Ipsen 2010 first half revenue increases to €31.7 million

Regulatory News:

“Above and beyond the transaction with 'Inspiration' and its diversified international presence, the Group continues to secure its future by actively developing its rich R&D pipeline.”

The Board of Directors of Ipsen (Paris:IPN) (Euronext: IPN; ADR IPSEY), chaired by Jean-Luc Bélingard, met on August 30, 2010 to review the Group's results for the first half 2010, published today. The financial statements have been subject to a limited review by the statutory auditors. The full 2010 half year financial report is available on the Group's web site, www.ipsen.com, under the Regulated Information heading in the Investor Relations pages.

Commenting on the first half 2010 performance, Jean-Luc Bélingard, Chairman and Chief Executive Officer of Ipsen, said: "Once again, our first half 2010 results validate Ipsen's positioning with a double digit Specialist Care sales growth in oncology, neurology and endocrinology and a sustained intrinsic operating profitability, up 20.2%. In a difficult economic and changing pharmaceutical environment in its historical European markets, the Group continues its geographic expansion in the US and in emerging markets. Furthermore, the Group significantly expanded its therapeutic footprint with a major development in hemophilia thanks to its partnership with 'Inspiration Biopharmaceuticals' in the U.S., which could potentially - in the short and medium terms - provide the Group with a comprehensive portfolio of clotting factor products." Jean-Luc Bélingard concluded: "Above and beyond the transaction with 'Inspiration' and its diversified international presence, the Group continues to secure its future by actively developing its rich R&D pipeline."

 "Recurring adjusted operating profit": Excluding (i) €36.4 million over the first half 2009 of Kogenate^® royalties in connection with the favourable settlement of the litigation between the Group and Bayer, (ii) the purchase price accounting impact related to the Group's transaction in North America over the two periods as well as (iii) non-recurring costs incurred on 30 June 2010.

"Diluted recurring adjusted earnings per share": Attributable to equity holders of Ipsen, excluding the impacts, net of tax, over the first half 2009 of (i) the Kogenate^® royalties in connection with the favourable settlement of the litigation between the Group and Bayer, (ii) the purchase price accounting impacts related to the Group's transactions in North America over the two periods as well as (iii) non-recurring costs incurred on 30 June 2010.

Review of the Group's first half 2010 sales and results

Consolidated Group sales reached €553.9 million, up 6.3% on a year-on-year (+5.5% at constant exchange rates). Sales of specialist care products amounted to €352.1 million, up 15.6% on a year-on-year, or 14.4% at constant exchange rates. Sales of specialist care products represented 63.6% of consolidated Group sales, versus 58.4% a year earlier. Sales of primary care products reached €185.6 million, down 6.9% year-on-year.

Drug sales grew 6.7% year-on-year (6.0% at constant exchange rates), driven by sales of the endocrinology franchise, up 20.0% thanks notably to its presence in North America, and of the oncology franchise, up 11.2% due to launches of Decapeptyl^® 3-month formulation in China and the new 6-month formulation in France.

In the first half 2010, sales in the major Western European countries amounted to €283.4 million, stable year-on-year. Despite a tougher competitive environment, notably in the French Primary care landscape, sales were fuelled by the Group's dynamic specialty care franchises in France, Germany and Italy. In the other European countries, sales totaled €128.9 million, up 11.6% excluding foreign exchange impacts, driven by sustained growth particularly in Turkey and Scandinavia and a strong recovery in Russia and certain countries in Eastern Europe. Sales in North America amounted to €27.5 million, up 33.3% excluding foreign exchange impacts. In the rest of the World sales reached €114.2 million, up 11.1% year-on-year (9.0% at constant exchange rates), fuelled by the strong performance of Decapeptyl^® in China and strong sales in Brazil, Australia and Mexico.

Other revenues amounted to €31.7 million in the first half 2010, down €20.2 million relative to June 2009 when €36.4 million were recorded in connection with the favourable settlement of the litigation between the Group and Bayer on Kogenate^®'s royalties. This expected decrease has been partly offset by the growth in royalties received in the framework of the Group's partnerships in aesthetic medicine and the rebilling of OBI-1 development expenditures to Inspiration Biopharmaceuticals Inc.

Consequently, total revenues reached €585.7 million in the first half 2010, up 2.2% year-on-year.

Research and development expenses amounted to €99.1 million, up 8.3% year-on-year. A significant proportion of the first half 2010 expenses were related to the preparation of clinical batches of OBI-1, rebilled to Inspiration Biopharmaceuticals Inc. and recorded in 'other revenues'.

Operating profit totaled €104.9 million in the first half 2010, down 16.2% year-on-year, and represented 18.9% of sales compared with 24.0% a year earlier, when €36.4 million were recorded in connection with the favourable settlement of the litigation between the Group and Bayer on Kogenate^®'s royalties. Excluding the latter as well as the purchase price accounting impacts related to the Group's transaction in North America over the two periods and non-recurring costs incurred on 30 June 2010, the Group's recurring adjusted operating profit totaled €113.2 million in the first half 2010 and represented 20.4% of sales, compared with 18.1% a year earlier, up 20.2% year-on-year.

The Group recorded a €(5.1) million share of loss from associated companies for the first half 2010, stemming from the share of loss made by Inspiration Biopharmaceuticals Inc., equity consolidated by the Group since January 2010.

Consolidated profit (attributable to equity holders of Ipsen) amounted to €75.5 million, compared with €98.7 million a year earlier. Excluding the impacts, net of tax, over the first half 2009 of the Kogenate^® royalties in connection with the favourable settlement of the litigation between the Group and Bayer, the purchase price accounting impacts related to the Group's transactions in North America over the two periods as well as non-recurring costs incurred on 30 June 2010, the Group's recurring adjusted diluted earnings per share (attributable to equity holders of Ipsen) stood at €0.96, up 7.1% year-on-year.

The net cash flow generated by operating activities amounted to €134.7 million, compared to €147.2 million a year earlier. On 30 June 2010, the Group had a positive net cash position of €164.1 million, up €25.0 million compared to 30 June 2009.

2010 financial objectives

Based on the information available to date, Ipsen confirms the objectives established in March 2010 for the year 2010:

• An increase in sales of Specialist care products of nearly 10.0% and a decrease in Primary Care products of between -5.0% and -7.0% resulting in a Group sales growth of drugs between 3.0% and 5.0% as compared to the prior year;
• Other revenues of nearly €50 million, depending on the commercial performances of the Group's partners (excluding the rebilling to Inspiration of expenses related to OBI-1);
• Adjusted operating profit with growth of approximately 15.0%, compared to a recurring adjusted operating profit of €144.4 million in 2009.
• Recurring adjusted earnings per share to remain roughly stable from one year to another.