IDORSIA LTD Financial Status as of March 31, 2024
in connection with an upcoming Bondholders meeting
Contents
3 Section 1: Context of the Financial Status report
4 Section 2: Management discussion and analysis
8 Section 3: Idorsia Group - Financial Status as of March 31, 2024 (unaudited)
16 Section 4: Idorsia Ltd - Financial Status as of March 31, 2024 (unaudited)
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Section 1: Context of the Financial Status report
The Group determined that the current available financial resources would not allow the Group to fund its operations and to redeem the CHF 200 million convertible bonds at maturity on July 17, 2024 (hereafter referred as the "Bonds 2024").
Therefore, the company seeks to amend the terms of the Bonds 2024 to give more flexibility to repay the Bonds 2024. This Financial Status is provided in connection with the calling of a bondholders' meeting of the Bonds 2024 as required by Article 1175 of the Swiss Code of Obligations.
Shareholders and bondholders should note that whilst Management and Board of Directors consistently continue to evaluate and execute all available options to extend the cash runway and operate the business as a going concern, there is no guarantee that any transaction can be realized or that such transaction would generate sufficient funds in the near-term future to prevent a default of payment.
This material uncertainty may cast significant doubts about the going concern of the Group. In this context, shareholders and bondholders should note that the accompanying unaudited financial information has been prepared on the basis that the Group will continue as a going concern and therefore does not include any adjustments that would be necessary should the Group be unable to continue as a going concern. The accompanying financial information is unaudited and may be subject to change. Readers of this financial information shall not place undue reliance on it.
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Section 2: Management discussion and analysis
The consolidated numbers for the first quarter 2024 and the fourth quarter 2023 are unaudited and assume that the Group will continue as a going concern. Therefore, these numbers do not include any adjustments that would be necessary should the Group be unable to continue as a going concern.
Idorsia measures and reports its non-GAAP operating performance, which management believes more accurately reflects the underlying business performance. The Group believes that these non-GAAP financial measurements provide useful supplementary information for investors. These non- GAAP measures are reported in addition to, not as a substitute for, US GAAP financial performance. Rounding differences may occur.
Operating performance
US GAAP | Non- GAAP | |||
First | Fourth | First | Fourth | |
Unaudited | quarter | quarter | quarter | quarter |
(in CHF millions) | 2024 | 2023 | 2024 | 2023 |
Revenues | 10 | 22 | 10 | 22 |
Operating expenses | 20 | (134) | (96) | (137) |
Other income | 1 | 1 | 1 | 1 |
Operating income (loss) | 31 | (111) | (85) | (115) |
The US GAAP operating income for the first quarter 2024 at 31 million Swiss francs is positively impacted by a gain of 125 million Swiss francs in connection with the Viatris deal.
Idorsia announced on March 18, 2024, the closing of a global research and development collaboration with Viatris Inc. ("Viatris"), focused on the development and commercialization of two innovative compounds, selatogrel and cenerimod, both discovered by Idorsia ("Viatris deal"). Only 150 million US dollars of the 350 million US dollars upfront consideration paid by Viatris was recorded as a gain on sale of disposal, offset by some expenses, resulting in a net gain of 125 million Swiss francs. The remainder of 181 million Swiss francs was accrued to account for the performance of services and Idorsia commitment to fund the ongoing phase 3 of selatogrel and cenerimod up to 200 million US dollars, of which 17 million Swiss francs were consumed during the first quarter of 2024.
Revenues amounted to 10 million Swiss francs in the first quarter 2024.
Unaudited | First quarter | Fourth quarter |
(in CHF millions) | 2024 | 2023 |
Product sales | 10 | 11 |
Contract revenue - milestones | - | 9 |
Contract revenue - others | 0 | 1 |
US GAAP Revenue | 10 | 22 |
4
Product sales of QUVIVIQ™ (daridorexant) amounted to 10 million Swiss francs in the first quarter 2024 of which 7 million Swiss francs in the US and 3 million Swiss francs in EUCAN region. Key milestones in EUCAN region with reimbursement secured in England (October 2023), France (January 2024) and Scottland (April 2024) and the exemption from the 4 weeks prescription restriction for Quviviq™ in Germany.
The US-GAAP operating expenses comprised Non-GAAP operating expenses of 96 million Swiss francs in the first quarter 2024 compared to 137 million Swiss francs in the fourth quarter 2023, the one-off gain of 125 million Swiss francs of the Viatris deal and other operating expenses of 10 million Swiss francs.
Unaudited | First quarter | Fourth quarter |
(in CHF millions) | 2024 | 2023 |
Cost of sales | 4 | 0 |
Research | 15 | 18 |
Development | 14 | 39 |
Selling | 47 | 57 |
General and administrative | 17 | 22 |
Non-GAAP operating expenses | 96 | 137 |
Depreciation and amortization | 4 | 4 |
Share-based compensation | 5 | (4) |
Restructuring charges | 1 | (1) |
Effect of the Viatris and Sosei deals | (125) | (3) |
Other operating expenses | (116) | (4) |
US GAAP operating expenses | (20) | 134 |
The cost reduction initiative implemented in the third quarter 2023 showed benefits across the organization with lower spend in Research, Development, and the Commercial organization.
Non-GAAP research expenses at 15 million Swiss francs in the first quarter 2024 are mainly driven by the reduction in headcount of the drug discovery organization.
Non-GAAP development expenses at 14 million Swiss francs in the first quarter include a release of 17 million Swiss francs to neutralize the costs incurred for selatogrel and cenerimod in connection with the Viatris deal. The further reduction in development expenses is driven by the reduction in headcount of the clinical and CMC organization and the impact of a portfolio review that led to a prioritization of the pipeline assets.
Non-GAAP selling expenses amounted 47 million Swiss francs in the first quarter (vs. 57 million Swiss francs in the fourth quarter 2023). The 10 million Swiss francs reduction was mainly driven by the US commercial affiliate due to a reduced field force and lower DTC expenses.
Non-GAAP general and administrative expenses at 17 million Swiss francs in the first quarter (vs 22 million Swiss francs in the fourth quarter 2023). The 5 million Swiss francs decrease is driven by a reduction in personnel cost (including related pension cost) and lower legal fees .
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Cash-Flow
Total cash-flow of 190 million Swiss francs in the first quarter 2024 included the 350 million US dollars upfront consideration paid by Viatris (308 million Swiss francs), 85 million Swiss francs outflows from operations reflecting a lower cost base and working capital requirements of 33 million Swiss francs.
Unaudited | First quarter | Fourth quarter |
(in CHF millions) | 2024 | 2023 |
Net outflows from operations | (85) | (121) |
Change in working capital | (33) | 13 |
Operating Cash-Flow | (118) | (108) |
Cash from the Viatris deal | 308 | - |
Cash flow | 190 | (110) |
Liquidity and financial indebtedness
Unaudited | March 31, | December 31, |
(in CHF millions) | 2024 | 2023 |
Cash and cash equivalents | 335 | 145 |
Short-term deposits | - | - |
Total liquidity | 335 | 145 |
Convertible loan | 335 | 335 |
Convertible bonds | 797 | 796 |
Other financial debt | 162 | 162 |
Total Indebtedness | 1,293 | 1,293 |
Idorsia liquidity as of March 31, 2024, amounted to 335 million Swiss francs, an increase of 190 million Swiss francs compared to December 31, 2023.
Idorsia financial indebtedness as of March 31, 2024, remained unchanged at 1,293 million Swiss francs.
The convertible loan of 335 million Swiss francs is the remaining portion of a 580 million Swiss francs loan underwritten by Cilag Holding AG, an affiliate of Johnson and Johnson at the time of the demerger from Actelion in June 2017 (the "Cilag loan"). The Cilag loan was issued at par, does not carry interest, has a conversion price of 11.48 Swiss francs, a maturity on June 15, 2027, and a redemption likely to be in shares (29.1 million shares of Idorsia, which would result in a total shareholding of 18% on a diluted basis) since Cilag can convert in shares at any time but Idorsia has eventually the option to redeem it in shares at maturity. However, Cilag would have the option to choose for a cash redemption, should Idorsia undergo a change of control or file for insolvency.
The convertible bonds consist of two senior unsecured convertible bonds: the convertible bond due 2024 ("Bonds 2024") and the convertible bond due 2028 ("Bonds 2028").
The Bonds 2024 were issued on July 17, 2018, for an aggregate amount of 200 million Swiss francs (1,000 senior unsecured bonds with a denomination of 200,000 Swiss francs per bond). The Bonds 2024 were issued at par, with an interest rate of 0.75% per annum, a conversion price of CHF 33.95, a maturity on July 17, 2024, and a redemption in cash at 100% of the principal amount. The Company seeks to amend the terms of these bonds to have more flexibility.
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The Bonds 2028 were issued on August 4, 2021, for an aggregate amount of 600 million Swiss francs (3,000 senior unsecured bonds with a denomination of 200,000 Swiss francs per bond). The bonds were issued at par, with an interest rate of 2.125% per annum, a conversion price of 31.54 Swiss francs, a maturity on August 4, 2028, and a redemption in cash at 100% of the principal amount. The investors may request redemption of the bonds on the fifth anniversary of the settlement date (on August 4, 2026) or upon a change of control and in case of a delisting of shares.
The other financial debt of 162 million Swiss francs is relating to a sale and lease-back transaction for its research and development building at Idorsia headquarters. The transaction generated net proceeds of 162 million Swiss. The transaction does not qualify as a sale for US GAAP purposes as Idorsia has an option to repurchase the building; therefore, the related assets and potential liability remain on the balance sheet.
The conditional debt arising from the reacquisition of the worldwide rights to aprocitentan from Janssen is not recorded on the balance sheet. With the recent marketing approval of aprocitentan by the FDA in the US, Janssen is entitled to receive to 275.5 million Swiss francs and could be entitled to receive up to 30.5 million Swiss francs should the EMA approve aprocitentan in Europe. Idorsia is obligated to repay such conditional debt via low to mid-single digit royalties on net sales, 30% of proceeds received from an outlicense or divestiture of aprocitentan, and 10% of proceeds received from an outlicense or divestiture of other Idorsia assets.
Shares
Unaudited | March 31, | December 31, |
(in CHF millions) | 2024 | 2023 |
Issued common shares | 189.0 | 188.5 |
Equity derivatives | 54.0 | 54.0 |
Equity instruments | 13.8 | 14.7 |
Total potential issued shares | 256.8 | 257.2 |
The 189 million common shares issued as of March 31, 2024, include 9 million treasury shares.
The 54 million equity derivatives as of March 31, 2024, include
5.9 million shares relating to the Bonds 2024, 19 million shares relating to the Bonds 2028 and 29.1 million shares relating to the Cilag convertible loan.
The 13.8 million equity instruments as of March 31, 2024, include restricted share units, performance share units and stock-options granted to employees.
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Section 3: Idorsia Group - Financial Status as of March 31, 2024 (unaudited)
Unaudited Consolidated Income Statement (1/2)
First quarterFourth quarter | ||
(in CHF thousands, except per share amounts) | 2024 | 2023 |
(unaudited) | (unaudited) | |
Net revenue | ||
Product sales | 10,022 | 11,374 |
Contract revenue | 37 | 10,140 |
Total net revenue | 10,058 | 21,514 |
Operating (expenses)1 | ||
Cost of sales | (3,530) | (489) |
Research and development | (32,810) | (59,062) |
Selling, general and administrative | (67,799) | (77,621) |
Amortization of intangible assets | (531) | (141) |
Restructuring charges | (661) | 579 |
Gains on sale of disposal group | 125,314 | 3,155 |
Total operating (expenses) | 19,983 | (133,579) |
Other income | 900 | 711 |
Operating income (loss) | 30,941 | (111,354) |
Interest income (expense), net | (4,895) | (4,481) |
Accretion of convertible debt | (315) | (316) |
Other financial income (expense), net | 4,275 | (103) |
Total financial income (expense) | (935) | (4,900) |
Income (loss) before income tax benefit (expense) | 30,006 | (116,254) |
Income tax benefit (expense) | (146) | (422) |
Net income (loss) | 29,860 | (116,676) |
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Unaudited Consolidated Income Statement (2/2)
First quarterFourth quarter | ||
(in CHF thousands, except per share amounts) | 2024 | 2023 |
(unaudited) | (unaudited) | |
Basic net income (loss) per share attributable to Idorsia's shareholders | 0.17 | (0.65) |
Weighted-average number of common shares (in thousands) | 179,123 | 178,639 |
Diluted net income (loss) per share attributable to Idorsia's shareholders | 0.13 | (0.65) |
Weighted-average number of common shares (in thousands) | 233,266 | 177,434 |
1Includes share-based compensation as follows: | ||
Research and development | (1,235) | 961 |
Selling, general and administrative | (3,418) | 2,882 |
Total share-based compensation | (4,653) | 3,843 |
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Unaudited Consolidated Statement of Comprehensive Income
First quarterFourth quarter | ||
(in CHF thousands) | 2024 | 2023 |
(unaudited) | (unaudited) | |
Net income (loss) | 29,860 | (116,676) |
Other comprehensive income (loss), net of tax: | - | |
Foreign currency translation adjustments | 118 | (163) |
Change of unrecognized components of net periodic benefit costs | (365) | (24,548) |
Other comprehensive income (loss), net of tax | (247) | (24,711) |
- | ||
Comprehensive income (loss) | 29,613 | (141,387) |
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Idorsia Ltd. published this content on 17 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 April 2024 05:13:05 UTC.
