Best Quarter Ever with Net Income up 48.2% to $110.5m
Driven by Strong Revenue Growth
- Guidance for 2003 Confirmed -
GENEVA, Oct. 23 /PRNewswire-FirstCall/ -- Serono S.A. (NYSE: SRA; virt-x:
SEO) today reported its third quarter results for the period ended September
30, 2003.
Highlights
* Total revenues of $502.7m, up 32.9% in dollars and underlying growth of
26.0% in local currencies
* Product sales up 32.7% to $463.5m
* Significant growth of leading products in each therapeutic area:
Rebif(R) up 52.1%, Gonal-f(R) up 12.1% and Saizen(R) up 26.9%
* Reported net income of $110.5m, up 48.2% and 39.3% in local currencies
* Basic EPS up 49.2% to $6.98 per Bearer Share and $0.17 per American
Depositary Share
* Positive European CPMP opinion for Gonal-f(R) pre-filled pen injector
* FDA approval and positive European CPMP opinion for
Ovidrel(R)/Ovitrelle(R) pre-filled syringe
* Progress of promising new compounds, oral cladribine and TACI-Ig, into
clinical development
"This has been our best quarter ever, with net income up 48.2% to $110.5m
driven by strong revenue growth in each of our businesses," said Ernesto
Bertarelli, Chief Executive Officer.
"Our operational momentum will result in an excellent 2003, and we are
clearly on track to meet our guidance," said Allan Shaw, Chief Financial
Officer.
Financial Performance
In the third quarter of 2003, total revenues grew by 32.9% to $502.7m (Q3
2002: $378.2m). Product sales rose 32.7% to $463.5m (Q3 2002: $349.3m). US
dollar weakness caused a positive currency impact of $24.9m on product sales.
In local currencies, product sales grew by 25.4%.
Royalty and license income grew by 36.0% to $39.2m (Q3 2002: $28.8m).
Gross margin was 85.8% (Q3 2002: 83.2%) as a result of operational
improvements.
Selling, general and administrative expenses were $158.9m (Q3 2002:
$117.8m), reflecting commercial expenditure and marketing programs.
Research and development expenses increased to $107.1m or 21.3% of total
revenues (Q3 2002: $101.3m or 26.8% of total revenues).
Other operating expenses reached $53.6m (Q3 2002: $23.5m) influenced by
licensing agreements for new products and higher royalties paid to third
parties.
Operating income grew by 52.6% to $117.3m reflecting strong revenue growth
and cost-control management. Net financial income was $9.4m in the third
quarter (Q3 2002: $13.2m).
Reported net income grew 48.2% to $110.5m (Q3 2002: $74.5m), or 39.3% in
local currencies.
Reported basic earnings per share (EPS) grew 49.2% to $6.98 per bearer
share (Q3 2002: $4.68) and $0.17 per American Depositary Share (ADS) (Q3 2002:
$0.12). The average number of equivalent bearer shares outstanding for the
three months ended September 30, 2003 was 15,829,041.
Neurology
In the third quarter of 2003, total neurology sales were $222.2m. Rebif(R)
worldwide sales were up 52.1% (41.5% in local currencies) to $212.0m (Q3 2002:
$139.4m). Rebif(R) continued its market leadership outside the USA with sales
up by 33.1% to $161.6m (Q3 2002: $121.4m).
In the USA, Rebif(R) sales grew by 179.8% to $50.4m in the third quarter
(Q3 2002: $18.0m) with demand continuing to strengthen. Rebif(R) is the
fastest growing multiple sclerosis (MS) disease modifying drug and continues
to gain market share in the USA.
Novantrone(R) sales in MS were $10.2m in the third quarter (Q2 2003:
$6.6m) as marketing programs gained momentum (total Novantrone(R) sales were
$26.3m).
On September 19, new data from a long-term assessment of a cohort of
patients with relapsing-remitting multiple sclerosis (RRMS) on Rebif(R)
therapy were presented at the 19th ECTRIMS Congress. The results support the
long-term benefit of Rebif(R) 44 mcg subcutaneously three times weekly, in the
treatment of RRMS on relapses, disability and magnetic resonance imaging (MRI)
outcomes measured, with a favorable risk benefit profile through eight years.
The exact relationship between MRI findings and clinical outcomes for patients
is unknown. The results also reflect the importance of starting treatment
early.
Reproductive Health
In the third quarter, worldwide reproductive health product sales
increased by 6.9% to $157.9m (Q3 2002: $147.7m). Sales of Gonal-f(R) grew by
12.1% (5.8% in local currencies) to $117.1m (Q3 2002: $104.5m).
Serono's core reproductive health portfolio consisting of three
recombinant hormones (Gonal-f(R), Ovidrel(R), Luveris(R)) and two
complementary products (Cetrotide(R), Crinone(R)) grew by 14.8% to $133.4m, or
8.2% in local currencies. In accordance with our phase out plan, sales of
urine-derived gonadotropin represented only $21.8m (Q3 2002: $28.9m).
Several significant regulatory milestones were achieved. On September 25,
the Committee for Proprietary Medicinal Products (CPMP) issued a positive
opinion for the Gonal-f(R) pre-filled pen injector in Europe. On September 30,
an Advisory Committee of the Food and Drug Administration (FDA) issued a
favorable recommendation for Luveris(R) in Serono's proposed indication of
follicular development in infertile hypogonadotropic hypogonadal women with
profound luteinizing hormone deficiency. On July 24, the CPMP issued a
positive opinion for Ovitrelle(R) pre-filled syringe in Europe. Recently, the
Ovidrel(R) pre-filled syringe was approved by the FDA.
Growth and Metabolism
Sales of Serono's recombinant growth hormone products rose by 12.2% to
$59.9m in the third quarter (Q3 2002: $53.4m). Saizen(R) sales increased by
26.9% (18.9% in local currencies) to $36.8m (Q3 2002: $29.0m). The favorable
market acceptance of the Saizen(R) family of devices in the USA and in Europe
continue to make Saizen(R) a popular choice with prescribers and patients.
Serostim(R) sales continue to be stable at $23.0m (Q3 2002: $24.4m). In the
USA, the Serostim(R) Secured Distribution Program, which has been in operation
for one year, has been recently highlighted by staff of the FDA as an
outstanding example of the use of a tracking and tracing technology to assure
patient safety and product integrity.
Regional Sales
Sales performance was strong in all of our geographic areas. In Europe,
sales increased by 25.7% to $191.8m (Q3 2002: $152.5m). Sales in North America
grew strongly by 52.0% to reach $179.8m (Q3 2002: $118.3m). In the rest of the
world, sales grew by 17.1% to $91.9m (Q3 2002: $78.5m).
R&D News
In the third quarter of 2003, progress was made in product development and
the following molecules moved into Phase 1 clinical development:
* Cladribine, potentially the first oral treatment for multiple sclerosis
* TACI-Ig, a fusion protein inhibitor of B-cell activation, which
represents a novel therapeutic approach to treating autoimmune diseases
such as systemic lupus erythematosus, rheumatoid arthritis, and
potentially other diseases such as non-Hodgkin's lymphoma.
Investor Meetings
Serono's senior management will be presenting a company update in Zurich,
London and New York on October 24, 27 and 28, 2003 respectively. The Zurich
meeting will be webcast.
Conference Call and Webcast
Serono will hold a conference call today, October 23, 2003, starting at
3.00 pm Central European Time (9.00 am U.S. Eastern Time) during which Serono
management will present the Company's third quarter 2003 results. To join the
telephone conference please dial 091 610 5600 (from Switzerland), 0207 107
0611 (from the UK), 1 866 291 4166 (from the USA) and +41 91 610 5600 (from
elsewhere). Telephone playback will be available one hour after the conference
call and until close of business 6.00 pm CET on October 30, 2003. To access
this playback please dial the following numbers: 091 612 4330 (from
Switzerland), 0207 866 4300 (from the UK), 1 412 858 1440 (from the USA) and
+41 91 612 4330 (from elsewhere) and enter the PIN code 303# from a touch tone
telephone.
The event will also be relayed by live audio webcast that interested
parties may access via Serono's Corporate home page, http://www.serono.com. A link to
the webcast will be provided immediately prior to the event, and accompanying
slides will be made available for download approximately 1 hour before the
beginning of the webcast. Additionally, the webcast will be available for
replay until close of business on November 15, 2003.
Some of the statements in this press release are forward looking. Such
statements are inherently subject to known and unknown risks, uncertainties
and other factors that may cause actual results, performance or achievements
of Serono S.A. and affiliates to be materially different from those expected
or anticipated in the forward-looking statements. Forward-looking statements
are based on Serono's current expectations and assumptions, which may be
affected by a number of factors, including those discussed in this press
release and more fully described in Serono's Annual Report on Form 20-F filed
with the U.S. Securities and Exchange Commission on April 17, 2003. These
factors include any failure or delay in Serono's ability to develop new
products, any failure to receive anticipated regulatory approvals, any
problems in commercializing current products as a result of competition or
other factors, our ability to obtain reimbursement coverage for our products,
and government regulations limiting our ability to sell our products. Serono
has no responsibility to update the forward-looking statements contained in
this press release to reflect events or circumstances occurring after the date
of this press release.
About Serono
Serono is a global biotechnology leader. The Company has six recombinant
products on the market, Gonal-f(R), Luveris(R), Ovidrel(R)/Ovitrelle(R),
Rebif(R), Serostim(R) and Saizen(R) (Luveris(R) is not approved in the USA).
In addition to being the world leader in reproductive health, Serono has
strong market positions in neurology, metabolism and growth. The Company's
research programs are focused on growing these businesses and on establishing
new therapeutic areas. Currently, there are over 30 projects in development.
Serono was awarded the International James D. Watson Helix 2003 Award from
the Biotechnology Industry Organization (BIO) in recognition of the Company's
outstanding leadership and highest standards of scientific and product
achievement.
In 2002, Serono achieved worldwide revenues of US$ 1.538 billion, and a
net income of US$321 million, making it the third largest biotech company in
the world. The Company operates in 44 countries, and its products are sold in
94 countries. Bearer shares of Serono S.A., the holding company, are traded on
the virt-x (SEO) and its American Depositary Shares are traded on the New York
Stock Exchange (SRA).
On the following pages, there are:
* Tables detailing sales in dollars by therapeutic area, geographic
region and the top 10 products for the 3 and 9 months ended September
30, 2003.
* The unaudited consolidated financial statements for the 3 and 9 months
ended September 30, 2003, including income statements, balance sheets
and statements of cash flows, prepared in accordance with International
Financial Reporting Standards (IFRS).
Sales by therapeutic area
Three Months Ended Three Months Ended
September 30, 2003 September 30, 2002
$ million % of sales % change $ $ million % of sales
Neurology 222.2 47.9% 59.4% 139.4 39.9%
Reproductive Health 157.9 34.1% 6.9% 147.7 42.3%
Growth & Metabolism 59.9 12.9% 12.2% 53.4 15.3%
Others 23.5 5.1% 164.9% 8.8 2.5%
Total sales
(US$ million) $463.5 100% 32.7% $349.3 100%
Sales by geographic region
Three Months Ended Three Months Ended
September 30, 2003 September 30, 2002
$ million % of sales % change $ $ million % of sales
Europe 191.8 41.4% 25.7% 152.5 43.7%
North America 179.8 38.8% 52.0% 118.3 33.9%
Latin America 28.5 6.1% 9.4% 26.0 7.5%
Others 63.4 13.7% 20.9% 52.5 14.9%
Total sales
(US$ million) $463.5 100% 32.7% $349.3 100%
Sales by therapeutic area
Nine Months Ended Nine Months Ended
September 30, 2003 September 30, 2002
$ million % of sales % change $ $ million % of sales
Neurology 608.1 45.4% 61.2% 377.3 37.2%
Reproductive Health 501.9 37.5% 10.0% 456.1 45.0%
Growth & Metabolism 175.1 13.1% 11.8% 156.6 15.5%
Others 53.6 4.0% 126.5% 23.7 2.3%
Total sales
(US$ million) $1,338.7 100% 32.1% $1,013.7 100%
Sales by geographic region
Nine Months Ended Nine Months Ended
September 30, 2003 September 30, 2002
$ million % of sales % change $ $ million % of sales
Europe 580.9 43.4% 31.2% 442.6 43.7%
North America 501.6 37.5% 50.3% 333.7 32.9%
Latin America 69.4 5.2% (16.8%) 83.4 8.2%
Others 186.8 13.9% 21.4% 154.0 15.2%
Total sales
(US$ million) $1,338.7 100% 32.1% $1,013.7 100%
TOP TEN PRODUCTS
Three Months Ended Three Months Ended
September 30, 2003 September 30, 2002
$ % of % $ % of
* TA million sales change $ million sales
Rebif(R) MS 212.0 45.7% 52.1% 139.4 39.9%
Gonal-F(R) RH 117.1 25.3% 12.1% 104.5 29.9%
Saizen(R) Growth 36.8 7.9% 26.9% 29.0 8.3%
Novantrone(R) MS/Oncology 26.3 5.7% 100.0% --
Serostim(R) Wasting 23.0 5.0% (5.4%) 24.4 7.0%
Pergonal(R) RH 11.8 2.5% (2.0%) 12.0 3.4%
Cetrotide(R) RH 5.6 1.2% 21.4% 4.6 1.3%
Metrodin HP(R) RH 5.2 1.1% (54.4%) 11.4 3.3%
Crinone(R) RH 5.2 1.1% 28.6% 4.0 1.1%
Profasi(R) RH 4.1 0.9% (11.2%) 4.7 1.3%
Nine Months Ended Nine Months Ended
September 30, 2003 September 30, 2002
$ % of % $ % of
* TA million sales change $ million sales
Rebif(R) MS 586.2 43.8% 55.4% 377.3 37.2%
Gonal-F(R) RH 378.6 28.3% 15.0% 329.2 32.5%
Saizen(R) Growth 109.2 8.2% 24.0% 88.0 8.7%
Serostim(R) Wasting 65.9 4.9% (3.8%) 68.6 6.8%
Novantrone(R) MS/Oncology 54.7 4.1% 100.0% --
Pergonal(R) RH 33.9 2.5% 3.7% 32.7 3.2%
Metrodin HP(R) RH 19.5 1.5% (50.9%) 39.7 3.9%
Cetrotide(R) RH 17.1 1.3% 32.3% 12.9 1.3%
Crinone(R) RH 14.4 1.1% 84.1% 7.8 0.8%
Profasi(R) RH 12.9 1.0% (12.9%) 14.8 1.5%
* Therapeutic Areas
RH = Reproductive Health Wasting = AIDS Wasting
MS = Multiple Sclerosis Growth = Growth Retardation
Oncology = Oncology
Consolidated Income Statements
Three months ended September 30
2003 * % of 2002 * % of
US$'000 Revenues % change US$'000 Revenues
Revenues
Product sales 463,533 32.7% 349,334
Royalty and license income 39,187 36.0% 28,821
Total Revenues 502,720 100.0% 32.9% 378,155 100.0%
Operating Expenses
Cost of product sales 65,753 12.1% 58,631
% of Sales 14.2% 16.8%
Selling, general and
administrative 158,919 31.6% 34.9% 117,838 31.2%
Research and
development 107,102 21.3% 5.7% 101,312 26.8%
Other operating
expense, net 53,621 10.7% 128.1% 23,505 6.2%
Total Operating Expenses 385,395 76.7% 27.9% 301,286 79.7%
Operating Income 117,325 23.3% 52.6% 76,869 20.3%
Financial income, net 9,412 (28.7%) 13,192
Other income/(expense), net 62 109.5% (656)
Total Non Operating
Income, Net 9,474 12,536
Income Before Taxes and
Minority Interests 126,799 25.2% 41.8% 89,405 23.6%
Taxes 17,011 14,751
Income Before Minority
Interests 109,788 74,654
Minority interests (666) 117
Net Income 110,454 22.0% 48.2% 74,537 19.7%
Comparative figures have been reclassified to conform with current year's
presentation
* Unaudited
2003 2002 % Change
Basic Earnings per Share (in U.S. dollars)
- Bearer shares 6.98 4.68 49.2%
- Registered shares 2.79 1.87 49.2%
- American depositary shares 0.17 0.12 49.2%
Diluted Earnings per Share (in U.S. dollars)
- Bearer shares 6.96 4.67 49.0%
- Registered shares 2.78 1.87 49.0%
- American depositary shares 0.17 0.12 49.0%
Basic earnings per share are calculated in accordance with IAS 33
(Earnings per Share) by dividing the net income of the group, US$110.5 million
(2002 US$74.5 million), by an appropriate number of shares. This is 11,423,825
bearer shares (2002 11,532,883) and 11,013,040 registered shares (2002
11,013,040). The total weighted average equivalent number of bearer shares is
15,829,041 (2002 15,938,099) for the three months ended September 30, 2003. As
each American depositary share represents ownership interest in one fortieth
of a bearer share, basic and diluted earnings per American depositary share is
calculated as one fortieth of the earnings per bearer share.
For diluted earnings per share, the total number of bearer shares is
adjusted to assume conversion of all share options granted to employees and
directors. The number of bearer shares used to calculate diluted earnings per
share is 11,459,401 (2002 11,544,653).
Consolidated Income Statements
Nine months ended September 30
2003 * % of 2002 * % of
US$'000 Revenues % change US$'000 Revenues
Revenues
Product sales 1,338,733 32.1% 1,013,701
Royalty and license income 114,820 32.9% 86,398
Total Revenues 1,453,553 100.0% 32.1% 1,100,099 100.0%
Operating Expenses
Cost of product sales 199,201 25.6% 158,584
% of Sales 14.9% 15.6%
Selling, general
and administrative 457,959 31.5% 27.3% 359,730 32.7%
Research and development 343,571 23.6% 30.8% 262,681 23.9%
Other operating
expense, net 150,320 10.3% 158.9% 58,063 5.3%
Total Operating Expenses 1,151,051 79.2% 37.2% 839,058 76.3%
Operating Income 302,502 20.8% 15.9% 261,041 23.7%
Financial income, net 24,816 (9.2%) 27,324
Other income/(expense), net 429 123.4% (1,833)
Total Non Operating
Income, Net 25,245 25,491
Income Before Taxes and
Minority Interests 327,747 22.5% 14.4% 286,532 26.0%
Taxes 49,162 47,278
Income Before Minority
Interests 278,585 239,254
Minority interests 235 62
Net Income 278,350 19.1% 16.4% 239,192 21.7%
Comparative figures have been reclassified to conform with current year's
presentation
* Unaudited
2003 2002 % Change
Basic Earnings per Share (in U.S. dollars)
- Bearer shares 17.58 14.92 17.8%
- Registered shares 7.03 5.97 17.8%
- American depositary shares 0.44 0.37 17.8%
Diluted Earnings per Share (in U.S. dollars)
- Bearer shares 17.55 14.90 17.8%
- Registered shares 7.02 5.96 17.8%
- American depositary shares 0.44 0.37 17.8%
Basic earnings per share are calculated in accordance with IAS 33
(Earnings per Share) by dividing the net income of the group, US$278.3 million
(2002 US$239.2 million), by an appropriate number of shares. This is
11,429,052 bearer shares (2002 11,625,344) and 11,013,040 registered shares
(2002 11,013,040). The total weighted average equivalent number of bearer
shares is 15,834,268 (2002 16,030,560) for the nine months ended September 30,
2003. As each American depositary share represents ownership interest in one
fortieth of a bearer share, basic and diluted earnings per American depositary
share is calculated as one fortieth of the earnings per bearer share.
For diluted earnings per share, the total number of bearer shares is
adjusted to assume conversion of all share options granted to employees and
directors. The number of bearer shares used to calculate diluted earnings per
share is 11,450,658 (2002 11,643,162).
Consolidated Balance Sheets
As of September 30, * December 31,
2003 2002
US$ 000 US$ 000 $ Change
Assets
Current Assets
Cash and cash equivalents 661,930 686,033 -24,103
Short-term financial assets 437,796 378,865 58,931
Trade accounts receivable 311,414 257,313 54,101
Inventories 305,021 259,477 45,544
Prepaid expenses 33,021 26,609 6,412
Other current assets 182,683 208,100 -25,417
Total Current Assets 1,931,865 1,816,397 115,468
Long-Term Assets
Property, plant and equipment 634,743 554,509 80,234
Long-term financial assets 871,302 711,201
Intangible assets 249,395 230,117
Deferred tax assets 176,585 136,687
Other long-term assets 37,753 45,763
Total Long-Term Assets 1,969,778 1,678,277 291,501
Total Assets 3,901,643 3,494,674 406,969
Liabilities
Current Liabilities
Bank advances 36,902 70,093 -33,191
Trade accounts payable 52,064 60,591 -8,527
Current portion of long-term
debt 19,422 23,505 -4,083
Income taxes 29,687 55,152 -25,465
Deferred income - current 32,766 18,221 14,545
Other current liabilities 396,443 330,483 65,960
Total Current Liabilities 567,284 558,045 9,239
Long-term Liabilities
Long-term debt 63,963 25,857 38,106
Deferred tax liabilities 11,800 12,080 -280
Deferred income - non-current 201,205 183,659 17,546
Provisions and other
long-term liabilities 335,301 252,670 82,631
Total Long-Term Liabilities 612,269 474,266 138,003
Total Liabilities 1,179,553 1,032,311 147,242
0
Minority Interests 1,465 1,165 300
Shareholders' Equity
Share capital 253,882 253,416 466
Share premium 1,002,752 989,141 13,611
Treasury shares (140,253) (126,460)
Retained earnings 1,557,993 1,364,626 193,367
Fair value reserves (26,193) (44,807)
Cumulative foreign currency
translation adjustments 72,444 25,282 47,162
Total Shareholders' Equity 2,720,625 2,461,198 259,427
0
Total Liabilities,
Minority Interests and
Shareholders' Equity 3,901,643 3,494,674 406,969
* Unaudited
Consolidated Statements of Cash Flows
Nine months ended September 30 2003 * 2002 *
US$ 000 US$ 000
Cash Flows From Operating Activities
Income before taxes and minority interests 327,747 286,532
Depreciation and amortization 100,849 74,432
Financial income (37,077) (50,644)
Financial expense 13,720 7,735
Other non-cash items 23,503 656
Cash Flows From Operating Activities
Before Working Capital Changes 428,742 318,711
Working Capital Changes
Trade accounts payable, other current
liabilities and deferred income 72,346 162,574
Trade accounts receivable (45,036) (22,340)
Inventories (48,785) (8,362)
Prepaid expenses and other current assets 12,596 (22,539)
Taxes paid (67,697) (47,985)
Net Cash Flows From Operating Activities 352,166 380,059
Cash Flows From Investing Activities
Acquisition of subsidiary -- (98,950)
Purchase of property, plant and equipment (125,323) (71,062)
Purchase of intangible and other
long-term assets (6,842) (13,318)
Purchase of financial assets (208,443) (551,193)
Other non-current liabilities (10,204) (5,606)
Proceeds from sale of property,
plant and equipment 8,804 10,646
Interest received 53,988 33,141
Net Cash Flows From Investing Activities (288,020) (696,342)
Cash Flows From Financing Activities
Proceeds from issuance of share capital 13,105 11,611
Proceeds from exercises of stock options 7,651 1,384
Premiums received on written calls 1,249 --
Purchase of treasury shares (24,637) (96,582)
Repayment of bank advances (30,812) (71,909)
Repayment of long-term debt (13,965) (9,073)
Issuance of long-term debt 44,208 --
Interest paid (3,361) (5,958)
Dividends paid (85,709) (64,240)
Net Cash Flows From Financing Activities (92,271) (234,767)
Effect of Exchange Rate Changes on Cash
and Cash Equivalents 4,022 6,010
Net (Decrease) in Cash and Cash Equivalents (24,103) (545,040)
Cash and Cash Equivalents
- Beginning of period 686,033 1,131,091
- End of period 661,930 586,051
* Unaudited
SOURCE Serono S.A.
 back to top
Related links:
http://www.serono.com
http://www.seronousa.com
CONTACT:
Serono in Geneva, Switzerland - Media
Relations - +41-22-739-36-00, Fax, +41-22-739-30-85, or Investor
Relations - +41-22-739-36-01, Fax, +41-22-739-30-22, Reuters:
SEOZ.VX / SRA.N, Bloomberg: SEO VX / SRA US; Serono, Inc.,
Rockland, MA - Media Relations - +1-781-681-2340, Fax,
+1-781-681-2935, or Investor Relations - +1-781-681- 2552, Fax,
+1-781-681-2912
|
