Actelion announces Full Year 2008 financial results

To better measure and compare operating performance over time, Actelion continues to report non-US GAAP Cash EBIT (Operating Income excluding charges such as In-Process R&D, charges related to employee stock options under FAS 123R as well as non-cash depreciation and amortization charges). For the full year 2008, Actelion achieved a Cash EBIT of CHF 476.8 million, an increase of 1 percent compared to 2007. In local currencies, Cash EBIT increased by 16 percent. Adjusted (non-US GAAP) diluted earnings per share for the full year 2008 were CHF 3.40, compared to CHF 3.57 in 2007.

On a US GAAP basis, net profit for the full year 2008 was CHF 321.5 million (FY 2007: CHF 124.6 m). Fully diluted earnings per share (EPS), on a US GAAP basis, for the full year 2008 were CHF 2.60, compared to CHF 1.00 for the full year of 2007.

Jean-Paul Clozel, M.D. and Chief Executive Officer commented: "In 2008, Actelion has executed successfully in all important areas. Despite increasing competition, our products continue to grow. Our pre-clinical and clinical efforts have resulted in a broad pipeline, with 10 compounds currently investigated in humans".

Jean-Paul Clozel added: "Together with the strengthening of our global infrastructure and recruitment of some of the best talent in the industry, Actelion is prepared to continue its growth path in 2009. I expect product sales to grow and I expect more compounds to enter into man this year. With two out of the four Phase III programs reporting final results this year, 2009 has the potential to not only be a year of growth, but also one of transformation for Actelion."

Jean-Paul Clozel concluded: "I am very pleased with the overall progress of our pipeline. In particular I am impressed by the outstanding results achieved with our CRTH2 receptor antagonist which has the potential to be a therapeutic breakthrough in asthma as well as other allergic diseases. We are looking at the best business option to optimize the potential value of this compound."

Andrew J. Oakley, Chief Financial Officer commented: "In 2008, Actelion's financial performance exceeded our expectations, driven by higher than forecasted product sales and improved operating leverage. Operating expenses grew in-line with our continued strategy to significantly invest in innovation. The strength of our results is however masked by the strong Swiss Franc, as evidenced by 2008 Cash EBIT which grew by 16 percent in local currencies compared to 1 percent in Swiss Francs."

Andrew J. Oakley added: "Unforeseen events excluded, Actelion expects the year 2009 to be another year of growth, with total net revenues - in local currencies - to increase between 12 and 15 percent. Cash EBIT is forecasted to increase - in local currencies - by 10 to 12 percent."

Andrew J. Oakley concluded: "Given our ongoing growth and strong balance sheet, Actelion has all the assets at hand to fully finance its ongoing expansion. At the same time, we are prepared to act opportunistically, should there be innovative products available in the market place."

Continued growth of total net revenues For the full year 2008, Actelion had total net revenues of CHF 1,473.5 million (FY 2007: CHF 1,317.4 m), an increase of 12 percent compared to the same period a year ago. In local currencies, total net revenues increased by 20 percent.

Contract revenues increased by 76 percent during the same period, largely due to revenue recognition of the up-front payment received from GSK upon entering the Actelion/GSK collaboration. Actelion entered into this exclusive worldwide collaboration (excluding Japan) for Actelion's first-in-class orexin receptor antagonist almorexant. Almorexant is currently investigated in Phase III development as a treatment for primary insomnia. Full details of the collaboration are covered in the joint Actelion/GSK media release issued Monday, 14 July 2008.

Product sales For the full year 2008, Tracleer® (bosentan) sales were CHF 1,294.1 million (FY 2007: CHF 1,178.6 m), an increase of 10 percent compared to the same period last year. In local currencies, Tracleer® sales increased by 17 percent year on year.

At the end of December 2008, Tracleer® was commercially available in over 50 countries worldwide, including all major pharmaceutical markets. Actelion continues to strengthen Tracleer®'s availability with further market introductions expected in the coming quarters.

In addition to expanding and setting up its own commercial infrastructure in China and Russia, Actelion is also continuing to expand its existing field forces in all territories worldwide to further capitalize on the existing growth momentum for Tracleer® and to continue overall PAH market expansion. In the European Union, additional resources were deployed to support the new indication of Tracleer® for the treatment of digital ulcerations in patients with scleroderma, where commercialization started on a country by country basis in 2008.

In August of 2008, Tracleer® (bosentan) obtained an expanded label in the European Union for the treatment of patients with mildly symptomatic pulmonary arterial hypertension (PAH) WHO Functional Class II (FC II). Tracleer® is the only PAH treatment to be investigated in a clinical study that exclusively enrolled patients with mildly symptomatic WHO FC II. This 185-patient randomized, double-blind, placebo-controlled study provided the basis for this EU approval. The results from EARLY (Endothelin Antagonist tRial in miLdlY symptomatic PAH patients) were published in "The Lancet" in June 2008 (Galiè N, Rubin LJ, Hoeper MM et al. Treatment of patients with mildly symptomatic pulmonary arterial hypertension with bosentan (EARLY study): a double-blind, randomised controlled trial. The Lancet 2008; 371: 2093-2100). Regulatory review for this indication is ongoing in other territories, including the United States of America.

For the full year 2008, Ventavis® (iloprost) sales were CHF 94.6 million. In local currencies, Ventavis® sales increased by 34 percent. The company believes that the additional patient support programs and improved convenience of the current Ventavis® device has led to continued Ventavis® sales growth.

Currently ongoing is a clinical study PROWESS 15 to demonstrate that a single dose of iloprost (delivered by the Power 15 device) versus placebo, improves exercise capacity in patients with PAH. This is another example of Actelion's continued commitment to the PAH community.

Otto Schwarz, President Business Operations, commented: "Our products have performed well, with growth achieved in all markets world-wide, despite growing competition in the PAH space. This strong performance is the result of very strong product data and the communication thereof, through a global, highly professional and dedicated marketing and sales organization."

For the full year 2008, Zavesca® (miglustat) sales were CHF 40.1 million (FY 2007: CHF 35.3 m). In local currencies, Zavesca® sales increased by 20 percent. Zavesca® is commercially available in over 35 countries including the United States and most European markets. Amendments to the EU SmPC in 2008 have recognized recent published data on the positive effects of Zavesca® on bone manifestations in Gaucher disease type 1.

In January 2009, Zavesca® (miglustat) received approval in the European Union for the treatment of progressive neurological manifestations in adult patients and pediatric patients with Niemann-Pick type C disease (NPC). Zavesca® is the first treatment to be approved for patients with Niemann-Pick type C disease, a very rare and devastating neurodegenerative genetic disorder affecting both children and adults.

Otto Schwarz concluded: "In 2008, we have strengthened our global footprint further by adding new sales forces and better aligning headquarter resources to support existing products and prepare for the launch of new products. Actelion, therefore, is fully prepared to be successful in its existing core market, PAH, as well as entering into or creating new markets, first with Zavesca® in Europe with the NPC indication."

Operating expenses For the full year 2008, operating expenses were CHF 1,102.2 million (FY 2007: CHF 1,174.8 m).

Research and development expenses for the same period increased by 28 percent to CHF 374.5 million (FY 2007: CHF 292.1 m). This increase is in-line with continued investments into a rapidly expanding pipeline and includes milestone payments to Nippon Shinyaku for the first-in-class PGI2 receptor agonist paid during the first half of 2008.

Research and Development Actelion's pipeline now has 10 compounds in clinical development as well as more than 25 active projects in drug discovery.

Isaac Kobrin, MD and Head of Development at Actelion commented: "At the end of 2008, the clinical development programs at Actelion have rapidly matured and expanded, with close to 8,300 patients or healthy volunteers foreseen to participate in over 75 clinical studies. We have also ensured that we are ready to rapidly approach health care authorities in the case of successful clinical data from our two most advanced Phase III programs, bosentan (Tracleer®) in idiopathic pulmonary fibrosis and clazosentan (Pivlaz®) in vasospasm after aneurismal subarachnoid hemorrhage. "

In total, Actelion currently pursues four ongoing phase III programs:

Almorexant in primary insomnia: The first Phase III study, which is part of the RESTORA program has commenced enrollment and is designed to evaluate safety and efficacy of almorexant in patients diagnosed with primary insomnia. The 700-patient study RESTORA 1 includes a reference arm with zolpidem, an approved treatment for insomnia. First study results are expected in the second half of 2009.

End-of-Phase II discussions with the US Food and Drug Administration (FDA) have taken place where Actelion provided the FDA with additional four-week safety data generated in healthy volunteers as well as with results from a successful dose-finding study with almorexant in elderly patients. The Actelion/GSK collaboration expects to initiate further clinical studies with almorexant upon conclusion of discussions with the FDA based on responses to the Special Protocol Assessment and results from additional trials.

Bosentan (Tracleer®) in IPF: This multicenter, double-blind, randomized, placebo- controlled, parallel group, event-driven morbidity/mortality study (BUILD-3) is evaluating the safety and efficacy of bosentan 125mg bid in patients diagnosed with idiopathic pulmonary fibrosis. BUILD-3 enrollment was completed in November 2008 with 616 patients. The first interim analysis for BUILD-3 (i.e., 50 % of the primary endpoint events) has taken place on the 17 February 2009, with the independent Data and Safety Monitoring Board (DSMB) recommending continuation of the study. Final study results could become available by the end of 2009.

Clazosentan in aSAH: The Phase III study CONSCIOUS-2 (Clazosentan to Overcome Neurological iSCHemia and Infarct OccUrring after Subarachnoid hemorrhage) evaluates safety and efficacy of this intravenous endothelin receptor antagonist through the primary endpoint of all-cause mortality and vasospasm-related morbidity, which includes vasospasm related neurological deterioration, vasospasm related new brain infarcts, initiation of vasospasm related rescue therapy or death from any cause. CONSCIOUS-2 is currently enrolling at centers in over 25 countries in the EU, Canada, Asia, Australia and New Zealand. At the end of January 2009, Actelion had also initiated additional clinical centers in the United States. The study aims to enroll 765 patients with aSAH and aneurysmal surgical clipping. Study results may become available in the second half of 2009, if successful Actelion will approach health authorities for potential filing.

A second Phase III study CONSCIOUS-3 is being initiated to evaluate the safety and efficacy of two doses (5 or 15 mg/h) of clazosentan versus placebo in patients post-aSAH treated by endovascular coiling. The primary endpoint is similar to that of CONSCIOUS 2, i.e., reduction of the incidence of cerebral vasospasm-related morbidity and all-cause mortality within six weeks. CONSCIOUS-3 is expected to commence enrollment in the second quarter of 2009 at approximately 150 centers with a target enrollment of 1500 patients.

Macitentan in PAH: The multicenter, double-blind, randomized, placebo-controlled, parallel group, event-driven pivotal SERAPHIN program is evaluating safety and efficacy of this highly potent tissue-targeting endothelin receptor antagonist through the primary endpoint of morbidity and all-cause mortality in patients with symptomatic PAH. Global enrollment is ongoing with over 200 patients already enrolled of the 525 patients planned. This is the largest trial in PAH patients and the first to include, from the beginning, a clearly defined morbidity/mortality primary endpoint.

Isaac Kobrin added: "I am very pleased that Actelion can now also initiate advanced clinical development for our novel CRTH2 receptor antagonist, following the recent successful conclusion of the proof-of-concept study in patients suffering from asthma."

The earlier-stage clinical development programs include:

CRTH2 receptor antagonist: Positive data have been obtained in a proof-of-mechanism study with Actelion's orally active CRTH2 receptor antagonist in mild asthma. In preclinical studies, this compound inhibited migration and activation of fundamental cell types involved in allergic inflammation. In the 18 patient-crossover double-blind placebo-controlled study, the primary endpoint (FEV1) was met, and the compound was well tolerated. Results support progression of this novel compound into full Phase II development in asthma.

Miglustat in Cystic Fibrosis: This compound is under-going a Phase IIa proof-of-concept trial, following pre-clinical findings suggesting a potential for disease-modifying properties. (Antigny F., Norez C., Becq F. and Vandebrouck C. Calcium homeostasis is abnormal in cystic fibrosis airway epithelial cells but is normalized after rescue of F508del-CFTR. Cell Calcium. 43, 175-83; 2008). Results are expected later in the first quarter of 2009. These results, if positive, will determine the need, size and duration of future studies.

Macitentan in IPF: Actelion intends to begin a clinical development program with this highly potent tissue targeting endothelin receptor antagonist in idiopathic pulmonary fibrosis. A double-blind, randomized, multicenter study evaluating the efficacy and safety of macitentan in patients with IPF is planned to initiate in the second quarter of 2009 reinforcing the concept of dual endothelin receptor antagonism in IPF.

PGI2 receptor agonist: This first-in-class orally active non-prostanoid PGI2 receptor agonist was well tolerated in Phase I. A Phase IIa study in PAH patients has completed enrollment and results are expected in Q3 2009. A Phase IIb study is foreseen to commence in the coming months.

Selective S1P1 receptor agonist: Actelion and Roche have agreed that preclinical and clinical data support progressing Actelion's first-in-class selective S1P1 receptor agonist into Phase II clinical development. Actelion has initiated a proof-of-concept study in Psoriasis and a Phase IIb study in Multiple Sclerosis is foreseen to initiate in the coming months.

Renin Inhibitor: Based on the results of several clinical studies, the renin alliance with Merck & Co., Inc. (through an affiliate), decided to promote an as yet undisclosed compound already in clinical development, thereby replacing the first compound that entered Phase IIa in December 2007. A series of Phase I studies have been undertaken, including investigations of pharmacokinetics, pharmacodynamics and drug-drug interaction studies. The collaboration continues its commitment to best-in-class renin inhibition by assessing this new compound and continuing to bring forward further compounds.

Actelion's Drug Discovery efforts, in more than 25 active projects, resulted in three compounds undergoing preclinical investigation at the end of 2008, and the potential selection of several other preclinical development candidates during 2009. In 2008, the company filed 52 priority patent applications.

Walter Fischli, Co-Head of Drug Discovery at Actelion, commented: "We continue to profit from our experience of our target platforms. With the expansion of our platform approach to include ion channels and antibiotics, and our continued investment in screening technology we fully expect to continue our high productivity into the future. In 2008 we demonstrated our high research productivity with more than 50 priority patent applications filed."

Martine Clozel, Co-Head of Drug Discovery at Actelion, added: "Several innovative compounds are in the final stages of preclinical development and we expect to move some of these compounds forward in 2009. As always our focus is on compounds with unique mechanism of actions which address high unmet medical needs."

Selling, general and administrative expenses for the full year 2008 amounted to CHF 550.0 million (FY 2007: CHF 500.1 m), an increase of 10 percent, as the company continued to increase disease awareness for all three marketed products. Infrastructure to support our operations has grown in line with the expansion of the company.

Operating profit Actelion's operating profit for the full year 2008 was CHF 371.4 million (FY 2007: CHF 142.6 m). Cash EBIT for the same period amounted to CHF 476.8 million (FY 2007: CHF 471.4 m), an increase of 1 percent in Swiss Francs and 16 percent in local currencies.

Net Profit For the full year 2008, the net profit of CHF 321.5 million (FY 2007: CHF 124.6 m) includes interest income of CHF 21.8 million, interest expense of CHF 6.6 million, a non- cash charge on the Convertible Bond of CHF 1.7 million, foreign currency losses of CHF 31.9 million (predominantly the result of valuation losses on intercompany receivables) and an income tax expense of CHF 31.4 million.

Cash and cash flow For the full year 2008, Actelion generated net cash flow from operations of CHF 513.7 million (FY 2007: CHF 394.2 m). As at 31 December 2008 total liquid funds (excluding holdings of treasury shares) amounted to CHF 1,131.7 million.

Strong talent growth At the end of 2008, Actelion employed 1,907 employees worldwide, an increase of more than 300 compared to the end of 2007. Of those 1,907 employees, 862 are located in Switzerland.

In 2009, Actelion expects to increase its global work force to around 2,350 employees. In Switzerland, Actelion expects to employ by year-end 2009 more than 1,000 employees.

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