We launched our own ProAir authorized generic in the United States in January 2019.

QVAR revenues in our North America segment in the fourth quarter of 2019 increased to $67 million, compared to the fourth quarter of 2018. The increase in sales was mainly due to a higher net price and an increase in volume.

AJOVY revenues in our North America segment in the fourth quarter of 2019 were $25 million. AJOVY’s exit market share in the United Stated in terms of total number of prescriptions during 2019 was 17%. On January 28, 2020, the FDA approved an auto-injector device for AJOVY in the U.S.

AUSTEDO revenues in our North America segment in the fourth quarter of 2019 were $136 million, compared to $68 million in the fourth quarter of 2018. This increase was mainly due to higher volumes.

Anda revenues in our North America segment in the fourth quarter of 2019 increased by 13% to $412 million, compared to the fourth quarter of 2018, mainly due to higher volumes.

North America Gross Profit

Gross profit from our North America segment in the fourth quarter of 2019 was $1,196 million, flat compared to the fourth quarter of 2018. Gross profit in the fourth quarter of 2019 was mainly impacted by lower revenues from COPAXONE, offset by higher revenues from AUSTEDO, the launch of TRUXIMA and higher revenues from other specialty products.

Gross profit margin for our North America segment in the fourth quarter of 2019 decreased to 50.4%, compared to 53.7% in the fourth quarter of 2018. This decrease was mainly due to lower COPAXONE revenues.

North America Profit

Profit from our North America segment in the fourth quarter of 2019 was $686 million, an increase of 24% compared to $551 million in the fourth quarter of 2018. Profit increased mainly due to higher revenues from AUSTEDO, the launch of TRUXIMA, higher revenues from other specialty products and cost reductions and efficiency measures, partially offset by lower revenues from COPAXONE.

Europe Segment

Our Europe segment includes the European Union and certain other European countries.

The following table presents revenues, expenses and profit for our Europe segment for the three months ended December 31, 2019 and 2018:

* Segment profit does not include amortization and certain other items.

§ Represents an amount less than 0.5%.

Revenues from our Europe segment in the fourth quarter of 2019 were $1,184 million, a decrease of $20 million, or 2%, compared to the fourth quarter of 2018. In local currency terms, revenues increased by 2%, mainly due to new generic product launches partially offset by a decline in COPAXONE revenues due to the entry of competing glatiramer acetate products and the loss of exclusivity for certain products in our oncology portfolio.

Revenues by Major Products and Activities

The following table presents revenues for our Europe segment by major products and activities for the three months ended December 31, 2019 and 2018:

Generic products revenues in our Europe segment in the fourth quarter of 2019, including OTC products, increased by 3% to $871 million, compared to the fourth quarter of 2018. In local currency terms, revenues increased by 7%, mainly due to new generic product launches.

COPAXONE revenues in our Europe segment in the fourth quarter of 2019 decreased by 10% to $106 million, compared to the fourth quarter of 2018. In local currency terms, revenues decreased by 8%, mainly due to price reductions resulting from the entry of competing glatiramer acetate products.

Respiratory products revenues in our Europe segment in the fourth quarter of 2019 decreased by 4% to $86 million, compared to the fourth quarter of 2018. In local currency terms, revenues decreased by 2%, mainly due to lower sales in the United Kingdom.

Europe Gross Profit

Gross profit from our Europe segment in the fourth quarter of 2019 was $638 million, a decrease of 7% compared to $689 million in the fourth quarter of 2018. The decrease was mainly due to lower revenues from COPAXONE, the impact of currency fluctuations and higher cost of goods sold, partially offset by new generic product launches.

Gross profit margin for our Europe segment in the fourth quarter of 2019 decreased to 53.9%, compared to 57.2% in the fourth quarter of 2018. This decrease was mainly due to higher cost of goods sold and product mix.

Europe Profit

Profit from our Europe segment in the fourth quarter of 2019 was $258 million, an increase of 2% compared to $253 million in the fourth quarter of 2018. This increase was mainly due to cost reductions and efficiency measures as part of the restructuring plan.

International Markets Segment

Our International Markets segment includes all countries other than those in our North America and Europe segments. The key markets in this segment are Japan, Russia and Israel.

The following table presents revenues, expenses and profit for our International Markets segment for the three months ended December 31, 2019 and 2018:

* Segment profit does not include amortization and certain other items.

§ Represents an amount less than 0.5%.

The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See "Revision of Previously Reported Consolidated Financial Statements" above.

Revenues from our International Markets segment in the fourth quarter of 2019 were $578 million, a decrease of $21 million, or 3%, compared to the fourth quarter of 2018. In local currency terms, revenues decreased by 3% compared to the fourth quarter of 2018, mainly due to lower sales in Japan and Israel.

Revenues by Major Products and Activities

The following table presents revenues for our International Markets segment by major products and activities for the three months ended December 31, 2019 and 2018:

*The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See "Revision of Previously Reported Consolidated Financial Statements" above.

Generic products revenues in our International Markets segment, which include OTC products, decreased by 2% to $489 million in the fourth quarter of 2019, compared to the fourth quarter of 2018. In local currency terms, revenues decreased by 3%, mainly due to lower sales in Japan resulting from regulatory pricing reductions and generic competition to off-patented products.

COPAXONE revenues in our International Markets segment in the fourth quarter of 2019 decreased by 14% to $17 million, compared to the fourth quarter of 2018. In local currency terms, revenues decreased by 8%.

Distribution revenues in our International Markets segment in the fourth quarter of 2019 increased by 11% to $6 million, compared to the fourth quarter of 2018. In local currency terms, revenues increased by 3%.

International Markets Gross Profit

Gross profit from our International Markets segment in the fourth quarter of 2019 was $290 million, a decrease of 7% compared to $312 million in the fourth quarter of 2018. Gross profit margin for our International Markets segment in the fourth quarter of 2019 decreased to 50.1%, compared to 52.1% in the fourth quarter of 2018. The decrease was mainly due to lower gross profit resulting from changes in the product mix in certain countries, mainly Japan.

International Markets Profit

Profit from our International Markets segment in the fourth quarter of 2019 was $101 million, compared to $114 million in the fourth quarter of 2018. The decrease was mainly due to lower revenues in Japan, partially offset by cost reductions and efficiency measures as part of the restructuring plan.

Other Activities

We have other sources of revenues, primarily the sale of APIs to third parties, certain contract manufacturing services and an out-licensing platform offering a portfolio of products to other pharmaceutical companies through our affiliate Medis. Our other activities are not included in our North America, Europe or International Markets segments.

Our revenues from other activities in the fourth quarter of 2019 decreased by 12% to $332 million, compared to the fourth quarter of 2018. In local currency terms, revenues decreased by 11%.

API sales to third parties in the fourth quarter of 2019 were $187 million, a decrease of 10% compared to the fourth quarter of 2018, in both U.S. dollars and local currency terms.

On February 12, 2020 Revolution Medicines, Inc. (Nasdaq:RVMD) reported the pricing of its initial public offering of 14,000,000 shares of common stock at a public offering price of $17.00 per share, before underwriting discounts and commissions (Press release, Revolution Medicines, FEB 12, 2020, View Source [SID1234554219]). All of the shares of common stock are being offered by Revolution Medicines. In addition, Revolution Medicines has granted the underwriters a 30-day option to purchase up to an additional 2,100,000 shares of common stock at the initial public offering price, less the underwriting discounts and commissions. Revolution Medicines’ common stock is expected to begin trading on the Nasdaq Global Select Market on February 13, 2020, under the ticker symbol "RVMD". The gross proceeds from the offering, before deducting underwriting discounts and commissions and other offering expenses payable by Revolution Medicines, are expected to be approximately $238.0 million, excluding any exercise of the underwriters’ option to purchase additional shares. The offering is expected to close on February 18, 2020, subject to the satisfaction of customary closing conditions.

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J.P. Morgan, Cowen, SVB Leerink and Guggenheim Securities acted as joint book-running managers for the offering.

The offering is being made only by means of a prospectus. Copies of the final prospectus may be obtained, when available, from: J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, or by telephone at (866) 803-9204, or by email at [email protected]; Cowen and Company, LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY, 11717, Attn: Prospectus Department, by email at [email protected] or by telephone at (833) 297-2926; SVB Leerink LLC, Attention: Syndicate Department, One Federal Street, 37th Floor, Boston, MA, 02110, by telephone at 1-800-808-7525, ext. 6218, or by email at [email protected]; or Guggenheim Securities, LLC, Attention: Equity Syndicate Department, 330 Madison Avenue, 8th Floor, New York, NY 10017, by telephone at (212) 518-9544, or by email at [email protected].

A registration statement relating to the sale of these securities was declared effective by the Securities and Exchange Commission on February 12, 2020. This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

On February 12, 2020 AmorChem II is proud to reported the financing of a collaboration centered around c-Myc, a proto-oncogene implicated in over 50% of all human cancers (, Amorchem, FEB 12, 2020, View Source [SID1234554237]). The venture capital fund is partnering with Univalor, the Montreal Clinical Research Institute ("IRCM") and McGill University in order to support the innovative work of the teams of Dr.Tarik Möröy and Dr. Nicolas Moitessier.

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Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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According to the World Health Organization, cancer is the second leading cause of death globally, responsible for an estimated 9.6 million deaths in 2018. The dysregulation of the oncoprotein c-Myc is a feature of many cancers, including medulloblastoma, colon cancer and leukemias. However, c-Myc is generally considered to be a challenging target because it lacks a druggable domain. In fact, despite the centrality of its role, none of the efforts to modulate c-Myc have shown clinical success to date.

"What attracted us to the project is the team’s unique proposal of targeting Miz-1, a c-Myc co-factor, which is critical for c-Myc’s ability to regulate cell cycle progression as well as apoptosis. We believe this is a very intriguing approach which also offers the potential of adding a promising small molecule strategy in the field of immunotherapy, through the emerging role of c-Myc in T-cell biology," says Kevin McBride, Partner and Chief Scientific Officer at AmorChem.

"Their participation at the 2019 AmorChem KNOCK OUTTM convinced us that the combination of Dr. Möröy’s work in biology and Dr. Moitessier’s work in medicinal and computational chemistry offered significant potential for solving the challenges presented by this target," explains Inès Holzbaur, Managing Partner at AmorChem.

"Beyond c-Myc, this program’s platform provides AmorChem a unique opportunity to develop a series of new drugs based on the potential druggability of POZ domains aimed, eventually, at other critical targets," adds Elizabeth Douville, Managing Partner at AmorChem.

"Participating in commercialized research such as this is a key goal for our University," said Sylvain Coulombe, Associate Vice-Principal, Innovation and Partnerships (I+P), McGill University. "Transforming world-leading research into innovation that saves lives is and will always be our priority, and this association brings us closer to that reality."

"The IRCM values ​​collaboration and we are convinced of the benefits of bringing together the best experts around a project. We are therefore extremely pleased to receive the support of AmorChem for this promising collaborative project which aims to develop new therapeutic strategies for the future, "said Max Fehlmann, President and Scientific Director of the IRCM.

"Commercialising university research is not a simple task. It requires several stakeholders to agree on a common vision for the maturation of a project, and to work together toward de-risking innovation in order to create commercial value. The collaboration between the IRCM, McGill University, Univalor and AmorChem is a very good example of this kind of partnership. Through AmorChem’s financial support, it will be possible to validate the potential of the new platform developed by the team of Dr Möröy and Dr Moitessier", says Luc Paquet, President and CEO of Univalor.

On February 12, 2020 Ipsen (Euronext: IPN; ADR: IPSEY), a global specialty-driven biopharmaceutical group, reported its financial results for the full year 2019 (Press release, Ipsen, FEB 12, 2020, View Source [SID1234554238]).

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Group sales growth of 15.8% as reported or 14.8% at constant currency and scope of consolidation1, driven by Specialty Care sales growth of 17.2%1, reflecting strong performance across all major products and geographies, while Consumer Healthcare sales were down -1.2%1
Core Operating margin at 30.4% of net sales, up 0.7 points. IFRS Operating margin at -1.3% of net sales, down 24.6 points
Setback in the palovarotene program of partial clinical hold for all patients under 14 years of age and reaching pre-specified second interim analysis futility criteria in the Phase 3 MOVE trial for fibrodysplasia ossificans progressiva (FOP), leading to a partial impairment of €669 million before tax
Core consolidated net profit of €563 million (+14.6% vs. 2018), with fully diluted Core EPS growing by 14.1% to reach €6.74. IFRS Consolidated net profit showing a loss of €50 million, with an IFRS net loss per share of €0.61
Sound financial structure, with a closing Net Debt of €1,116 million and a Net Debt to EBITDA ratio at 1.3x. Strong Free Cash Flow at €468 million, up 2%, mainly driven by higher Operating Cash Flow.
Continued commitment to disciplined execution of business development strategy for long-term sustainability focusing on the Group’s core therapeutic areas (Oncology, Neuroscience, Rare Diseases) and across different transaction structures and various phases of drug development
Advancing solid pipeline with several significant new chemical entities and Phase 3 / registrational trials, including the initiation of pivotal Phase 3 trials for Onivyde in 1L Pancreatic Ductal Adenocarcinoma (PDAC) and 2L Small Cell Lung Cancer (SCLC) and upcoming top-line results for the Phase 3 trial of Cabometyx in combination with nivolumab in 1L Renal Cell Carcinoma (RCC)
Proposed distribution of €1.00 per share2 for the 2019 financial year, consistent with the prior year
2020 guidance3 of Group sales growth greater than +6.0% at constant currency and Core Operating margin around 30.0% of net sales
Updated 2022 outlook3 with Group sales greater than €2.8 billion and Core Operating margin greater than 28.0% of net sales
Aymeric Le Chatelier, Chief Executive Officer and Chief Financial Officer of Ipsen, stated: "2019 was another excellent year of operating performance for Ipsen with continued double-digit top-line growth and core operating margin expansion. Despite the recent palovarotene setback, the fundamentals of our business remain strong with a growing Specialty Care franchise and a sound financial structure including attractive cash flow generation. We are committed to the disciplined execution of our strategy, delivering solid mid-single digit growth in 2020 and further advancing our R&D pipeline programs. We have also updated our 2022 outlook taking into account the latest developments in the current business. We remain focused on executing our internal and external R&D strategy to strengthen our pipeline and deliver sustainable growth for years to come."

_______________________

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. Sales [2]growth adjusted for consolidation scope including: subsidiaries involved in the partnership between Ipsen and Schwabe Group consolidated in accordance with the equity method since 1 January 2019; and 2018 Etiasa (mesalazine) sales adjusted for the new contractual set up.

2 Decided by the Ipsen S.A. Board of Directors, which met on 12 February 2020, to propose at the Annual Shareholders’ meeting on 2 May 2020.

3 Assuming no impact of new somatostatin analog (SSA) generic entry in 2020 and excluding impact of incremental investments in pipeline expansion initiatives

Review of full year 2019 results

Extract of audited consolidated results for the full year 2019 and 2018

(in million euros)

FY 2019

FY 2018

%

change

% change at

constant currency

and scope1

Group net sales

2,576.2

2,224.8

+15.8%

+14.8%

Specialty Care sales

2,299.4

1,924.5

+19.5%

+17.2%

Consumer Healthcare sales

276.8

300.3

-7.8%

-1.2%

CORE

Core Operating Income

782.6

659.9

+18.6%

Core Operating margin (as a % net sales)

30.4%

29.7%

+0.7 pts

Core consolidated net profit

563.4

491.6

+14.6%

Core EPS – fully diluted (€)

6.74

5.91

+14.1%

IFRS

Operating Income

(33.4)

519.4

-106.4%

Operating margin (as a % net sales)

-1.3%

23.3%

-24.6 pts

Consolidated net profit

(50.2)

389.1

-112.9%

EPS – fully diluted (€)

(0.61)

4.68

-113.0%

Group net sales reached €2,576.2 million, up 14.8%1 year-on-year.

Specialty Care sales reached €2,299.4 million, up 17.2%1, driven by the continued strong growth of Somatuline (lanreotide) and the €376.9 million contribution from the key Oncology launches of Cabometyx (cabozantinib) and Onivyde (irinotecan liposome injection). Somatuline growth of 18.3%1 was driven by continued positive momentum in North America (21.3%) and solid performance throughout Europe, including Germany. Dysport (botulinum toxin type A) growth was fueled by good performance in the therapeutics and in the aesthetics markets. Decapeptyl (triptorelin) sales reflect good volume growth across Major European countries and in Southeast Asia.

Consumer Healthcare sales reached €276.8 million, down -1.2%1, due to a decline in Smecta (diosmectite) sales, especially in China.

Core Operating Income reached €782.6 million in 2019, compared to €659.9 million in 2018, a growth of 18.6%, driven by the sales growth and after increased R&D investments to support the development of the growing pipeline.

Core Operating margin reached 30.4% of net sales, up 0.7 points compared to 2018.

Core consolidated net profit was €563.4 million in 2019, an increase of 14.6% versus €491.6 million in 2018, driven by higher Core Operating Income compensated by increased net financial costs, notably related to higher net debt from the Clementia acquisition.

Fully diluted Core earnings per share grew by 14.1% to reach €6.74, compared to €5.91 in 2018.

IFRS Operating Income was a loss of €33.4 million, mainly due to an impairment charge of €668.8 million on the intangible assets of palovarotene. IFRS operating margin of -1.3% was down 24.6 points compared to 2018.

IFRS Consolidated net profit was a loss of €50.2 million due to financial expenses resulting from the Onivyde contingent payment reevaluation, financing costs and income tax for a total of €244.8 million, offset by the positive impact on financial result of the revaluation of the Clementia Contingent Value Rights (CVR) and milestones, and on income tax of the tax effect from the palovarotene intangible asset impairment for a total of €220.0 million.

IFRS Fully diluted EPS (Earnings per share) was a net loss per share amounting to €0.61 versus a net profit of €4.68 in 2018.

Free Cash Flow reached €467.7 million, up by €9.3 million, mainly driven by higher Operating Cash Flow partly offset by higher cash out from restructuring costs, financial result and current income tax.

Closing net debt reached €1,115.6 million at the end of 2019, as compared to closing net debt in 2018 of €242.5 million. This reflects the acquisition of Clementia, other business development and milestones, the impact of the application of IFRS16, and the payment of the dividend.

Impairment loss related to palovarotene program

Ipsen recorded a €668.8 million partial impairment, before tax, on the palovarotene intangible assets at December 31, 2019 as a result of the recent developments in the palovarotene development program. This takes into account:

6 December 2019: Following discussions with the U.S. Food and Drug Administration (FDA), a partial clinical hold was issued for patients under the age of 14 for studies evaluating palovarotene for the chronic treatment of fibrodysplasia ossificans progressiva (FOP) and multiple osteochondromas (MO).
24 January 2020: Palovarotene Phase 3 MOVE trial for fibrodysplasia ossificans progressiva (FOP) reached pre-specified second interim analysis futility criteria. Ipsen paused dosing patients in FOP trials taking into consideration IDMC’s recommendation to not discontinue trials based on encouraging therapeutic activity observed in preliminary post-hoc analyses.
Ipsen will continue the development of palovarotene, conduct further assessment of the MOVE dataset, address the FDA questions and define next steps for the clinical program to bring palovarotene to patients as quickly as possible.

Strategy update

During 2019, Ipsen made progress on its journey to being a leading global biopharmaceutical company focused on innovation and Specialty Care.

The three Specialty Care franchises all saw significant progress. The Oncology and Neuroscience franchises continued to demonstrate strong double-digit momentum and despite recent developments with palovarotene, Ipsen remains committed to building a successful Rare Diseases franchise and supporting patients living with FOP. In October 2019, Ipsen in-licensed BLU-782 from Blueprint Medicines, a highly selective ALK2 inhibitor in Phase 1 development for the treatment of FOP.

Ipsen is committed to continuing its business development strategy for long-term sustainability. The strategy will focus on the Group’s core therapeutic areas (Oncology, Neuroscience, Rare Diseases) and across different transactions structures and various phases of drug development. The disciplined execution of this strategy will be supported by the Group’s strong Free Cash Flow generation and close internal collaboration across Ipsen’s teams.

In 2020 and beyond, the Group’s mission to bring innovation to patients remains the same. The priorities and roadmap are clear, and Ipsen continues to execute against its objectives to maximize the portfolio while increasing the value of the pipeline.

Comparison of 2019 performance with financial objectives

The Group exceeded its upgraded guidance provided on 25 July 2019 as shown in the table below:

2019 Financial objectives

2019 Actuals

Group sales growth

(at constant exchange rate)

> +14.0%1

+14.8%1

Core Operating margin
(as a percentage of sales)

around 30.0%

30.4%

Distribution for the 2019 financial year proposed for the approval of Ipsen’s shareholders

The Ipsen S.A. Board of Directors, which met on 12 February 2020, decided to propose at the Annual Shareholders’ meeting on 29 May 2020 the distribution of €1.00 per share for the 2019 financial year, consistent with the prior year.

2020 Financial guidance

The Group has set the following financial targets for the current year, assuming no impact in 2020 of new somatostatin analog (SSA) generic entry:

■ Group sales growth year-on-year greater than +6.0% at constant currency; no impact of currency expected based on the current level of exchange rates.

■ Core Operating margin around 30.0% of net sales, excluding incremental investments in pipeline expansion initiatives.

Updated 2022 Outlook: The Group has updated its 2022 outlook taking into account the latest developments in its current business, mainly in the palovarotene development program:

– Group net sales greater than €2.8 billion, assuming current level of exchange rates;

– Core Operating margin greater than 28.0% of net sales

The outlook has been updated assuming no approval of additional meaningful products or indications (including no contribution from palovarotene), progressive entry of additional octreotide and lanreotide generics globally from 2021 and excluding the impact of incremental investments in pipeline expansion initiatives.

Conference call

Ipsen will hold a conference call Thursday, 13 February 2020 at 2:30 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) 2071 928 000

France and continental Europe: +33 (0) 1 76 70 07 94

UK: 08445 718 892

U.S.: (631) 510-7495

Conference ID: 8178467

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

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. Sales growth adjusted for consolidation scope including: subsidiaries involved in the partnership between Ipsen and Schwabe Group consolidated in accordance with the equity method since 1 January 2019; and 2018 Etiasa (mesalazine) sales adjusted for the new contractual set up.

On February 12, 2020 Anika Therapeutics, Inc. (NASDAQ: ANIK) reported that Dr. Cheryl Blanchard, a member of the Company’s Board of Directors since August 2018, has been named interim Chief Executive Officer, effective immediately, while the Board continues its search to identify a new CEO following the recent passing of Joseph Darling (Press release, Anika Therapeutics, FEB 12, 2020, View Source [SID1234554345]). In connection with Dr. Blanchard’s appointment, the previously announced interim Office of the President has been dissolved.

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"We are pleased that Dr. Blanchard, a seasoned executive who has previously served as a biotech President and CEO, has agreed to step in as our interim CEO as we search for Anika’s next leader," said Dr. Joseph Bower, Chairman of Anika’s Board of Directors. "With Dr. Blanchard’s experience, as well as her service on our Board since August 2018, we expect this to be a smooth transition. Given her experience in leading orthopaedic device, joint preservation and restoration businesses, we are fortunate to be able to call on her to help build on Anika’s strong foundation and continue its evolution into a leader in joint preservation and restoration. We are confident in Anika’s prospects and the strong and deep leadership team we have in place as we continue to enhance value for our shareholders, customers and other stakeholders."

"We are all saddened by Joe’s sudden passing, but we also share a commitment to carrying out the initiatives crafted by him and the rest of the executive team and Board. I step into this interim role confident in the team’s ability to continue the successful execution of Anika’s five-year strategic plan," said Dr. Blanchard. "Since joining the Board, I have developed a deep appreciation for the Company’s proprietary offerings and exceptional talent. Anika is well-positioned in its markets and has significant growth prospects. I look forward to leveraging my past experiences and collaborating with the team to maintain the high level of operating discipline while solidifying an expanding position and share in the $7 billion sports and regenerative medicine market."

The Company plans to issue its fourth-quarter and full-year 2019 financial results after the close of the market on February 20, 2020 and will hold its investor conference call on the same day, February 20, 2020, at 5:00 p.m. ET to discuss its financial results, business highlights, and outlook.

About Cheryl R. Blanchard, Ph.D.
Dr. Blanchard joined the Board of Directors of Anika Therapeutics in August 2018. She served as President and Chief Executive Officer of Microchips Biotech, Inc., a venture-backed biotechnology company developing regenerative medicine and drug delivery products, from 2014 until its sale to Daré Bioscience, Inc. in November 2019. From 2000 to 2012, she served in various officer positions of Zimmer, Inc. (now Zimmer Biomet), a medical device company focused on musculoskeletal products, including as the Senior Vice President, Corporate Chief Scientific Officer and General Manager of its Biologics Business. She was also a member of Zimmer’s executive committee and founded, built and led Zimmer’s Joint Preservation/Regenerative Medicine business. Prior to joining Zimmer, Dr. Blanchard built and led the medical device practice at Southwest Research Institute. Dr. Blanchard received her M.S. and Ph.D. in Materials Science and Engineering at the University of Texas at Austin and received her B.S. in Ceramic Engineering at Alfred University. Dr. Blanchard is a member of the National Academy of Engineering.

Until her appointment as Interim Chief Executive Officer, Dr. Blanchard was serving as a member of Anika’s Compensation Committee and Governance and Nominating Committee. She has served as a director of Neuronetics (NASDAQ: STIM) since February 2019 and a director of Daré Bioscience, Inc. (NASDAQ: DARE) since November 2019. Dr. Blanchard also serves on the Board of a privately held company in the life sciences industry.