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UCB: Delivering for patients through innovation

Statement of the CEO of UCB at the AGM

  • For 2009: Dividend +4% of EUR 0.96 gross (EUR 0.72 net) per share
  • Outlook 2010:

o Top priority is the continued launch and growth of Cimzia®, Vimpat® and Neupro® around the world

o Financials: revenue of approx. EUR 3.0 billion, recurring EBITDA of approx. EUR 700 million, Core earnings per share of approx. EUR 1.76

  • All resolutions passed the Annual General Meeting

Brussels (Belgium), April 29, 2010 - Today, UCB held its Annual General Meeting (AGM). During the course of this meeting Roch Doliveux, Chief Executive Officer UCB, gave the shareholders of UCB an overview of the financial year 2009 and the interim report for the first three months of 2010.

"2009 was a pivotal year, marking a new stage in the implementation of our strategy and opening up the way for a new phase of growth. The transformation of UCB into a leading patient-centric bio-pharmaceutical company is coming closer to reality with every day that passes. Our strategic priority to focus on serious diseases of the central nervous system and immunology disorders not only enables us to use our resources effectively but, above all, to build a global reputation for expertise in these fields of science. With the successful launch of three new drugs in the crucial US and/or European markets, we are improving quality of life for a considerable number of people and, at the dawn of a new decade, paving the way for a promising level of growth.

Before outlining UCB's plans for 2010, I would like to look back at the achievements of the past year and our financial and operating results.

2009: A key year

The last 18 months will be remembered as an exceptional time for UCB in terms of product approvals and launches. In the United States and/or Europe (two regions that represent 80% of the global market), we obtained approval for Cimzia®, Vimpat® and Neupro®, the three drugs at the core of our strategy for future growth. Once these approvals were obtained, our teams worked tirelessly to market these drugs within the tightest deadlines, sometimes in barely two hours, as was the case for Cimzia® in Germany. Results of this kind would not be possible without the effort and commitment of all my colleagues at UCB, and I would like to offer my heartfelt thanks to them all for what they have achieved. Their performance is even more remarkable because it was achieved in a context of continuous change, involving a refocus of our activities, organisational changes and strict cost management. In spite of the difficulties often experienced, our teams maintained their levels of efficiency and determination. They proved their capacity to react promptly and overcome any obstacles, and the Executive Committee is extremely grateful to them for that.

Financial results

UCB's financial performance for 2009 was in line with expectations. UCB achieved revenues of 3.1 billion Euros, down by 13% on the 3.6 billion figure achieved in 2008. The loss of exclusivity for Keppra® and Zyrtec® in the United States, competition from generic products in this market and our divestments in smaller emerging markets are the main reasons behind this reduction in turnover. This was partially compensated by growth for Keppra® in Europe and in major emerging markets.

In 2009, UCB showed underlying profitability, recurring EBITDA, of 698 million Euros, 5% down on the previous year, but a solid financial performance nevertheless, in line with our expectations and above market expectations. We have largely absorbed the loss of €473 million of income due to competition from generic versions of Keppra® in the United States by reducing operational costs through the refocusing of activity on our core areas.

As anticipated, we felt the full impact of the expiry of the patents of Zyrtec® and Keppra® in the United States end 2007 and end 2008 respectively. This resulted in a loss of nearly 800 million Euros in terms of operating income before non-recurring items. Nearly all of this impact has been absorbed. Our operating income before non-recurring items went from 480 million Euros in 2007 to 453 million Euros in 2009.

Finally, our net result went from 42 million Euros in 2008 to 513 million Euros in 2009. This is due to the positive impact of non-recurring gains from the disposals of non-strategic assets, more than compensating the negative impact of non-recurring charges for restructuring and refinancing the debt.

Given that UCB's dividend policy continues to be based on the company's potential for long-term growth, and not on short-term fluctuations in results, the Board of Directors is proposing a gross dividend of 0.96 Euros per share, which is 4% up on 2008.

These financial results are a healthy basis from which to go forward, equipping us for sustainable growth. At the dawn of a new decade, we believe that UCB is in a good position to face competition on the bio-pharmaceuticals market. While our competitors will have to cope with the expiry of major patents over the next few years, UCB has already overcome most of these challenges, even if we still have to deal with some losses of exclusivity for Xyzal® and Keppra® in Europe, which will keep growth in check throughout 2010 and 2011. Once we have overcome this particular hurdle, we are forecasting strong company growth through the new products of Cimzia®, Vimpat® and Neupro®, with no further major loss of exclusivity or patents in the near future.

Products and pipeline

The key feature of 2009 was the approval and market launch of our three new flagship products: Cimzia®, Vimpat® and Neupro®.

We obtained market authorisations for Cimzia®, indicated for rheumatoid arthritis (RA) in adults, in May 2009 in the United States and October 2009 in Europe. Progress made with this drug is promising, and by the end of 2009 over 9,200 patients had already been treated with Cimzia® for RA. The double benefits of Cimzia® with its fast mode of action and prolonged efficacy is being increasingly recognised by patients, prescribers and payers. Since begin January 2010, the average growth of Cimzia® is significantly bigger than any of our competitors. We made administration easier with an innovative practical injection device, perfected by and with patients in partnership with OXO®. Global sales of Cimzia® reached 75 million Euros in 2009, and are showing strong continued growth. Based on our forecasts, peak sales of Cimzia® should reach in excess of 1.5 billion Euros in the second half of the decade.

The second core element of our strategy, Vimpat®, was launched in the United States for the treatment of epilepsy in June 2009. We launched the product a few days later. In Europe, where Vimpat® was approved in September 2008, the drug was available in 11 countries by the end of 2009.

We are delighted to report that Vimpat® is showing excellent results, in line with the best-performing anti-epileptic drug ever launched in the USA in terms of number of prescriptions at the same point in time of launch. By the end of 2009, 46,000 patients were already benefiting from Vimpat®, and sales reached 46 million Euros in 2009. Based on our forecasts, Vimpat® should achieve peak sales in excess of 1.2 billion Euros in the second half of the decade.

Finally, since June 2009, Neupro® is now available again in Europe for the treatment of Parkinson's disease and restless legs syndrome. By the end of 2009, 53,000 patients had been treated with Neupro®, compared with 30,000 in June when we were authorised to re-launch the product. Sales of Neupro® reached 61 million Euros in 2009 and are continuing to rise.

Neupro® should achieve peak sales in excess of 400 million Euros in the second half of the decade. The recommendation on Neupro® made by the FDA that the product needs to be reformulated before being relaunched on the U.S. market, although disappointing, does not change our faith in the product nor does it change the sales estimates that we have made. We remain convinced that Neupro® can contribute significantly to the lives of people living with Parkinson's disease and restless legs syndrome and we are doing all that we can to make this medication available again to these people in the U.S.

Besides launching them, UCB intends to maximise the benefits of these products by studying their potential for application in other therapeutic indications and increasing sales by obtaining authorisations in other major markets. We are also continuing to build on the potential of older products that have already proved their worth. Keppra® for example, a key product in the treatment of epilepsy, is still generating double digit sales growth across Europe. In September 2009, Keppra® was approved in Europe as an adjunctive treatment for partial seizures in infants and young children under the age of four. In Europe, Keppra® is increasingly used as a single treatment, or monotherapy.

However, promising beginnings for our new drugs should not make us lose sight of the importance of continuing to develop and invest in our pipeline. Around 22% of revenue is invested in research and development.

Our aim is to continue accelerating research in our key areas, namely the central nervous system and immunology disorders. We shall focus research on patients and their unmet needs. Our goal is to enable the greatest possible number of patients to live as normal an everyday life as possible.

With this in mind, Dr Ismail Kola has joined the UCB management team as Head of UCB NewMedicines(TM), our unit responsible for drug discovery to proof of concept. Ismail has an impressive experience in pharmaceutical research. He has been at UCB for some months now, and has already given new impetus to our research teams. Two new molecules have moved into Phase 1 clinical research in recent months (UCB2892, CDP7657).

It is with Dr. Kola and his team that we are continuing to develop our open innovation model. This model looks to actively encourage the use our internal expertise as basis for the development of external partnerships primarily with universities - we already have more than 150 collaboration projects underway with these institutions - among them the University of Liége and the University of Leuven - and with biotech companies. Current industry partnerships include Wilex, Germany and Biogen Idec, US.

In terms of clinical development, we made major progress in 2009, particularly with a new antibody (epratuzumab) for the treatment of systemic lupus erythematosus. The Phase IIb dosage study has been successfully completed. In addition to this, the successful completion of Phase I together with our strategic partner Amgen has enabled us to move a new antibody (anti-sclerostin) for the treatment of bone loss disorders into Phase II. Trials are focused on the treatment of post-menopausal osteoporosis and fracture healing.

UCB has completed two phase III clinical trials on the effectiveness of a new treatment for epilepsy (brivaracetam). One of these trials brought proof of a significant reduction in the frequency of seizures. After analysing the results and consulting with opinion leaders and regulatory bodies, we plan to start an additional phase III study to confirm the drug's effectiveness.

Finally, based on research that we have conducted with Cimzia® into Crohn's disease, we have decided to continue our development work in the field of inflammatory bowel disease, particularly chronic ulcerative colitis, an area of major medical need not currently addressed.

Cimzia® is also being developed in two other important new indications: ankylosing spondylitis and psoriatic arthritis.

As well as these developments with our new medicines UCB also succeeded in the full refinancing and the diversification of its debts in 2009. This diversification has allowed us to spread our new repayments more evenly and in line with our expected cash-flow over the coming years.

Together with this, our focus on the severe conditions has also been accompanied by a refocusing of our efforts on to the important markets of today and tomorrow, essentially North America, Europe and Asia (including China, Japan, Korea and India). Along with this we have divested a number of mature UCB products in non-strategic markets as well as other non-strategic products.

People

Everything that we achieved in 2009, be it drug launches, sales of mature products,research and development, refinancing, new partnerships, the change of our strategic focus could not have been done without the determination and commitment of the staff at UCB.

Even in difficult times, and there were quite a few in 2009, they continue to commit themselves with passion, flexibility and perseverance.

UCB's transformation is not happening magically. The SHAPE programme and other necessary organisational changes that we have made over the past two years have had a considerable impact on staff. At the end of 2009, UCB employed 9,324 people which is approximately a quarter less than at the start of the programme. We set up a job centre 'relais emploi' to help the people affected to retrain for other jobs, and we are delighted to report that, so far, more than 70% of them have already found work or are starting new careers.

In spite of such changes and challenges, we are happy to report that the determination of UCB's teams remains strong, as demonstrated by an annual survey carried out among over 1,000 of our management staff. This helps us to continue to consider ways in which we can improve how we manage and train our teams, enabling them to develop and flourish in their work.

Finally, we can also proudly state that our business culture, focused as it is on the patient, is a driving force behind our teams, who are increasingly applying the advantages this focus brings in their work each day. And it is not only the patients we are able to help, it is also those who continue to suffer, that provide a great source of inspiration to all who work at UCB.

2010

So, what can we hope for in 2010?

This year follows on logically from what has already been achieved. We now have to build on the foundations laid. Our top priority will, of course, be to continue marketing Cimzia®, Vimpat® and Neupro® around the world and support their growth. Early sales are very encouraging, confirming that we made the right decision. Continuous development of new generation therapies and feeding our product 'pipeline' will also remain a core focus in 2010. We are still planning to make a considerable investment in developing staff potential, which has always been a priority for UCB. In other domains, strict control of efficiency and costs will continue.

From a financial point of view, we believe that total revenue is expected to reach approximately 3 billion Euros in 2010. This reflects full annualised generic erosion of Keppra® in the U.S and the loss of exclusivity for Keppra® in the E.U. in the second half of 2010, impacts by the divestitures made early 2009 and further erosion of mature products. These impacts should be partially offset by the growth of the newly launched products Cimzia®, Vimpat® and Neupro®.

In 2010, UCB's recurring EBITDA is expected to reach approximately EUR 700 million.

Core EPS 2010 are expected to reach approximately EUR 1.76 versus EUR 1.74 in 2009 (based on EUR 180 million non-diluted shares).

Finally, I would like to emphasise that all our achievements, be they commercial, scientific or human, are part of a clear and ambitious long-term strategy that has been consistent since 2004. They all strive towards the same objective, namely to make a difference to patients facing a serious disease, and to the people close to them.

2009 was a major milestone for UCB. The way is now open to us for future growth, and we can go into this new decade with great confidence, energy and ambition.

In conclusion, I would like to thank the Board of Directors and shareholders for their support, encouragement and commitment in the continued development of UCB."

At the Ordinary Annual General Meeting (AGM) 109,028,033 shares (60.51% of shares outstanding) were represented. For details please see UCB's website www.ucb.com/investors/calendar.asp.

The AGM approved for the fiscal year 2009 the payment of a gross dividend of EUR 0.96 per share (net dividend of EUR 0.72 per share) compared with EUR 0.92 per share for 2007 (net EUR 0.69). The dividend will be payable on 6 May 2010 (coupon No. 12).

The AGM re-elected Roch Doliveux as Director and Peter Fellner as an Independent Director. The AGM appointed Alexandre Van Damme as a new Director and Bert De Graeve, as a new independent Director. For curriculum vitae of the Board members, please see UCB's website www.ucb.com/investors/governance.asp.

The Annual Report 2009 of UCB is published on the internet: www.ucb.com/investors/financials/annual-reports.asp

An interim report on the first three months has been published today, the financial results for the first half year 2010 will be announced on 2 August 2010 and an interim report for the first nine months of 2010 is due on 21 October 2010. Next year's AGM will be held on Thursday 28 April 2011 at 11:00 am in Brussels (Belgium).

For further information
Antje Witte, Corporate Communications & Investor Relations, UCB
T +32.2.559.9414, antje.witte@ucb.com

Nancy Nackaerts, External Communications, UCB

T +32 473 86 44 14, nancy.nackaerts@ucb.com


About UCB
UCB, Brussels, Belgium (www.ucb.com) is a biopharmaceutical company dedicated to the research, development and commercialization of innovative medicines with a focus on the fields of central nervous system and immunology disorders. Employing approximately 9 000 people in over 40 countries, UCB generated revenue of EUR 3.1 billion in 2009. UCB is listed on Euronext Brussels (symbol: UCB).

Forward looking statement
This press release contains forward-looking statements based on current plans, estimates and beliefs of management. Such statements are subject to risks and uncertainties that may cause actual results to be materially different from those that may be implied by such forward-looking statements contained in this press release. Important factors that could result in such differences include: changes in general economic, business and competitive conditions, effects of future judicial decisions, changes in regulation, exchange rate fluctuations and hiring and retention of its employees.


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