Pronova BioPharma Release: Strong Start With Excellent Production Performance,
Published: May 05, 2009
Q1 2009 – highlights
(Figures in brackets = Q1 2008 unless other specified)
· Continued strong growth in global end-user sales for Omacor/ Lovaza™, up 36 per cent to USD 140 million for the first two months in 2009. Estimated global annual run-rate was USD 860 million* (February 2008: USD 619 million).
· Strong partner demand exceeding production capacity.
· 368 tonnes produced (256 tonnes) and 294 tonnes shipped (239 tonnes) in the quarter. Due to the excellent production output in the quarter, the company has raised the production target and expects to produce between 1 550 1 600 tonnes for the full year 2009
· Three Paragraph IV notification letters received.
· The Kalundborg plant has recently started to produce the first batch of intermediaries. The project is firmly on track to achieve the initial commercial shipments from the new plant in the first quarter of 2010.
· Initial testing of all installed equipment at the Kalundborg plant completed and test production carried out successfully.
*Source: IMS Health
Q1 2009 – Financial highlights
(Figures in brackets = Q1 2008 unless other specified)
· Revenues up 38.5 per cent to NOK 358.6 million (NOK 258.9 million.
· EBITDA1 up 34.9 per cent to NOK 164.1 million (NOK 121.6 million), reflecting a high production capacity in the quarter.
· EBITDA margin2 at 45.7 per cent (47 per cent), impacted by increased operating expenses.
· Gross margin at 74.4 per cent (79.7 per cent), affected by active use of increased insourced intermediate products and higher cost of raw materials in the quarter.
· Cash flow from operating activities of NOK 80.3 million (negative NOK 144 million).
1) EBITDA is defined as profit for the accounting period before financial income and financial expense, income tax expense and depreciation and amortisation. Pronova BioPharma presents EBITDA because it is considered to be an important supplemental measure of the group’s operating performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry.
2) EBITDA margin is defined as EBITDA for a particular period divided by revenues for that period. Commenting on the first quarter results, Tomas Settevik, president and CEO of Pronova BioPharma said: “This was another excellent quarter for Pronova BioPharma. The strong production performance we saw during Q1 gives us confidence that we will meet our new production targets for 2009. We are particularly pleased by the continuing strong and growing end-user demand for Omacor/Lovaza, which is supported by increasing clinical endorsement of the benefits of Lovaza\Omacor on cadiovascular health.”
Excellent production performance gave strong start to 2009
Pronova reports further solid progress in the first quarter of 2009 38.5 per cent revenue growth yearon- year driven by continued strong demand. The production volume reached record high 368 tonnes, and the company raises its production target to between 1 550 and 1 600 tonnes for the full year 2009.
The production of the first batch of low-concentrate intermediaries was recently started at the Kalundborg plant, ahead of schedule.
Total production of the company’s active pharmaceutical ingredient in the quarter was 368 tonnes in the quarter (256 tonnes), up 19.2 per cent from the same quarter last year. The increase was driven by an excellent production performance in the Sandefjord plant. in-sourcing of intermediate products also contributed to increased output from the production facility. The in-sourcing will continue throughout 2009. In addition, further successful upgrading and de-bottlenecking of critical steps in the production process is expected to increase capacity at the Sandefjord plant in the second half of 2009. The group’s gross margin for the first quarter was 74.4 per cent (79.7 per cent), and shipped volumes in the quarter reached 294 tonnes (239 tonnes).
EBITDA for the quarter was up 34.9 per cent to NOK 164.1 million (NOK 121.6 million), reflecting the high production capacity in the quarter. The EBITDA margin was 45.7 per cent (47 per cent), impacted by increased operating expenses.
The Kalundborg facility recently started to produce its first batches of low-concentrate intermediate products, and initial testing of all critical equipment and systems has been successfully executed. Fully integrated laboratory systems are now in place and test production with crude fish oil has been successfully carried out. The first commercial shipment from Kalundborg is expected to be made in the first quarter of 2010 and the targeted total investment of NOK 1.9 billion remains unchanged.
Statistics from IMS Health show that the growth in underlying end-user sales continued in the first two months of 2009. In the USA, Lovaza™ is continuing to capture an increasing market share and achieved 17.2 per cent share of new prescriptions (NRx) in the non-statin dyslipidemic market (as of late April 2009) compared to 13.3 per cent market share in the same period last year. The share of total prescriptions (TRx) grew to 14.9 per cent (as of late April 2009) compared to 11.5 per cent at mid April 2008. IMS Health also reported that total end-user sales in the USA amounted to USD 92 million in the first two months, with a current run-rate of USD 595 million at 28 February 2009. Due to currency fluctuation, the European growth in sales value was flat year-on¬year, amounting to USD 45.4 million YTD February 2009 compared to USD 45.3 million for the first two months of 2008.
However, the growth in volume continued, with 14 per cent increase in volume from the same period last year. Total end-user sales in the group’s eight major markets amounted to USD 140 million for the first two months of 2009, with a run-rate at 28 February of USD 860 million.
During March 2009, the group received paragraph IV notification letters from Teva Pharmaceuticals USA, PAR Pharmaceutical, Inc. USA and Apotex Inc. The companies said they intended to market a generic version of Lovaza™ before the expiration of US patents Nos. 5 502 077 (‘077 patent) and 5 656 667 (‘667 patent). Pronova BioPharma has full confidence in the protection afforded by its intellectual property portfolio for the Omacor® and Lovaza™ brands and will vigorously defend and enforce its patents.
Due to the excellent production output in the first quarter of 2009, the group has raised its previous full year-production target of 1 500, and now expects to produce 1 550 to 1 600 tonnes in 2009. Importantly, the Kalundborg plant recently started its first test production of intermediaries from crude fish-oil, ahead of schedule.
The plant is well on track to supply intermediate products to the plant in Sandefjord, Norway by the end of the first half of 2009. This supply of intermediate products will play an important role to achieve the updated production target of 1 550 to 1 600 tonnes for the year, enabling the company and its partners to meet the continued strong end-user demand. The first commercial shipment from the plant is expected to take place in the first quarter of 2010.
The difference between shipped and produced volumes in the first quarter was due to increased volumes sent to capsulation. These volumes will be shipped to the European markets in the second and third quarters of 2009. Omacor/Lovaza™ is growing at a rapid pace in all markets and the positive trend is expected to continue and the group expects partner demand in 2009 to exceed production capacity.
Omacor®/Lovaza™ is growing at a rapid pace in all markets and the positive trend is expected to continue and the group expects partner demand in 2009 to exceed production capacity. The complete first quarter report is available at www.newsweb.no and at www.pronova.com.