-- Total net revenue increases to CHF 290.4 million, up 38 percent
compared to Q1 2006
-- Tracleer(r) sales of CHF 260.4 million
-- Cash EBIT up 41% to CHF 101.3 million
-- One-time IPRD charge results in U.S. GAAP Operating loss
-- Increased revenue and Cash EBIT guidance for FY 2007
ALLSCHWIL/BASEL, Switzerland, April 19, 2007 (PRIME NEWSWIRE) -- Actelion Ltd (SWX:ATLN) today announced its financial results for the first quarter of 2007. With total net revenue of CHF 290.4 million (Q1 2006: CHF 210.6 m) and operating expenses of CHF 441.9 million (Q1 2006: 149.5 m) -- including a one-time non-cash In-Process Research and Development (IPRD) charge of CHF 224.8 million, the company reported an operating loss under U.S.-GAAP of CHF 151.5 million (Q1 2006: operating profit of CHF 61.0 m). The net loss for the quarter was CHF 150.0 million (Q1 2006: operating profit of CHF 53.7 m).
The loss per share (EPS) for the first quarter of 2007 was CHF 6.43 (basic: number of shares 23.3 million) compared to fully diluted earnings per share of CHF 2.33 in Q1 2006 (fully diluted: number of shares: 23.1 million).
To better measure and compare operating performance over time, Actelion also reports non-GAAP Cash-EBIT (Operating Income excluding non-cash charges such as In-Process R&D, charges related to employee stock options under FAS 123R, as well as non-cash depreciation and amortization charges). In Q1 2007, Actelion's Cash-EBIT was CHF 101.3 million, an increase of 41% percent compared to Q1 2006.
Jean-Paul Clozel, MD and Chief Executive Officer commented: "Actelion has successfully achieved many different milestones during the first three months of 2007, highlighting the strength of our organization as well as our innovation power. We grew Tracleer(r) in the marketplace. We demonstrated the benefits of our dual endothelin receptor antagonist in patients suffering from chronic-thromboembolic pulmonary hypertension. We successfully concluded the integration of CoTherix within only a few weeks, adding Ventavis(r) to our PAH franchise in the U.S. We obtained a positive opinion in the European Union on the use of Tracleer(r) in patients with systemic sclerosis and ongoing digital ulcer disease. We further demonstrated the innovation power of Actelion with the outstanding initial efficacy findings obtained with our first-in-class dual orexin receptor antagonist in patients with primary insomnia."
Jean-Paul Clozel concluded: "I am confident that Actelion has every resource required to continue its long-term growth trajectory. There is upcoming competition in the PAH field, but our two products -- both first-in-class -- are uniquely supported by outstanding long-term clinical data and a strong and experienced sales force. By year-end, the company could have five different compounds in Phase III and ten compounds in clinical development in total, some of them with blockbuster potential. Therefore, I believe that we have a pipeline at hand with the potential to put the company on an accelerated growth trajectory in the years to come."
CoTherix integration successfully completed
On 9 January 2007, Actelion consummated the acquisition of CoTherix. Thereby, Actelion strengthened its PAH franchise by adding Ventavis(r) (iloprost) to its product offerings in the United Sates. Ventavis(r) is the only approved inhaled therapy for the treatment of Pulmonary Arterial Hypertension (WHO group I) in patients with NYHA class III or IV symptoms.
Actelion is continuing the ongoing programs to further evaluate the safety and efficacy of both, Ventavis(r) in combination settings and its use in an improved delivery system. Later this year, the company expects to make decisions on how to further improve Ventavis(r) delivery, via dry-powder reformulation or by other approaches.
After careful review, Actelion has decided not to pursue further development with fasudil. Accordingly, the related agreement with Asahi-Kasei has been terminated.
The CoTherix integration itself was successfully completed in early March 2007. The integration resulted in the rapid realization of the expected synergies, making this acquisition -- as expected -- immediately cash-accretive.
In terms of accounting under U.S.-GAAP, the transaction resulted in a one-time, non-cash charge for In-Process Research and Development of CHF 224.8 million, as reported in Q1 2007. The transaction also results in an annual recurrent non-cash amortization charge related to acquired capitalized intangible assets of approximately CHF 16 million for each of the next 12 years. In addition, this transaction is expected to result in a slower than expected increase in the corporate tax rate.
Andrew J. Oakley, Chief Financial Officer commented: "Operationally, Actelion has continued to perform strongly in the first three months of 2007, as witnessed by the continued growth of Tracleer(r) in the market place and the increase in Cash EBIT. As expected, the accounting related to the CoTherix acquisition resulted in an operating loss under U.S. GAAP in Q1 2007. In 2008, the transaction is expected to be U.S.-GAAP earnings accretive.
Andrew J. Oakley continued: "I now believe that, given a three-month performance already ahead of my expectations, Actelion will report -- unforeseen events excluded -- total net revenues in 2007 of between 1,200 to 1,245 million Swiss Francs (previously estimated at 1,175 to 1,225) and a Cash EBIT of between 380 to 415 million Swiss Francs (previously estimated at 360 to 395)."
Financial result overview -- Table Q1 2007 vs. Q1 2006
In CHF thousands Results Results Variance in %
Q1 2007 Q1 2006
Net Revenue 290,439 210,554 79,885 38
Operating Expenses 441,912 149,547 292,365 196
Operating Income (151,473) 61,007 (212,480) --
Cash EBIT 101,288 71,734 29,554 41
Net Income (149,998) 53,666 (203,664) --
Diluted EPS in CHF (6.43) 2.33 (8.76) --
The full financial statements for the first quarter 2007 can be found on http://www.actelion.com.
Strong top line growth
In the first quarter of 2007, Actelion's total net revenue was CHF 290.4 million (Q1 2006: 210.6 m). On a quarter-to-quarter basis, total net revenue grew by 11 percent (Q4 2006: 261.4 m).
Contract revenues in Q1 2007 amounted to CHF 6.8 million (Q1 2006: 3.8 m). On a quarter-to-quarter basis, contract revenues were almost unchanged (Q4 2006: CHF 7.1 m).
Continued Tracleer(r) growth -- Ventavis(r) sales on track
In Q1 2007, Tracleer(r) sales were CHF 260.4 million (Q1 2006: CHF 201.4 m). On a quarter-to-quarter basis, Tracleer(r) sales increased by 5 percent (Q4 2006: CHF 246.8 m). At the end of March 2007, Tracleer(r) (bosentan) was marketed in over 35 countries worldwide, including all major pharmaceutical markets.
In Q1 2007, Ventavis(r) (iloprost) sales were CHF 15.8 million. These sales were achieved after CoTherix was formally acquired on 9 January 2007. On a pro-forma basis, first-quarter sales -- including those booked by Co-Therix in the period up to 9 January 2007, were CHF 23.2 million. In comparison, Q4 pro-forma sales would have been CHF 15.4 million.
A proportion of the increase in either Tracleer(r) or Ventavis(r) sales might be attributable to buying pattern variations.
In the first quarter of 2007, Zavesca(r) sales reached CHF 7.5 million (Q1 2006: CHF 5.4 m). On a quarter-to-quarter basis, Zavesca(r) sales were flat (Q4 2006: CHF 7.4 m). Zavesca(r) (miglustat) is commercially available in the United States and in most European markets.
Tracleer(r) expands beyond PAH
On 5 March 2007, the double-blind, placebo-controlled, multicenter study BENEFiT (Bosentan Effects in Inoperable Forms of Chronic Thromboembolic Pulmonary Hypertension) demonstrated that treatment with bosentan (Tracleer(r)) was associated with a significant reduction in pulmonary vascular resistance PVR (positive primary endpoint, p less than 0.0001).
In this first-ever double-blind study in a patient population suffering from this form of pulmonary hypertension, the six-minute walk test remained stable over the four months of blinded evaluation in both treatment groups. Patients on bosentan showed a significant improvement in breathlessness (Borg dyspnoea score) with exercise and there was a trend in favor of bosentan towards prevention of worsening WHO functional class.
Initial results also indicate that treatment with bosentan was associated with a significant decrease in NT-proBNP, an important biomarker of disease severity. In this study, Tracleer(r)'s safety and tolerability profile was consistent with that observed in previous placebo-controlled clinical trials in pulmonary arterial hypertension (PAH).
On 26 March 2007, the Committee for Medicinal Products for Human Use (CHMP), the scientific committee of the European Medicines Agency (EMEA), has issued a positive opinion on bosentan (Tracleer(r)) to extend the use of this dual endothelin receptor antagonist beyond Pulmonary Arterial Hypertension. The CHMP has recommended that the European Commission approve bosentan (Tracleer(r)) for the reduction of the number of new digital ulcers in patients with systemic sclerosis and ongoing digital ulcer disease. The European Commission is expected to make a final decision before the end of May 2007.
Christian Chavy, President Business Operations, commented: "Actelion continues to strengthen Tracleer(r) and its PAH franchise ahead of upcoming competition. The positive results, with our orally available dual endothelin receptor antagonist in CTEPH, highlight once again the unique benefits of our lead product. I am also pleased with Ventavis(r) sales, where we now have the full Actelion U.S. sales force behind this important inhaled treatment option."
Christian Chavy concluded: "With the positive CHMP decision on the use of Tracleer(r) for digital ulcerations, we will soon be able to expand the use of Tracleer(r) beyond PAH. We are preparing a dedicated outreach effort to scleroderma physicians. We will support the appropriate use of the product through a dedicated registry effort."
Expenditure in line with company expectations
In Q1 2007, operating expenses were CHF 441.9 million (Q1 2006: CHF 149.5 m). Compared to the previous quarter, this represents a 133 percent increase (Q4 2006: CHF 190.0 m). Included in the operating expenses are recurrent non-cash charges of CHF 18.7 million for employee stock options as mandated by FAS 123R, recurrent non-cash charges for depreciation and amortization of CHF 9.2 million as well as a one-time only In-Process Research and Development (IPRD) charge of CHF 224.8 million related to the acquisition of CoTherix.
In Q1 2007, research and development expenses were CHF 65.7 million (Q1 2006: CHF 47.7 m). Compared to the previous quarter, this represents an increase of 16 percent (Q4 2006: CHF 56.7 m), in-line with the start of new pre-clinical and clinical programs, such as the BUILD-3 pivotal study to evaluate the safety and efficacy of bosentan in patients suffering from idiopathic pulmonary fibrosis (IPF) and accelerated recruitment into the Phase II program with the orexin receptor antagonist.
In Q1 2007, marketing and advertising costs were CHF 52.6 million (Q1 2006: CHF 41.1 m). Compared to the previous quarter (Q4 2006: CHF 56.1m), this represents a decrease of 6 percent, in-line with usual seasonal trends.
In Q1 2007, selling, general and administrative expenses amounted to CHF 64.5 million (Q1 2006: CHF 39.4 m). Compared to the previous quarter, these expenses were 24% higher (Q4 2006: CHF 51.9m).
Loss under U.S. GAAP -- Increased non-GAAP Cash EBIT
In the first quarter of 2007, Actelion's operating loss was CHF 151.5 million (Q1 2006: operating profit of CHF 61.0 m). In Q1 2007, Cash EBIT amounted to CHF 101.3 million (Q1 2006: CHF 71.7 m). Compared to Q4 2006, cash EBIT increased by 20%. As a reminder, cash EBIT is operating income excluding non-cash charges such as charges related to employee stock options, depreciation and amortization charges as well as IPRD charges.
Net income
Net loss for the first quarter 2007 was CHF 150.0 million (Q1 2006: net profit of CHF 53.7 m). This includes interest income of CHF 3.8 million, interest expense of CHF 0.1 million, a non-cash convertible bond charge of CHF 2.9 million and other financial income -- predominantly related to currency hedging -- of CHF 9.3 million. In Q1 2007, the net income tax expense was CHF 8.7 million. Net income for the previous quarter was CHF 69.3 million.
Cash and cash flow
The company generated cash from operations in the first quarter of 2007 of CHF 61.9 million (Q1 2006; CHF 33.2 m). Cash from operations in Q4 2006 was CHF 84.1 million.
Research and Development programs on track
At the 'Actelion Day' in mid- February 2007, the company provided a full update on its Research and Development program. The programs discussed are on track. The next update is schedule at the H1 2007 report in July 2007.
For documentation purposes -- table Q1 2007 vs. Q4 2006
In CHF thousands Results Results Variance in %
Q1 2007 Q4 2006
Net Revenue 290,439 261,394 29,045 11
Operating Expenses 441,912 189,984 251,928 133
Operating Profit (151,473) 71,410 (222,883) --
Cash EBIT 101,288 84,438 16,850 20
Net Profit (149,998) 69,298 (219,296) --
Diluted EPS in CHF (6.43) 2.89 (9.32) --
Actelion Ltd
Actelion Ltd is a biopharmaceutical company with its corporate headquarters in Allschwil/Basel, Switzerland. Actelion's first drug Tracleer(r), an orally available dual endothelin receptor antagonist, has been approved as a therapy for pulmonary arterial hypertension. Actelion markets Tracleer(r) through its own subsidiaries in key markets worldwide, including the United States (based in South San Francisco), the European Union, Japan, Canada, Australia and Switzerland. Actelion, founded in late 1997, is a leading player in innovative science related to the endothelium -- the single layer of cells separating every blood vessel from the blood stream. Actelion focuses on the discovery, development and marketing of innovative drugs for significant unmet medical needs. Actelion shares are traded on the SWX Swiss Exchange (ticker symbol: ATLN).
Conference Call
Actelion will host an Investor Conference Call and discussion/Q&A on Thursday, 19 April 2007, 15.00 CEST / 09.00 a.m. EDT / 14.00 BST
Dial: +41 (0) 91 610 56 00 (Europe)
+1 (1) 866 291 41 66 (U.S.)
+44 207 107 06 11 (U.K.)
Webcast -- Live and replay on demand
Actelion webcasts its Investor Conference Call. On the Web, you may either follow the call live or have the call replayed later on demand.
To access the webcast live, simply visit the link on our homepage http://www.actelion.com 5-10 minutes before the conference is due to start.
Approximately 60 minutes after the call has ended, the archived investor webcast will be available for replay through our homepage. After 2 weeks, it will be stored under Investors/Past Events.
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