13 August 2010, Lysaker, Norway: Pronova BioPharma ASA (OSE: PRON.OL) today announced its second quarter 2010 results. Revenues reached NOK 443.6 million and the group generated NOK 177 million in EBITDA in the quarter. The group entered into final negotiations on a multinational partnering agreement with Abbott renewing the license and supply agreement with Solvay Pharmaceuticals. The partnership covers 69 countries, including established markets such as Greece, UK and Germany as well as major emerging markets, and is expected to lay the foundations for the further growth of Omacor®. Omacor® also received marketing authorisation in Australia for HTG and Post MI indications. Pronova BioPharma further strengthened its intellectual property, with a fourth patent listed in the FDA Orange Book.
Total group revenues in the second quarter decreased by 2.6 per cent, to NOK 443.6 million (NOK 455.2 million). Shipments to the group’s partners increased by 12.6%, but revenues were offset by lower supply prices and the impact of a stronger NOK. Revenues for the first half of the year increased by 10.5 per cent to NOK 899 million (NOK 813.8 million)
Gross margin was 77 per cent (72.3 per cent) in the quarter and 76.9 per cent (73.2 per cent) in the first half year. The group produced 28 tonnes more than shipped in the quarter, which had a positive effect on the gross margin. In addition, cost of materials was lower as a result of lower raw material costs and reduced cost of in-sourcing. This has enabled the group to maintain a high gross margin performance despite the reduction in revenues per shipped tonne. This resulted in an increase in the group’s gross profit of 3.8 per cent in the quarter to NOK 341.6 million (NOK 329.1 million), and an increase of 16.1 per cent in the first half year from NOK 596 million to NOK 691.7 million.
EBITDA was NOK 177.3 million (NOK 221.1 million) in the quarter and NOK 362.5 million (NOK 385.2 million) in the first half year which represents a decrease of 19.9% and 5.9%, respectively.
Group operating profit decreased to NOK 91.9 million (NOK 177.3 million) in the quarter, and to NOK 191.2 million (NOK 298.1 million) in the first half, due to the reduction in EBITDA and the increased depreciation.
Net financial items were negative at NOK 21.1 million (negative NOK 2.8 million) in the quarter and negative NOK 67.3 million (negative NOK 114.4 million) in the first half year.
Pronova BioPharma and its US marketing partner GSK have received notification that PAR Pharmaceuticals (“PAR”) has submitted a Paragraph IV filing to the US Food and Drug Administration for approval to market a generic version of Lovaza™. PAR intends to market a generic version of Lovaza™ before the expiration of US Patent No. 7,732,488 (‘488 patent) listed in the FDA Orange Book with expiry in 2025. Pronova BioPharma has full confidence in the strength of the Lovaza™ patent, and will vigorously defend and enforce its intellectual property.
The company has still not observed any generic versions of Omacor ® in the European market, 12 months since the expiration of its patents in most European countries. Pronova BioPharma has further reinforced its market positioning; a new process patent entitled “A Process Decreasing Environmental Pollutants in an Oil or Fat” has been granted by the European Patent Office and is now validated in 27 countries and granted in Norway.
Overall partner demand for 2010 is expected to be in the range of 1,600–1,700 tonnes. In recent years, Pronova BioPharma’s production and shipments have been driven by strong end- user demand for Omacor®/ Lovaza™ and stock build-up by the company’s partners. Following the inventory rebalancing in the USA, future shipments of API and capsules are expected to gradually be aligned with end-user consumption in the market. The annual run rate in end- user demand was 21.8 per cent as per 30 June 2010.
Pronova BioPharma will continue to concentrate on expanding into new markets as well as on developing new products, including reformulations, to add further impetus to the group’s volume growth. The addition of Abbott as a long term partner for the expansion of Omacor ®, will strengthen Pronova BioPharma’s ability to realise the product’s growth potential.
The group expects to further improve operational efficiency by initiating a cost reduction programme and anticipates continuing to generate persistent strong cash flow from operations. The large investment programmes related to capacity increases, have been completed and the group does not have any major capital expenditure plans.
Commenting on the results, Morten Jurs, Chief Executive Officer of Pronova BioPharma, said, “The group has continued to make progress during 2010, with the further strengthening of our IP position and having entered into final negotiations for a new and extensive marketing partnership with Abbott. The addition of Abbott as a long-term partner for Omacor will strengthen Pronova BioPharma’s ability to realise the product’s growth potential. We remain focused on improving operational efficiency through the initiation of a cost reduction programme and we are confident that we will continue to generate strong cash flow.”
The complete first quarter report is available at www.newsweb.no and at www.pronova.com.
The company will present the results today at 08:30AM CET/07:30 GMT. The presentation, will be webcasted live and can be accessed at www.pronova.com. (Internet explorer web browser needed). Web cast attendants may send questions electronically during the session.
For further information, please contact:
Hamed Brodersen, Vice president IR and communications + 47 22 53 48 60 + 47 40 46 81 10 Synne Røine, CFO + 47 22 53 49 10
