Ipsen S.A. (IPN) Earnings Call Transcript & Summary

Good afternoon. Welcome to the Ipsen presentation at the JPMorgan Healthcare Conference. I'm Richard Vosser, European pharma analyst at JPMorgan, and it's my great pleasure to introduce the CEO and CFO, Aymeric Le Chatelier, from Ipsen. Before I hand over to Aymeric, the breakout session following this presentation is in the Georgian Room, which is just around the corner. Aymeric, welcome to the conference.

Okay, thank you. Thank you very much, Richard. I'm very pleased to be with you this afternoon and to provide you with an update on Ipsen. So clearly -- before the safe harbor, so clearly, at Ipsen, we continue to deliver on our vision of being a leading global biopharma focused on innovation and specialty care. And as you see, we are growing our 2 businesses, I mean, our specialty care business accounting for almost 90% of our sales, focusing on 3 therapeutic area, being oncology, more than 70% of our sales; neuroscience, with our key neurotoxin, Dysport; and rare disease, which is a new therapeutic area where we are going. And I'm going to go more into the detail of the recent acquisition that we did in rare disease. We still have our consumer business, which is accounting for almost 10% of our sales, and we're still committed to that business. By geography, I mean, Ipsen has changed a lot over the last 3, 5 years. Now North America represents 30% of our sales, driven by our oncology business, our key products, Somatuline and Onivyde. Europe still remains a significant part of our business with the top 5 country in Europe representing 1/3 of our sales. And we have significant presence in emerging country and rest of Europe across both our specialty care and consumer business. The company is going through a significant transformation and growth. And as you can see, we are growing both our top line, our bottom line and also our pipeline significantly. We have now significant market position on #1 and #2 on most of the niche markets where we are operating in specialty care. And we are very proud of Ipsen as being 1 of the top 15 oncology company through the significant growth of our oncology business. But not only are we growing our business, we're also growing our pipeline. And I'm going to go more into the detail later in the presentation. And we are very happy having 6 new chemical entity and a lot of life cycle management program advancing in our pipeline. We have more than 5,700 employee in more than 30 countries, almost all the key countries, excluding Japan, and we are selling our products in more than 115 countries. And even more important, we have a high-performing executive management team, and I'm very proud of that leadership team. And just wanted to share with you our last 2 key people joining the team, our Head of R&D. Howard Mayer, recently joining the team in November; also, our new Chief Medical Officer, Steven Hildemann, joining the team in a few weeks. Clearly, 2019 has been another outstanding year for Ipsen. I won't go into the detail of our financial performance. But as you can see, we continue to deliver on the top line growth with another third year in a row with a double-digit growth, strong performance driven by our specialty care business across all our key products and also across all our key geographies. And based on the latest guidance for 2019, we expect the sales to exceed $2.5 billion for the first time for Ipsen. Not only our top line growth has been impressive over the last 3 years, but also our profitability is improving significantly, as we are leveraging our global commercial infrastructure. And in 2019, we expect to reach around 30%, which is a big milestone for the company, while, at the same time, we are continuing to accelerate investment in R&D including specifically investment in rare disease, a new therapeutic area for us. Pipeline has been also a pretty busy year for -- in pipeline for Ipsen. As you know, in business development, we announced 2 significant transactions, the acquisition of Clementia in February 2019 for more than $1 billion and also a global licensing agreements for an asset, BLU-782, which we licensed from Blueprint Medicines in order to strengthen our new franchise in rare disease. But also, our internal pipeline, we had positive data for product, Onivyde, with 2 Phase II encouraging route leading to new Phase III initiative during 2019 for first-line PDAC and second line small cell lung cancer. And also, we were able to continue to deliver for our key product, Somatuline, with the launch of a new delivery system across all geographies including the U.S. during Q3 of last year. Clearly, our oncology business is driving a lot of our growth at Ipsen, and 2019 has been a great year to advance and to grow our existing products, but also to expand our pipeline. Let's start with Somatuline, our key products, today almost 40% of our sales. This is a product which is growing significantly in volume and market share across all the geography. Today, more than 50% of the sale of Somatuline are in the U.S., and this growth is really driven by the best-in-class profile of the product in the somatostatin analog market, the superior clinical profile and also our new delivery system, which is making a strong differentiation to competition. And that growth was delivered despite the first entry of a generic in Europe of our key competitors. Not only are we growing Somatuline as a product of primary indication in NET, but we are also expanding our leadership in NET with our companion product, Xermelo, and also a new asset under development in systemic radiation therapies. Our second product in oncology is Cabometyx. Cabometyx is a product that we licensed from Exelixis in 2016. We have all rights for this product, excluding U.S. and Japan. And Cabometyx has been a growing story for Ipsen as we are, today, a TKI of choice in the second line RCC markets. And more importantly, we are growing that product despite a very competitive [ elements ] with new and additional immuno-oncology combination entering the market. And we are firmly confident that we should be able to grow Cabometyx and expand the use of Cabometyx in second line, especially in RCC. Not only Cabometyx is a good commercial product, but this is also -- and Exelixis did communicate at the beginning of this week on the pipeline. And this is a product which is also a pipeline for Ipsen as we have options to expand indication. So they're going to be Phase III readout for CheckMate 9ER, first combination in RCC of the 2 lead drug, Cabometyx and Opdivo. There is another combination in HCC with TECENTRIQ, and Exelixis did communicate on further potential combination of indication. And we are confident that we should continue to be able to grow Cabometyx in our portfolio. Onivyde is our third product, and Onivyde is an acquisition that we did from Merrimack in 2017. This product is primarily used today in second-line metastatic pancreatic cancer. We've been able to grow market share and volume of that product and benefit of significant synergies and leverage our U.S. oncology commercial infrastructure. Good news, as I said before, positive Phase II data, expansion to new indication we initiated in 2019 to Phase III to expand the use of Onivyde. And latest, our legacy products, Decapeptyl, in pretty attractive markets where we are considered as a backbone therapy in prostate cancer and some other hormone-dependent markets, this is a product that is showing nice resilience with a mid- to high single-digit growth over the last few years. And we are confident we can keep and maintain the growth of that product. Now turning to our neuroscience, and let's talk to neurotoxin business, where we are a strong and high toxin market supporting our franchise and our key product, Dysport. First, let's focus on the market. And clearly, this is a very attractive market, estimated to be $4 billion. And more importantly, this is a market growing at 10% per year and expected to continue to grow at least at 10% for the coming years. Both on therapeutic and aesthetic markets, and we are positioned exactly our key competitors, where you know that on this market, there is very significant barrier to entry. This is a specialized biologic product with very high regulation to be able to manufacture and get approval in many countries. Dysport has a leading position in many markets, #2 in the main markets, but also #1 position in some emerging markets like Russia or Brazil. And today, we estimate the total sales of Dysport to reach EUR 600 million including our partnership with Galderma for the aesthetic indication. On therapeutic, we are focusing on spasticity, and we believe that there is a huge potential to increase the use of toxin within spasticity. Today, just to give you an indication, the eligible population, less than 5% of the eligible population in spasticity is using toxin. We believe that there is a huge potential to increase the use of toxin in spasticity, but also to be able to expand to other indication. And we have launched 2 Phase II to new indication, hallux valgus and vulvodynia, and we expect some readout later this year. In aesthetic, we are building our leadership through our partnership with Galderma. We are very pleased of the performance of Galderma. We are also convinced of the potential to further increase the use of toxin in the aesthetic market, and Galderma is also proposing a bundled offer of fillers and toxin, which allow for increasing market share. But beyond existing Dysport, we are also committed to the toxin -- to the neurotoxin through the development of a next-generation of toxin. And we have a new recombinant toxin programs in development, where we believe we can propose, through a differentiated mechanism of action, new effective therapy, 2 programs today in preclinical and entering into clinics for fast-acting and long-acting toxins. Our third strategic therapeutic area is about establishing our rare disease leadership, especially in FOP, where I said we've done 2 specific acquisition: one, the acquisition of Clementia; and secondly, the licensing agreement with Blueprint Medicines. Clearly, our ambition was to build a new therapeutic area within Ipsen, but, more importantly, to clearly address a divested disease, which is FOP, where, today, there is absolutely no therapeutic option for patients. We have secured 2 potentially complementary drug to be able to offer to the patient population, which is highly demanding a solution for those patients in order to advance research and development for FOP. The first asset is palovarotene. This is our strongest [ onco ] asset. We are today preparing for the regulatory submission in the episodic treatment of the FOP disease, and we expect to be able to submit as quickly as possible in 2020. We had a setback in the development of that asset. As in December, FDA imposed a partial clinical hold on part of the population, the patient below 14 years old, in the ongoing trials, both for FOP and another indication, being MO, where palovarotene was developed. This was triggered by safety issue of the early growth of plate closure in some of the FOP pediatric population. Today, we received a letter from FDA. Many investors were asking us a question, and we are diligently working with FDA to be able to answer all the questions and raised by this partial clinical hold and to be able to resolve as quickly as possible and be in a position to provide palovarotene to FOP patients in the course of 2020. Second asset was BLU-782. This is a complementary mechanism of action, where BLU-782 is an ALK2 inhibitors, which is a different pathway to address FOP disease. And we believe this has a potential. This is a Phase I asset, and we expect to launch a Phase II for this asset before the end of this year and to be able to develop further either as a monotherapy or as a combination, BLU-782 with palovarotene. This is really showing our dedication to the FOP population, to the FOP community. And we, as Ipsen, are really, really focusing on making sure that this patient population have access to treatment as soon as possible. Not only we are clearly developing our 3 franchise, as I just described to you, but also we are accelerating and growing our pipeline. At Ipsen, this is really a top priority to ensure that we are bringing innovative treatment to patients. Our priority is to focus on our strategic area also in terms of research and development, and we are addressing unmet medical needs in oncology focusing on solid tumors, in neuroscience with a focus on our neurotoxin, but also in rare disease, where we believe there is a lot of opportunity for a company like Ipsen. Our objective is to identify the first best-in-class assets and to be able to develop them. And you have here on the screen some example of systemic radiation therapy programs or new recombinant programs and our new assets in rare disease, palovarotene and BLU-782. We are developing with a combination of our internal resources, and we want to become a developmental house being able to develop as soon as possible new treatments, life cycle management of our existing program to the patient. But also, we are relying on our external innovation model with a dedicated team across our 3 key hubs in U.S. Cambridge, in France and in U.K., and we try to leverage as much as possible our collaboration and partnership across the world. As a consequence, you see that, as I said at the beginning, we have a very rich pipeline at Ipsen. And I won't go into each of the line, but as you see, pretty diversified across the 3 therapeutic area being oncology, rare disease and neuroscience, also across the different phase between Phase I, Phase II, Phase III, and also new chemical entities being new toxin systemic radiation therapy, but also rare disease assets. More importantly, we are also delivering and advancing and expect to advance in 2020 a lot of milestones whether to advance our pipeline, to get some additional top line data, to submit and be able to also launch some new product. I would just highlight 2 important project, and you see here that we have a combination of rare disease, oncology and, again, neuroscience program advancing at the various stage of development. Clearly, palovarotene is being one of the key program to advance in 2020 as well as Cabometyx, where we expect the first-line RCC combination with Opdivo to read out during the first half of 2020. As a consequence, and to finish and complete my presentation, we are very confident that 2020 will be another great year of growth and transformation for Ipsen. And as you can see, our priority remain to continue to transform the company, to continue to grow the company, to continue to increase our pipeline and to continue to build on our people and our culture. First priority is to continue to maximize the growth of our existing products worldwide and to continue to grow our market share on most of the market where we are operating. We want also to continue the transformation of our consumer health care business towards OTC business and also towards more and more otomy in order to address the potential of the consumer health care market. And thirdly, we want to continue to increase our efficiency by leveraging our commercial capability and optimizing our cost base. But pipeline is also key for 2020. As you know, one of the top priority is to ensure we are advancing palovarotene answering to the FDA partial clinical order, but also to advance other programs in our pipeline. We also want to continue to invest in business development, to bring new products and to build new partnership. We have a strong firepower. We communicated in early 2019 after the acquisition of Clementia. But our ability to replenish our firepower, we will have EUR 1 billion of firepower by the end of 2020. And we are being still very active on many, many business development opportunity in order to accelerate the transformation and the growth of our pipeline. But clearly, nothing is possible without our people, our culture. We have significantly transformed the organization, and I'm very proud of the Ipsen people bringing every day new products, new idea and even more importantly, being able to look at patients, being able to look at innovative solution, to be able to find solution for unmet medical needs, as you know, where there is huge opportunity in our 3 therapeutic area. So as a conclusion, we see our ambition to continue to deliver great value to patients and also to our shareholders. Thank you very much.