Strong first six months – UCB with continued delivery and strong resilience
UCB HY-Year Report 2022, Brussels (Belgium), 28 July 2022 – 7:00 (CEST) – regulated information
Jean-Christophe Tellier, CEO UCB says: “We had a strong first half 2022, delivered good product growth and strong regional launches of BIMZELX®, which received great feedback from people living with psoriasis. As expected, we’re seeing the impacts from the loss of exclusivity for E KEPPRA® in Japan and VIMPAT® in the U.S. We are confident to bring BIMZELX® to people living with psoriasis in the U.S. following our submission of the response to the complete response letter by the end of 2022. We are looking forward to our strong long-term growth ahead and our ability in creating value for all stakeholders, now and into the future - also driven by the new product launches currently under preparation serving people living with psoriasis, psoriatic arthritis, across the full spectrum of axial spondyloarthritis and generalized myasthenia gravis.”
UCB’s HY 2022 financial results & core product net sales
1 CER = constant exchange rates
2 adj. EBITDA = adjusted Earnings Before Interest, Taxes, Depreciation and Amortization charges
3 Core EPS = core earnings per share
*As communicated on 24 June 2022
In the first six months 2022, revenue reached € 2 925 million (+5%; +3% CER1). Net sales went up by 2% to € 2 705 million (0% CER1), driven by the continued growth of UCB’s product portfolio, namely CIMZIA® and BRIVIACT®, and by the addition of FINTEPLA®. Royalty income and fees increased from € 40 million to € 45 million. Other revenue benefitted from continued payments from R&D and licensing partners, including a one-time amount of € 70 million from sale of intellectual property rights, reaching € 175 million after € 87 million.
Underlying profitability (adjusted EBITDA2) reached € 814 million (-3%; -2% CER1) reflecting higher revenue and higher operating expenses driven by the Zogenix acquisition and the ongoing and coming launches – partly compensated by a strong increase in other operating income in connection with EVENITY® (romosozumab).
Profit decreased to € 399 million (-30%; -25% CER1) also due to the higher amortization charges and fees in connection with the Zogenix acquisition. Core EPS3 were € 3.15 after € 3.40 in the first six months 2021.
1 CER = constant exchange rates
2 adj. EBITDA = adjusted Earnings Before Interest, Taxes, Depreciation and Amortization charges
3 Core EPS = core earnings per share
Regulatory and R&D update
BIMZELX® (bimekizumab) - In January and February 2022, BIMZELX® was approved in Japan and Canada respectively. In March 2022, BIMZELX® was approved in Australia.
In May 2022, UCB announced that the U.S. Food and Drug Administration (FDA) has issued a Complete Response Letter (CRL) regarding the Biologics License Application (BLA) for bimekizumab for the treatment of adults with moderate to severe plaque psoriasis. The letter indicates that the FDA could not approve the application in its current form and that certain pre-approval inspection observations of UCB's manufacturing site in Belgium must be resolved before approval of the application. The CRL is not related to efficacy nor to safety of bimekizumab. UCB is working with the U.S. FDA to address and resolve the pre-approval inspection observations and bring this potential treatment option for moderate to severe plaque psoriasis to patients in the U.S. UCB aims to submit the response to the bimekizumab CRL to the U.S. FDA by the end of 2022.
In March 2022, FINTEPLA® (fenfluramine) oral solution was approved in the U.S. for the treatment of seizures associated with Lennox-Gastaut syndrome (LGS) in patients two years of age and older. Additionally, the U.S. FDA has granted pediatric exclusivity for the product. It is already approved for the treatment of seizures associated with Dravet syndrome in patients two years of age and older in the U.S., Europe and the UK.
Following the acquisition of Zogenix UCB decided to continue with the development of the Phase 3 with fenfluramine in CDKL5 deficiency disorder (CDD). The Phase 3 program evaluates efficacy and safety as an adjunctive therapy in patients 1 to 35 years of age with CDD and uncontrolled seizures. First topline results are expected in H2 2024. CDD is a rare developmental epileptic encephalopathy caused by mutations in the CDKL5 gene. In June 2022, the FDA granted orphan drug designation to FINTEPLA® to treat CDD.
Following the acquisition of Zogenix, UCB sees a high unmet medical need to continue with the development of MT1621 (nucleoside therapy) in Thymidine Kinase 2 deficiency (TK2d). TK2d is an ultra-rare debilitating and life-threatening (often fatal) genetic mitochondrial disorder and causes progressive and severe muscle weakness. Given the high unmet need, no approved therapies, and MT1621 considered to change the disease trajectory, UCB has an opportunity to create pivotal patient value. The clinical development program is complete. UCB is currently engaged in discussions with regulatory agencies to validate the global submission strategy. The target submission projections are aimed for 2023.
Rozanolixizumab - UCB decided to de-prioritize the development of rozanolixizumab in immune thrombocytopenia (ITP). Since UCB took the decision to progress the rozanolixizumab ITP development program to Phase 3 in 2019, the treatment landscape for people living with ITP has significantly evolved. New targeted therapies, offering multiple opportunities to transform the care and management of ITP, are now available or in late-stage development. This evolution looks set to address many of the significant unmet needs faced by the ITP patient community. Taking these factors into account, UCB will not progress with the rozanolixizumab ITP development program. This allows UCB to reallocate resources to areas with higher unmet medical needs. All other rozanolixizumab programs continue as planned.
All other clinical development programs are continuing as planned. In 2022, the timelines for UCB’s clinical development program have not experienced any material delays due to COVID-19. UCB continues to monitor the impact of COVID-19 on all ongoing clinical trials and will implement changes as necessary.
Net sales break-down by product
Due to rounding, some financial data may not add up in the tables.
CIMZIA® (certolizumab pegol), for people living with inflammatory TNF-mediated diseases, went up by 14% (+7% CER), outperforming the anti-TNF market based on strong differentiation and driven by continued growth in all markets, namely in the U.S. and strong growth in international markets, reaching more patients.
VIMPAT® (lacosamide) for people living with epilepsy showed net sales of € 744 million. After strong growth in the U.S. in the beginning of the year, the expected generic erosion in the U.S. since end of March impacted the performance in the U.S., compensated by continued good growth in Europe and international markets.
KEPPRA® (levetiracetam) available for people living with epilepsy reported 22% lower net sales. The generic erosion in Japan started early January this year and was stronger than expected due to multiple generics and governmental support for generic levetiracetam.
BRIVIACT® (brivaracetam), used by people living with epilepsy showed continued, significant growth in all regions Briviact® is available to patients. Briviact® has a different mode of action from Vimpat® and differentiates from Keppra®.
NEUPRO® (rotigotine), the patch for Parkinson’s disease and restless legs syndrome, recorded declining net sales in the U.S. and international markets, namely Japan, and stable net sales in Europe – in a competitive market environment.
NAYZILAM® (midazolam) Nasal SprayCIV, a nasal rescue treatment for epilepsy seizure clusters in the U.S. (launched since December 2019) reached net sales of € 36 million after € 21 million.
FINTEPLA® (fenfluramine) is now part of the UCB epilepsy portfolio thanks to the completed acquisition of Zogenix, Inc. in early March. FINTEPLA® is approved for seizures associated with rare epileptic syndromes, Dravet (since mid-2020) and Lennox-Gastaut syndrome (since late March 2022), providing new treatment options for patients and families living with these rare syndromes that are particularly challenging to treat. Net sales (March - June) were € 35 million. The integration of Zogenix is ongoing and expected to be completed as planned by the end of 2022.
BIMZELX® (bimekizumab) for people living with psoriasis is being launched in Europe and the UK since autumn last year and in Japan and Canada most recently this year. Reported net sales were € 10 million after € 4 million in the second half 2021.
For the U.S., UCB received a complete response letter (CRL) from the U.S. Food and Drug Administration (FDA). The letter indicates that the FDA cannot approve the application in its current form. The CRL states that certain pre-approval inspection observations must be resolved before approval of the application. UCB will address all observations and questions noted in the CRL and is fully confident in the quality of its manufacturing process. UCB aims to submit the response to the CRL to the FDA by the end of 2022.
EVENITY® (romosozumab) for the treatment of severe osteoporosis in postmenopausal women at high risk of fracture is being successfully launched in Europe since March 2020 and reported net sales of € 9 million. EVENITY® is being launched successfully globally by Amgen, Astellas and UCB since 2019, with net sales outside Europe reported by the partners.
2022 HY financial highlights
Due to rounding, some financial data may not add up in the tables.
For the net financial debt, the reporting date for comparative period is 31 December 2021
The statutory auditor has issued an unqualified review report dated 27 July 2022 on the company’s condensed consolidated interim financial statements as of and for the six-month period ended 30 June 2022, and has confirmed that the accounting data reported in the press release is consistent, in all material respects, with the accounts from which it has been derived.
Revenue in the first six months 2022 went up by 5% (+3% CER1) to € 2 925 million and net sales reached € 2 705 million (+2%; 0% CER1). This was driven by the continued growth of UCB’s product portfolio, namely CIMZIA® and BRIVIACT®, BIMZELX® being launched now in Europe, the UK, Japan and Canada and by the addition of FINTEPLA® following the acquisition of Zogenix.
Royalty income and fees were € 45 million (+12%; 1% CER1). Other revenue reached € 175 million
(+> 100%; +97% CER1) due to milestones and other payments from R&D partners and include a one-time amount of € 70 million from sale of intellectual property rights (olokizumab).
Gross profit was stable with € 2 080 million (0%; -2% CER1). The cost of sales for products and services increased by the write-off of some commercial bimekizumab inventory after not being able to launch in the U.S. market. The gross margin was 71% after 75% - impacted by the addition of FINTEPLA® amortization. If adjusted for “amortization of intangible assets linked to sales”, the adjusted gross margin is 77% after 78% in the first six months of 2021.
Operating expenses increased to € 1 529 million (+9%; +5% CER1) reflecting:
- 21% higher marketing and selling expenses of € 730 million – driven by launches and pre-launch activities: FINTEPLA® launch activities, BIMZELX® global launch activities and preparations, EVENITY® ongoing launch activities and global launch preparations for generalized myasthenia gravis.
- 6% higher research and development expenses of € 798 million reflecting the investments in UCB’s progressing pipeline encompassing six late-stage assets and ongoing earlier stage research. The strategic decision to terminate the development in ITP lead to termination costs of € 29 million. The R&D ratio remained stable at 27% in the first six months of 2022,
- 18% higher general and administrative expenses of € 115 million, due to implementation expenses for improved value-focused allocation of resources and the integration of Zogenix,
- significantly higher other operating income of € 114 million after € 50 million in the first half 2021 - driven by an income of € 108 million (+96%) reflecting the net contribution from Amgen in connection with the commercialization of EVENITY®.
Underlying operational profitability – adjusted EBITDA2 – reached € 814 million (-3%; -2% CER1) reflecting higher revenue and higher operating expenses driven by the impacts from the Zogenix acquisition and the ongoing and coming launches. Partly compensated by the strong increase in other operating income in connection with EVENITY®. The adjusted EBITDA ratio (in % of revenue) reached 28%, after 30% in the first six months of 2021.
Total impairment, restructuring and other income/expenses were expenses of € 61 million. This was mainly due to fees related to the acquisition of Zogenix, Inc. and restructuring expenses. In the first six months 2021, the pre-tax expenses were € 4 million and included mainly restructuring expenses offset with the unwinding of cumulative currency translation adjustments.
Net financial expenses went down to € 9 million from € 35 million, mainly due to a one-time positive currency impact of € 25 million.
Income tax expenses were € 82 million, after € 76 million. The average effective tax rate was 17% compared to 12% in the first six months 2021. This is driven by the continued and sustainable use of R&D incentives in line with UCB’s business activities overcompensated by the inability to launch bimekizumab in the U.S. in 2022.
Profit amounted to € 399 million (-30%; -25% CER1) also due to the higher amortization charges and fees in connection with the Zogenix acquisition. The full amount is attributable to UCB shareholders as the contributions to non-controlling interests have expired at the end of 2020. Core EPS3 were € 3.15 after € 3.40 in the first six months 2021.
Core earnings per share, which reflect profit attributable to UCB shareholders, adjusted for the after-tax impact of to be adjusted items and the net amortization of intangibles linked to sales, reached € 3.15 based on 190 million weighted average shares outstanding after € 3.40 based on 189 million in the first six months 2021. In the first six months of 2022, mainly amortization of intangible assets linked to sales and expenses in connection with the acquisition of Zogenix, Inc. needed to be adjusted.
UCB updated its financial guidance 2022 on 24 June 2022, which is confirmed:
UCB is aiming for revenues in the range of €5.30 - 5.40 billion based on continued core product growth and taking into account impacts from the loss of exclusivity for VIMPAT® in the U.S. (since March) and Europe (from September) and the strong generic competition to E KEPPRA® in Japan since January.
UCB continues to invest in research and development to advance its late-stage development pipeline and prepare for upcoming launches to offer potential new solutions for patients. Underlying profitability, adjusted EBITDA, is now expected in the range of 21 - 22% of revenue, also reflecting the continued research and development and marketing & selling investment levels. Core earnings per share are therefore expected in the range of €3.70 - 4.00 per share – based on an average of 189 million shares outstanding.
The figures for the updated financial guidance 2022 as mentioned above are calculated on the same basis as the actual figures for 2021; they have been extended by the consolidation of the acquisition of Zogenix, Inc.
Supported by solid multiple scenario planning and sustainable efficiency generating initiatives in all areas of UCB - being introduced since Q4 2021 - UCB maintains its financial guidance for 2025. Revenue in 2025 is expected to reach at least € 6 billion and the underlying profitability (adjusted EBITDA) should reach the low to mid-thirties in percent of revenue.
Based on UCB’s current assessment of the Covid-19 pandemic and other macroeconomic factors, UCB remains confident in the fundamental underlying demand for its products in the short-term and its prospects for long-term growth. UCB will continue to closely follow the evolving COVID-19 pandemic and other macroeconomic factors and its consequences to the business environment diligently to assess potential near- and mid-term challenges.
Find the financial reports on UCB website: http://www.ucb.com/investors/Download-center
Today, UCB will host a conference call/video webcast at 08.00 (EDT) / 13.00 (BST) / 14.00 (CEST)
Details are available on https://www.ucb.com/investors/UCB-financials/Half-year-financial-results
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T: +32 2 559 9580
Laurent Schots, Media Relations
UCB, Brussels, Belgium (www.ucb.com) is a global biopharmaceutical company focused on the discovery and development of innovative medicines and solutions to transform the lives of people living with severe diseases of the immune system or of the central nervous system. With approximately 8 600 people operating in 40 countries, the company generated revenue of € 5.8 billion in 2021. UCB is listed on Euronext Brussels (symbol: UCB). Follow us on Twitter: @UCB_news
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