-- Record Third-Quarter 2020 Net Sales of
$636.4 Million Increased 90 Percent; Third-Quarter 2020 GAAP Net
Income of $292.8 Million; Adjusted EBITDA of $329.8 Million --
-- Quarterly Orphan Segment Net Sales Increased
131 Percent to $534.8 Million, Representing Nearly 85 Percent of
Total Company Net Sales --
-- TEPEZZA (teprotumumab-trbw) Third-Quarter
2020 Net Sales of $286.9 Million; Increasing Full-Year 2020
Guidance to Greater Than $800 Million from Greater Than $650
Million; Significantly Increasing Investment in TEPEZZA to Support
Continued Strong Growth --
-- KRYSTEXXA® (pegloticase injection)
Third-Quarter 2020 Net Sales of $108.5 Million; Increasing
Full-Year 2020 Net Sales Guidance to Low Double-Digit Growth --
-- Increasing Full-Year 2020 Net Sales Guidance
to $2.12 Billion to $2.14 Billion and Full-Year 2020 Adjusted
EBITDA Guidance to $920 Million to $940 Million --
-- Pursuing TEPEZZA Expansion Outside the
United States --
-- Karin Rosén, M.D., Ph.D., Named Executive
Vice President, Research and Development and Chief Scientific
Officer --
-- Topline Data Announced for RECIPE Randomized
Controlled Trial Evaluating Co-Administration of KRYSTEXXA with an
Immunomodulator; Response Rate of 86 Percent; KRYSTEXXA Use with
Immunomodulation Now at More Than 25 Percent --
-- Expanding HZN-825 Development Program to
Include Interstitial Lung Diseases --
-- Completed Equity Offering and Extinguishment
of Exchangeable Senior Notes; Cash Position of $1.7 Billion at
Sept. 30, 2020 --
Horizon Therapeutics plc (Nasdaq: HZNP) today announced record
third-quarter 2020 financial results and increased both its
full-year 2020 net sales and adjusted EBITDA guidance.
“We are proud of the fact that in just eight months TEPEZZA has
made such a dramatic difference in the lives of so many patients,
resulting in one of the most successful rare disease medicine
launches ever,” said Tim Walbert, chairman, president and chief
executive officer, Horizon. “We are now pursuing our global
strategy to provide TEPEZZA to patients with Thyroid Eye Disease in
other parts of the world. Furthermore, we are significantly
increasing our investment in TEPEZZA to drive additional awareness
of Thyroid Eye Disease and support the continued strong demand for
this important medicine.”
Walbert continued, “During the third quarter we also saw a
return to growth for KRYSTEXXA, our biologic for the treatment of
uncontrolled gout and a key growth driver for the Company. With our
substantial progress this year, including the improvements we have
made to our capital structure and investments in our clinical
programs, we are well positioned for continued growth.”
Financial Highlights
(in millions except for per share amounts and percentages)
Q3 20
Q3 19
% Change
YTD 20
YTD 19
% Change
Net sales
$
636.4
$
335.5
90
$
1,455.1
$
936.5
55
Net income (loss)
292.8
18.2
NM
199.2
(19.7
)
NM
Non-GAAP net income
392.2
124.1
216
559.2
273.6
104
Adjusted EBITDA
329.8
130.4
153
627.7
342.9
83
Earnings (Loss) per share - diluted
1.31
0.09
NM
0.95
(0.11
)
NM
Non-GAAP earnings per share - diluted
1.74
0.64
172
2.58
1.44
79
Third-Quarter and Recent Company Highlights
- Increasing TEPEZZA Investment to Support Continued Strong
Growth: Today, the Company increased full-year 2020 net sales
guidance for TEPEZZA to greater than $800 million from greater than
$650 million. In addition, to support the Company’s outlook for
continued strong TEPEZZA growth, as well as to increase awareness
of Thyroid Eye Disease (TED), the Company is significantly
expanding its commercial and field-based organization for TEPEZZA
and increasing its investment in marketing initiatives, including
its direct-to-consumer campaign. The Company is also increasing its
investment in TEPEZZA long-term supply. These initiatives are
intended to support TEPEZZA peak U.S. annual net sales guidance of
greater than $3 billion.
- Pursuing TEPEZZA Expansion Outside the United States:
With the U.S. launch of TEPEZZA earlier this year and the
demonstrated benefit it has provided U.S. patients with TED, the
Company is pursuing its global expansion strategy to bring TEPEZZA
to patients with TED in other parts of the world. Based on its
preliminary analysis, the Company projects the initial opportunity
to be greater than $500 million in annual net sales, which covers
multiple geographies but does not yet incorporate any potential
revenue in Europe. Japan is one of the countries the Company is
pursuing, and the Company will be engaging with Japanese regulatory
authorities and the Pharmaceutical and Medical Devices Agency, as
well as with the Japanese medical community, to better understand
the current dynamics of TED in Japan and the regulatory
requirements for approval of TEPEZZA.
- New Executive Vice President, Research & Development and
Chief Scientific Officer: The Company announced today that
Karin Rosén, M.D., Ph.D., has joined Horizon as executive vice
president, research and development and chief scientific officer.
Dr. Rosén is an accomplished life sciences executive and physician
with nearly three decades of experience, which includes biologic
clinical research and development, as well as building, leading and
successfully launching multiple novel medicines in the United
States and globally. Dr. Rosén will contribute to solidifying the
Company’s position as a leading rare disease biopharmaceutical
company.
- Expanding HZN-825 Development Program: As part of its
strategy to further explore the potential fibrosis-mediating
benefits of LPAR1 antagonism, the Company is planning a clinical
development program for its pipeline candidate HZN-825 in
interstitial lung diseases. The most common interstitial lung
disease (ILD) is idiopathic pulmonary fibrosis (IPF), a rare
progressive lung disease with a median survival of less than five
years. The Company anticipates initiating its first trial in an
ILD, a Phase 2b pivotal trial in the IPF indication, in
mid-2021.
- KRYSTEXXA Immunomodulation RECIPE Trial Achieved 86 Percent
Response Rate: Data from the investigator-initiated trial
RECIPE will be presented at the 2020 American College of
Rheumatology annual meeting on Nov. 7, 2020. This trial was the
first randomized controlled trial (RCT) evaluating the effect of
co-administration of KRYSTEXXA with an immunomodulator to increase
the complete response rate of KRYSTEXXA. The primary endpoint was
the proportion of patients with serum uric acid (sUA) less than or
equal to 6 mg/dL at 12 weeks: 86 percent of patients receiving
KRYSTEXXA co-administered with the immunomodulator mycophenolate
mofetil (MMF) achieved this outcome, compared to 40 percent of
placebo patients on KRYSTEXXA monotherapy (p-value 0.01). After 12
weeks off of MMF therapy but continuing on KRYSTEXXA therapy, 68
percent of patients achieved a sustained response, compared to 30
percent of placebo patients. The combination was well tolerated
with no new safety signals. This trial adds to the growing body of
evidence supporting the immunomodulation treatment approach where
complete response rates have ranged between 70 and 100
percent.
- Initiated Enrollment in KRYSTEXXA Shorter Infusion Duration
Trial: On Oct. 29, 2020, the Company announced that the first
patient was enrolled in an open-label clinical trial to evaluate a
shorter infusion duration for KRYSTEXXA co-prescribed with
methotrexate to treat patients with uncontrolled gout. Currently,
KRYSTEXXA is infused over a two-hour or longer timeframe. A shorter
infusion duration administration could meaningfully impact the
experience for patients, physicians and sites of care.
- Announced Interim Data in KRYSTEXXA PROTECT Trial: On
Oct. 22, 2020, the Company announced interim data from its PROTECT
open-label trial evaluating KRYSTEXXA to improve management of
uncontrolled gout for adults with a kidney transplant. These data
were presented as part of the 2020 American Society of Nephrology
Kidney Week. Early data of this ongoing clinical trial are
encouraging with respect to the ability of KRYSTEXXA to treat
uncontrolled gout in this very sensitive transplant population
without compromising kidney function.
- Expanding HZN-825 Development Program: As part of its
strategy to further explore the potential fibrosis-mediating
benefits of LPAR1 antagonism, the Company is planning a clinical
development program for its pipeline candidate HZN-825 in
interstitial lung diseases. The most common interstitial lung
disease (ILD) is idiopathic pulmonary fibrosis (IPF), a rare
progressive lung disease with a median survival of less than five
years. The Company anticipates initiating its first trial in an
ILD, a Phase 2b pivotal trial in the IPF indication, in
mid-2021.
- Completed Enrollment for KRYSTEXXA MIRROR RCT: In August
2020, the Company completed enrollment of its MIRROR RCT, with a
total of 145 patients, exceeding its target enrollment of 135
patients. MIRROR RCT is the first randomized trial to evaluate the
efficacy and safety of the concomitant use of KRYSTEXXA with
methotrexate to increase the complete response rate of KRYSTEXXA.
Preliminary six-month results are expected in the first half of
2021 with the full 12-month dataset available after the trial is
completed in the second half of 2021.
- Announced Topline Data from TEPEZZA OPTIC-X Open-Label
Extension Trial and OPTIC 48-Week Off-Treatment Follow-Up
Period: In July 2020, the Company announced topline results
from its OPTIC-X open-label clinical trial, an extension trial of
OPTIC, the TEPEZZA Phase 3 pivotal confirmatory clinical trial, as
well as data from the OPTIC 48-week off-treatment follow-up period.
OPTIC-X results demonstrated that 89 percent of patients who
received placebo during OPTIC and then entered OPTIC-X and received
TEPEZZA achieved the primary endpoint of 2 mm or more reduction in
proptosis at Week 24. These patients had a TED diagnosis for an
average of one year prior to initiating treatment with TEPEZZA
compared with an average of six months for patients in OPTIC. The
results of the OPTIC 48-week off-treatment follow-up period
demonstrated that the majority of TEPEZZA patients who were
proptosis responders at Week 24 of OPTIC maintained their response
at Week 72, nearly a year off treatment. For the small number of
TEPEZZA patients who relapsed during the OPTIC follow-up period,
the majority experienced improvements in proptosis with an
additional course of TEPEZZA in OPTIC-X. The OPTIC-X and OPTIC
48-week follow-up data underscore the long-term durability of
TEPEZZA, the potential for retreatment and the efficacy of TEPEZZA
in patients with longer duration of TED.
- Permanent J-Code Issued for TEPEZZA: On Oct. 1, 2020,
the Company’s permanent, product-specific Healthcare Common
Procedure Coding System (HCPCS) J-code (J3241) became effective for
TEPEZZA. The permanent J-code enables reimbursement in all
outpatient treatment settings.
- Additional Clinical Trial Data on TEPEZZA at Upcoming
Medical Meetings: Several TEPEZZA-related events will take
place at the Nov. 13-15, 2020, virtual American Academy of
Ophthalmology (AAO) 2020 annual meeting, including additional
details on OPTIC 48-week off-treatment durability of response as
well as OPTIC-X treatment results. The Nov. 20-22, 2020, virtual
American Society of Ophthalmic Plastic and Reconstructive Surgery
(ASOPRS) Fall Scientific Symposium will include a presentation on
the recent case report published in the American Journal of
Ophthalmology on the treatment of a patient with chronic TED.
Additionally, case reports of improvement of dysthyroid optic
neuropathy after treatment with TEPEZZA will be presented at both
meetings.
- Completed Equity Offering and Improved Company’s Capital
Structure: On Aug. 11, 2020, the Company completed a public
offering of ordinary shares and raised approximately $920 million
in net proceeds. On Aug. 3, 2020, the Company completed the
extinguishment of all $400 million of its 2.50 percent exchangeable
senior notes due 2022.
- Received Best Workplace Awards: During the third
quarter, the Company received three workplace recognitions. In
August 2020, Crain’s Chicago Business selected Horizon as one of
the “Best Places to Work in Chicago” and Fortune and Great Place to
Work® named Horizon to the “Fortune Best Workplaces for
Millennials™” list. In September 2020, Horizon ranked 15th out of
50 U.S. companies on the “PEOPLE Companies That Care®” list. More
recently, in October 2020, Horizon was named to the “Fortune Best
Small & Medium Workplaces™” list, the Chicago Tribune Top
Workplaces 2020 list, the “San Francisco Bay Area’s Best and
Brightest Companies to Work For” list, the Dave Thomas Foundation
for Adoption “Best Adoption-Friendly Workplaces” list and the
Crain’s Chicago Business “Most Innovative Companies” List. To date
in 2020, the Company has received 11 workplace-related
recognitions, reflecting the high level of engagement of its
employees.
Key Research and Development Programs
- HZN-825 Diffuse Cutaneous Systemic Sclerosis (dcSSc)
Program: HZN-825 is the Company’s LPAR1 antagonist in
development for the treatment of dcSSc, a rare, chronic autoimmune
disease marked by fibrosis, or skin thickening, with no
FDA-approved treatment options. The Company expects to begin a
Phase 2b pivotal trial in the first half of 2021.
- HZN-825 ILD Program: As part of its strategy to further
explore the potential fibrosis-mediating benefits of LPAR1
antagonism, the Company is planning a clinical development program
for its pipeline candidate HZN-825 in ILD, starting with IPF, which
is a rare progressive lung disease with a median survival of less
than five years. The Company anticipates initiating a Phase 2b
pivotal trial in the IPF indication in mid-2021.
- TEPEZZA Trial in Chronic TED: The Company expects to
initiate a randomized, placebo-controlled trial of TEPEZZA in
patients with chronic TED by year-end 2020. In chronic TED, the
disease is no longer progressive; however, significant disease
manifestations such as proptosis (eye bulging) and diplopia (double
vision) remain.
- TEPEZZA Subcutaneous Administration Program: The Company
has initiated a pharmacokinetic trial to explore subcutaneous
dosing of TEPEZZA, which is currently administered by infusion. The
objective of the trial is to inform the potential for additional
administration options for TEPEZZA, which could provide greater
flexibility for patients and physicians.
- TEPEZZA dcSSc Exploratory Trial: As part of its
evaluation of additional potential indications for TEPEZZA, the
Company is planning to initiate an exploratory trial in dcSSc by
year-end 2020.
- KRYSTEXXA MIRROR RCT: The Company is currently
evaluating the efficacy and safety of the concomitant use of
KRYSTEXXA with methotrexate to increase the complete response rate
of KRYSTEXXA in the MIRROR placebo-controlled RCT. The trial has
completed enrollment, with 145 patients. The primary endpoint of
the trial is the proportion of serum uric acid (sUA) responders
(sUA of less than 6 mg/dL) at six months, with secondary endpoints
out to 12 months. The registrational trial is designed to enable
the potential submission of results to the FDA to update the
prescribing information. The MIRROR RCT follows the MIRROR
open-label trial completed in 2019 that demonstrated a 79 percent
complete response rate for patients using KRYSTEXXA with
methotrexate, nearly double the 42 percent response rate in the
KRYSTEXXA Phase 3 clinical program, which evaluated KRYSTEXXA
alone. 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 has achieved more than 75
percent enrollment in its PROTECT open-label clinical trial, and
expects to complete enrollment by the end of 2020. The trial is
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.
- KRYSTEXXA Shorter Infusion Duration Trial: On Oct. 29,
2020, the Company enrolled the first patient in its shorter
infusion duration trial 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 administration could
meaningfully impact the experience for patients, physicians and
sites of care.
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 2020 net sales were $636.4
million, an increase of 90 percent compared to the third quarter of
2019.
- Gross Profit: Under U.S. GAAP, the third-quarter 2020
gross profit ratio was 76.2 percent compared to 73.2 percent in the
third quarter of 2019. The non-GAAP gross profit ratio in the third
quarter of 2020 was 86.7 percent compared to 90.7 percent in the
third quarter of 2019.
- Operating Expenses: Research and development (R&D)
expenses were 4.7 percent of net sales and selling, general and
administrative (SG&A) expenses were 35.5 percent of net sales.
Non-GAAP R&D expenses were 4.4 percent of net sales, and
non-GAAP SG&A expenses were 30.5 percent of net sales.
- Income Tax Benefit: In the third quarter of 2020, income
tax benefit on a GAAP and non-GAAP basis was $91.1 million and
$73.3 million, respectively.
- Net Income: On a GAAP basis in the third quarter of
2020, net income was $292.8 million. Third-quarter 2020 non-GAAP
net income was $392.2 million.
- Adjusted EBITDA: Third-quarter 2020 adjusted EBITDA was
$329.8 million.
- Earnings per Share: On a GAAP basis diluted earnings per
share in the third quarter of 2020 and 2019 was $1.31 and $0.09,
respectively. Non-GAAP diluted earnings per share in the third
quarter of 2020 and 2019 was $1.74 and $0.64, respectively.
Weighted average shares outstanding used for calculating GAAP and
non-GAAP diluted earnings per share in the third quarter of 2020
were 223.7 million and 225.3 million, respectively.
Third-Quarter Segment Results
Management uses net sales and segment operating income to
evaluate the performance of the Company’s two segments, the orphan
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.
Orphan Segment
(in millions except for percentages)
Q3 20 Q3 19
%Change YTD 20 YTD 19 %Change
TEPEZZA®
286.9
-
NM
476.3
-
NM
KRYSTEXXA®
108.5
99.6
9
276.9
231.6
20
RAVICTI®
64.6
60.0
8
191.4
160.3
19
PROCYSBI®
43.1
40.4
7
122.8
121.1
1
ACTIMMUNE®
28.3
27.9
2
83.1
78.9
5
BUPHENYL®
3.2
3.0
6
8.4
8.2
3
QUINSAIRTM
0.2
0.2
(23
)
0.5
0.6
(9
)
Orphan Net Sales
$
534.8
$
231.1
131
$
1,159.4
$
600.7
93
Orphan Segment Operating Income
$
274.7
$
79.7
245
$
480.6
$
180.1
167
- Third-quarter 2020 net sales of the orphan segment, the
Company’s strategic growth segment, were $534.8 million, an
increase of 131 percent over the prior year’s quarter, driven by
the strong performance of TEPEZZA, KRYSTEXXA, RAVICTI and PROCYSBI.
The orphan segment represented 84 percent of total third-quarter
net sales.
- Third-quarter 2020 orphan segment operating income was $274.7
million, which includes significant investment spend associated
with the commercial launch of TEPEZZA.
Inflammation Segment
(in millions except for percentages)
Q3 20 Q3 19
%Change YTD 20 YTD 19 %Change
PENNSAID 2%®
50.3
42.1
20
126.9
143.7
(12
)
DUEXIS®
27.9
29.9
(7
)
87.1
89.4
(3
)
RAYOS®
18.1
19.3
(6
)
50.8
59.1
(14
)
VIMOVO®(1)
5.3
13.1
(60
)
30.9
41.8
(26
)
MIGERGOT®(2)
-
-
NM
-
1.8
NM
Inflammation Net Sales
$
101.6
$
104.4
(3
)
$
295.7
$
335.8
(12
)
Inflammation Segment Operating Income
$
55.1
$
49.8
11
$
145.1
$
161.7
(10
)
(1)
On Feb. 27, 2020, Dr. Reddy’s Laboratory
initiated an at-risk launch of generic VIMOVO in the United
States.
(2)
In June 2019, the Company divested the
rights to MIGERGOT.
- Third-quarter 2020 net sales of the inflammation segment were
$101.6 million and segment operating income was $55.1 million.
Cash Flow Statement and Balance Sheet Highlights
- On a GAAP basis, operating cash flow in the third quarter of
2020 was $108.9 million. Non-GAAP operating cash flow was $109.0
million.
- The Company had cash and cash equivalents of $1.725 billion as
of Sept. 30, 2020.
- As of Sept. 30, 2020, the total principal amount of debt
outstanding was $1.018 billion, which reflects the extinguishment
by holders in the third quarter of the remaining $193.0 million of
the total $400.0 million of the Company’s 2.50 percent exchangeable
senior notes due 2022 through $191.3 million of exchanges for
ordinary shares and $1.7 million of cash redemptions. As of Sept.
30, 2020, the gross-debt-to-last-12-months adjusted EBITDA leverage
ratio was 1.3 times, compared to 2.9 times as of Sept. 30,
2019.
Revised 2020 Guidance
The Company now expects full-year 2020 net sales to range
between $2.12 billion and $2.14 billion, an increase from the
previous guidance range of $1.85 billion to $1.90 billion. The
Company now expects TEPEZZA full-year 2020 net sales of greater
than $800 million, compared to the previous guidance of greater
than $650 million, and low double-digit KRYSTEXXA full-year 2020
net sales growth. Full-year 2020 adjusted EBITDA is now expected to
range between $920 million and $940 million, an increase from the
previous guidance range of $725 million to $775 million.
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 and follow us on Twitter,
LinkedIn, Instagram and Facebook.
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 and non-GAAP operating cash flow, 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 divestiture, 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 and commercialization 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; impacts of the COVID-19 pandemic and
actions taken to slow its spread, including impacts on net sales of
Horizon’s medicines and potential delays in clinical trials; 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.
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,
2020
2019
2020
2019
Net sales
$
636,427
$
335,466
$
1,455,115
$
936,484
Cost of goods sold
151,475
89,949
370,406
267,254
Gross profit
484,952
245,517
1,084,709
669,230
OPERATING EXPENSES: Research and development
30,206
24,572
138,483
74,611
Selling, general and administrative
226,164
172,326
696,271
511,720
Loss on sale of assets
-
-
-
10,963
Total operating expenses
256,370
196,898
834,754
597,294
Operating income
228,582
48,619
249,955
71,936
OTHER EXPENSE, NET: Loss on debt extinguishment
(14,602
)
(41,371
)
(31,856
)
(58,835
)
Interest expense, net
(12,185
)
(20,428
)
(48,100
)
(69,991
)
Foreign exchange (loss) gain
(753
)
(40
)
306
(25
)
Other income (expense), net
717
890
1,791
(193
)
Total other expense, net
(26,823
)
(60,949
)
(77,859
)
(129,044
)
Income (Loss) before benefit for income taxes
201,759
(12,330
)
172,096
(57,108
)
Benefit for income taxes
(91,081
)
(30,564
)
(27,143
)
(37,359
)
Net income (loss)
$
292,840
$
18,234
$
199,239
$
(19,749
)
Net income (loss) per ordinary share - basic
$
1.38
$
0.10
$
1.00
$
(0.11
)
Weighted average ordinary shares outstanding - basic
212,320,219
186,470,141
198,413,779
181,949,838
Net income (loss) per ordinary share - diluted
$
1.31
$
0.09
$
0.95
$
(0.11
)
Weighted average ordinary shares outstanding - diluted
223,743,903
194,171,967
208,678,460
181,949,838
Horizon Therapeutics
plc
Condensed Consolidated Balance
Sheets (Unaudited)
(in thousands, except share
data)
As of September 30,2020 December
31,2019 ASSETS CURRENT ASSETS: Cash and cash
equivalents
$
1,725,403
$
1,076,287
Restricted cash
3,573
3,752
Accounts receivable, net
705,898
408,685
Inventories, net
77,104
53,802
Prepaid expenses and other current assets
220,341
143,577
Total current assets
2,732,319
1,686,103
Property and equipment, net
156,287
30,159
Developed technology and other intangible assets, net
1,847,880
1,702,628
Goodwill
413,669
413,669
Deferred tax assets, net
566,605
555,165
Other assets
50,115
48,310
Total assets
$
5,766,875
$
4,436,034
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT
LIABILITIES: Accounts payable
$
38,978
$
21,514
Accrued expenses
421,827
235,234
Accrued trade discounts and rebates
322,798
466,421
Total current liabilities
783,603
723,169
LONG-TERM LIABILITIES: Exchangeable Senior Notes, net
-
351,533
Long-term debt, net
1,002,846
1,001,308
Deferred tax liabilities, net
97,647
94,247
Other long-term liabilities
85,968
80,328
Total long-term liabilities
1,186,461
1,527,416
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Ordinary shares, $0.0001 nominal value; 600,000,000 shares
authorized at September 30, 2020 and December 31, 2019; 220,995,108
and 188,402,040 shares issued at September 30, 2020 and December
31, 2019, respectively, and 220,610,742 and 188,017,674 shares
outstanding at September 30, 2020 and December 31, 2019,
respectively
22
19
Treasury stock, 384,366 ordinary shares at September 30, 2020 and
December 31, 2019
(4,585
)
(4,585
)
Additional paid-in capital
4,208,845
2,797,602
Accumulated other comprehensive loss
(1,028
)
(1,905
)
Accumulated deficit
(406,443
)
(605,682
)
Total shareholders' equity
3,796,811
2,185,449
Total liabilities and shareholders' equity
$
5,766,875
$
4,436,034
Horizon Therapeutics
plc
Condensed Consolidated
Statements of Cash Flows (Unaudited)
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES: Net income
(loss)
$
292,840
$
18,234
$
199,239
$
(19,749
)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities: Depreciation and amortization expense
70,510
59,319
209,906
177,336
Equity-settled share-based compensation
30,356
18,151
113,834
67,066
Acquired in-process research and development expense
-
-
47,517
-
Loss on debt extinguishment
14,602
41,371
31,856
58,835
Amortization of debt discount and deferred financing costs
1,208
5,447
12,025
17,069
Loss on sale of assets
-
-
-
10,963
Deferred income taxes
(3,480
)
9,559
(8,041
)
8,302
Foreign exchange and other adjustments
423
77
1,084
572
Changes in operating assets and liabilities: Accounts receivable
(162,267
)
(1,625
)
(297,392
)
68,162
Inventories
(10,986
)
(7,500
)
(23,329
)
(8,004
)
Prepaid expenses and other current assets
(62,816
)
(54,358
)
(83,226
)
(72,055
)
Accounts payable
(65,846
)
(14,892
)
17,709
(3,338
)
Accrued trade discounts and rebates
34,170
5,910
(143,551
)
(53,241
)
Accrued expenses
(24,675
)
17,481
56,830
(10,591
)
Deferred revenues
-
(7,311
)
-
(4,901
)
Other non-current assets and liabilities
(5,176
)
(2,347
)
11,410
(1,474
)
Net cash provided by operating activities
108,863
87,516
145,871
234,952
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property
and equipment
(13,429
)
(4,467
)
(133,399
)
(11,325
)
Payments for long-term investments
(8,937
)
-
(8,937
)
-
Proceeds from sale of assets
-
-
-
6,000
Payments for acquisitions
-
-
(262,305
)
-
Change in escrow deposit for property purchase
-
-
6,000
-
Net cash used in investing activites
(22,366
)
(4,467
)
(398,641
)
(5,325
)
CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from
issuance of senior notes
-
590,057
-
590,057
Repayment of senior notes
(1,739
)
(556,138
)
(1,739
)
(814,420
)
Net proceeds from the issuance of ordinary shares
919,995
-
919,995
326,793
Repayment of term loans
-
(100,155
)
-
(918,181
)
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
7,979
5,468
Proceeds from the issuance of ordinary shares in connection with
stock option exercises
8,112
4,207
33,999
16,236
Payment of employee withholding taxes relating to share-based
awards
(6,743
)
(5,086
)
(59,752
)
(29,460
)
Net cash provided by (used in) financing activities
919,625
(63,815
)
900,482
(302,832
)
Effect of foreign exchange rate changes on cash, cash
equivalents and restricted cash
1,166
(1,260
)
1,225
(1,202
)
Net increase (decrease) in cash, cash equivalents and
restricted cash
1,007,288
17,974
648,937
(74,407
)
Cash, cash equivalents and restricted cash, beginning of the
period(1)
721,688
869,736
1,080,039
962,117
Cash, cash equivalents and restricted cash, end of the
period(1)
$
1,728,976
$
887,710
$
1,728,976
$
887,710
(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,
2020
2019
2020
2019
GAAP net income (loss)
$
292,840
$
18,234
$
199,239
$
(19,749
)
Non-GAAP adjustments: Acquisition/divestiture-related costs
199
67
47,296
2,613
Restructuring and realignment costs
-
-
-
33
Amortization and step-up: Intangible amortization expense
65,353
57,662
190,677
172,762
Inventory step-up expense
-
-
-
90
Amortization of debt discount and deferred financing costs
1,208
5,447
12,025
17,069
Impairment of long-lived assets
-
-
1,072
-
Loss on sale of assets
-
-
-
10,963
Share-based compensation
30,356
18,151
113,834
67,066
Depreciation
5,157
1,658
19,229
4,574
Litigation settlements
-
-
-
1,000
Upfront, progress and milestone payments related to license and
collaboration agreements
-
3,073
3,000
9,073
Fees related to refinancing activities
-
262
54
1,437
Loss on debt extinguishment
14,602
41,371
31,856
58,835
Drug substance harmonization costs
193
80
483
394
Charges relating to discontinuation of Friedreich's ataxia program
-
-
-
1,221
Total of pre-tax non-GAAP adjustments
117,068
127,771
419,526
347,130
Income tax effect of pre-tax non-GAAP adjustments
(23,063
)
(21,919
)
(80,122
)
(52,291
)
Other non-GAAP income tax adjustments
5,331
-
20,541
(1,452
)
Total of non-GAAP adjustments
99,336
105,852
359,945
293,387
Non-GAAP Net Income
$
392,176
$
124,086
$
559,184
$
273,638
Non-GAAP Earnings Per Share:
Weighted average ordinary shares - Basic
212,320,219
186,470,141
198,413,779
181,949,838
Non-GAAP Earnings Per Share - Basic: GAAP loss per
share - Basic
$
1.38
$
0.10
$
1.00
$
(0.11
)
Non-GAAP adjustments
0.47
0.57
1.82
1.61
Non-GAAP earnings per share - Basic
$
1.85
$
0.67
$
2.82
$
1.50
Non-GAAP Net Income
$
392,176
$
124,086
$
559,184
$
273,638
Effect of assumed exchange of Exchangeable Senior Notes, net of tax
223
-
3,789
-
Numerator - non-GAAP Net Income
$
392,399
$
124,086
$
562,973
$
273,638
Weighted average ordinary shares - Diluted Weighted
average ordinary shares - Basic
212,320,219
186,470,141
198,413,779
181,949,838
Ordinary share equivalents
12,959,618
7,701,826
19,431,212
7,747,931
Denominator - weighted average ordinary shares – Diluted
225,279,837
194,171,967
217,844,991
189,697,769
Non-GAAP Earnings Per Share - Diluted GAAP loss
per share - Diluted
$
1.31
$
0.09
$
0.95
$
(0.11
)
Non-GAAP adjustments
0.43
0.55
1.63
1.61
Diluted earnings per share effect of ordinary share equivalents
-
-
-
(0.06
)
Non-GAAP earnings per share - Diluted
$
1.74
$
0.64
$
2.58
$
1.44
Horizon Therapeutics
plc
GAAP to Non-GAAP
Reconciliations
EBITDA (Unaudited)
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
GAAP net income (loss)
$
292,840
$
18,234
$
199,239
$
(19,749
)
Depreciation
5,157
1,658
19,229
4,574
Amortization and step-up: Intangible amortization expense
65,353
57,662
190,677
172,762
Inventory step-up expense
-
-
-
90
Interest expense, net (including amortization of debt discount and
deferred financing costs)
12,185
20,428
48,100
69,991
Benefit for income taxes
(91,081
)
(30,564
)
(27,143
)
(37,359
)
EBITDA
$
284,454
$
67,418
$
430,102
$
190,309
Other non-GAAP adjustments: Acquisition/divestiture-related costs
199
67
47,296
2,613
Restructuring and realignment costs
-
-
-
33
Impairment of long-lived assets
-
-
1,072
-
Loss on sale of assets
-
-
-
10,963
Share-based compensation
30,356
18,151
113,834
67,066
Litigation settlements
-
-
-
1,000
Upfront, progress and milestone payments related to license and
collaboration agreements
-
3,073
3,000
9,073
Fees related to refinancing activities
-
262
54
1,437
Loss on debt extinguishment
14,602
41,371
31,856
58,835
Drug substance harmonization costs
193
80
483
394
Charges relating to discontinuation of Friedreich's ataxia program
-
-
-
1,221
Total of other non-GAAP adjustments
45,350
63,004
197,595
152,635
Adjusted EBITDA
$
329,804
$
130,422
$
627,697
$
342,944
Horizon Therapeutics
plc
GAAP to Non-GAAP
Reconciliations
Operating Income
(Unaudited)
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
GAAP operating income
$
228,582
$
48,619
$
249,955
$
71,936
Non-GAAP adjustments: Acquisition/divestiture-related costs
144
(44
)
47,416
1,231
Restructuring and realignment costs
-
-
-
33
Amortization and step-up: Intangible amortization expense
65,353
57,662
190,677
172,762
Inventory step-up expense
-
-
-
90
Impairment of long-lived assets
-
-
1,072
-
Loss on sale of assets
-
-
-
10,963
Share-based compensation
30,356
18,151
113,834
67,066
Depreciation
5,157
1,658
19,229
4,574
Litigation settlements
-
-
-
1,000
Upfront, progress and milestone payments related to license and
collaboration agreements
-
3,073
3,000
9,073
Fees related to refinancing activities
-
262
54
1,437
Drug substance harmonization costs
193
80
483
394
Charges relating to discontinuation of Friedreich's ataxia program
-
-
-
1,221
Total of non-GAAP adjustments
101,203
80,842
375,765
269,844
Non-GAAP operating income
$
329,785
$
129,461
$
625,720
$
341,780
Orphan segment operating income
274,687
79,695
480,584
180,095
Inflammation segment operating income
55,098
49,766
145,136
161,685
Total segment operating income
$
329,785
$
129,461
$
625,720
$
341,780
Foreign exchange (loss)/gain
(753
)
(40
)
306
(25
)
Other income, net
772
1,001
1,671
1,189
Adjusted EBITDA
$
329,804
$
130,422
$
627,697
$
342,944
Horizon Therapeutics
plc
GAAP to Non-GAAP
Reconciliations
Gross Profit and Operating
Cash Flow (Unaudited)
(in thousands, except
percentages)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
Non-GAAP Gross Profit: GAAP gross
profit
$
484,952
$
245,517
$
1,084,709
$
669,230
Non-GAAP gross profit adjustments: Acquisition/divestiture-related
costs
-
-
-
1,114
Intangible amortization expense
65,149
57,458
190,070
172,156
Inventory step-up expense
-
-
-
90
Share-based compensation
1,566
901
5,543
2,891
Depreciation
17
158
435
475
Drug substance harmonization costs
193
80
483
394
Charges relating to discontinuation of Friedreich's ataxia program
-
-
-
1,221
Total of Non-GAAP adjustments
66,925
58,597
196,531
178,341
Non-GAAP gross profit
$
551,877
$
304,114
$
1,281,240
$
847,571
GAAP gross profit %
76.2
%
73.2
%
74.5
%
71.5
%
Non-GAAP gross profit %
86.7
%
90.7
%
88.1
%
90.5
%
GAAP cash provided by operating activities
$
108,863
$
87,516
$
145,871
$
234,952
Cash payments for acquisition/divestiture-related costs
97
88
80
583
Cash payments for restructuring and realignment costs
-
382
189
3,264
Cash payments for litigation settlements
-
1,000
-
1,000
Cash payments for upfront, progress and milestone payments related
to license and collaboration agreement
-
7,073
-
9,073
Cash payments drug substance harmonization costs
-
313
290
985
Cash payments for discontinuation of Friedreich's ataxia program
-
-
-
2,589
Cash payments relating to refinancing activities
-
112
73
1,918
Non-GAAP operating cash flow
$
108,960
$
96,484
$
146,503
$
254,364
Horizon Pharma plc
GAAP to Non-GAAP
Reconciliations
EBITDA (Unaudited) -
2019
(in thousands)
Twelve Months Ended December
31,
2019
GAAP net income
$
573,020
Depreciation
6,733
Amortization and step-up: Intangible amortization expense
230,424
Inventory step-up expense
89
Interest expense, net (including amortization of debt discount and
deferred financing costs)
87,089
Benefit for income taxes
(593,244
)
EBITDA
$
304,111
Other non-GAAP adjustments: Acquisition/divestiture-related costs
3,556
Restructuring and realignment costs
237
Share-based compensation
91,215
Litigation settlements
1,000
Upfront, progress and milestone payments related to license and
collaboration agreements
9,073
Fees related to refinancing activities
2,292
Loss on debt extinguishment
58,835
Drug substance harmonization costs
457
Charges relating to discontinuation of Friedreich's ataxia program
1,076
Gain on sale of assets
10,963
Total of other non-GAAP adjustments
178,704
Adjusted EBITDA
$
482,815
Horizon Therapeutics
plc
GAAP to Non-GAAP Tax Rate
Reconciliation (Unaudited)
(in millions, except
percentages and per share amounts)
Q3 2020
Pre-tax Net (Loss)
Income
Income Tax (Benefit)
Expense
Tax Rate
Net Income (Loss)
Diluted Earnings (Loss) Per
Share
As reported - GAAP
$
201.8
$
(91.1
)
(45.1
)%
$
292.8
$
1.31
Non-GAAP adjustments
117.1
17.7
99.3
Non-GAAP
$
318.8
$
(73.3
)
(23.0
)%
$
392.2
$
1.74
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
$
115.4
$
(8.7
)
(7.5
)%
$
124.1
$
0.64
YTD 2020
Pre-tax Net (Loss)
Income
Income Tax (Benefit)
Expense
Tax Rate
Net Income (Loss)
Diluted Earnings (Loss) Per
Share
As reported - GAAP
$
172.1
$
(27.1
)
(15.8
)%
$
199.2
$
0.95
Non-GAAP adjustments
419.5
59.6
359.9
Non-GAAP
$
591.6
$
32.4
5.5
%
$
559.2
$
2.58
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
Horizon Therapeutics plc
Certain Income Statement Line Items -
Non-GAAP Adjusted
For the Three Months Ended Sept. 30, 2020
and Sept. 30, 2019 (Unaudited)
(in thousands)
Horizon Therapeutics
plc
Certain Income Statement Line
Items - Non-GAAP Adjusted
For the Three Months Ended
Sept. 30, 2020
(in thousands)
Income Tax Research & Selling, General Loss on
Debt Interest Other Benefit COGS Development & Administrative
Extinguishment Expense Expense (Expense)
GAAP as
reported
$
(151,475
)
$
(30,206
)
$
(226,164
)
$
(14,602
)
$
(12,185
)
$
717
$
91,081
Non-GAAP Adjustments (in thousands):
Acquisition/divestiture-related costs(1)
-
36
108
-
-
55
-
Amortization and step-up: Intangible amortization expense(2)
65,149
-
204
-
-
-
-
Amortization of debt discount and deferred financing costs(3)
-
-
-
-
1,208
-
-
Share-based compensation(4)
1,566
2,453
26,337
-
-
-
-
Depreciation(5)
17
29
5,111
-
-
-
-
Loss on debt extinguishment(6)
-
-
-
14,602
-
-
-
Drug substance harmonization costs(7)
193
-
-
-
-
-
-
Income tax effect on pre-tax non-GAAP adjustments(8)
-
-
-
-
-
-
(23,063
)
Other non-GAAP income tax adjustments(9)
-
-
-
-
-
-
5,331
Total of non-GAAP adjustments
66,925
2,518
31,760
14,602
1,208
55
(17,732
)
Non-GAAP
$
(84,550
)
$
(27,688
)
$
(194,404
)
$
-
$
(10,977
)
$
772
$
73,349
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
Income, net (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(2)
57,458
-
204
-
-
-
-
Amortization of debt discount and deferred financing costs(3)
-
-
-
-
5,447
-
-
Share-based compensation(4)
901
1,953
15,297
-
-
-
-
Depreciation(5)
158
-
1,500
-
-
-
-
Upfront, progress and milestone payments related to license and
collaboration agreements(10)
-
3,073
-
-
-
-
-
Loss on debt extinguishment(6)
-
-
-
41,371
-
-
-
Fees related to refinancing activities (11)
-
-
262
-
-
-
-
Drug substance harmonization costs(7)
80
-
-
-
-
-
-
Income tax effect on pre-tax non-GAAP adjustments(8)
-
-
-
-
-
-
(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 Nine Months Ended Sept. 30, 2020 and
Sept. 30, 2019 (Unaudited)
(in thousands)
Horizon Therapeutics
plc
Certain Income Statement Line
Items - Non-GAAP Adjusted
For the Nine Months Ended
Sept. 30, 2020
(Unaudited)
Income Tax Research & Selling, General Interest
Other Loss on Debt Benefit COGS Development & Administrative
Expense Expense Extinguishment (Expense)
GAAP as
reported
$
(370,406
)
$
(138,483
)
$
(696,271
)
$
(48,100
)
$
1,791
$
(31,856
)
$
27,143
Non-GAAP Adjustments (in thousands):
Acquisition/divestiture-related costs(1)
-
47,365
51
-
(120
)
-
-
Amortization and step-up: Intangible amortization expense(2)
190,070
-
607
-
-
-
-
Amortization of debt discount and deferred financing costs(3)
-
-
-
12,025
-
-
-
Impairment of long lived assets(12)
-
-
1,072
-
-
-
-
Share-based compensation(4)
5,543
11,381
96,910
-
-
-
-
Depreciation(5)
435
72
18,722
-
-
-
-
Loss on debt extinguishment(6)
-
-
-
-
-
31,856
-
Upfront, progress and milestone payments related to license and
collaboration agreements(10)
-
3,000
-
-
-
-
-
Fees related to refinancing activities (11)
-
-
54
-
-
-
-
Drug substance harmonization costs(7)
483
-
-
-
-
-
-
Income tax effect on pre-tax non-GAAP adjustments(8)
-
-
-
-
-
-
(80,122
)
Other non-GAAP income tax adjustments(9)
-
-
-
-
-
-
20,541
Total of non-GAAP adjustments
196,531
61,818
117,416
12,025
(120
)
31,856
(59,581
)
Non-GAAP
$
(173,875
)
$
(76,665
)
$
(578,855
)
$
(36,075
)
$
1,671
$
-
$
(32,438
)
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 on Debt Loss/(Gain) on
Interest Other Benefit COGS Development & Administrative
Extinguishment Sale of Assets Expense Income (Expense)
GAAP as reported
$
(267,254
)
$
(74,611
)
$
(511,720
)
$
(58,835
)
$
(10,963
)
$
(69,991
)
(193
)
$
37,359
Non-GAAP Adjustments (in thousands):
Acquisition/divestiture-related costs(1)
1,114
-
119
-
-
-
1,380
-
Restructuring and realignment costs(13)
-
-
33
-
-
-
-
-
Amortization and step-up: Intangible amortization expense(2)
172,156
-
606
-
-
-
-
-
Inventory step-up expense
90
-
-
-
-
-
-
-
Amortization of debt discount and deferred financing costs(3)
-
-
-
-
-
17,069
-
-
Impairment of long lived assets(12)
-
-
-
-
-
-
-
-
Loss on sale of assets(14)
-
-
-
-
10,963
-
-
-
Share-based compensation(4)
2,891
6,931
57,244
-
-
-
-
-
Depreciation(5)
475
-
4,099
-
-
-
-
-
Litigation settlements(15)
-
-
1,000
-
-
-
-
-
Upfront, progress and milestone payments related to license and
collaboration agreements(9)
-
9,073
-
-
-
-
-
-
Fees related to refinancing activities (11)
-
-
1,437
-
-
-
-
-
Loss on debt extinguishment(6)
-
-
-
58,835
-
-
-
-
Drug substance harmonization costs(7)
394
-
-
-
-
-
-
-
Charges relating to discontinuation of Friedreich's ataxia
program(16)
1,221
-
-
-
-
-
-
-
Income tax effect on pre-tax non-GAAP adjustments(8)
-
-
-
-
-
-
-
(52,291
)
Other non-GAAP income tax adjustments(9)
-
-
-
-
-
-
-
(1,452
)
Total of non-GAAP adjustments
178,341
16,004
64,538
58,835
10,963
17,069
1,380
(53,743
)
Non-GAAP
$
(88,913
)
$
(58,607
)
$
(447,182
)
-
-
$
(52,922
)
$
1,186
$
(16,384
)
NOTES FOR CERTAIN INCOME
STATEMENT LINE ITEMS - NON-GAAP
1.
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. In addition, the
nine months ended September 30, 2020 amounts include the Curzion
acquisition payment of $45.0 million, which was recorded as a
research and development expense.
2.
Intangible amortization expenses are
associated with our intellectual property rights, developed
technology and customer relationships related to TEPEZZA,
KRYSTEXXA, RAVICTI, PROCYSBI, ACTIMMUNE, BUPHENYL, RAYOS, PENNSAID
2%, VIMOVO and MIGERGOT.
3.
Represents amortization of debt discount
and deferred financing costs associated with our debt.
4.
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.
5.
Represents depreciation expense related to
our property, equipment, software and leasehold improvements.
6.
During the nine months ended September 30,
2020, we recorded a loss on debt extinguishment of $31.9 million in
the condensed consolidated statements of comprehensive income
(loss), which reflects the exchange of our Exchangeable Senior
Notes.
During the nine months ended September 30,
2019, we recorded a loss on debt extinguishment of $58.8 million in
the condensed 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.
7.
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, 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.
8.
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.
9.
During the nine months ended September 30,
2020, following the publication of the Anti-Hybrid Rules on April
8, 2020, we recorded a write off of a deferred tax asset related to
certain interest expense accrued to a foreign related party during
the year ended December 31, 2019 and recognized a corresponding
one-time tax provision, resulting in a non-GAAP tax adjustment of
$15.2 million. We also recognized a U.S. federal tax liability on
U.S. taxable income generated from an intra-company transfer of
intellectual property from a U.S. subsidiary to an Irish
subsidiary, which was partially offset by the recognition of a
deferred tax asset in the Irish subsidiary, resulting in a non-GAAP
tax adjustment of $5.3 million.
During the nine months ended September 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.
10.
During the nine months ended September 30,
2020, we recognized a $3.0 million progress payment in relation to
the collaboration agreement with HemoShear Therapeutics, LLC, or
HemoShear, which was paid in July 2020.
During the nine months ended September 30,
2019, we recorded an 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 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.
11.
Represents arrangement and other fees
relating to our refinancing activities.
12.
During the nine months ended September 30,
2020, we recorded an impairment charge of $1.1 million related to
the Novato, California office lease, which was obtained through an
acquisition.
13.
Represents expenses, including severance
costs and consulting fees, related to restructuring and realignment
activities.
14.
During the nine months ended September 30,
2019, we recorded a loss of $11.0 million on the sale of our rights
to MIGERGOT.
15.
We recorded $1.0 million of expense during
the nine months ended September 30, 2019 for litigation
settlements.
16.
Represents expenses incurred relating to
discontinuation of Friedreich’s ataxia program and a reduction to
previous charges recorded.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201102005464/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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