Evenity(®) (romosozumab) had its first European launch in March 2020, for the treatment of severe osteoporosis in postmenopausal women at high risk of fracture, and reported net sales of EUR 2 million, impacted by the pandemic which significantly impedes outreach to new patient populations. Evenity(®) is being launched globally by Amgen, Astellas and UCB since 2019, with net sales outside Europe reported by Amgen and Astellas.
2020 FY financial highlights
Revenue in 2020 increased by 9% (+8% CER) to EUR 5 347 million and net sales increased by 8% (+7% CER) to EUR 5 052 million. Net sales before "designated hedging reclassified to net sales" were EUR5 022 million with a plus of 5% (+7% CER). This growth was driven by the resilient UCB product portfolio - despite the pandemic.
Royalty income and fees were EUR 96 million, plus 22% and benefitting from a one-time royalty recognized. Other revenue increased by 28% to EUR 199 million due to higher contract manufacturing, milestones and other payments from R&D partners.
Gross profit reached EUR 3 984 million, with a plus of 9% (+8% CER) and reflecting a slightly improved gross margin compared to 2019.
Operating expenses went up to EUR 2 891 million (+14%; +16% CER) reflecting
· 10% higher marketing and selling expenses of EUR 1 221 million - driven by the launch of Cimzia(®) in active non-radiographic axial spondyloarthritis (nr-axSpA) in the U.S. and the launches in Japan and China, the launch of Nayzilam(®) in the U.S. and Evenity(®) in Europe as well as launch preparations for bimekizumab for people living with psoriasis, zilucoplan and rozanolixizumab in myasthenia gravis and include expenses in connection with accelerated digital transformation in the pandemic context to better interactions, targeting and marketing
· 23% higher research and development expenses of EUR 1 569 million - which include for the first time the R&D expenses for the acquired Ra Pharma, Engage Therapeutics and Handl Therapeutics R&D programs. Ongoing high investments in UCB's progressing pipeline encompass five late stage assets and include expenses in connection with digital transformation for better patient experience and faster development time. Slightly lower R&D expenses due to the pandemic related to the recruitment pause in the first half 2020 were compensated by higher pandemic related expenses for the safety of patients as well as ensuring patient recruitment in the second half of the year. Hence, the R&D ratio reached 29% in 2020 after 26% in 2019.
· with +1% almost stable general and administrative expenses of EUR 196 million, reflecting lower costs due to COVID-19 pandemic compensated by digital business transformation activities and the contribution to the UCB fund (EUR 5 million) in connection with COVID-19 pandemic.
Other operating income doubled to EUR 95 million after EUR 48 million in 2019 - driven by an income of EUR 96 million in connection with the commercialization of Evenity(®) in collaboration with Amgen, after an income of EUR 8 million in 2019, compensating mainly UCB's marketing & selling as well as R&D expenses. UCB's share to the total Evenity(®) contribution has turned to positive earnings for the first time. In 2019, "other" operating items were impacted by one-time positive contributions from investment grants, gain on divestiture and release of provisions.
Underlying operational profitability - adjusted (recurring) EBITDA- reached EUR 1 441 million (+1%, -4% CER) driven by continued revenue growth and higher operating expenses, reflecting the investments into the future of UCB, namely into product launches and clinical development. The adjusted EBITDA ratio for 2020 (in % of revenue) reached 27%, from 29% in 2019.
Total impairment, restructuring and other income/expenses (formerly called "non-recurring") were expenses of EUR 122 million after EUR 50 million in 2019. In 2020, this includes fees related to the acquisitions, restructuring expenses and an increase of provisions. In 2019, UCB strengthened its operating model to ensure maximum agility to meet the growth expectations for the years ahead, leading to higher restructuring expenses.
Net financial expenses went down to EUR 93 million from EUR 107 million in 2019, thanks to lower hedging costs, reduction of interest payable due to the repaid bond in March 2020, compensated by higher interest expenses due to the debt financing of the Ra Pharma acquisition.
Income taxexpenses were EUR 119 million compared to EUR 146 million in 2019. The effective tax rate is 13% after 15% in 2019.
Profit amounted to EUR 761 million (after EUR 817 million), of which EUR 732 million (after EUR 792 million) is attributable to UCB shareholders and EUR 29 million (after EUR 25 million) to non-controlling interests.
Core earnings per share, which reflect profit attributable to UCB shareholders, adjusted for the after-tax impact of to be adjusted items, the financial one-offs, the after-tax contribution from discontinued operations and the net amortization of intangibles linked to sales, reached EUR 5.36 after EUR 5.20 based on 189 million weighted average shares outstanding (+1%)
Dividend - The Board of Directors of UCB proposes a dividend of EUR1.27 per share (gross), +2%.
Outlook 2021: For 2021, UCB is aiming for revenues in the range of EUR 5.45 - 5.65 billion thanks to the current core product growth and new patient populations being served, based on current assessment of the ongoing pandemic. UCB will continue to advance its late stage development pipeline and prepare upcoming launches to offer potential new solutions for patients.
Underlying profitability, adjusted EBITDA, is expected in the range of 27 - 28% of revenue, reflecting the high R&D and marketing & sales investment levels. Core earnings per share are therefore expected in the range of EUR 5.60 - 6.10 based on an average of 189 million shares outstanding. The figures for the outlook 2021 as mentioned are calculated on the same basis as the actual figures for 2020.
Outlook for 2025: For the first time UCB shares its growth ambition for 2025, despite upcoming patent expirations. Based on the strong product portfolio and the promising late-stage pipeline assets, UCB aims to lead in specific populations by 2025, creating value for patients now and into the future. Revenue in 2025 are expected to reach at least EUR six billion and the underlying profitability (adj. EBITDA) should reach the low to mid-thirties in percent of revenue.
Outlook 2021 & 2025: Based on UCB's current assessment of the Covid-19 pandemic, UCB remains confident in the fundamental underlying demand for its products in the short-term and its prospects for long-term growth. UCB will continue to closely follow evolving COVID-19 pandemic and its consequences to the business environment diligently to assess potential near- and mid-term challenges.
Changes to the Board of Directors: In October 2020, UCB announced that at the UCB Annual General Meeting on April 29, 2021, Evelyn du Monceau will have reached the statutory age limit and will step down as Chair and Director of the Board of UCB SA/NV. She will retire from the Board after 4 years as UCB's Chair and over 35 years as UCB Board member.
The mandates of Albrecht De Graeve, Viviane Monges and Roch Doliveux will expire at the Annual General Meeting of April 29, 25 Feb. (AGM 2021) - . Roch Doliveux informed the Board that, for personal reasons, he will not be candidate for a further renewal of his mandate and will therefore leave the Board and UCB at the end of the term of his current mandate (i.e. the AGM 2021).
The Board will propose the following appointments to the AGM of April 29, 2021:
· The appointment of Mr. Stefan Oschmann as independent Director. If elected by the AGM 2021, Stefan Oschmann will become the Chair of the Board in replacement of Mrs. Evelyn du Monceau.