-- Third-Quarter 2019 Net Sales of $335.5
Million Increased 3 Percent; Third-Quarter 2019 GAAP Net Income of
$18.2 Million; Adjusted EBITDA of $130.4 Million -- -- Record
Quarterly Orphan and Rheumatology Segment Net Sales of $250.4
Million, an Increase of 14 Percent; Segment Represents
Approximately 75 Percent of Total Company Net Sales; KRYSTEXXA®
Third-Quarter 2019 Net Sales of $99.6 Million Increased 42 Percent
-- -- Maintaining Full-Year 2019 Net Sales Guidance Range of $1.28
to $1.30 Billion; Raising Midpoint of Full-Year 2019 Adjusted
EBITDA Guidance; Range is Now $465 Million to $475 Million;
KRYSTEXXA Full-Year 2019 Net Sales Growth Expected to Be Greater
Than 25 Percent -- -- Granted U.S. FDA Priority Review of
Teprotumumab with March 8, 2020, PDUFA Date -- -- Initiated PROTECT
Trial Evaluating KRYSTEXXA to Improve Management of Uncontrolled
Gout for Adults with a Kidney Transplant -- -- Presented
Phase 3 Teprotumumab Secondary Endpoint Data Demonstrating
Significantly Reduced Double Vision and Improved Quality of Life
for Active Thyroid Eye Disease (TED) Patients -- -- Cash Position
of $884 Million; Net Leverage of 1.1 Times as of Sept. 30, 2019
--
Horizon Therapeutics plc (Nasdaq: HZNP) today announced its
third-quarter 2019 financial results and raised the midpoint of its
full-year 2019 adjusted EBITDA guidance.
“Our third-quarter performance underscores the strength of our
commercial and R&D organizations,” said Timothy Walbert,
chairman, president and chief executive officer, Horizon. “We
generated record quarterly net sales in our orphan and rheumatology
segment – including a record quarter for net sales of KRYSTEXXA,
our medicine for uncontrolled gout – and the U.S. FDA also granted
Priority Review of our BLA for teprotumumab, our biologic candidate
for the treatment of active thyroid eye disease. We made great
progress on all fronts during the quarter, including our market
education activities related to teprotumumab, and remain excited
about the prospect of being able to address the significant unmet
need for patients living with active thyroid eye disease.”
Financial Highlights
(in millions except for per share amounts and percentages)
Q3
19 Q3 18 % Change YTD 19 YTD 18
% Change Net sales
$
335.5
$
325.3
3
$
936.5
$
852.0
10
Net income (loss)
18.2
33.4
(45
)
(19.7
)
(140.0
)
86
Non-GAAP net income
124.1
112.6
10
273.6
197.9
38
Adjusted EBITDA
130.4
149.9
(13
)
342.9
300.3
14
Earnings (Loss) per share - diluted
0.09
0.19
(53
)
(0.11
)
(0.84
)
87
Non-GAAP earnings per share - diluted
0.64
0.65
(2
)
1.44
1.16
24
Third-Quarter and Recent Company Highlights
- Granted Priority Review of Teprotumumab BLA: In
September, the Company announced the U.S. Food and Drug
Administration (FDA) accepted the Biologics License Application
(BLA) for its investigational medicine teprotumumab for the
treatment of active TED and granted it Priority Review designation,
with a March 8, 2020, Prescription Drug User Fee Act (PDUFA) date.
If approved, teprotumumab would be the first and only approved
treatment for active TED.
- Presented Additional Teprotumumab Phase 3 Data: The
Company recently presented additional data from the Phase 3 OPTIC
confirmatory clinical trial showing that teprotumumab provided
significant benefit on several devastating effects of active TED
compared with placebo, including diplopia (double vision), quality
of life (QoL) and clinical activity score (CAS). At Week 24, 68
percent of teprotumumab patients had a change from baseline of at
least 1 grade in diplopia, compared to 29 percent of placebo
patients (p=0.001). On the Graves' Ophthalmopathy Quality of Life
(GO-QoL) scale, a change of 6 points is considered clinically
significant, and teprotumumab patients had a mean change of 13.79
compared to 4.43 for placebo patients (p<0.001). At Week 24, 59
percent of teprotumumab patients achieved a CAS value of 0 or 1
compared to 21 percent of placebo patients (p<0.001). These data
were presented during the American Society of Ophthalmic Plastic
and Reconstructive Surgery (ASOPRS) 50th Anniversary 2019 Fall
Scientific Symposium in San Francisco, and build upon data
presented earlier in the year that demonstrated the significant
benefit of teprotumumab on proptosis.
- Announced Teprotumumab Expanded Access Program (EAP): In
August, the Company announced an EAP for teprotumumab while the FDA
reviews the BLA. The EAP provides access to teprotumumab for
patients with active TED who meet protocol criteria, who may have
otherwise progressed to the inactive stage of the debilitating
disease before the BLA review process is completed.
- Initiated PROTECT Trial Evaluating KRYSTEXXA to Improve
Management of Uncontrolled Gout for Adults with a Kidney
Transplant: In October, the Company initiated its open-label
PROTECT clinical trial evaluating the use of KRYSTEXXA in adults
with uncontrolled gout who have undergone a kidney transplant. The
objective of the trial is to demonstrate that KRYSTEXXA provides
effective disease control without burdening the kidneys. The
randomized multicenter open-label trial is expected to enroll 20
adults with uncontrolled gout who have received a kidney
transplant.
- Further Improved the Company’s Capital Structure: In
July, the Company issued $600 million of 5.5 percent Senior Notes
due 2027 and used the proceeds together with cash on hand to repay
$625 million of its outstanding debt. These actions reduced
interest expense and extended the maturity of the debt, furthering
the Company’s strategy to improve its capital structure. The
Company has reduced its gross debt by $575 million in the
year-to-date period ended Sept. 30, 2019.
- Intellectual Property Update: In October, the Federal
Circuit Court of Appeals issued a decision in favor of the Company
regarding an appeal of the 2017 decision by the United States
District Court for the District of New Jersey upholding the
validity of a PENNSAID® 2% patent that expires in 2027.
- Gender and Ethnicity Pay Equity Demonstrated; Received Best
Medium Workplace Award: A recent study conducted by Aon, a
leading compensation consulting firm, showed that Horizon
demonstrates both gender and ethnicity pay equity, ranking in the
top five of the roughly 100 companies Aon has studied in this
regard, and in line with the value the Company places on diversity.
In addition, the Company was selected to FORTUNE Magazine’s 2019
“Best Medium Workplaces” list for the fourth consecutive year,
ranking eighth out of 100 other medium sized companies.
- Appointed Sue Mahony to the Board of Directors: In
August, the Company appointed Sue Mahony, Ph.D., MBA, to its board
of directors. Dr. Mahony brings more than 30 years of diverse
industry experience to the board, including an 18-year tenure at
Eli Lilly and Company, where she served in a variety of global and
domestic leadership roles of increasing responsibility, including
helping oversee the development of an innovative pipeline. Before
Lilly, Dr. Mahony spent five years at Bristol-Myers Squibb
Company.
- Named Andy Pasternak Executive Vice President, Chief
Business Officer: In August, the Company named Andy Pasternak
executive vice president, chief business officer, effective Nov. 1.
Pasternak leads business development, mergers and acquisitions,
corporate strategy, commercial development and portfolio
management.
Research and Development Programs
Orphan Disease Candidate and Program:
- Teprotumumab: Teprotumumab is a fully human monoclonal
antibody insulin-like growth factor-1 receptor (IGF-1R) inhibitor
candidate for the treatment of active TED. TED is a serious,
progressive, vision-threatening autoimmune disease in which the
muscles and fatty tissue behind the eye become inflamed and expand,
which can lead to proptosis (eye bulging) and diplopia (double
vision) and impact activities of daily living and quality of life.
The development program for teprotumumab in TED includes positive
results from the confirmatory Phase 3 OPTIC clinical trial,
announced in February 2019, as well as positive Phase 2 results
published in The New England Journal of Medicine in May 2017. The
OPTIC study met its primary endpoint of a ≥2 mm reduction in
proptosis (p<0.001), the main cause of morbidity in TED, with
82.9 percent of patients treated with teprotumumab demonstrating a
significant improvement in proptosis compared to 9.5 percent of
placebo patients. In addition, all secondary endpoints were met
(p≤0.001), and the safety profile was consistent with the Phase 2
study.
Rheumatology Pipeline Candidates and Programs:
- KRYSTEXXA MIRROR Immunomodulation Trial: The Company is
evaluating the use of methotrexate to increase the response rate
with KRYSTEXXA. This evaluation was initiated through the small
open-label MIRROR pilot study, followed by the larger MIRROR
registrational clinical trial. Methotrexate is the immunomodulator
most used by rheumatologists, and has been shown to reduce
anti-drug antibody formation to biologic therapies when used in
conjunction with these therapies. The MIRROR registrational trial
commenced in June.
- KRYSTEXXA PROTECT Trial in Kidney Transplant Patients with
Uncontrolled Gout: In October, the Company initiated PROTECT,
its clinical trial evaluating the effect of KRYSTEXXA on serum uric
acid levels in kidney transplant patients with uncontrolled gout.
Kidney transplant patients have more than a tenfold increase in the
prevalence of gout when compared to the general population, and
literature suggests that persistently high serum uric acid levels
can be associated with organ rejection. Managing uncontrolled gout
is one of the most common and significant unmet needs of kidney
transplant patients.
- Next-generation Programs for Uncontrolled Gout: The
Company is pursuing early-stage development programs for
next-generation biologics for uncontrolled gout to support and
sustain the Company’s market leadership in this area. These include
HZN-003 and HZN-007, as well as a collaboration with HemoShear
Therapeutics, LLC (HemoShear) to discover new targets for
gout.
Third-Quarter Financial Results
Note: For additional detail and reconciliation of non-GAAP
financial measures to the most directly comparable GAAP financial
measures, please refer to the tables at the end of this
release.
- Net Sales: Third-quarter 2019 net sales were $335.5
million, an increase of 3 percent.
- Gross Profit: Under U.S. GAAP, the third-quarter 2019
gross profit ratio was 73.2 percent compared to 72.0 percent in the
third quarter of 2018. The non-GAAP gross profit ratio in the third
quarter of 2019 was 90.7 percent compared to 91.2 percent in the
third quarter of 2018.
- Operating Expenses: Research and development (R&D)
expenses were 7.3 percent of net sales and selling, general and
administrative (SG&A) expenses were 51.4 percent of net sales.
Non-GAAP R&D expenses were 5.8 percent of net sales, and
non-GAAP SG&A expenses were 46.2 percent of net sales.
- Income Tax Rate: In the third quarter of 2019, the
income tax rates on a GAAP and non-GAAP basis were 247.9 percent
and negative 7.5 percent, respectively.
- Net Income: On a GAAP basis in the third quarter of
2019, net income was $18.2 million. Third-quarter 2019 non-GAAP net
income was $124.1 million.
- Adjusted EBITDA: Third-quarter 2019 adjusted EBITDA was
$130.4 million.
- Earnings per Share: On a GAAP basis, diluted earnings
per share in the third quarter of 2019 and 2018 were $0.09 and
$0.19, respectively. Non-GAAP diluted earnings per share in the
third quarter of 2019 and 2018 were $0.64 and $0.65, respectively.
Weighted average shares outstanding used for calculating GAAP and
non-GAAP diluted earnings per share in the third quarter of 2019
were 194.2 million.
Third-Quarter Segment Results
Management uses net sales and segment operating income to
evaluate the performance of the Company’s two segments. While
segment operating income contains certain adjustments to the
directly comparable GAAP figures in the Company’s consolidated
financial results, it is considered to be prepared in accordance
with GAAP for purposes of presenting the Company’s segment
operating results.
Orphan and Rheumatology Segment
(in millions except for percentages)
Q3 19 Q3 18 %
Change YTD 19 YTD 18 % Change
KRYSTEXXA
99.6
70.2
42
231.6
175.6
32
RAVICTI®(1)
60.0
60.4
(1
)
160.3
166.5
(4
)
PROCYSBI®
40.4
41.4
(2
)
121.1
114.7
6
ACTIMMUNE®
27.9
25.8
8
78.9
78.1
1
RAYOS®
19.3
17.2
13
59.1
41.3
43
BUPHENYL®(1)
3.0
4.4
(30
)
8.2
15.3
(47
)
QUINSAIRTM
0.2
0.1
67
0.6
0.3
59
LODOTRA®(1)
-
0.4
NM
-
2.0
NM
Orphan and Rheumatology Net Sales
$
250.4
$
219.9
14
$
659.8
$
593.8
11
Orphan and Rheumatology Segment Operating Income
$
89.8
$
91.5
(2
)
$
211.0
$
205.3
3
(1)
Beginning in 2019, the Company no longer
recognizes revenue from RAVICTI and AMMONAPS sales outside of North
America and Japan, nor from sales of LODOTRA. On Dec. 28, 2018, the
Company divested the rights to RAVICTI and AMMONAPS outside of
North America and Japan. AMMONAPS is known as BUPHENYL in the
United States. In addition, effective Jan. 1, 2019, the RAYOS and
LODOTRA license and supply agreements were amended, including the
transfer of LODOTRA to Vectura Group plc. LODOTRA is known as RAYOS
in the United States.
- Third-quarter 2019 net sales of the orphan and rheumatology
segment, the Company’s strategic growth segment, were $250.4
million, an increase of 14 percent over the prior year’s quarter,
driven by growth of KRYSTEXXA, ACTIMMUNE and RAYOS. The orphan and
rheumatology segment represents approximately 75 percent of total
Company net sales.
- Third-quarter 2019 orphan and rheumatology segment operating
income was $89.8 million, which includes the impact of investment
in teprotumumab pre-launch activities.
Inflammation Segment
(in millions except for percentages)
Q3 19 Q3 18 %
Change YTD 19 YTD 18 % Change
PENNSAID 2%
42.1
51.5
(18
)
143.7
125.9
14
DUEXIS®
29.9
34.2
(13
)
89.4
80.6
11
VIMOVO®
13.1
18.6
(30
)
41.8
48.9
(15
)
MIGERGOT®(1)
-
1.1
NM
1.8
2.8
(34
)
Inflammation Net Sales
$
85.1
$
105.4
(19
)
$
276.7
$
258.2
7
Inflammation Segment Operating Income
$
39.6
$
58.0
(32
)
$
130.8
$
94.3
39
(1)
In June 2019, the Company divested the
rights to MIGERGOT.
- Third-quarter 2019 net sales of the inflammation segment were
$85.1 million and segment operating income was $39.6 million.
Cash Flow Statement and Balance Sheet Highlights
- On a GAAP basis in the third quarter of 2019, operating cash
flow was $87.5 million. Non-GAAP operating cash flow was $96.5
million.
- The Company had cash and cash equivalents of $884.0 million as
of Sept. 30, 2019.
- In July, the Company issued $600 million of 5.5 percent Senior
Notes due 2027 and used the proceeds along with cash on hand to
repay $625 million of its outstanding debt. As of Sept. 30, 2019,
the total principal amount of debt outstanding was $1.418 billion,
consisting of $418 million in senior secured term loans due 2026,
$600 million of Senior Notes due 2027 and $400 million of
Exchangeable Senior Notes due 2022. As of Sept. 30, 2019, net debt
was $534.1 million and net-debt-to-last-12-months adjusted EBITDA
leverage ratio was 1.1 times, compared to 2.9 times at Sept. 30,
2018.
2019 Guidance
The Company continues to expect full-year 2019 net sales to
range between $1.28 billion and $1.30 billion. The Company now
expects full-year 2019 adjusted EBITDA to range between $465
million and $475 million, versus the previous guidance range of
$460 million to $475 million.
Webcast
At 8 a.m. EDT / 1 p.m. IST today, the Company will host a live
webcast to review its financial and operating results and provide a
general business update. The live webcast and a replay may be
accessed at http://ir.horizontherapeutics.com. Please connect to
the Company's website at least 15 minutes prior to the live webcast
to ensure adequate time for any software download that may be
needed to access the webcast. A replay of the webcast will be
available approximately two hours after the live webcast.
About Horizon
Horizon is focused on researching, developing and
commercializing medicines that address critical needs for people
impacted by rare and rheumatic diseases. Our pipeline is
purposeful: we apply scientific expertise and courage to bring
clinically meaningful therapies to patients. We believe science and
compassion must work together to transform lives. For more
information on how we go to incredible lengths to impact lives,
please visit www.horizontherapeutics.com, follow us @HorizonNews on
Twitter, like us on Facebook or explore career opportunities on
LinkedIn.
Note Regarding Use of Non-GAAP Financial Measures
EBITDA, or earnings before interest, taxes, depreciation and
amortization, and adjusted EBITDA are used and provided by Horizon
as non-GAAP financial measures. Horizon provides certain other
financial measures such as non-GAAP net income, non-GAAP diluted
earnings per share, non-GAAP gross profit and gross profit ratio,
non-GAAP operating expenses, non-GAAP operating income, non-GAAP
tax rate, non-GAAP operating cash flow, net leverage ratio and net
debt, each of which include adjustments to GAAP figures. These
non-GAAP measures are intended to provide additional information on
Horizon’s performance, operations, expenses, profitability and cash
flows. Adjustments to Horizon’s GAAP figures as well as EBITDA
exclude acquisition and/or divestiture-related expenses, charges
related to the discontinuation of ACTIMMUNE development for
Friedreich’s ataxia, gain or loss from sale of assets, upfront,
progress and milestone payments related to license and
collaboration agreements, litigation settlements, loss on debt
extinguishment, costs of debt refinancing, drug manufacturing
harmonization costs, restructuring and realignment costs, as well
as non-cash items such as share-based compensation, depreciation
and amortization, non-cash interest expense, long-lived asset
impairment charges and other non-cash adjustments. Certain other
special items or substantive events may also be included in the
non-GAAP adjustments periodically when their magnitude is
significant within the periods incurred. Horizon maintains an
established non-GAAP cost policy that guides the determination of
what costs will be excluded in non-GAAP measures. Horizon believes
that these non-GAAP financial measures, when considered together
with the GAAP figures, can enhance an overall understanding of
Horizon’s financial and operating performance. The non-GAAP
financial measures are included with the intent of providing
investors with a more complete understanding of the Company’s
historical and expected 2019 financial results and trends and to
facilitate comparisons between periods and with respect to
projected information. In addition, these non-GAAP financial
measures are among the indicators Horizon’s management uses for
planning and forecasting purposes and measuring the Company's
performance. For example, adjusted EBITDA is used by Horizon as one
measure of management performance under certain incentive
compensation arrangements. These non-GAAP financial measures should
be considered in addition to, and not as a substitute for, or
superior to, financial measures calculated in accordance with GAAP.
The non-GAAP financial measures used by the Company may be
calculated differently from, and therefore may not be comparable
to, non-GAAP financial measures used by other companies. Horizon
has not provided a reconciliation of its full-year 2019 adjusted
EBITDA outlook to an expected net income (loss) outlook because
certain items such as acquisition/divestiture-related expenses and
share-based compensation that are a component of net income (loss)
cannot be reasonably projected due to the significant impact of
changes in Horizon’s stock price, the variability associated with
the size or timing of acquisitions/divestitures and other factors.
These components of net income (loss) could significantly impact
Horizon’s actual net income (loss).
Forward-Looking Statements
This press release contains forward-looking statements,
including, but not limited to, statements related to Horizon’s
full-year 2019 net sales and adjusted EBITDA guidance; expected
financial performance and operating results in future periods,
including potential growth in net sales of certain of Horizon’s
medicines; expected impact of refinancing transactions; expected
timing of clinical trials and regulatory submissions and decisions,
including related to the BLA for teprotumumab; potential market
opportunity for and benefits of Horizon’s medicines and medicine
candidates; and business and other statements that are not
historical facts. These forward-looking statements are based on
Horizon’s current expectations and inherently involve significant
risks and uncertainties. Actual results and the timing of events
could differ materially from those anticipated in such
forward-looking statements as a result of these risks and
uncertainties, which include, without limitation, risks that
Horizon’s actual future financial and operating results may differ
from its expectations or goals; Horizon’s ability to grow net sales
from existing medicines; the availability of coverage and adequate
reimbursement and pricing from government and third-party payers;
risks relating to Horizon’s ability to successfully implement its
business strategies; risks inherent in developing novel medicine
candidates, such as teprotumumab, and existing medicines for new
indications; risks associated with regulatory approvals; risks in
the ability to recruit, train and retain qualified personnel;
competition, including potential generic competition; the ability
to protect intellectual property and defend patents; regulatory
obligations and oversight, including any changes in the legal and
regulatory environment in which Horizon operates and those risks
detailed from time-to-time under the caption "Risk Factors" and
elsewhere in Horizon’s filings and reports with the SEC. Horizon
undertakes no duty or obligation to update any forward-looking
statements contained in this press release as a result of new
information.
Contacts:
Investors:
U.S. Media:
Tina Ventura
Geoff Curtis
Senior Vice President,
Executive Vice President,
Investor Relations
Corporate Affairs & Chief
Communications Officer
investor-relations@horizontherapeutics.com
media@horizontherapeutics.com
Ruth Venning
Ireland Media:
Executive Director,
Ray Gordon
Investor Relations
Gordon MRM
investor-relations@horizontherapeutics.com
ray@gordonmrm.ie
Horizon Therapeutics plc Condensed Consolidated
Statements of Operations (Unaudited) (in thousands, except
share and per share data) Three Months Ended
September 30, Nine Months Ended September 30,
2019
2018
2019
2018
Net sales
$
335,466
$
325,311
$
936,484
$
852,027
Cost of goods sold
89,949
91,077
267,254
292,702
Gross profit
245,517
234,234
669,230
559,325
OPERATING EXPENSES: Research and development
24,572
21,169
74,611
63,079
Selling, general and administrative
172,326
161,585
511,720
517,858
(Gain)/Loss on sale of assets
-
(12,303
)
10,963
(12,303
)
Impairment of long-lived assets
-
1,603
-
35,249
Total operating expenses
196,898
172,054
597,294
603,883
Operating income (loss)
48,619
62,180
71,936
(44,558
)
OTHER EXPENSE, NET: Interest expense, net
(20,428
)
(30,437
)
(69,991
)
(91,921
)
Loss on debt extinguishment
(41,371
)
-
(58,835
)
-
Foreign exchange (loss) gain
(40
)
35
(25
)
(81
)
Other income (expense), net
890
337
(193
)
834
Total other expense, net
(60,949
)
(30,065
)
(129,044
)
(91,168
)
(Loss) Income before (benefit) expense for income
taxes
(12,330
)
32,115
(57,108
)
(135,726
)
(Benefit) expense for income taxes
(30,564
)
(1,266
)
(37,359
)
4,301
Net income (loss)
$
18,234
$
33,381
$
(19,749
)
$
(140,027
)
Earnings (Loss) per ordinary share - basic
$
0.10
$
0.20
$
(0.11
)
$
(0.84
)
Weighted average ordinary shares outstanding - basic
186,470,141
167,047,104
181,949,838
166,018,603
Earnings (Loss) per ordinary share - diluted
$
0.09
$
0.19
$
(0.11
)
$
(0.84
)
Weighted average ordinary shares outstanding - diluted
194,171,967
172,485,757
181,949,838
166,018,603
Horizon Therapeutics plc Condensed Consolidated Balance
Sheets (Unaudited) (in thousands, except share data)
As of September 30,2019 December
31,2018 ASSETS CURRENT ASSETS: Cash and cash
equivalents
$
883,964
$
958,712
Restricted cash
3,746
3,405
Accounts receivable, net
396,626
464,730
Inventories, net
58,505
50,751
Prepaid expenses and other current assets
135,963
68,218
Total current assets
1,478,804
1,545,816
Property and equipment, net
26,202
20,101
Developed technology, net
1,756,493
1,945,639
Other intangible assets, net
4,024
4,630
Goodwill
413,669
413,669
Deferred tax assets, net
45
3,148
Other assets
42,185
8,959
Total assets
$
3,721,422
$
3,941,962
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT
LIABILITIES: Accounts payable
$
26,906
$
30,284
Accrued expenses
204,164
215,739
Accrued trade discounts and rebates
404,544
457,763
Deferred revenues, current portion
-
4,901
Total current liabilities
635,614
708,687
LONG-TERM LIABILITIES: Exchangeable notes, net
346,541
332,199
Long-term debt, net
1,000,819
1,564,485
Deferred tax liabilities, net
112,968
107,768
Other long-term liabilities
69,907
38,717
Total long-term liabilities
1,530,235
2,043,169
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Ordinary shares, $0.0001 nominal value; 600,000,000 and 300,000,000
shares authorized at September 30, 2019 and December 31, 2018,
respectively; 187,174,795 and 169,244,520 shares issued at
September 30, 2019 and December 31, 2018, respectively, and
186,790,429 and 168,860,154 shares outstanding at September 30,
2019 and December 31, 2018, respectively
19
17
Treasury stock, 384,366 ordinary shares at September 30, 2019 and
December 31, 2018
(4,585
)
(4,585
)
Additional paid-in capital
2,761,068
2,374,966
Accumulated other comprehensive loss
(2,475
)
(1,523
)
Accumulated deficit
(1,198,454
)
(1,178,769
)
Total shareholders' equity
1,555,573
1,190,106
Total liabilities and shareholders' equity
$
3,721,422
$
3,941,962
Horizon Therapeutics plc Condensed Consolidated
Statements of Cash Flows (Unaudited) (in thousands)
Three Months Ended September 30, Nine
Months Ended September 30,
2019
2018
2019
2018
CASH FLOWS FROM OPERATING ACTIVITIES: Net income
(loss)
$
18,234
$
33,381
$
(19,749
)
$
(140,027
)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities: Depreciation and amortization expense
59,319
62,668
177,336
187,135
Equity-settled share-based compensation
18,151
28,428
67,066
86,981
Impairment of long-lived assets
-
1,603
-
35,249
Loss on debt extinguishment
41,371
-
58,835
-
Amortization of debt discount and deferred financing costs
5,447
5,694
17,069
16,879
(Gain)/Loss on sale of assets
-
(12,303
)
10,963
(12,303
)
Deferred income taxes
9,559
3,398
8,302
1,645
Foreign exchange and other adjustments
77
(219
)
572
243
Changes in operating assets and liabilities: Accounts receivable
(1,625
)
12,318
68,162
14,060
Inventories
(7,500
)
(3,647
)
(8,004
)
7,902
Prepaid expenses and other current assets
(54,358
)
(13,788
)
(72,055
)
(35,526
)
Accounts payable
(14,892
)
33,711
(3,338
)
30,119
Accrued trade discounts and rebates
5,910
(90,026
)
(53,241
)
(142,164
)
Accrued expenses
17,481
21,926
(10,591
)
35,581
Deferred revenues
(7,311
)
1,130
(4,901
)
1,462
Other non-current assets and liabilities
(2,347
)
586
(1,474
)
(1,401
)
Net cash provided by operating activities
87,516
84,860
234,952
85,835
CASH FLOWS FROM INVESTING ACTIVITIES: Payment related to
license agreement
-
-
-
(12,000
)
Proceeds from sale of assets
-
9,424
6,000
9,424
Purchases of property and equipment
(4,467
)
(120
)
(11,325
)
(881
)
Net cash (used in) provided by investing activities
(4,467
)
9,304
(5,325
)
(3,457
)
CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from
issuance of senior notes
590,057
-
590,057
-
Repayment of senior notes
(556,138
)
-
(814,420
)
-
Net proceeds from the issuance of ordinary shares
-
-
326,793
-
Repayment of term loans
(100,155
)
-
(918,181
)
(27,723
)
Net proceeds from term loans
-
-
517,378
-
Contingent consideration proceeds from divestiture
3,297
-
3,297
-
Proceeds from the issuance of ordinary shares in conjunction with
ESPP program
3
(23
)
5,468
4,711
Proceeds from the issuance of ordinary shares in connection with
stock option exercises
4,207
6,081
16,236
9,753
Payment of employee withholding taxes relating to share-based
awards
(5,086
)
(3,697
)
(29,460
)
(12,882
)
Net cash (used in) provided by financing activities
(63,815
)
2,361
(302,832
)
(26,141
)
Effect of foreign exchange rate changes on cash, cash
equivalents and restricted cash
(1,260
)
316
(1,202
)
(688
)
Net increase (decrease) in cash, cash equivalents and
restricted cash
17,974
96,841
(74,407
)
55,549
Cash, cash equivalents and restricted cash, beginning of the
period(1)
869,736
716,605
962,117
757,897
Cash, cash equivalents and restricted cash, end of the
period(1)
$
887,710
$
813,446
$
887,710
$
813,446
(1) Amounts include restricted cash balance in
accordance with ASU No. 2016-18. Cash and cash equivalents
excluding restricted cash are shown on the balance sheet.
Horizon Therapeutics plc GAAP to Non-GAAP
Reconciliations Net Income and Earnings Per Share
(Unaudited) (in thousands, except share and per share
data) Three Months Ended September 30,
Nine Months Ended September 30,
2019
2018
2019
2018
GAAP net income (loss)
$
18,234
$
33,381
$
(19,749
)
$
(140,027
)
Non-GAAP adjustments: Acquisition/divestiture-related costs
67
302
2,613
6,179
Restructuring and realignment costs
-
4,582
33
14,815
Amortization and step-up: Intangible amortization expense
57,662
61,144
172,762
182,508
Inventory step-up expense
-
83
90
17,212
Amortization of debt discount and deferred financing costs
5,447
5,694
17,069
16,880
Impairment of long-lived assets
-
1,603
-
35,249
(Gain)/Loss on sale of assets
-
(12,303
)
10,963
(12,303
)
Share-based compensation
18,151
28,428
67,066
86,981
Depreciation
1,658
1,523
4,574
4,627
Litigation settlements
-
1,500
1,000
5,750
Upfront, progress and milestone payments related to license and
collaboration agreements
3,073
(100
)
9,073
(10
)
Fees related to refinancing activities
262
40
1,437
82
Loss on debt extinguishment
41,371
-
58,835
-
Drug substance harmonization costs
80
301
394
1,579
Charges relating to discontinuation of Friedreich's ataxia program
-
254
1,221
1,476
Total of pre-tax non-GAAP adjustments
127,771
93,051
347,130
361,025
Income tax effect of pre-tax non-GAAP adjustments
(21,919
)
(13,865
)
(52,291
)
12,774
Other non-GAAP income tax adjustments
-
-
(1,452
)
(35,893
)
Total of non-GAAP adjustments
105,852
79,186
293,387
337,906
Non-GAAP Net Income
$
124,086
$
112,567
$
273,638
$
197,879
Non-GAAP Earnings Per Share:
Weighted average ordinary shares - Basic
186,470,141
167,047,104
181,949,838
166,018,603
Non-GAAP Earnings Per Share - Basic: GAAP earnings
(loss) per share - Basic
$
0.10
$
0.20
$
(0.11
)
$
(0.84
)
Non-GAAP adjustments
0.57
0.47
1.61
2.03
Non-GAAP earnings per share - Basic
$
0.67
$
0.67
$
1.50
$
1.19
Weighted average ordinary shares - Diluted
Weighted average ordinary shares - Basic
186,470,141
167,047,104
181,949,838
166,018,603
Ordinary share equivalents
7,701,826
5,438,653
7,747,931
4,621,407
Weighted average shares - Diluted
194,171,967
172,485,757
189,697,769
170,640,010
Non-GAAP Earnings Per Share - Diluted GAAP
earnings (loss) per share - Diluted
$
0.09
$
0.19
$
(0.11
)
$
(0.84
)
Non-GAAP adjustments
0.55
0.46
1.61
2.03
Diluted earnings per share effect of ordinary share equivalents
-
-
(0.06
)
(0.03
)
Non-GAAP earnings per share - Diluted
$
0.64
$
0.65
$
1.44
$
1.16
Horizon Therapeutics plc GAAP to Non-GAAP
Reconciliations GAAP Net Income to Adjusted EBITDA
(Unaudited) (in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
GAAP net income (loss)
$
18,234
$
33,381
$
(19,749
)
$
(140,027
)
Depreciation
1,658
1,523
4,574
4,627
Amortization and step-up: Intangible amortization expense
57,662
61,144
172,762
182,508
Inventory step-up expense
-
83
90
17,212
Interest expense, net (including amortization of debt discount and
deferred financing costs)
20,428
30,437
69,991
91,921
(Benefit) expense for income taxes
(30,564
)
(1,266
)
(37,359
)
4,301
EBITDA
$
67,418
$
125,302
$
190,309
$
160,542
Other non-GAAP adjustments: Acquisition/divestiture-related costs
67
302
2,613
6,179
Restructuring and realignment costs
-
4,582
33
14,815
Impairment of long-lived assets
-
1,603
-
35,249
(Gain)/Loss on sale of assets
-
(12,303
)
10,963
(12,303
)
Share-based compensation
18,151
28,428
67,066
86,981
Litigation settlements
-
1,500
1,000
5,750
Upfront, progress and milestone payments related to license and
collaboration agreements
3,073
(100
)
9,073
(10
)
Fees related to refinancing activities
262
40
1,437
82
Loss on debt extinguishment
41,371
-
58,835
-
Drug substance harmonization costs
80
301
394
1,579
Charges relating to discontinuation of Friedreich's ataxia program
-
254
1,221
1,476
Total of other non-GAAP adjustments
63,004
24,607
152,635
139,798
Adjusted EBITDA
$
130,422
$
149,909
$
342,944
$
300,340
Horizon Pharma plc
GAAP to Non-GAAP
Reconciliations
EBITDA (Unaudited) -
2018
(in thousands)
Twelve Months Ended December
31,
2018
GAAP net loss
$
(38,380
)
Depreciation
6,126
Amortization and step-up: Intangible amortization expense
243,634
Inventory step-up expense
17,312
Interest expense, net (including amortization ofdebt discount and
deferred financing costs)
121,692
Benefit for income taxes
(44,752
)
EBITDA
$
305,632
Other non-GAAP adjustments: Acquisition/divestiture-related costs
4,396
Restructuring and realignment costs
15,350
Share-based compensation
114,860
Impairment of long-lived assets
46,096
Litigation settlements
5,750
Upfront, progress and milestone payments related to license and
collaboration agreements
(10
)
Fees related to refinancing activities
937
Drug substance harmonization costs
2,855
Charges relating to discontinuation of Friedreich's ataxia program
(1,464
)
Gain on sale of assets
(42,985
)
Total of other non-GAAP adjustments
145,785
Adjusted EBITDA
$
451,417
Horizon Therapeutics plc GAAP to Non-GAAP
Reconciliations Operating Income (Unaudited) (in
thousands) Three Months Ended September
30, Nine Months Ended September 30,
2019
2018
2019
2018
GAAP operating income (loss)
$
48,619
$
62,180
$
71,936
$
(44,558
)
Non-GAAP adjustments: Acquisition/divestiture-related costs
(44
)
186
1,231
6,035
Restructuring and realignment costs
-
4,582
33
14,815
Amortization and step-up: Intangible amortization expense
57,662
61,144
172,762
182,508
Inventory step-up expense
-
83
90
17,212
Impairment of long-lived assets
-
1,603
-
35,249
(Gain)/Loss on sale of assets
-
(12,303
)
10,963
(12,303
)
Share-based compensation
18,151
28,428
67,066
86,981
Depreciation
1,658
1,523
4,574
4,627
Litigation settlements
-
1,500
1,000
5,750
Upfront, progress and milestone payments related to license and
collaboration agreements
3,073
-
9,073
90
Fees related to refinancing activities
262
40
1,437
82
Drug substance harmonization costs
80
301
394
1,579
Charges relating to discontinuation of Friedreich's ataxia program
-
254
1,221
1,476
Total of non-GAAP adjustments
80,842
87,341
269,844
344,101
Non-GAAP operating income
$
129,461
$
149,521
$
341,780
$
299,543
Orphan and Rheumatology segment operating income
89,823
91,537
211,003
205,249
Inflammation segment operating income
39,638
57,984
130,777
94,294
Total segment operating income
$
129,461
$
149,521
$
341,780
$
299,543
Foreign exchange (loss)/gain
(40
)
35
(25
)
(81
)
Other income, net
1,001
353
1,189
878
Adjusted EBITDA
$
130,422
$
149,909
$
342,944
$
300,340
Horizon Therapeutics plc GAAP to Non-GAAP
Reconciliations Gross Profit and Operating Cash Flow
(Unaudited) (in thousands, except percentages)
Three Months EndedSeptember 30, Nine Months
EndedSeptember 30,
2019
2018
2019
2018
Non-GAAP Gross Profit: GAAP gross
profit
$
245,517
$
234,234
$
669,230
$
559,325
Non-GAAP gross profit adjustments: Acquisition/divestiture-related
costs
-
(239
)
1,114
(171
)
Intangible amortization expense
57,458
60,940
172,156
181,902
Inventory step-up expense
-
83
90
17,212
Share-based compensation
901
874
2,891
2,767
Depreciation
158
176
475
529
Drug substance harmonization costs
80
301
394
1,579
Charges relating to discontinuation of Friedreich's ataxia program
-
254
1,221
1,389
Total of Non-GAAP adjustments
58,597
62,389
178,341
205,207
Non-GAAP gross profit
$
304,114
$
296,623
$
847,571
$
764,532
GAAP gross profit %
73.2
%
72.0
%
71.5
%
65.6
%
Non-GAAP gross profit %
90.7
%
91.2
%
90.5
%
89.7
%
GAAP cash provided by operating
activities
$
87,516
$
84,860
$
234,952
$
85,835
Cash payments for acquisition/divestiture-related costs
88
2,299
583
7,854
Cash payments for restructuring and realignment costs
382
4,357
3,264
9,034
Cash payments for litigation settlements
1,000
4,250
1,000
5,750
Cash payments for upfront, progress and milestone payments related
to license and collaboration agreement
7,073
(100
)
9,073
175
Cash payments drug substance harmonization costs
313
(16
)
985
5,943
Cash payments for discontinuation of Friedreich's ataxia program
-
(108
)
2,589
3,399
Cash payments relating to refinancing activities
112
26
1,918
57
Non-GAAP operating cash flow
$
96,484
$
95,568
$
254,364
$
118,047
Horizon Therapeutics
plc
Net Debt Reconciliation
(Unaudited)
(in thousands)
As of September 30,2019 December
31,2018 September 30,2018 Long-term debt, net of
current
$
1,000,819
$
1,564,485
$
1,563,239
Exchangeable notes, net
346,541
332,199
327,573
Total Debt
1,347,360
1,896,684
1,890,812
Debt discount
65,234
87,038
92,473
Deferred financing fees
5,432
9,304
9,741
Total Principal Amount of Debt
1,418,026
1,993,026
1,993,026
Less: cash and cash equivalents
883,964
958,712
807,047
Net Debt
$
534,062
$
1,034,314
$
1,185,979
Horizon Therapeutics
plc
GAAP to Non-GAAP Tax Rate
Reconciliation (Unaudited)
(in millions, except
percentages and per share amounts)
Q3 2019 Pre-tax Net(Loss) Income
Income Tax(Benefit) Expense Tax Rate Net
Income(Loss) Diluted Earnings(Loss) Per Share As
reported - GAAP
$
(12.3
)
$
(30.6
)
247.9
%
$
18.2
$
0.09
Non-GAAP adjustments
127.8
21.9
105.9
Non-GAAP
$
115.5
$
(8.7
)
(7.5
)%
$
124.1
$
0.64
Q3 2018 Pre-tax Net(Loss) Income
Income Tax(Benefit) Expense Tax Rate Net
Income(Loss) Diluted Earnings(Loss) Per Share As
reported - GAAP
$
32.1
$
(1.3
)
(3.9
)%
$
33.4
$
0.19
Non-GAAP adjustments
93.1
13.9
79.2
Non-GAAP
$
125.2
$
12.6
10.1
%
$
112.6
$
0.65
YTD 2019 Pre-tax Net(Loss) Income
Income Tax(Benefit) Expense Tax Rate Net
Income(Loss) Diluted Earnings(Loss) Per Share As
reported - GAAP
$
(57.1
)
$
(37.4
)
65.4
%
$
(19.7
)
$
(0.11
)
Non-GAAP adjustments
347.1
53.7
293.4
Non-GAAP
$
290.0
$
16.3
5.6
%
$
273.7
$
1.44
YTD 2018 Pre-tax Net(Loss) Income
Income Tax(Benefit) Expense Tax Rate Net
Income(Loss) Diluted Earnings(Loss) Per Share As
reported - GAAP
$
(135.7
)
$
4.3
(3.2
)%
$
(140.0
)
$
(0.84
)
Non-GAAP adjustments
361.0
23.1
337.9
Non-GAAP
$
225.3
$
27.4
12.2
%
$
197.9
$
1.16
Horizon Therapeutics plc Certain Income Statement
Line Items - Non-GAAP Adjusted For the Three Months Ended
September 30, 2019 (Unaudited)
Income Tax
Research &
Selling, General
Loss on Debt
Interest
Other
Benefit
COGS
Development
& Administrative
Extinguishment
Expense
Expense
(Expense)
GAAP as reported
$
(89,949
)
$
(24,572
)
$
(172,326
)
$
(41,371
)
$
(20,428
)
$
890
$
30,564
Non-GAAP Adjustments (in thousands):
Acquisition/divestiture-related costs(1)
-
-
(44
)
-
-
111
-
Amortization and step-up: Intangible amortization expense(3)
57,458
-
204
-
-
-
-
Amortization of debt discount and deferred financing costs(5)
-
-
-
-
5,447
-
-
Share-based compensation(8)
901
1,953
15,297
-
-
-
-
Depreciation(9)
158
-
1,500
-
-
-
-
Upfront, progress and milestone payments related to license and
collaboration agreements(11)
-
3,073
-
-
-
-
-
Fees related to refinancing activities (12)
-
-
262
-
-
-
-
Loss on debt extinguishment(13)
-
-
-
41,371
-
-
-
Drug substance harmonization costs(14)
80
-
-
-
-
-
-
Income tax effect on pre-tax non-GAAP adjustments(16)
-
-
-
-
-
-
(21,919
)
Total of non-GAAP adjustments
58,597
5,026
17,219
41,371
5,447
111
(21,919
)
Non-GAAP
$
(31,352
)
$
(19,546
)
$
(155,107
)
$
-
$
(14,981
)
$
1,001
$
8,645
Horizon Therapeutics plc Certain Income Statement
Line Items - Non-GAAP Adjusted For the Three Months Ended
September 30, 2018 (Unaudited)
Income Tax
Research &
Selling, General
Impairment of
Loss/(Gain) on
Interest
Other
Benefit
COGS
Development
& Administrative
Long-Lived Assets
Sale of Assets
Expense
Income, net
(Expense)
GAAP as reported
$
(91,077
)
$
(21,169
)
$
(161,585
)
$
(1,603
)
$
12,303
$
(30,437
)
$
337
$
1,266
Non-GAAP Adjustments (in thousands):
Acquisition/divestiture-related costs(1)
(239
)
-
541
-
-
-
-
-
Restructuring and realignment costs(2)
-
-
4,582
-
-
-
-
-
Amortization and step-up: Intangible amortization expense(3)
60,940
-
204
-
-
-
-
-
Inventory step-up expense(4)
83
-
-
-
-
-
-
-
Amortization of debt discount and deferred financing costs(5)
-
-
-
-
-
5,694
-
Impairment of long lived assets(6)
-
-
-
1,603
-
-
-
-
(Gain)/Loss on sale of assets(7)
-
-
-
-
(12,303
)
-
-
-
Share-based compensation(8)
874
2,049
25,505
-
-
-
-
-
Depreciation(9)
176
-
1,347
-
-
-
-
-
Litigation settlements(10)
-
-
1,500
-
-
-
-
-
Upfront, progress and milestone payments related to license and
collaboration agreements(11)
-
-
-
-
-
-
(100
)
-
Fees related to refinancing activities (12)
-
-
40
-
-
-
-
-
Drug substance harmonization costs(14)
301
-
-
-
-
-
-
-
Charges relating to discontinuation of Friedreich's ataxia
program(15)
254
-
-
-
-
-
-
-
Income tax effect on pre-tax non-GAAP adjustments(16)
-
-
-
-
-
-
-
(13,865
)
Total of non-GAAP adjustments
62,389
2,049
33,719
1,603
(12,303
)
5,694
(100
)
(13,865
)
Non-GAAP
$
(28,688
)
$
(19,120
)
$
(127,866
)
$
-
$
-
$
(24,743
)
$
237
$
(12,599
)
Horizon Therapeutics plc Certain Income Statement Line
Items - Non-GAAP Adjusted For the Nine Months Ended
September 30, 2019 (Unaudited)
Income Tax
Research &
Selling, General
Loss/(Gain) on
Interest
Other
Loss on Debt
Benefit
COGS
Development
& Administrative
Sale of Assets
Expense
Expense
Extinguishment
(Expense)
GAAP as reported
$
(267,254
)
$
(74,611
)
$
(511,720
)
$
(10,963
)
$
(69,991
)
$
(193
)
$
(58,835
)
$
37,359
Non-GAAP Adjustments (in thousands):
Acquisition/divestiture-related costs(1)
1,114
-
119
-
-
1,380
-
-
Restructuring and realignment costs(2)
-
-
33
-
-
-
-
-
Amortization and step-up: Intangible amortization expense(3)
172,156
-
606
-
-
-
-
-
Inventory step-up expense(4)
90
-
-
-
-
-
-
-
Amortization of debt discount and deferred financing costs(5)
-
-
-
-
17,069
-
-
-
(Gain)/Loss on sale of assets(7)
-
-
-
10,963
-
-
-
-
Share-based compensation(8)
2,891
6,931
57,244
-
-
-
-
-
Depreciation(9)
475
-
4,099
-
-
-
-
-
Litigation settlements(10)
-
-
1,000
-
-
-
-
-
Upfront, progress and milestone payments related to license and
collaboration agreements(11)
-
9,073
-
-
-
-
-
-
Fees related to refinancing activities (12)
-
-
1,437
-
-
-
-
-
Loss on debt extinguishment(13)
-
-
-
-
-
-
58,835
-
Drug substance harmonization costs(14)
394
-
-
-
-
-
-
-
Charges relating to discontinuation of Friedreich's ataxia
program(15)
1,221
-
-
-
-
-
-
-
Income tax effect on pre-tax non-GAAP adjustments(16)
-
-
-
-
-
-
-
(52,291
)
Other non-GAAP income tax adjustments(17)
-
-
-
-
-
-
-
(1,452
)
Total of non-GAAP adjustments
178,341
16,004
64,538
10,963
17,069
1,380
58,835
(53,743
)
Non-GAAP
$
(88,913
)
$
(58,607
)
$
(447,182
)
$
-
$
(52,922
)
$
1,186
$
-
$
(16,384
)
Horizon Therapeutics plc Certain Income Statement
Line Items - Non-GAAP Adjusted For the Nine Months Ended
September 30, 2018 (Unaudited)
Income Tax
Research &
Selling, General
Impairment of
Loss/(Gain) on
Interest
Other
Benefit
COGS
Development
& Administrative
Long-Lived Assets
Sale of Assets
Expense
Income
(Expense)
GAAP as reported
$
(292,702
)
$
(63,079
)
$
(517,858
)
$
(35,249
)
$
12,303
$
(91,921
)
834
$
(4,301
)
Non-GAAP Adjustments (in thousands):
Acquisition/divestiture-related costs(1)
(171
)
(67
)
6,417
-
-
-
-
-
Restructuring and realignment costs(2)
-
1,733
13,082
-
-
-
-
-
Amortization and step-up: Intangible amortization expense(3)
181,902
-
606
-
-
-
-
-
Inventory step-up expense(4)
17,212
-
-
-
-
-
-
-
Amortization of debt discount and deferred financing costs(5)
-
-
-
-
-
16,880
-
Impairment of long lived assets(6)
-
-
-
35,249
-
-
-
-
(Gain)/Loss on sale of assets(7)
-
-
-
-
(12,303
)
-
-
-
Share-based compensation(8)
2,767
6,697
77,517
-
-
-
-
-
Depreciation(9)
529
-
4,098
-
-
-
-
-
Litigation settlements(10)
-
-
5,750
-
-
-
-
-
Upfront, progress and milestone payments related to license and
collaboration agreements(11)
-
90
-
-
-
-
(100
)
-
Fees related to refinancing activities (12)
-
-
82
-
-
-
-
-
Drug substance harmonization costs(14)
1,579
-
-
-
-
-
-
-
Charges relating to discontinuation of Friedreich's ataxia
program(15)
1,389
87
-
-
-
-
-
-
Income tax effect on pre-tax non-GAAP adjustments(16)
-
-
-
-
-
-
-
12,774
Other non-GAAP income tax adjustments(17)
-
-
-
-
-
-
-
(35,893
)
Total of non-GAAP adjustments
205,207
8,540
107,552
35,249
(12,303
)
16,880
(100
)
(23,119
)
Non-GAAP
$
(87,495
)
$
(54,539
)
$
(410,306
)
$
-
$
-
$
(75,041
)
$
734
$
(27,420
)
NOTES FOR CERTAIN INCOME STATEMENT LINE
ITEMS - NON-GAAP
- Represents expenses, including legal and consulting fees,
incurred in connection with our acquisitions and divestitures.
- Represents expenses, including severance costs and consulting
fees, related to restructuring and realignment activities.
- Intangible amortization expenses are associated with our
intellectual property rights, developed technology and customer
relationships related to ACTIMMUNE, BUPHENYL, KRYSTEXXA, LODOTRA,
MIGERGOT, PENNSAID 2%, PROCYSBI, RAVICTI, VIMOVO and RAYOS.
- During the nine months ended Sept. 30, 2018, we recognized in
cost of goods sold $17.2 million for inventory step-up expense
primarily related to KRYSTEXXA inventory sold.
- Represents amortization of debt discount and deferred financing
costs associated with our debt.
- Impairment of long-lived assets during the nine months ended
Sept. 30, 2018, relates to the write-off of the book value of
developed technology related to PROCYSBI in Canada and Latin
America.
- During the nine months ended Sept. 30, 2019, we recorded a loss
of $11.0 million on the sale of our rights to MIGERGOT. During the
nine months ended Sept. 30, 2018, we completed the IMUKIN sale for
cash proceeds of $9.5 million, with a potential additional
contingent consideration payment and we recorded a gain of $12.3
million on the sale. The contingent consideration payment of €3.0
million ($3.3 million when converted using a Euro-to-Dollar
exchange rate at the date of receipt of 1.0991) was received in
September 2019.
- Represents share-based compensation expense associated with our
stock option, restricted stock unit and performance stock unit
grants to our employees and non-employee directors and our employee
share purchase plan.
- Represents depreciation expense related to our property,
equipment, software and leasehold improvements.
- We recorded $1.0 million and $5.8 million of expense during the
nine months ended Sept. 30, 2019 and 2018, respectively, for
litigation settlements.
- During the nine months ended Sept. 30, 2019, we recorded
upfront, progress and milestone payments related to license and
collaboration agreements of $9.1 million which was composed of a
$3.0 million milestone payment to F. Hoffmann-La Roche Ltd relating
to the teprotumumab BLA submission to the FDA during the third
quarter of 2019, an upfront cash payment of $2.0 million and a
progress payment of $4.0 million in relation to the collaboration
agreement with HemoShear.
- Represents arrangement and other fees relating to our
refinancing activities.
- During the nine months ended Sept. 30, 2019, we recorded a loss
on debt extinguishment of $58.8 million in the condensed
consolidated statements of comprehensive loss, which reflected the
early redemption premiums and the write-off of the deferred
financing fees and debt discount fees related to the prepayment of
$775.0 million of our 2023 Senior Notes and 2024 Senior Notes and
the write-off of the deferred financing fees and debt discount fees
related to the $400.0 million of term loan repayments.
- During the year ended Dec. 31, 2016, we entered into a
definitive agreement to acquire certain rights to interferon
gamma-1b, marketed as IMUKIN in an estimated thirty countries
primarily in Europe and the Middle East, or the IMUKIN purchase
agreement. We already owned the rights to interferon gamma-1b
marketed as ACTIMMUNE in the United States, Canada and Japan. In
connection with the IMUKIN purchase agreement, we also committed to
pay our contract manufacturer certain amounts related to the
harmonization of the manufacturing processes for ACTIMMUNE and
IMUKIN drug substance, or the harmonization program. At the time we
entered into the IMUKIN purchase agreement and the harmonization
program commitment was made, we had anticipated achieving certain
benefits should the Phase 3 clinical trial evaluating ACTIMMUNE for
the treatment of Friedreich’s ataxia, or FA, be successful. If the
study had been successful and if U.S. marketing approval had
subsequently been obtained, we had forecasted significant increases
in demand for the medicine and the harmonization program would have
resulted in significant benefits for us. Following our
discontinuation of the FA program, we determined that certain
assets, including an upfront payment related to the IMUKIN purchase
agreement, were impaired, and the costs under the harmonization
program would no longer have benefit to us and should be expensed
as incurred.
- Represents expenses incurred relating to discontinuation of the
FA program and a reduction to previous charges recorded.
- Income tax adjustments on pre-tax non-GAAP adjustments
represent the estimated income tax impact of each pre-tax non-GAAP
adjustment based on the statutory income tax rate of the applicable
jurisdictions for each non-GAAP adjustment.
- Following Notice 2018-28, issued by the U.S. Treasury
Department and the U.S. Internal Revenue Service on April 2, 2018
and in accordance with the measurement period provisions under
Staff Accounting Bulletin No. 118, or SAB 118, during the nine
months ended Sept. 30, 2018 we reinstated the deferred tax asset
previously written off during the year ended Dec. 31, 2017, related
to our U.S. interest expense carry forwards under Section 163(j) of
the Internal Revenue Code of 1986, as amended, based on the revised
U.S. federal tax rate of 21 percent. The impact of the deferred tax
asset reinstatement in accordance with SAB 118 was a $35.9 million
increase to our benefit for income taxes and a corresponding
decrease to the U.S. group net deferred tax liability position.
During the nine months ended Sept. 30, 2019 we released a reserve
that was originally established and treated as a non-GAAP
adjustment related to an uncertain tax position in connection with
an acquisition resulting in a non-GAAP tax adjustment of $1.5
million.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191106005491/en/
Investors: Tina
Ventura Senior Vice
President, Investor
Relations investor-relations@horizontherapeutics.com
Ruth Venning Executive Director, Investor Relations investor-relations@horizontherapeutics.com
U.S. Media: Geoff
Curtis Executive Vice
President, Corporate
Affairs & Chief Communications Officer media@horizontherapeutics.com
Ireland Media: Ray
Gordon Gordon MRM
ray@gordonmrm.ie
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