On July 31, 2019 Takeda Pharmaceutical Company Limited (TOKYO:4502)(NYSE:TAK) (Press release, Takeda, JUL 31, 2019, View Source [SID1234537913]):
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Underlying Revenue declined -0.8% vs FY2018 Q1 pro-forma revenue1
Takeda’s 14 global brands, with an aggregate revenue of 270.2 billion yen posted strong year-over-year growth of +22%. This growth mostly offset the negative impact from intensified competition, phasing, and generic erosion.
Takeda’s 5 key business areas represent ~78% of revenues.
GI grew +8% spearheaded by ENTYVIO continuing to gain market share.
Plasma Derived Therapy (PDT) Immunology grew +2% driven by Albumin growth, with Immunoglobulin (IG) sales impacted by phasing of Intravenous Immunoglobulin (IVIG) shipments.
Rare Diseases declined -10% with rare hematology impacted by competition and price pressure, and strong uptake of TAKHZYRO not fully offsetting the decline of other Hereditary Angioedema (HAE) products due to the switch to TAKHZYRO and stocking in FY2018 Q1.
Oncology grew +8% driven by expansion of NINLARO.
Neuroscience grew +10% driven by the U.S. business under a new commercial structure.
Underlying Core Operating Profit Margin 32.4% for Q1
Reported Operating Profit declined 90.0% to 9.9 billion yen, largely impacted by one-time integration costs as well as non-cash purchase accounting expenses including unwinding of inventory step-up, and increased amortization of intangibles and impairment.
Underlying Core Operating Profit Margin for the current period was 32.4% reflecting synergy savings and continued OPEX discipline.
Achieved several important pipeline milestones in Q1
Currently 19 New Molecular Entity assets in Phase 2 & 3.
Advances in Cell and Gene Therapy platforms where CAR-T Cell Therapy from T-CiRA moves towards clinic and the integration of Adeno-Associated Virus-based (AAV-based) process development and manufacturing center in Austria.
ENTYVIO subcutaneous formulation achieved primary endpoint as maintenance therapy in Crohn’s disease.
Orexin 2 receptor agonist TAK-925 received Sakigake Designation in Japan for treatment of narcolepsy.
Disposing non-core assets to generate cash and focus the business
Net debt / adjusted EBITDA reduced from 4.7x at end of FY2018 to 4.4x as of June 2019, which does not include the $3.4 billion upfront cash payment received July 1, 2019 for the sale of XIIDRA to Novartis.
Sale of TACHOSIL remains on track to close in second half of calendar year.
Negotiations ongoing for further potential divestments.
Costa Saroukos, Chief Financial Officer, commented:
"Takeda had a very strong start to the year, delivering on our strategic priorities while successfully executing the integration of Shire. The combination of solid performance across our 14 global brands, continued OPEX discipline, and realization of cost synergies resulted in strong margins and cash flow. We are also making steady progress against our divestiture plan, with the completion of the XIIDRA sale on July 1st.
For the full year, Takeda has revised management guidance upward to reflect updated VELCADE assumptions and divestitures, and now anticipates delivering an Underlying Core Operating Profit margin in the mid-to-high twenties.
Takeda is relentlessly executing towards our cost synergy, de-leveraging, and margin targets. We remain on track to achieve our previously raised cost synergy target of $2 billion by the end of FY 2021, we are committed to achieving our 2x net debt / adjusted EBITDA target over the next three to five years, and our strong start to fiscal 2019 gives us great confidence towards realizing top-tier margins in the medium-term."
Underlying Growth compares two periods (quarters or years) of financial results under a common basis and is used by management to assess the business. These financial results are calculated on a constant currency basis and excluding the impact of divestitures and other amounts that are unusual, non-recurring items or unrelated to our ongoing operations.
Growth versus FY2018 Q1 pro-forma revenue. Pro forma adjustments to reflect amortization of intangible assets as if the acquisition of Shire had occurred at the beginning of FY2018, while removing non-recurring costs related to the acquisition such as transaction costs. The adjustments also include removal of impacts related to Shire’s oncology business which was divested in August 2018.
Core Operating Profit represents net profit adjusted to exclude income tax expenses, our share of profit or loss of investments accounted for using the equity method, finance expenses and income, other operating expenses and income, amortization and impairment losses on intangible assets associated with products and other items that management believes are unrelated to our core operations, such as purchase accounting effects and transaction related costs
Attributable to the owners of the company.
Not Meaningful
FY2019 Management Guidance: Upward revision to reflect changes to assumptions
Takeda no longer assumes any additional U.S. competitor for VELCADE within FY2019
Reflects divestitures of XIIDRA (closed July 1, 2019) and TACHOSIL (expected close CY2019 H2)
vi. Constant Exchange Rate growth (applying FY2018 full year average foreign exchange rate). Compared to baseline of 3,300 billion JPY (rounded pro-forma April 2018 – March 2019 combined revenue of Legacy Takeda and Legacy Shire, converted at April 2018 – March 2019 average exchange rate of 111 JPY/USD; also adjusted to remove the revenue from divested assets such as Techpool, Multilab, and TACHOSIL from Legacy Takeda, and the oncology portfolio and XIIDRA from Legacy Shire)
FY2019 Reported Forecast: Increasing Earnings forecasts with Reported Revenue forecast unchanged
For more details on Takeda’s FY2019 1st quarter results and other financial information, please visit View Source