Takeda reports strong first quarter fy2019 results and raises guidance for the full year
Osaka, japan--(business wire)--takeda pharmaceutical company limited (tokyo:4502)(nyse:tak): underlying revenue declined -0.8% vs fy2018 q1 pro-forma revenue1 takeda’s 14 global brands, with an aggregate revenue of 270.2 billion yen posted strong year-over-year growth of +22%. this growth mostly offset the negative impact from intensified competition, phasing, and generic erosion. takeda’s 5 key business areas represent ~78% of revenues. gi grew +8% spearheaded by entyvio continuing to gain market share. plasma derived therapy (pdt) immunology grew +2% driven by albumin growth, with immunoglobulin (ig) sales impacted by phasing of intravenous immunoglobulin (ivig) shipments. rare diseases declined -10% with rare hematology impacted by competition and price pressure, and strong uptake of takhzyro not fully offsetting the decline of other hereditary angioedema (hae) products due to the switch to takhzyro and stocking in fy2018 q1. oncology grew +8% driven by expansion of ninlaro. neuroscience grew +10% driven by the u.s. business under a new commercial structure. gi grew +8% spearheaded by entyvio continuing to gain market share. plasma derived therapy (pdt) immunology grew +2% driven by albumin growth, with immunoglobulin (ig) sales impacted by phasing of intravenous immunoglobulin (ivig) shipments. plasma derived therapy (pdt) immunology grew +2% driven by albumin growth, with immunoglobulin (ig) sales impacted by phasing of intravenous immunoglobulin (ivig) shipments. rare diseases declined -10% with rare hematology impacted by competition and price pressure, and strong uptake of takhzyro not fully offsetting the decline of other hereditary angioedema (hae) products due to the switch to takhzyro and stocking in fy2018 q1. rare diseases declined -10% with rare hematology impacted by competition and price pressure, and strong uptake of takhzyro not fully offsetting the decline of other hereditary angioedema (hae) products due to the switch to takhzyro and stocking in fy2018 q1. oncology grew +8% driven by expansion of ninlaro. oncology grew +8% driven by expansion of ninlaro. neuroscience grew +10% driven by the u.s. business under a new commercial structure. neuroscience grew +10% driven by the u.s. business under a new commercial structure. underlying core operating profit margin 32.4% for q1 reported operating profit declined 90.0% to 9.9 billion yen, largely impacted by one-time integration costs as well as non-cash purchase accounting expenses including unwinding of inventory step-up, and increased amortization of intangibles and impairment. underlying core operating profit margin for the current period was 32.4% reflecting synergy savings and continued opex discipline. achieved several important pipeline milestones in q1 currently 19 new molecular entity assets in phase 2 & 3. advances in cell and gene therapy platforms where car-t cell therapy from t-cira moves towards clinic and the integration of adeno-associated virus-based (aav-based) process development and manufacturing center in austria. entyvio subcutaneous formulation achieved primary endpoint as maintenance therapy in crohn’s disease. orexin 2 receptor agonist tak-925 received sakigake designation in japan for treatment of narcolepsy. disposing non-core assets to generate cash and focus the business net debt / adjusted ebitda reduced from 4.7x at end of fy2018 to 4.4x as of june 2019, which does not include the $3.4 billion upfront cash payment received july 1, 2019 for the sale of xiidra to novartis. sale of tachosil remains on track to close in second half of calendar year. negotiations ongoing for further potential divestments. costa saroukos, chief financial officer, commented: “takeda had a very strong start to the year, delivering on our strategic priorities while successfully executing the integration of shire. the combination of solid performance across our 14 global brands, continued opex discipline, and realization of cost synergies resulted in strong margins and cash flow. we are also making steady progress against our divestiture plan, with the completion of the xiidra sale on july 1st. for the full year, takeda has revised management guidance upward to reflect updated velcade assumptions and divestitures, and now anticipates delivering an underlying core operating profit margin in the mid-to-high twenties. takeda is relentlessly executing towards our cost synergy, de-leveraging, and margin targets. we remain on track to achieve our previously raised cost synergy target of $2 billion by the end of fy 2021, we are committed to achieving our 2x net debt / adjusted ebitda target over the next three to five years, and our strong start to fiscal 2019 gives us great confidence towards realizing top-tier margins in the medium-term.” reported results for q1 (april - june) fy2019 (billion yen) reported core underlying i. fy2019 q1 vs. prior year fy2019 q1 vs. prior year revenue 849.1 +88.8% 849.1 +88.8% -0.8% y-o-y ii. (pro-forma) operating profit 9.9 -90.0% 283.0 iii. +142.3% margin 1.2% -20.8pp 33.3% +7.4pp 32.4% net profit iv. -20.7 n/m v. 198.4 +103.0% eps (jpy) -13 yen -113 yen 128 yen +3 yen 124 yen fy2019 management guidance: upward revision to reflect changes to assumptions takeda no longer assumes any additional u.s. competitor for velcade within fy2019 reflects divestitures of xiidra (closed july 1, 2019) and tachosil (expected close cy2019 h2) previous guidance (may 14, 2019) revised guidance (july 31, 2019) underlying revenue growth vi. flat to slightly declining flat to slightly increasing underlying core operating profit margin mid-twenties % mid-to-high-twenties % underlying core eps 350 – 370 yen 360 – 380 yen annual dividend per share 180 yen 180 yen vi. constant exchange rate growth (applying fy2018 full year average foreign exchange rate). compared to baseline of 3,300 billion jpy (rounded pro-forma april 2018 - march 2019 combined revenue of legacy takeda and legacy shire, converted at april 2018 - march 2019 average exchange rate of 111 jpy/usd; also adjusted to remove the revenue from divested assets such as techpool, multilab, and tachosil from legacy takeda, and the oncology portfolio and xiidra from legacy shire) fy2019 reported forecast: increasing earnings forecasts with reported revenue forecast unchanged (billion yen) previous forecast (may 14, 2019) revised forecast (july 31, 2019) change growth versus fy2018 revenue 3,300.0 3,300.0 - +57.4% operating profit -193.0 -166.0 +14.0% - net profit -383.0 -367.7 +4.0% - eps -246 yen -236 yen +4.2% - core operating profit 883.0 910.0 +3.1% +98.1% exchange rate (annual average) 1 us$=111 yen 1 euro=124 yen 1 us$=111 yen 1 euro=124 yen for more details on takeda's fy2019 1st quarter results and other financial information, please visit https://www.takeda.com/investors/reports/ about takeda pharmaceutical company limited takeda pharmaceutical company limited (tokyo:4502/nyse:tak) is a global, values-based, r&d-driven biopharmaceutical leader headquartered in japan, committed to bringing better health and a brighter future to patients by translating science into highly-innovative medicines. takeda focuses its r&d efforts on four therapeutic areas: oncology, gastroenterology (gi), rare diseases and neuroscience. we also make targeted r&d investments in plasma-derived therapies and vaccines. we are focusing on developing highly innovative medicines that contribute to making a difference in people's lives by advancing the frontier of new treatment options and leveraging our enhanced collaborative r&d engine and capabilities to create a robust, modality-diverse pipeline. our employees are committed to improving quality of life for patients and to working with our partners in health care in approximately 80 countries and regions. for more information, visit https://www.takeda.com important notice for the purposes of this notice, “press release” means this document, any oral 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https://www.takeda.com/investors/reports/sec-filings/ or at www.sec.gov. neither takeda nor its management gives any assurances that the expectations expressed in these forward-looking statements will turn out to be correct, and actual results, performance or achievements could materially differ from expectations. persons receiving this press release should not place undue reliance on forward looking statements. takeda undertakes no obligation to update any of the forward-looking statements contained in this press release or any other forward-looking statements it may make, except as required by law or stock exchange rule. past performance is not an indicator of future results and the results of takeda in this press release may not be indicative of, and are not an estimate, forecast or projection of takeda’s future results. certain non-ifrs financial measures this press release includes certain non-ifrs financial measures and targets. takeda's management evaluates results and makes operating and investment decisions using both ifrs and non-ifrs measures included in this press release. non-ifrs results exclude certain income and cost items which are included in ifrs results. by including these non-ifrs measures, management intends to provide investors with additional information to further analyze takeda's performance, core results and underlying trends. non-ifrs results are not prepared in accordance with ifrs and non-ifrs information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with ifrs. investors are encouraged to review the reconciliations of non-ifrs financial measures to their most directly comparable ifrs measures. reconciliation from reported revenue to underlying revenue growth presented in accordance with ifrs are included as an appendix to this document. further information on certain of takeda’s non-ifrs measures, including reconciliations to the most comparable measures presented under ifrs, is posted on takeda’s investor relations website at https://www.takeda.com/investors/reports/quarterly-announcements/quarterly-announcements-2019/ medical information this press release contains information about products that may not be available in all countries, or may be available under different trademarks, for different indications, in different dosages, or in different strengths. nothing contained herein should be considered a solicitation, promotion or advertisement for any prescription drugs including the ones under development. financial information takeda’s financial statements are prepared in accordance with international financial reporting standards (“ifrs”). the shire acquisition closed on january 8, 2019, and our consolidated results for the fiscal year ended march 31, 2019 include shire’s results from january 8, 2019 to march 31, 2019. references to “legacy takeda” businesses are to our businesses held prior to our acquisition of shire. references to “legacy shire” businesses are to those businesses acquired through the shire acquisition. this press release includes certain pro forma information giving effect to the shire acquisition as if it had occurred on april 1, 2018. this pro forma information has not been prepared in accordance with article 11 of regulation s-x. this pro forma information is presented for illustrative purposes and is based on certain assumptions and judgments based on information available to us as of the date hereof, which may not necessarily have been applicable if the shire acquisition had actually happened as of april 1, 2018. moreover, this pro forma information gives effect to certain transactions and other events which are not directly attributable to the shire acquisition and/or which happened subsequently to the shire acquisition, such as divestitures and the effects of the purchase price allocation for the shire acquisition, and therefore may not accurately reflect the effect on our financial condition and results of operations if the shire acquisition had actually been completed on april 1, 2018. therefore, undue reliance should not be placed on the pro forma information included herein. 1 growth versus fy2018 q1 pro-forma revenue (3-month april-june 2018 combined revenue of legacy takeda and legacy shire, excluding oncology business). please see the appendix for more details.
