Ipsen reports consolidated group sales of €1,032.8M for 2009

Commenting on the full year 2009 sales performance, Jean-Luc Bélingard, Chairman and Chief Executive Officer of Ipsen said: “We are very pleased with our performance in 2009. Despite increasing pressure in the global healthcare environment, the Group has once again demonstrated its ability to deliver on its objectives and sustain an above industry growth. We have continued to foster Ipsen’s specialty care strengths throughout the year and achieved - at constant currency - an overall 13.9% sales growth for these products, reaching a very strong 16.6% outside France. This was mainly driven by the performances of two global products, Somatuline^® and Dysport^®, both growing at c. 18.0% worldwide.” Jean-Luc Bélingard added: “Beyond our sales performance, we have been able in 2009 to reach all our key strategic milestones, notably with the approval and launch of Dysport^® in the US, the partnership with Menarini for Adenuric^® in Europe, the approval of Decapeptyl^® 6-month in Europe and the phase III initiation of Somatuline in neuro-endocrine tumours in the US. Now making our vision of Ipsen as an international specialty care pharma company come true, we market three products globally and develop a very rich pipeline, further increasing our growth prospects in the years to come.”

Full year 2009 sales highlight

Group drug sales excluding foreign exchange impacts grew by a strong 7.6% year-on-year.

Consolidated Group sales reached €1,032.8 million for the full year 2009, up 6.8% year-on-year excluding foreign exchange impact.

Sales generated in the Major Western European countries amounted to €554.7 million, down 0.9% year-on-year or flat excluding foreign exchange impacts. Sales were driven by the Group’s dynamic specialty care franchises in Italy, Germany and the United Kingdom, offset by a tougher competitive environment in Primary Care in France. Sales in Major Western European countries continued to decrease in relative terms to 53.7% of total sales from 57.6% a year earlier.

Sales generated in Other European countries reached €234.3 million, slightly down 0.8%, weakened by tough economic conditions affecting some important economies in Eastern Europe, such as for example Ukraine and Romania. Excluding foreign exchange impacts, growth in that region has resumed from the second quarter 2009 onwards. In 2009, sales in Other European countries represented 22.7% of total consolidated Group sales, against 24.3% a year earlier.

Sales generated in North America reached €45.7 million, up from €11.2 million a year earlier, reflecting a sustained and dynamic growth beyond the effects of the full consolidation of the Group’s US acquisitions. On a comparable basis, sales in North America have increased by more than 60.0% year-on-year to $48.5 million. This performance was driven by the continuous penetration of Increlex^®, Somatuline^® and to a lesser degree Apokyn^® and the supply of Dysport^® to Medicis for distribution in aesthetic use in the United States. Dysport^® was only launched in its therapeutic indication in November 2009. Overall, this growth was achieved despite a changing environment, characterized notably by an increased pressure from payers, associated with tougher reimbursement criteria and reimbursement conversion rates as well as the economic crisis impact on the patients’ purchasing power (e.g. co-pay). In 2009, sales in North America represented 4.4% of total consolidated Group sales, against 1.2% a year earlier.

Sales generated in the Rest of the World reached €198.2 million, up 20.8% or up 20.1% excluding foreign exchange impacts, with strong volume growth across all products, notably Decapeptyl^® and Smecta^® in China, Smecta^® in Algeria and Dysport^® in Brazil, Australia and Colombia. In 2009, sales in this region continued to grow in relative terms to 19.2% of total consolidated Group sales, from 16.9% a year earlier.

Sales of specialty care products reached €622.5 million, up 12.6% year-on-year or up 13.9% excluding foreign exchange impacts. This performance was fuelled by strong growth in the Group’s endocrinology and neurology franchises, up 28.3% and 19.9% respectively with Somatuline^® up 18.2% and Dysport^® up 18.0% year-on-year, excluding foreign exchange impacts. Outside France, specialty care sales grew 16.6% excluding foreign exchange impacts. In North America, Somatuline^® Depot more than doubled its sales year-on-year while Increlex^® grew by more than 40.0%, on a comparable basis. Sales of specialty care now represent 60.3% of the Group’s consolidated sales, against 57.0% a year earlier.

Sales of primary care products reached €380.1 million, down 0.8% year-on-year, or down 1.4% excluding foreign exchange impacts, representing 36.8% of the Group’s consolidated sales, against 39.5% a year earlier. Outside France, primary care products grew 5.6% excluding foreign exchange impacts.

Risk factors

The Group carries out business in an environment which is undergoing rapid change and exposes its operations to a number of risks, some of which are outside its control. The risks and uncertainties set out below are not exhaustive and the reader is advised to refer to the Group’s 2008 Registration Document available on its website (www.ipsen.com).

• The Group is dependent on the setting of prices for medicines and is vulnerable to the possible lowering of the reimbursement rate of certain of its products or to their possible withdrawal from the list of reimbursable products by public or private payers in the countries where it does business.
• The Group depends on third parties to develop and market some of its products, which generates substantial royalties for the Group, but these third parties could behave in ways which cause damage to the Group’s business. The Group cannot be certain that its partners will fulfil their obligations and it might be unable to obtain any benefit from those agreements. A default by any of the Group’s partners could result in some of the Group’s products generating lower revenues than expected. Such situations could have a negative impact on the business of the Group, its financial situation or its results.
• Actual results may depart significantly from the objectives set by the management given that a new product can appear to be promising at a development stage or after clinical trials but never be launched on the market or be launched on the market but fail to sell notably for regulatory or competitive reasons.
• The Group’s competitors could infringe its patents or circumvent them through design innovations. In order to prevent infringements, the Group could engage in patent litigation which is costly and time-consuming. It is difficult to monitor the unauthorised use of the Group’s intellectual property rights and it could find itself unable to prevent the unlawful appropriation of its intellectual property rights.
• The Group must deal with or may have to deal with competition (i) from generic products in particular for some of the Group’s products that do not benefit from any patent protection, such as Forlax^® or Smecta^® for example (ii) products which, although they are not strictly identical to the Group’s products or which have not demonstrated their bioequivalence, may obtain a marketing authorisation for indications similar to those of the Group’s products pursuant to the bibliographic reference regulatory procedure (well established medicinal use) before the patents protecting its products expire, in particular Tanakan^® and (iii) products sold for unauthorised uses when the protection afforded by patent law to the Group’s products and those of its competitors expires. To try to avoid such situations or reduce their impact, the Group could, where possible, bring legal actions against the counterfeiters in order to protect its rights. However, such a situation could result in the Group losing market share which could affect its current level of growth in sales or profitability.
• Third parties might claim the benefit of intellectual property rights in respect to the Group’s inventions. The Group collaborates with various third parties (including universities and other public or private entities), and exchanges in this context information and data in various forms relating to the research, development, manufacture and marketing of its products with these third parties. Despite the precautions taken by the Group with regard to these third parties, in particular of a contractual nature, they (or certain of their members or affiliates) could claim ownership of intellectual property rights arising from the work carried out by their employees or any other intellectual property right relating to the Group’s products or to compounds in developments.

Major developments

During the fourth quarter 2009, major developments included:

• On December 17, 2009 - Ipsen announced that its partner Roche had disclosed headline results of the fourth and fifth of eight T-emerge phase III studies in patients with diabetes for taspoglutide, the first once weekly glucagon-like peptide-1 (GLP-1) analogue based on a human sequence. Taspoglutide originating from Ipsen’s research is developed by Roche. T-emerge 5 (subcutaneous weekly taspoglutide versus daily insulin glargine as add-on to metformin in patients failing on metformin and sulfonylurea) and T-emerge 7 (subcutaneous weekly taspoglutide versus placebo as add-on to metformin in patients with high BMI) both met their respective primary endpoints of change in HbA1c.
• On December 14, 2009 - Ipsen announced the preliminary results of a phase I trial in metastatic breast cancer with BN83495, Ipsen’s lead and first-in-class orally available irreversible steroid sulfatase (STS) inhibitor. In the course of the study, the optimal biological dose was determined as 40 mg once daily oral administration for future phase II trials in this indication.
• On December 2, 2009 - Ipsen announced that its partner Roche had disclosed the results of the second and third of eight T-emerge phase III studies in patients with diabetes for taspoglutide, the first human once weekly glucagon-like peptide-1 (GLP-1) analogue originating from Ipsen’s research and developed by Roche. T-emerge 1 (subcutaneous weekly taspoglutide versus placebo in treatment-naïve patients) and T-emerge 4 (subcutaneous weekly taspoglutide versus sitagliptin versus placebo) both met their respective primary endpoints of change in HbA1c.
• On November 25, 2009 - Ipsen announced the initiation of an international, multi-center, controlled, randomized Phase II clinical trial to evaluate the safety and efficacy of BN83495, its investigational first-in-class steroid sulfatase (STS) inhibitor, in advanced endometrial cancer.
• On November 13, 2009 - Ipsen announced that the French regulatory authorities (Agence Française de Sécurité Sanitaire des Produits de Santé, AFSSAPS) had granted the marketing authorization to the 6-month sustained-release formulation of Decapeptyl^® (triptorelin embonate 22.5 mg) for the treatment of locally advanced and metastatic prostate cancer.

After the close of the period under review, major developments included:

• On January 21, 2010 – Ipsen and Inspiration Biopharmaceuticals, Inc. (Inspiration) announced that they had entered into a partnership to create a world leading hemophilia franchise. The partnership is designed to leverage combined expertise and resources to advance a broad portfolio of recombinant proteins, which address all major hemophilia disorders in a unique way by focusing on two significant unmet needs: wider access to treatment with coagulation factors and treatment for inhibitor complications. The two lead product candidates are scheduled to begin Phase III clinical testing in 2010 including Ipsen’s recombinant porcine factor VIII, OBI-1 (for the treatment of patients with acquired hemophilia and hemophilia A who have developed an inhibitory immune reaction to human forms of factor VIII), and Inspiration’s recombinant factor IX product, IB1001 (for the acute and preventative treatment of bleeding in patients with hemophilia B). Combined with Inspiration’s novel proprietary technology and an early-stage pipeline of additional hemophilia factors, this broad and unique portfolio would provide greater access to care and fulfil unmet needs for patients suffering from bleeding disorders.

Update on claims

• On January 19, 2009 the Group had disclosed that Biomeasure (Milford, MA, USA), an affiliate within the Ipsen Group, had been sued in Louisiana by Tulane University of New Orleans (United States) and a Tulane faculty member (“Tulane”), alleging breach of contract and/or inventor ship of some of the GLP-1 analogue patents that the Group licensed out to Roche in July 2006. The Group denies Tulane's allegation and vigorously contests Tulane's claim. However, should Tulane position prevail, despite Ipsen's strong arguments against their allegations, Ipsen might be led to pay royalties and/or milestones components from corresponding intellectual property revenues.

For the fourth quarter 2009, sales generated in the Major Western European countries amounted to €142.8 million, down 1.5% year-on-year (fourth quarter 2008, €145.0 million). For the full year, sales generated in the Major Western European countries amounted to €554.7 million, slightly down 0.9% year-on-year (full year 2008, €559.5 million) or flat excluding foreign exchange impacts. Despite a tougher competitive environment, notably in the French Primary care landscape, sales were driven by the Group’s dynamic specialty care franchises in Italy, Germany and the United Kingdom. Sales in Major Western European countries represented 53.7% of total sales compared with 57.6% a year earlier.

France – For the fourth quarter 2009, sales reached €87.6 million, down 5.5% year-on-year (fourth quarter 2008, €92.7 million). Despite good performances notably of NutropinAq^®, Somatuline^®, Adrovance^™ and Smecta^®. Full year sales in 2009 reached €323.3 million, down 3.2% year-on-year (full year 2008, €334.1 million), mainly due to a decrease in sales of Forlax^® following the launch of a generic competitor in March, as well as a slowdown of sales of Decapeptyl^® in an environment characterised by the launch of two 6-monhts formulations marketed by competitors. Decapeptyl^®’s 6-month formulation was approved in Europe in October 2009 and will be launched in France early in 2010, hence reinforcing its competitive positioning. The weight of France in the Group’s consolidated sales continued to decline, representing 31.3% of total Group sales against 34.4% a year earlier.

Spain – For the fourth quarter 2009, sales reached €14.4 million, up 4.3% year-on-year (fourth quarter 2008, €13.8 million). For the full year, sales reached €59.2 million, up 2.3% year-on-year (full year 2008, €57.9 million) fuelled notably by strong sales of Somatuline^®, partly offset by a slowdown of Decapeptyl^® in a tougher competitive environment characterised by the launch of two 6-month formulations marketed by competitors. Decapeptyl^®’s 6-month formulation will be launched in Spain in the coming months, thus reinforcing Ipsen’s competitive positioning. The weight of Spain in the Group’s consolidated sales was stable at 5.7% of total Group sales against 6.0% a year earlier.

Italy – For the fourth quarter 2009, sales reached €16.8 million, slightly up 0.6% year-on-year. For the full year, sales reached €72.2 million, up 3.3% year-on-year (full year 2008, €69.9 million) driven by sustained growth of NutropinAq^® and Somatuline^®, offset by slower sales of Decapeptyl^® in a tough price environment. Italy represented 7.0% of total Group sales against 7.2% a year earlier.

Germany – For the fourth quarter 2009, sales reached €13.2 million, up 20.8% year-on-year (fourth quarter 2008, €11.0 million), with a double-digit growth across all products. For the full year, sales reached €57.2 million, up 5.3% year-on-year (full year 2008, €54.3 million). The strong sales of Decapeptyl^®, NutropinAq^®, Somatuline^®, Increlex^® and Dysport^® were partly offset by a sharp drop in drug-related sales (active ingredients and raw materials). Germany represented 5.5% of total Group sales, flat year-on-year.

United Kingdom – For the fourth quarter 2009, sales reached €10.8 million, slightly down 0.8% year-on-year (fourth quarter 2008, €10.9 million) or up 8.7% excluding foreign exchange impacts. For the full year, sales reached €42.8 million, down 1.1% year-on-year (full year 2008, €43.2 million) or up 11.1% excluding foreign exchange impacts. The Group experienced strong volume growth in the UK of all its specialty care products, more than offset by a strong negative foreign exchange impact.

For the fourth quarter 2009, sales generated in the Other European countries reached €58.5 million, up 14.7% year-on-year (fourth quarter 2008, €51.0 million), mainly fuelled by a strong growth in Russia and a good performance in Belgium. For the full year 2009, sales in the region reached €234.3 million, slightly down 0.8% (full year 2008, €236.2 million), weakened by tough economic conditions affecting Eastern Europe, such as Ukraine and Romania. Excluding foreign exchange impacts, growth in the region has resumed from the second quarter 2009 onwards. In 2009, sales in Other European countries represented 22.7% of total consolidated Group sales, against 24.3% a year earlier.