UCB Full Year Report 2018: 2018 marks the fifth consecutive year of profitable growth, intensifying investment in UCB’s strong pipeline
Brussels (Belgium), 28 February 2019 – 7:00 (CET) – regulated information –
- Revenue reached € 4.6 billion: +2%, +5% CER1 ; net sales increased to € 4.4 billion: +5%, +8% CER, driven by core products (+6%, +10% CER)
- Underlying profitability (rEBITDA) increased to € 1 398 million: 2%, +5% CER
- R&D update: Evenity® approved in Japan; Vimpat® approved in China
- Financial outlook for 2019: Revenue expected in the range of € 4.6 - 4.7 billion, recurring EBITDA2 in the range of 27% - 29% of revenue, reflecting higher R&D investments
Latest R&D update
In October, UCB announced positive results from a phase 2 study with a novel, subcutaneous FcRn (neonatal Fc receptor) monoclonal antibody, rozanolixizumab, in patients with myasthenia gravis (MG), achieving proof-of-concept. These results support the rozanolixizumab development with a confirmatory study in MG starting in Q2 2019.
In December, Vimpat® (lacosamide) was approved in China as adjunctive therapy in the treatment of partial-onset seizures with or without secondary generalization in adult and adolescent patients 16 years of age and older with epilepsy.
In January 2019, Vimpat® was approved in Japan for the treatment of partial onset seizures in children 4 years of age and older. In addition, two new formulations have been approved, IV (intravenous) and dry syrup.
At the end of 2018, one phase 1 project in neurology, UCB3491, was terminated due to lack of patients for recruitment – driven by sufficient standard of care.
In December, Keppra® (levetiracetam) for monotherapy of epilepsy as well as an updated pregnancy language was submitted to the U.S. authorities. The application was accepted for filing by the FDA in January 2019.
The Keppra® pregnancy label has been approved in the EU in April 2018.
In October, UCB and its partner Biogen announced top-line results from a Phase 2b study with dapirolizumab pegol in moderately-to-severely active systemic lupus erythematosus. While the primary endpoint of the study was not met (p=0.06), the study did demonstrate consistent and potentially meaningful improvements for the majority of clinical endpoints in patients treated with dapirolizumab pegol compared with placebo. UCB and Biogen continue to further evaluate these data while assessing potential next steps.
At the end of 2018, the phase 1 project UCB6673 was returned to the partner – due to prioritization within the UCB pipeline.
In September and in Japan, positive phase 3 results were achieved for Cimzia® (certolizumab pegol) in patients with psoriasis and psoriatic arthritis. Submission to the Japanese agency took place in January 2019.
Early January 2019, UCB and Amgen announced the approval of Evenity® (romosozumab) in Japan. Evenity® is approved to reduce the risk of fractures and increase bone mineral density in men and post-menopausal women with osteoporosis at high risk of fracture.
One week later, the U.S. Food and Drug Administration (FDA) Bone, Reproductive and Urologic Drugs Advisory Committee (BRUDAC) voted positively for the approval of romosozumab. While the FDA is not bound by the Advisory Committee's recommendations, it takes the advice into consideration when making its decision.
All other clinical development programs are continuing as planned.
Revenue and net sales in 2018 reached € 4 632 million (+2%; +5% at constant exchange rates (CER)) and € 4 412 million (+5%; +8% CER) respectively. This growth was especially driven by the continued performance of UCB’s core products.
Royalty income and fees decreased to € 92 million from € 108 million. Other revenue reached € 128 million from € 240 million in 2017, due to the one-time other revenue in 2017 of € 56 million for out-licensing of the over-the-counter allergy drug Xyzal® (levoceterizine) in the U.S.
Gross profit went up to € 3 434 million (+3%) reflecting an improved gross margin of 74.1% from 73.5%.
Operating expenses went up to € 2 329 million (+6%; +8% CER) due to 3% higher marketing and selling expenses of € 964 million and 10% higher research and development (R&D) expenses of € 1 160 million, reflecting a R&D ratio of 25%, compensated by 6% lower general and administrative expenses of € 180 million. This resulted in an increased operating expense ratio (in relation to revenue) of 50.3% up from 48.6%.
Underlying profitability – rEBITDA2 - reached € 1 398 million after € 1 375 million (+2%; +5% CER) driven by the improved gross margin compensating higher marketing and selling and higher R&D expenses. The recurring EBITDA ratio (in % of revenue) surpassed for the second year in a row the 30%-mark, namely 30.2%, after 30.4% in 2017.
Non-recurring income was € 4 million due to gain on disposals from divestitures of UCB’s non-core assets after expenses of € 43 million in 2017 relating to restructuring and litigation.
Net financial expenses decreased to € 93 million from € 99 million.
Income tax expenses were € 200 million, down from € 218 million. The average effective tax rate on recurring activities was 19.7% - driven by R&D incentives - compared to 22.1% in 2017.
Profit of the Group amounted to € 823 million (from € 771 million) of which € 800 (+6%; +10% CER) million is attributable to the UCB shareholders and € 23 million to non-controlling interests.
Core earnings per share, which reflect profit attributable to UCB shareholders, adjusted for the after-tax impact of non-recurring items, the financial one-offs, the after-tax contribution from discontinued operations and the net amortization of intangibles linked to sales, reached € 4.78 (-1%; +3% CER) based on 188 million weighted average shares outstanding.
Dividend – the Board of directors of UCB proposes a dividend of €1.21 per share (gross; +2.5%).
Financial outlook 2019 and updated peak sales for Cimzia® and Vimpat® - 2019 revenue is expected in the range of € 4.6–4.7 billion – thanks to core product growth. Driven by higher R&D investments into UCB’s strong pipeline, recurring EBITDA is expected in the range of 27% - 29% of revenue. Core earnings per share are therefore expected in the range of € 4.40 – 4.80 based on an average of 188 million shares outstanding.
UCB is updating the peak sales guidance for its core products Cimzia® and Vimpat®: Cimzia is expected to reach € 1.7 billion by 2024 and Vimpat should reach 1.4 billion by 2022. Expected peak sales for Briviact (€ 600 million by 2026) remain unchanged. Neupro® has reached its peak sales in 2018 and is expected to mature in its lifecycle going forward. While showing good growth in international markets, global net sales of Keppra® are continuing to mature.
FY 2018 – Financial highlights
Find the FY financial reports on UCB website: http://www.ucb.com/investors/Download-center
“The statutory auditor has issued an unqualified report with no emphasis of matter paragraph dated 27 February 2019 on the company’s consolidated accounts as of and for the year ended 31 December 2018, and has confirmed that the accounting data reported in the accompanying press release is consistent, in all material respects, with the accounts from which it has been derived.”
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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 around 7 500 people in approximately 40 countries, the company generated revenue of € 4.6 billion in 2018. UCB is listed on Euronext Brussels (symbol: UCB). Follow us on Twitter: @UCB_news
Forward looking statements
This press release contains forward-looking statements based on current plans, estimates and beliefs of management. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including estimates of revenues, operating margins, capital expenditures, cash, other financial information, expected legal, political, regulatory or clinical results and other such estimates and results. By their nature, such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions which could cause actual results to differ materially 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, the inability to obtain necessary regulatory approvals or to obtain them on acceptable terms, costs associated with research and development, changes in the prospects for products in the pipeline or under development by UCB, effects of future judicial decisions or governmental investigations, product liability claims, challenges to patent protection for products or product candidates, changes in laws or regulations, exchange rate fluctuations, changes or uncertainties in tax laws or the administration of such laws and hiring and retention of its employees.
Additionally, information contained in this document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any offer, solicitation or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such jurisdiction. UCB is providing this information as of the date of this document and expressly disclaims any duty to update any information contained in this press release, either to confirm the actual results or to report a change in its expectations.
There is no guarantee that new product candidates in the pipeline will progress to product approval or that new indications for existing products will be developed and approved. Products or potential products which are the subject of partnerships, joint ventures or licensing collaborations may be subject to differences between the partners. Also, UCB or others could discover safety, side effects or manufacturing problems with its products after they are marketed.
Moreover, sales may be impacted by international and domestic trends toward managed care and health care cost containment and the reimbursement policies imposed by third-party payers as well as legislation affecting biopharmaceutical pricing and reimbursement.
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