-- Record Fourth-Quarter 2019 Net Sales of
$363.5 Million Driven by 14 Percent Growth in the Orphan and
Rheumatology Segment; Fourth-Quarter 2019 GAAP Net Income of $592.8
Million; Adjusted EBITDA of $139.9 Million --
-- Record Full-Year 2019 Net Sales of $1.30
Billion Driven by 32 Percent Growth in KRYSTEXXA®; Full-Year 2019
GAAP Net Income of $573.0 Million; Record Adjusted EBITDA of $482.8
Million --
-- Full-Year 2020 Net Sales Guidance of $1.40
Billion to $1.42 Billion; Full-Year 2020 Adjusted EBITDA Guidance
of $485 Million to $500 Million, Reflecting Significant Investment
in U.S. Launch of TEPEZZA™ and R&D Pipeline Programs to Drive
Long-Term Growth --
-- TEPEZZA Approved for the Treatment of
Thyroid Eye Disease (TED) on Jan. 21, 2020 --
-- Announced KRYSTEXXA Immunomodulation MIRROR
Open-Label Trial Top-line Data; 79 Percent of Patients Achieved a
Complete Response, Supporting KRYSTEXXA Immunomodulation Strategy
to Optimize Treatment Outcomes --
-- Increased Peak U.S. Annual Net Sales
Expectations for Growth Drivers KRYSTEXXA and TEPEZZA to More Than
$1 Billion Each --
-- Cash Position of $1.076 Billion; Net
Leverage of 0.7 Times as of Dec. 31, 2019 --
Horizon Therapeutics plc (Nasdaq: HZNP) today announced its
fourth-quarter and full-year 2019 financial results and provided
its full-year 2020 net sales and adjusted EBITDA guidance.
“The fourth quarter capped off another year of tremendous
progress at Horizon, marked by the achievement of several important
milestones,” said Timothy Walbert, chairman, president and chief
executive officer, Horizon. “We are in our strongest position ever
as a company, entering 2020 with FDA approval of TEPEZZA, the first
and only medicine approved for the treatment of thyroid eye
disease. We continue to see strong growth for KRYSTEXXA, the only
approved medicine for uncontrolled gout, particularly following the
significantly higher complete response rate demonstrated when used
in combination with methotrexate. With the excellent growth
potential we see for both TEPEZZA and KRYSTEXXA, we recently
increased our peak U.S. net sales expectations to more than $1
billion for each medicine. We remain focused on optimizing the
benefits our medicines provide patients and driving value for our
shareholders.”
Financial Highlights
(in millions except for per share amounts and percentages)
Q4
19 Q4 18 %Change FY 19 FY 18
%Change Net sales
$
363.5
$
355.5
2
$
1,300.0
$
1,207.6
8
Net income (loss)
592.8
101.6
483
573.0
(38.4
)
NM
Non-GAAP net income
116.6
116.8
-
390.2
314.7
24
Adjusted EBITDA
139.9
151.1
(7
)
482.8
451.4
7
Earnings (Loss) per share - diluted
2.84
0.58
390
2.90
(0.23
)
NM
Non-GAAP earnings per share - diluted
0.56
0.67
(16
)
1.94
1.83
6
Fourth-Quarter and Recent Company Highlights
- TEPEZZA Approved by FDA for the Treatment of Thyroid Eye
Disease (TED): On Jan. 21, 2020, the U.S. Food and Drug
Administration (FDA) approved TEPEZZA (teprotumumab-trbw) for the
treatment of TED, well in advance of the Prescription Drug User Fee
Act (PDUFA) action date of March 8, 2020. TEPEZZA is the first and
only FDA-approved medicine for the treatment of TED, a serious,
progressive and vision-threatening rare autoimmune disease.
- The New England Journal of Medicine Published TEPEZZA’s
Phase 3 Clinical Trial Data: In January 2020, the Company
announced that The New England Journal of Medicine had published
the comprehensive results of Phase 3 clinical trial evaluating
TEPEZZA for the treatment of TED. The results from the clinical
trial demonstrated that TEPEZZA provides significant improvements
in proptosis (eye bulging) and diplopia (double vision) when
compared to a placebo. This is one of the few clinical programs to
have both its Phase 2 and Phase 3 clinical results published in The
New England Journal of Medicine.
- FDA Advisory Committee Voted Unanimously to Support the Use
of TEPEZZA for TED: On Dec. 13, 2019, the Dermatologic and
Ophthalmic Drug Advisory Committee (DODAC) of the FDA voted
unanimously (12-0) that the potential benefits of TEPEZZA outweigh
the potential risks for the treatment of TED.
- KRYSTEXXA MIRROR Open-Label Immunomodulation Trial
Demonstrated 79 Percent Complete Response Rate: In January
2020, the Company announced topline results from its MIRROR
open-label trial, which evaluated the use of the immunomodulator
methotrexate with KRYSTEXXA to increase the complete response rate
of KRYSTEXXA. The results of the trial demonstrated that 79
percent, or 11 of 14 patients enrolled, achieved a complete
response, defined as the proportion of serum uric acid (sUA)
responders (sUA <6 mg/dL) at Month 6. The 79 percent response
rate is nearly double the 42 percent response rate in the KRYSTEXXA
Phase 3 clinical program, which evaluated KRYSTEXXA alone. The
combination was also well tolerated.
- Increased Peak U.S. Annual Net Sales Expectations for Key
Growth Drivers: In January 2020, the Company announced that it
increased both KRYSTEXXA and TEPEZZA peak U.S. annual net sales
expectations to more than $1 billion each, from the previous
expectation of more than $750 million each.
- Initiated PROTECT Trial Evaluating KRYSTEXXA to Improve
Management of Uncontrolled Gout for Adults with a Kidney
Transplant: In October 2019, 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 can provide 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.
- FDA Approved New Drug Application (NDA) for PROCYSBI® Oral
Granules: In February 2020, the FDA approved PROCYSBI
Delayed-Release Oral Granules in Packets for adults and children
one year of age and older living with nephropathic cystinosis. This
new dosage form provides another administration option for
patients, in addition to the currently available PROCYSBI
capsules.
- Two New Pipeline Programs Announced: In January 2020,
the Company announced two new pipeline programs expected to begin
in 2020: a TEPEZZA exploratory trial in diffuse cutaneous
scleroderma and a proof of concept trial evaluating the impact of
administering KRYSTEXXA over a shorter infusion duration.
- Opened New Facility in South San Francisco: In November
2019, the Company opened a new office in South San Francisco. The
20,000 square-foot facility features laboratory space that will
enable formulation and process development for manufacturing, as
well as bioanalytical method development and other R&D
functions. The Company expects to add new positions in bioanalysis,
clinical research, pharmacology, manufacturing and business
development in 2020.
- Expanding the Company’s U.S. Operations: In February
2020, the Company closed the acquisition of its new U.S.
headquarters in Deerfield, Ill. In line with the Company's
significant growth over the past three years, the new location will
provide the Company the flexibility to accommodate its current U.S.
operations as well as its anticipated future growth.
Research and Development Programs
- TEPEZZA Diffuse Cutaneous Scleroderma Exploratory Trial:
TEPEZZA is a fully human monoclonal antibody insulin-like growth
factor-1 receptor (IGF-1R) inhibitor approved by the FDA for the
treatment of TED. The Company is evaluating additional indications
for TEPEZZA and expects to begin an exploratory trial in 2020 in
diffuse cutaneous scleroderma, a rare fibrotic disease with no
treatment options.
- KRYSTEXXA MIRROR Randomized Clinical Trial: The Company
is currently evaluating the coadministration of KRYSTEXXA with
methotrexate to increase the complete response rate of KRYSTEXXA in
the MIRROR placebo-controlled randomized clinical trial (RCT). The
trial commenced in June 2019, and enrollment of 135 randomized
patients is on track to complete mid-2020. The registrational trial
is designed to enable the potential submission of results to the
FDA to update the prescribing information. The MIRROR RCT follows
an initial MIRROR open-label trial completed in 2019 that
demonstrated a 79 percent complete response rate for patients using
KRYSTEXXA with methotrexate. 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.
- KRYSTEXXA PROTECT Trial in Kidney Transplant Patients with
Uncontrolled Gout: The Company is evaluating the effect of
KRYSTEXXA on serum uric acid levels in kidney transplant patients
with uncontrolled gout in its PROTECT clinical trial, initiated in
October 2019. 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.
- KRYSTEXXA Shorter-Infusion Duration Trial: The Company
is initiating an open-label trial in mid-2020 to evaluate the
impact of administering KRYSTEXXA over a significantly shorter
infusion duration. Currently, KRYSTEXXA is infused over a two-hour
or longer timeframe. A shorter infusion duration could meaningfully
improve the experience and convenience for patients, physicians and
sites of care.
- 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 to discover new targets for gout.
Fourth-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: Fourth-quarter 2019 net sales were $363.5
million, an increase of 2.3 percent.
- Gross Profit: Under U.S. GAAP, the fourth-quarter 2019
gross profit ratio was 73.9 percent compared to 72.3 percent in the
fourth quarter of 2018. The non-GAAP gross profit ratio in the
fourth quarter of 2019 was 90.0 percent compared to 89.1 percent in
the fourth quarter of 2018.
- Operating Expenses: In the fourth quarter of 2019,
research and development (R&D) expenses were 7.9 percent of net
sales and selling, general and administrative (SG&A) expenses
were 51.0 percent of net sales. Non-GAAP R&D expenses were 7.3
percent of net sales, and non-GAAP SG&A expenses were 44.3
percent of net sales.
- Income Tax Rate: In the fourth quarter of 2019, the
Company recorded a benefit of $555.9 million primarily related to
an intra-company transfer of intellectual property assets,
resulting in a tax rate on a GAAP basis of negative 1,507.0
percent. On a non-GAAP basis, fourth-quarter 2019 income tax
expense was $11.7 million, resulting in a non-GAAP tax rate of 9.1
percent.
- Net Income: On a GAAP basis in the fourth quarter of
2019, net income was $592.8 million. Fourth-quarter 2019 non-GAAP
net income was $116.6 million.
- Adjusted EBITDA: Fourth-quarter 2019 adjusted EBITDA was
$139.9 million.
- Earnings per Share: On a GAAP basis, diluted earnings
per share (EPS) in the fourth quarter of 2019 and 2018 were $2.84
and $0.58, respectively. Non-GAAP diluted earnings per share in the
fourth quarter of 2019 and 2018 were $0.56 and $0.67, respectively.
The weighted average shares outstanding used to calculate
fourth-quarter 2019 and 2018 non-GAAP diluted earnings per share
were 211 million shares and 174 million shares, respectively. Given
the recent share price appreciation, the Company’s $400 million
dollars of exchangeable notes are approaching the point at which
the Company would be able to redeem them for cash, ordinary shares
or a combination of cash and ordinary shares. Based on current
expectations, the Company is incorporating the potential conversion
of the exchangeable notes into its fourth-quarter and full-year
2019 GAAP and non-GAAP diluted EPS calculations.
Fourth-Quarter Segment Results
Management uses net sales and segment operating income to
evaluate the performance of the Company’s two segments, the orphan
and rheumatology segment and the inflammation segment. 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. Beginning with the first quarter of 2020, the
Company is moving its medicine RAYOS®, which is not an orphan
medicine, to the inflammation segment, and the orphan and
rheumatology segment is being renamed the orphan segment.
Orphan and Rheumatology Segment
(in millions except for percentages)
Q4 19 Q4 18
%Change FY 19 FY 18 %Change
KRYSTEXXA
110.7
83.3
33
342.4
258.9
32
RAVICTI®(1)
68.5
60.2
14
228.8
226.6
1
PROCYSBI®
40.8
40.1
2
161.9
154.9
5
ACTIMMUNE®
28.4
27.5
3
107.3
105.6
2
RAYOS®
19.5
19.8
(1
)
78.6
61.1
29
BUPHENYL®(1)
1.6
6.4
(75
)
9.8
21.8
(55
)
QUINSAIR™
0.3
0.2
68
0.8
0.5
62
LODOTRA®(1)
-
0.1
NM
-
2.1
NM
Orphan and Rheumatology Net Sales
$
269.8
$
237.6
14
$
929.6
$
831.5
12
Orphan and Rheumatology Segment Operating Income
$
95.4
$
84.8
13
$
306.3
$
290.0
6
(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.
- Fourth-quarter 2019 net sales of the orphan and rheumatology
segment, the Company’s strategic growth segment, were $269.8
million, an increase of 14 percent over the prior year’s quarter,
driven by growth of KRYSTEXXA and RAVICTI.
- Fourth-quarter 2019 orphan and rheumatology segment operating
income was $95.4 million, which includes the impact of investment
in TEPEZZA pre-launch activities.
- For the full-year 2019, KRYSTEXXA net sales of $342.4 million
represented a 32 percent year-over-year increase, exceeding
expectations.
Inflammation Segment
(in millions except for percentages)
Q4 19 Q4 18
%Change FY 19 FY 18 %Change
PENNSAID 2%
57.0
64.3
(11)
200.8
190.2
6
DUEXIS®
26.3
34.0
(23)
115.7
114.7
1
VIMOVO®
10.4
18.8
(45)
52.1
67.6
(23)
MIGERGOT®(1)
-
0.8
NM
1.8
3.6
(49)
Inflammation Net Sales
$ 93.7
$ 117.9
(21)
$ 370.4
$ 376.1
(2)
Inflammation Segment Operating Income
$ 44.0
$ 66.2
(33)
$ 174.9
$ 160.4
9
(1)
In June 2019, the Company divested the
rights to MIGERGOT.
- Fourth-quarter 2019 net sales of the inflammation segment were
$93.7 million and segment operating income was $44.0 million.
Cash Flow Statement and Balance Sheet Highlights
- On a GAAP basis, operating cash flow was $191.4 million in the
fourth quarter of 2019 and $426.3 million for the full year of
2019. Non-GAAP operating cash flow was $192.0 million in the fourth
quarter of 2019 and $446.4 million for the full year of 2019.
- The Company had cash and cash equivalents of $1.076 billion as
of Dec. 31, 2019.
- As of Dec. 31, 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 Dec. 31, 2019, net debt was $341.7 million and the
net-debt-to-last-12-months adjusted EBITDA leverage (net leverage)
ratio was 0.7 times, compared to 2.3 times at Dec. 31, 2018.
2020 Guidance
The Company expects full‐year 2020 net sales to range between
$1.40 billion and $1.42 billion, reflecting KRYSTEXXA full-year net
sales growth of more than 25 percent and TEPEZZA full-year net
sales of $30 million to $40 million. Full-year 2020 adjusted EBITDA
is expected to range between $485 million and $500 million,
reflecting significant investment in the U.S. launch of TEPEZZA and
R&D pipeline programs to drive long-term growth.
Webcast
At 8 a.m. EST / 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, the
income tax effect on pre-tax non-GAAP adjustments and other
non-GAAP income tax adjustments, 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 2020
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 2020 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 2020 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; development plans; expected timing of clinical trials,
studies and regulatory submissions; 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 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 December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
(Unaudited) Net sales
$
363,545
$
355,543
$
1,300,029
$
1,207,570
Cost of goods sold
94,921
98,599
362,175
391,301
Gross profit
268,624
256,944
937,854
816,269
OPERATING EXPENSES: Research and development
28,558
19,683
103,169
82,762
Selling, general and administrative
185,391
174,628
697,111
692,485
(Gain)/Loss on sale of assets
-
(30,682
)
10,963
(42,985
)
Impairment of long-lived assets
-
10,847
-
46,096
Total operating expenses
213,949
174,476
811,243
778,358
Operating income
54,675
82,468
126,611
37,911
OTHER EXPENSE, NET: Interest expense, net
(17,098
)
(29,771
)
(87,089
)
(121,692
)
Loss on debt extinguishment
-
-
(58,835
)
-
Foreign exchange gain (loss)
58
(111
)
33
(192
)
Other (expense) income , net
(751
)
8
(944
)
841
Total other expense, net
(17,791
)
(29,874
)
(146,835
)
(121,043
)
Income (Loss) before benefit for income taxes
36,884
52,594
(20,224
)
(83,132
)
Benefit for income taxes
(555,885
)
(49,054
)
(593,244
)
(44,752
)
Net income (loss)
$
592,769
$
101,648
$
573,020
$
(38,380
)
Earnings (Loss) per ordinary share - basic
$
3.16
$
0.60
$
3.13
$
(0.23
)
Weighted average ordinary shares outstanding - basic
187,421,561
168,126,924
182,930,109
166,155,405
Earnings (Loss) per ordinary share - diluted
$
2.84
$
0.58
$
2.90
$
(0.23
)
Weighted average ordinary shares outstanding - diluted
210,953,579
174,230,711
205,224,221
166,155,405
Horizon Therapeutics
plc
Condensed Consolidated Balance
Sheets (Unaudited)
(in thousands, except share
data)
As of December 31,2019 December 31,2018
ASSETS CURRENT ASSETS: Cash and cash equivalents
$
1,076,287
$
958,712
Restricted cash
3,752
3,405
Accounts receivable, net
408,685
464,730
Inventories, net
53,802
50,751
Prepaid expenses and other current assets
143,577
68,218
Total current assets
1,686,103
1,545,816
Property and equipment, net
30,159
20,101
Developed technology, net
1,698,808
1,945,639
Other intangible assets, net
3,820
4,630
Goodwill
413,669
413,669
Deferred tax assets, net
555,165
3,148
Other assets
48,310
8,959
Total assets
$
4,436,034
$
3,941,962
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT
LIABILITIES: Accounts payable
$
21,514
$
30,284
Accrued expenses
235,234
215,739
Accrued trade discounts and rebates
466,421
457,763
Deferred revenues, current portion
-
4,901
Total current liabilities
723,169
708,687
LONG-TERM LIABILITIES: Exchangeable notes, net
351,533
332,199
Long-term debt, net of current
1,001,308
1,564,485
Deferred tax liabilities, net
94,247
107,768
Other long-term liabilities
80,328
38,717
Total long-term liabilities
1,527,416
2,043,169
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Ordinary shares, $0.0001 nominal value; 600,000,000 and 300,000,000
shares authorized at December 31, 2019 and December 31, 2018,
respectively 188,402,040 and 169,244,520 shares issued at December
31, 2019 and December 31, 2018, respectively, and 188,017,674 and
168,860,154 shares outstanding at December 31, 2019 and December
31, 2018, respectively
19
17
Treasury stock, 384,366 ordinary shares at December 31, 2019 and
December 31, 2018
(4,585
)
(4,585
)
Additional paid-in capital
2,797,602
2,374,966
Accumulated other comprehensive loss
(1,905
)
(1,523
)
Accumulated deficit
(605,682
)
(1,178,769
)
Total shareholders' equity
2,185,449
1,190,106
Total liabilities and shareholders' equity
$
4,436,034
$
3,941,962
Horizon Therapeutics
plc
Condensed Consolidated
Statements of Cash Flows (Unaudited)
(in thousands)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
(Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net
income (loss)
$
592,769
$
101,648
$
573,020
$
(38,380
)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities: Depreciation and amortization expense
59,821
62,624
237,157
249,759
Equity-settled share-based compensation
24,149
27,878
91,215
114,860
Impairment of long-lived assets
-
10,847
-
46,096
Loss on debt extinguishment
-
-
58,835
-
Amortization of debt discount and deferred financing costs
5,533
5,872
22,602
22,751
(Gain)/Loss on sale of assets
-
(30,682
)
10,963
(42,985
)
Deferred income taxes
(573,840
)
(66,136
)
(565,537
)
(64,491
)
Foreign exchange and other adjustments
2
92
574
332
Changes in operating assets and liabilities: Accounts receivable
(11,996
)
(73,757
)
56,166
(59,697
)
Inventories
4,737
2,378
(3,268
)
10,280
Prepaid expenses and other current assets
(708
)
10,213
(72,763
)
(25,313
)
Accounts payable
(5,385
)
(34,712
)
(8,723
)
(4,593
)
Accrued trade discounts and rebates
61,832
98,136
8,591
(44,028
)
Accrued expenses
30,379
5,202
19,788
40,787
Deferred revenues
-
(1,858
)
(4,901
)
(395
)
Other non-current assets and liabilities
4,087
(9,038
)
2,613
(10,440
)
Net cash provided by operating activities
191,380
108,707
426,332
194,543
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property
and equipment
(6,532
)
(3,890
)
(17,857
)
(4,771
)
Change in escrow deposit for property purchase
(6,000
)
-
(6,000
)
-
Proceeds from sale of assets
-
35,000
6,000
44,424
Payment related to license agreement
-
-
-
(12,000
)
Net cash (used in) provided by investing activities
(12,532
)
31,110
(17,857
)
27,653
CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from
issuance of senior notes
-
-
590,057
-
Repayment of senior notes
-
-
(814,420
)
-
Net proceeds from the issuance of ordinary shares
-
-
326,793
-
Repayment of term loans
(418,026
)
(818,026
)
(1,336,207
)
(845,749
)
Net proceeds from term loans
418,026
818,026
935,404
818,026
Contingent consideration proceeds from divestiture
-
-
3,297
-
Proceeds from the issuance of ordinary shares in conjunction with
ESPP program
5,849
3,900
11,317
8,610
Proceeds from the issuance of ordinary shares in connection with
stock option exercises
8,646
7,219
24,882
16,972
Payment of employee withholding taxes relating to share-based
awards
(2,109
)
(1,573
)
(31,569
)
(14,455
)
Net cash provided by (used in) financing activities
12,386
9,546
(290,446
)
(16,596
)
Effect of foreign exchange rate changes on cash, cash
equivalents and restricted cash
1,095
(692
)
(107
)
(1,380
)
Net increase in cash, cash equivalents and restricted cash
192,329
148,671
117,922
204,220
Cash, cash equivalents and restricted cash, beginning of the
period(1)
887,710
813,446
962,117
757,897
Cash, cash equivalents and restricted cash, end of the
period(1)
$
1,080,039
$
962,117
$
1,080,039
$
962,117
(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 December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
GAAP net income (loss)
$
592,769
$
101,648
$
573,020
$
(38,380
)
Non-GAAP adjustments: Acquisition/divestiture-related costs
942
(1,710
)
3,556
4,396
Restructuring and realignment costs
204
462
237
15,350
Amortization and step-up: Intangible amortization expense
57,662
61,125
230,424
243,634
Inventory step-up expense
-
99
89
17,312
Amortization of debt discount and deferred financing costs
5,533
5,872
22,602
22,752
Impairment of long-lived assets
-
10,847
-
46,096
(Gain)/Loss on sale of assets
-
(30,682
)
10,963
(42,985
)
Share-based compensation
24,149
27,878
91,215
114,860
Depreciation
2,159
1,499
6,733
6,126
Litigation settlements
-
-
1,000
5,750
Upfront, progress and milestone payments related to license and
collaboration agreements
-
-
9,073
(10
)
Fees related to refinancing activities
855
854
2,292
937
Loss on debt extinguishment
-
-
58,835
-
Drug substance harmonization costs
63
1,275
457
2,855
Charges relating to discontinuation of Friedreich's ataxia program
(145
)
(2,940
)
1,076
(1,464
)
Total of pre-tax non-GAAP adjustments
91,422
74,579
438,552
435,609
Income tax effect of pre-tax non-GAAP adjustments
(14,277
)
(57,961
)
(66,568
)
(45,186
)
Other non-GAAP income tax adjustments
(553,334
)
(1,499
)
(554,786
)
(37,392
)
Total of non-GAAP adjustments
(476,189
)
15,119
(182,802
)
353,031
Non-GAAP Net Income
$
116,580
$
116,767
$
390,218
$
314,651
Non-GAAP Earnings Per Share: Weighted
average ordinary shares - Basic
187,421,561
168,126,924
182,930,109
166,155,405
Non-GAAP Earnings Per Share - Basic: GAAP earnings
(loss) per share - Basic
$
3.16
$
0.60
$
3.13
$
(0.23
)
Non-GAAP adjustments
(2.54
)
0.09
(1.00
)
2.12
Non-GAAP earnings per share - Basic
$
0.62
$
0.69
$
2.13
$
1.89
Non-GAAP Net Income
$
116,580
$
116,767
$
390,218
$
314,651
Effect of assumed conversion of Exchangeable Senior Notes, net of
tax
1,875
-
7,500
-
Numerator - non-GAAP Net Income
$
118,455
$
116,767
$
397,718
$
314,651
Weighted average ordinary shares - Diluted Weighted
average ordinary shares - Basic
187,421,561
168,126,924
182,930,109
166,155,405
Ordinary share equivalents
23,532,018
6,103,787
22,294,112
5,393,514
Denominator - Weighted average ordinary shares - Diluted
210,953,579
174,230,711
205,224,221
171,548,919
Non-GAAP Earnings Per Share - Diluted GAAP
earnings (loss) per share - Diluted
$
2.84
$
0.58
$
2.90
$
(0.23
)
Non-GAAP adjustments
(2.28
)
0.09
(0.96
)
2.12
Diluted earnings per share effect of ordinary share equivalents
-
-
-
(0.06
)
Non-GAAP earnings per share - Diluted
$
0.56
$
0.67
$
1.94
$
1.83
Horizon Therapeutics
plc
GAAP to Non-GAAP
Reconciliations
EBITDA (Unaudited)
(in thousands)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
GAAP net income (loss)
$
592,769
$
101,648
$
573,020
$
(38,380
)
Depreciation
2,159
1,499
6,733
6,126
Amortization and step-up: Intangible amortization expense
57,662
61,125
230,424
243,634
Amortization of deferred revenue
-
-
-
-
Inventory step-up expense
-
99
89
17,312
Interest expense, net (including amortization of debt discount and
deferred financing costs)
17,098
29,771
87,089
121,692
Benefit for income taxes
(555,885
)
(49,054
)
(593,244
)
(44,752
)
EBITDA
$
113,803
$
145,088
$
304,111
$
305,632
Other non-GAAP adjustments: Acquisition/divestiture-related costs
942
(1,710
)
3,556
4,396
Restructuring and realignment costs
204
462
237
15,350
Impairment of long-lived assets
-
10,847
-
46,096
(Gain)/Loss on sale of assets
-
(30,682
)
10,963
(42,985
)
Share-based compensation
24,149
27,878
91,215
114,860
Litigation settlements
-
-
1,000
5,750
Upfront, progress and milestone payments related to license and
collaboration agreements
-
-
9,073
(10
)
Fees related to refinancing activities
855
854
2,292
937
Loss on debt extinguishment
-
-
58,835
-
Drug substance harmonization costs
63
1,275
457
2,855
Charges relating to discontinuation of Friedreich's ataxia program
(145
)
(2,940
)
1,076
(1,464
)
Total of other non-GAAP adjustments
26,068
5,984
178,704
145,785
Adjusted EBITDA
$
139,871
$
151,072
$
482,815
$
451,417
Horizon Therapeutics
plc
GAAP to Non-GAAP
Reconciliations
Operating Income
(Unaudited)
(in thousands)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
GAAP operating income
$
54,675
$
82,468
$
126,611
$
37,911
Non-GAAP adjustments: Acquisition/divestiture-related costs
(200
)
(1,972
)
1,032
3,989
Restructuring and realignment costs
204
462
237
15,350
Amortization and step-up: Intangible amortization expense
57,662
61,125
230,424
243,634
Inventory step-up expense
-
99
89
17,312
Impairment of long-lived assets
-
10,847
-
46,096
(Gain)/Loss on sale of assets
-
(30,682
)
10,963
(42,985
)
Share-based compensation
24,149
27,878
91,215
114,860
Depreciation
2,159
1,499
6,733
6,126
Litigation settlements
-
-
1,000
5,750
Upfront, progress and milestone payments related to license and
collaboration agreements
-
-
9,073
90
Fees related to refinancing activities
855
854
2,292
937
Drug substance harmonization costs
63
1,275
457
2,855
Charges relating to discontinuation of Friedreich's ataxia program
(145
)
(2,940
)
1,076
(1,464
)
Total of non-GAAP adjustments
84,747
68,445
354,591
412,550
Non-GAAP operating income
$
139,422
$
150,913
$
481,202
$
450,461
Orphan and Rheumatology segment operating income
95,388
84,761
306,333
290,014
Inflammation segment operating income
44,034
66,152
174,869
160,447
Total segment operating income
$
139,422
$
150,913
$
481,202
$
450,461
Foreign exchange (loss)/gain
58
(111
)
33
(192
)
Other income, net
391
270
1,580
1,148
Adjusted EBITDA
$
139,871
$
151,072
$
482,815
$
451,417
Horizon Therapeutics
plc
GAAP to Non-GAAP
Reconciliations
Gross Profit and Operating
Cash Flow (Unaudited)
(in thousands, except
percentages)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Non-GAAP Gross Profit: GAAP gross
profit
$
268,624
$
256,944
$
937,854
$
816,269
Non-GAAP gross profit adjustments: Acquisition/divestiture-related
costs
-
(728
)
1,115
(900
)
Intangible amortization expense
57,458
60,921
229,614
242,823
Inventory step-up expense
-
99
89
17,312
Share-based compensation
927
932
3,818
3,699
Depreciation
155
171
630
700
Drug substance harmonization costs
63
1,275
457
2,855
Charges relating to discontinuation of Friedreich's ataxia program
(145
)
(2,940
)
1,076
(1,551
)
Total of Non-GAAP adjustments
58,458
59,730
236,799
264,938
Non-GAAP gross profit
$
327,082
$
316,674
$
1,174,653
$
1,081,207
GAAP gross profit %
73.9
%
72.3
%
72.1
%
67.6
%
Non-GAAP gross profit %
90.0
%
89.1
%
90.4
%
89.5
%
GAAP cash provided by operating
activities
$
191,380
$
108,707
$
426,332
$
194,543
Cash payments for acquisition/divestiture-related costs
-
1,065
583
8,918
Cash payments for restructuring and realignment costs
200
2,767
3,464
11,801
Cash payments for litigation settlements
-
-
1,000
5,750
Cash payments for upfront, progress and milestone payments related
to license and collaboration agreement
-
-
9,073
175
Cash payments drug substance harmonization costs
67
1,718
1,052
7,661
Cash payments for discontinuation of Friedreich's ataxia program
-
-
2,589
3,399
Cash payments relating to refinancing activities
369
883
2,287
941
Non-GAAP operating cash flow
$
192,016
$
115,140
$
446,380
$
233,188
Horizon Therapeutics
plc
Net Debt Reconciliation
(Unaudited)
(in thousands)
As of December 31,2019 December 31,2018
Long-term debt, net of current
$
1,001,308
$
1,564,485
Exchangeable notes, net
351,533
332,199
Total Debt
1,352,841
1,896,684
Debt discount
59,922
87,038
Deferred financing fees
5,263
9,304
Total Principal Amount of Debt
1,418,026
1,993,026
Less: cash and cash equivalents
1,076,287
958,712
Net Debt
$
341,739
$
1,034,314
Horizon Therapeutics
plc
GAAP to Non-GAAP Tax Rate
Reconciliation (Unaudited)
(in millions, except
percentages and per share amounts)
Q4 2019
Pre-tax Net (Loss)
Income
Income Tax (Benefit)
Expense
Tax Rate
Net Income (Loss)
Diluted Earnings (Loss) Per
Share
As reported - GAAP
$
36.9
$
(555.9
)
(1507.0
)%
$
592.8
$
2.84
Non-GAAP adjustments
91.4
567.6
(476.2
)
Non-GAAP
$
128.3
$
11.7
9.1
%
$
116.6
$
0.56
Q4 2018
Pre-tax Net (Loss)
Income
Income Tax (Benefit)
Expense
Tax Rate
Net Income (Loss)
Diluted Earnings (Loss) Per
Share
As reported - GAAP
$
52.6
$
(49.1
)
(93.3
)%
$
101.7
$
0.58
Non-GAAP adjustments
74.6
59.5
15.1
Non-GAAP
$
127.2
$
10.4
8.2
%
$
116.8
$
0.67
FY 2019
Pre-tax Net (Loss)
Income
Income Tax (Benefit)
Expense
Tax Rate
Net Income (Loss)
Diluted Earnings (Loss) Per
Share
As reported - GAAP
$
(20.2
)
$
(593.2
)
2933.0
%
$
573.0
$
2.90
Non-GAAP adjustments
438.6
621.4
(182.8
)
Non-GAAP
$
418.3
$
28.2
6.7
%
$
390.2
$
1.94
FY 2018
Pre-tax Net (Loss)
Income
Income Tax (Benefit)
Expense
Tax Rate
Net Income (Loss)
Diluted Earnings (Loss) Per
Share
As reported - GAAP
$
(83.1
)
$
(44.8
)
53.8
%
$
(38.3
)
$
(0.23
)
Non-GAAP adjustments
435.6
82.6
353.0
Non-GAAP
$
352.5
$
37.8
10.7
%
$
314.7
$
1.83
Horizon Therapeutics
plc
Certain Income Statement Line
Items - Non-GAAP Adjusted
For the Three Months Ended
December 31, 2019
(Unaudited)
COGS Research &Development Selling, General&
Administrative Loss on DebtExtinguishment InterestExpense
OtherExpense Income TaxBenefit(Expense)
GAAP as
reported
$
(94,921
)
$
(28,558
)
$
(185,391
)
$
-
$
(17,098
)
$
(751
)
$
555,885
Non-GAAP Adjustments (in thousands):
Acquisition/divestiture-related costs(1)
-
(184
)
(19
)
-
-
1,145
-
Restructuring and realignment costs(2)
-
-
204
-
-
-
-
Amortization and step-up: Intangible amortization expense(3)
57,458
-
204
-
-
-
-
Amortization of debt discount and deferred financing costs(4)
-
-
-
-
5,533
-
-
Share-based compensation(5)
927
2,186
21,036
-
-
-
-
Depreciation(6)
155
13
1,991
-
-
-
-
Fees related to refinancing activities (7)
-
-
855
-
-
-
-
Drug substance harmonization costs(8)
63
-
-
-
-
-
-
Charges relating to discontinuation of Friedreich's ataxia
program(9)
(145
)
-
-
-
-
-
-
Income tax effect on pre-tax non-GAAP adjustments(10)
-
-
-
-
-
-
(14,277
)
Other non-GAAP income tax adjustments(11)
-
-
-
-
-
-
(553,334
)
Total of non-GAAP
adjustments
58,458
2,015
24,271
-
5,533
1,145
(567,611
)
Non-GAAP
$
(36,463
)
$
(26,543
)
$
(161,120
)
$
-
$
(11,565
)
$
394
$
(11,726
)
Horizon Therapeutics plc Certain Income Statement
Line Items - Non-GAAP Adjusted For the Three Months Ended
December 31, 2018 (Unaudited) COGS
Research &Development Selling, General& Administrative
Impairment ofLong-Lived Assets Loss/(Gain) onSale of Assets
InterestExpense OtherIncome, net Income TaxBenefit(Expense)
GAAP as reported
$
(98,599
)
$
(19,683
)
$
(174,628
)
$
(10,847
)
$
30,682
$
(29,771
)
$
8
$
49,054
Non-GAAP Adjustments (in thousands):
Acquisition/divestiture-related costs(1)
(728
)
(1,206
)
(38
)
-
-
-
262
-
Restructuring and realignment costs(2)
-
-
462
-
-
-
-
-
Amortization and step-up: Intangible amortization expense(3)
60,921
-
204
-
-
-
-
-
Inventory step-up expense(12)
99
-
-
-
-
-
-
-
Amortization of debt discount and deferred financing costs(4)
-
-
-
-
-
5,872
-
Impairment of long lived assets(13)
-
-
-
10,847
-
-
-
-
(Gain)/Loss on sale of assets(14)
-
-
-
-
(30,682
)
-
-
-
Share-based compensation(5)
932
2,182
24,764
-
-
-
-
-
Depreciation(6)
171
-
1,328
-
-
-
-
-
Fees related to refinancing activities (7)
-
-
854
-
-
-
-
-
Drug substance harmonization costs(8)
1,275
-
-
-
-
-
-
-
Charges relating to discontinuation of Friedreich's ataxia
program(9)
(2,940
)
-
-
-
-
-
-
-
Income tax effect on pre-tax non-GAAP adjustments(10)
-
-
-
-
-
-
-
(57,961
)
Other non-GAAP income tax adjustments(11)
-
-
-
-
-
-
-
(1,499
)
Total of non-GAAP adjustments
59,730
976
27,574
10,847
(30,682
)
5,872
262
(59,460
)
Non-GAAP
$
(38,869
)
$
(18,707
)
$
(147,054
)
-
-
$
(23,899
)
$
270
$
(10,406
)
Horizon Therapeutics
plc
Certain Income Statement Line
Items - Non-GAAP Adjusted
For the Twelve Months Ended
December 31, 2019
(Unaudited)
COGS Research &Development Selling, General&
Administrative Loss/(Gain) onSale of Assets InterestExpense
OtherExpense Loss on DebtExtinguishment Income TaxBenefit(Expense)
GAAP as reported
$
(362,175
)
$
(103,169
)
$
(697,111
)
$
(10,963
)
$
(87,089
)
$
(944
)
$
(58,835
)
$
593,244
Non-GAAP Adjustments (in thousands):
Acquisition/divestiture-related costs(1)
1,115
(184
)
101
-
-
2,524
-
-
Restructuring and realignment costs(2)
-
-
237
-
-
-
-
-
Amortization and step-up: Intangible amortization expense(3)
229,614
-
810
-
-
-
-
-
Inventory step-up expense(12)
89
-
-
-
-
-
-
-
Amortization of debt discount and deferred financing costs(4)
-
-
-
-
22,602
-
-
-
(Gain)/Loss on sale of assets(14)
-
-
-
10,963
-
-
-
-
Share-based compensation(5)
3,818
9,117
78,280
-
-
-
-
-
Depreciation(6)
630
13
6,090
-
-
-
-
-
Litigation settlements(15)
-
-
1,000
-
-
-
-
-
Upfront, progress and milestone payments related to license and
collaboration agreements(16)
-
9,073
-
-
-
-
-
-
Fees related to refinancing activities (7)
-
-
2,292
-
-
-
-
-
Loss on debt extinguishment(17)
-
-
-
-
-
-
58,835
-
Drug substance harmonization costs(8)
457
-
-
-
-
-
-
-
Charges relating to discontinuation of Friedreich's ataxia
program(9)
1,076
-
-
-
-
-
-
-
Income tax effect on pre-tax non-GAAP adjustments(10)
-
-
-
-
-
-
-
(66,568
)
Other non-GAAP income tax adjustments(11)
-
-
-
-
-
-
-
(554,786
)
Total of non-GAAP adjustments
236,799
18,019
88,810
10,963
22,602
2,524
58,835
(621,354
)
Non-GAAP
$
(125,376
)
$
(85,150
)
$
(608,301
)
$
-
$
(64,487
)
$
1,580
$
-
$
(28,110
)
Horizon Therapeutics plc Certain Income Statement
Line Items - Non-GAAP Adjusted For the Twelve Months Ended
December 31, 2018 (Unaudited) COGS
Research &Development Selling, General& Administrative
Impairment ofLong-Lived Assets Loss/(Gain) onSale of Assets
InterestExpense OtherIncome Income TaxBenefit(Expense)
GAAP as reported
$
(391,301
)
$
(82,762
)
$
(692,485
)
$
(46,096
)
$
42,985
$
(121,692
)
841
$
44,752
Non-GAAP Adjustments (in thousands):
Acquisition/divestiture-related costs(1)
(900
)
459
4,430
-
-
-
407
-
Restructuring and realignment costs(2)
15,350
-
-
-
-
-
Amortization and step-up: Intangible amortization expense(3)
242,823
-
811
-
-
-
-
-
Inventory step-up expense(12)
17,312
-
-
-
-
-
-
-
Amortization of debt discount and deferred financing costs(4)
-
-
-
-
-
22,752
-
Impairment of long lived assets(13)
-
-
-
46,096
-
-
-
-
(Gain)/Loss on sale of assets(14)
-
-
-
-
(42,985
)
-
-
-
Share-based compensation(5)
3,699
8,880
102,281
-
-
-
-
-
Depreciation(6)
700
-
5,426
-
-
-
-
-
Litigation settlements(15)
-
-
5,750
-
-
-
-
-
Upfront, progress and milestone payments related to license and
collaboration agreements(16)
-
90
-
-
-
-
(100
)
-
Fees related to refinancing activities (7)
-
-
937
-
-
-
-
-
Drug substance harmonization costs(8)
2,855
-
-
-
-
-
-
-
Charges relating to discontinuation of Friedreich's ataxia
program(9)
(1,551
)
87
-
-
-
-
-
-
Income tax effect on pre-tax non-GAAP adjustments(10)
-
-
-
-
-
-
-
(45,186
)
Other non-GAAP income tax adjustments(11)
-
-
-
-
-
-
-
(37,392
)
Total of non-GAAP adjustments
264,938
9,516
134,985
46,096
(42,985
)
22,752
307
(82,578
)
Non-GAAP
$
(126,363
)
$
(73,246
)
$
(557,500
)
$
-
$
-
$
(98,940
)
$
1,148
$
(37,826
)
NOTES FOR CERTAIN INCOME STATEMENT LINE
ITEMS - NON-GAAP
- Represents expenses, including legal and consulting fees,
incurred in connection with our acquisitions and divestitures.
Costs recovered from subleases of acquired facilities and
reimbursed expenses incurred under transition arrangements for
divestitures are also reflected in this line item.
- 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 KRYSTEXXA, RAVICTI, PROCYSBI, ACTIMMUNE,
RAYOS, BUPHENYL, LODOTRA, PENNSAID 2%, VIMOVO and MIGERGOT.
- Represents amortization of debt discount and deferred financing
costs associated with our debt.
- 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.
- Represents arrangement and other fees relating to our
refinancing activities.
- During the year ended December 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
trial 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.
- During the year ended December 31, 2019, we recorded charges
related to the FA discontinuation of $1.1 million, primarily due to
the remeasurement of an inventory purchase commitment liability.
During the year ended December 31, 2018, we recorded a reduction to
previously incurred charges relating to the FA discontinuation of
$1.5 million reflecting lower costs to discontinue the clinical
trial than previously anticipated.
- 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.
- Other non-GAAP income tax adjustments during the year ended
December 31, 2019, primarily reflect a tax benefit of $553.3
million resulting from an intra-company transfer of intellectual
property assets to an Irish subsidiary. Other non-GAAP income tax
adjustments during the year ended December 31, 2018, reflect the
impact of the deferred tax asset reinstatement in accordance with
SAB 118, that was a $37.4 million increase to our benefit for
income taxes and a corresponding decrease to the U.S. group net
deferred tax liability position. Following Notice 2018-28 that was
issued by the U.S. Treasury Department and the U.S. Internal
Revenue Service during the year ended December 31, 2018 and in
accordance with the measurement period provisions under SAB 118, we
reinstated the deferred tax asset related to our U.S. interest
expense carry forwards under Section 163(j) of the Internal Revenue
Code based on the revised U.S. federal tax rate of 21 percent.
- During the year ended December 31, 2018, we recognized in cost
of goods sold $17.3 million for inventory step-up expense primarily
related to KRYSTEXXA inventory sold.
- Impairment of long-lived assets during the year ended December
31, 2018, primarily relates to the write-off of the book value of
developed technology related to PROCYSBI in Canada and Latin
America and LODOTRA.
- During the year ended December 31, 2019, we recorded a loss of
$11.0 million on the sale of our rights to MIGERGOT. During the
year ended December 31, 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.
Additionally, during the year ended December 31, 2018, we sold our
rights to RAVICTI and AMMONAPS outside of North America and Japan
to Medical Need Europe AB, and we recorded a gain of $30.7
million.
- We recorded $1.0 million and $5.8 million of expense during the
years ended December 31, 2019 and 2018, respectively, for
litigation settlements.
- During the year ended December 31, 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 Roche relating to the TEPEZZA BLA
submission to the FDA during the third quarter of 2019, and an
upfront cash payment of $2.0 million and a progress payment of $4.0
million in relation to the collaboration agreement with
HemoShear.
- During the year ended December 31, 2019, we recorded a loss on
debt extinguishment of $58.8 million in the consolidated statements
of comprehensive income (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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200226005436/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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