OSAKA, Japan--(BUSINESS WIRE)--Takeda Pharmaceutical Company Limited (TOKYO:4502)(NYSE:TAK):

FY2018 Full Year Results

Legacy Takeda Underlying Revenue +5.3%; Consolidated reported revenue +18.5%

• Underlying Revenue growth for Legacy Takeda was solid at +5.3%, with significant contributions from key growth products such as ENTYVIO (+34.8%) and NINLARO (+36.1%).
• Consolidated reported revenue increased +18.5% to 2,097.2 billion yen. This was mainly due to the inclusion of Legacy Shire’s results from January 8, 2019, which was offset by the one-time negative impact from applying Takeda’s distribution channel policies to Legacy Shire products.

Legacy Takeda Underlying Core Earnings margin expanded +540 basis points

• Legacy Takeda underlying Core Earnings grew +38.7%, with Opex discipline driving three fourths of the +540bps margin expansion. Legacy Takeda’s underlying Core Earnings margin has now expanded +960bps based on simple addition of gains in the last two years, driven by key growth products and execution of the Global Opex Initiative.
• Legacy Takeda operating profit grew +70.3% mainly driven by business momentum. Large one-time gains in FY2017 from the divestiture of Wako Pure Chemical and the transfer of additional products to the Teva JV were matched by increased gains on sales of real estate and the divestitures of Multilab and Techpool in FY2018.
• Consolidated reported operating profit decreased -15.2% to 205.0 billion yen, and consolidated reported EPS declined -52.6% to 113 yen per share, mainly impacted by significant non-cash purchase accounting expenses. The strong performance in Legacy Takeda reported operating profit entirely absorbed Shire acquisition-related costs incurred in FY2018.

Innovative R&D engine delivered important pipeline milestones

• ENTYVIO demonstrated superior efficacy versus adalimumab in ulcerative colitis head-to-head VARSITY study4. Regulatory applications for a subcutaneous formulation filed in the U.S. for ulcerative colitis and Europe for ulcerative colitis and Crohn’s disease.5
• Approvals in FY2018 for TAKHZYRO in the U.S. and Europe as well as ALUNBRIG in Europe. Important label expansions for ADCETRIS to include previously untreated Hodgkin lymphoma approved in Japan and Europe, as well as TRINTELLIX in the U.S. to include data on speed of processing and Treatment Emergent Sexual Dysfunction.
• Innovative pipeline has delivered 15 New Molecular Entity clinical stage-ups since April 2018.
• 44 new collaborations with biotech and academia in FY2018, and announced 3 leading-edge cell-therapy partnerships.

Disposing non-core assets to generate cash and focus the business

• Consolidated Free Cash Flow +4.6% to 378.1 billion yen, including 200.9 billion yen from the sale of real estate, marketable securities, and non-core businesses Techpool and Multilab.
• On May 8, 2019, Takeda announced agreements to divest XIIDRA to Novartis for $3.4 billion upfront in cash and up to an additional $1.9 billion in potential milestones, and TACHOSIL to Ethicon for €358 million upfront with a long-term Manufacturing Services Agreement.6
• Takeda intends to use proceeds from the disposal of non-core assets to reduce debt and accelerate deleveraging toward its target of 2.0x net debt/adjusted EBITDA in 3 to 5 years.

Christophe Weber, President and Chief Executive Officer of Takeda, commented:

“Fiscal 2018 was an important year in the history of Takeda as we completed the acquisition of Shire to create a competitive, values-based, R&D-driven global biopharmaceutical leader. I am delighted to say that throughout the year, while we have focused on planning and executing the integration, we have also maintained strong business momentum, as demonstrated by our excellent financial results.
The integration of Shire is progressing as planned, aligned with Takeda’s values and culture. We have also identified opportunities to realize greater cost synergies, and already have made progress on our divestment strategy for non-core assets.
Looking ahead, I believe we have a strong and resilient foundation for the future growth of the business. We are focused on our five key business areas of GI, Rare Diseases, Plasma-Derived Therapies, Oncology and Neuroscience, and our revenue over the medium term will be driven by a balanced portfolio including 14 global brands. Our innovative pipeline is also delivering, as shown by the 15 clinical stage-ups over the past year, and we are committed to executing towards our margin expansion and deleveraging targets.
With our business area focus, R&D engine, and financial strength, Takeda is well positioned to deliver long-term value to patients and our shareholders.”

FY2018 Consolidated Reported Results (April - March)

• Strong Legacy Takeda performance absorbed Shire acquisition-related costs. For more details on the breakdown of these expenses, please refer to the attached appendix.

FY2019 Full Year Guidance

FY2019 Management Guidance: Business momentum expected to largely offset significant Loss of Exclusivity headwinds

• Momentum of key growth products in our 5 Key Business Areas is expected to largely offset the significant Loss of Exclusivity of VELCADE, FIRAZYR, ULORIC & other products.
• Full year consolidation of Legacy Shire results, cost synergies and OPEX discipline is expected to contribute to underlying Core EPS of 350-370 yen.

• Financial assumption for VELCADE in the U.S. is for one additional non-therapeutically equivalent competitor with intravenous and subcutaneous administration launching in July 2019. If no additional competitor launches, pro-forma underlying revenue growth would be "flat to slightly increasing".

Costa Saroukos, Chief Financial Officer of Takeda, stated:

“Our guidance for fiscal year 2019 reflects a significant impact from Loss of Exclusivity, without which the top-line would be growing by ~6-7 percentage points, driven by continued volume expansion of key products such as ENTYVIO, TAKHZYRO, NINLARO, and our Immunoglobulin franchise. We expect our Underlying Core Earnings margin to reach the mid-twenties in fiscal 2019, and we are targeting Underlying Core Earnings margin in the mid-thirties in the medium term, driven by continued Opex efficiencies and relentless execution against our cost synergy targets. After closing the Shire acquisition we conducted a deep-dive, bottoms-up review of the synergy opportunities, and I am pleased to say we are raising our cost synergy target from $1.4 billion to approximately $2 billion in annual recurring savings by the end of fiscal 2021.
In addition to margin improvement, we also are committed to rapid deleveraging towards our target net debt / adjusted EBITDA ratio of 2.0x in 3 to 5 years. This will be driven by strong cash flow, and accelerated deleverage from our divestitures such as the recently announced agreements to sell XIIDRA and TACHOSIL. In addition, we will continue to make focused investments in the business to support our growth drivers, and intend to maintain our well-established dividend policy of 180 yen per share annually.
Takeda has delivered against its commitments in FY2018, as exemplified in our superb margin improvement and cash generation, and we are committed to delivering against our future targets to drive significant returns for our shareholders.”

FY2019 Forecast: Expecting strong increase in core earnings of +92.2%, with Net Profit excluding deal-related costs and the impact of purchase accounting growing at +17.7%

• Anticipate Revenue up +57.4% vs. prior year due to inclusion of Legacy Shire’s full year results for the full year.
• Expect Operating Profit and EPS to be significantly impacted by Shire acquisition-related integration costs and costs related to purchase accounting. Excluding the impact of Shire acquisition-related costs and purchase accounting, Net Profit for the year would increase +17.7% (refer to the attached appendix for details).
• Anticipate Core Earnings strongly increasing +92.2% from full year Legacy Shire contribution, cost synergies and continued OPEX discipline.

For more details on Takeda's FY2018 results and other financial information, please visit https://www.takeda.com/investors/reports/

About Takeda Pharmaceutical Company Limited

Takeda Pharmaceutical Company Limited (TOKYO:4502/NYSE:TAK) is a global, values-based, R&D-driven biopharmaceutical leader headquartered in Japan, committed to bringing Better Health and a Brighter Future to patients by translating science into highly-innovative medicines. Takeda focuses its R&D efforts on four therapeutic areas: Oncology, Gastroenterology (GI), Rare Diseases and Neuroscience. We also make targeted R&D investments in Plasma-Derived Therapies and Vaccines. We are focusing on developing highly innovative medicines that contribute to making a difference in people's lives by advancing the frontier of new treatment options and leveraging our enhanced collaborative R&D engine and capabilities to create a robust, modality-diverse pipeline. Our employees are committed to improving quality of life for patients and to working with our partners in health care in approximately 80 countries and regions.
For more information, visit https://www.takeda.com

Important Notice

For the purposes of this notice, “press release” means this document, any oral presentation, any question and answer session and any written or oral material discussed or distributed by Takeda Pharmaceutical Company Limited (“Takeda”) regarding this release. This press release (including any oral briefing and any question-and-answer in connection with it) is not intended to, and does not constitute, represent or form part of any offer, invitation or solicitation of any offer to purchase, otherwise acquire, subscribe for, exchange, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in any jurisdiction. No shares or other securities are being offered to the public by means of this press release. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. This press release is being given (together with any further information which may be provided to the recipient) on the condition that it is for use by the recipient for information purposes only (and not for the evaluation of any investment, acquisition, disposal or any other transaction). Any failure to comply with these restrictions may constitute a violation of applicable securities laws.

The companies in which Takeda directly and indirectly owns investments are separate entities. In this press release, “Takeda” is sometimes used for convenience where references are made to Takeda and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies.

Forward-Looking Statements

This press release and any materials distributed in connection with this press release may contain forward-looking statements, beliefs or opinions regarding Takeda’s future business, future position and results of operations, including estimates, forecasts, targets and plans for Takeda. In particular, this press release contains forecasts and management estimates related to the financial and operational performance of Takeda, including statements regarding forecasts for Revenue, Operating profit, Adjusted EBITDA, Profit before income taxes, Net profit attributable to owners of Takeda, Basic earnings per share, Amortization and impairment and other income/expense, Underlying Revenue, Underlying Core Earnings margin, Underlying Core EPS and Net Debt. Without limitation, forward looking statements often include the words such as “targets”, “plans”, “believes”, “hopes”, “continues”, “expects”, “aims”, “intends”, “will”, “may”, “should”, “would”, “could” “anticipates”, “estimates”, “projects” or words or terms of similar substance or the negative thereof. Any forward-looking statements in this document are based on the current assumptions and beliefs of Takeda in light of the information currently available to it. Such forward-looking statements do not represent any guarantee by Takeda or its management of future performance and involve known and unknown risks, uncertainties and other factors, including but not limited to: the economic circumstances surrounding Takeda’s business, including general economic conditions in Japan, the United States and worldwide; competitive pressures and developments; applicable laws and regulations; the success of or failure of product development programs; decisions of regulatory authorities and the timing thereof; changes in exchange rates; claims or concerns regarding the safety or efficacy of marketed products or products candidates; and post-merger integration with acquired companies, any of which may cause Takeda’s actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by such forward-looking statements. For more information on these and other factors which may affect Takeda’s results, performance, achievements, or financial position, see “Item 3. Key Information—D. Risk Factors” in Takeda’s Registration Statement on Form 20-F filed with the U.S. Securities and Exchange Commission, available on Takeda’s website at: https://www.takeda.com/investors/reports/sec-filings/ or at www.sec.gov. Neither Takeda nor its management gives any assurances that the expectations expressed in these forward-looking statements will turn out to be correct, and actual results, performance or achievements could materially differ from expectations. Persons receiving this press release should not place undue reliance on forward looking statements. Takeda undertakes no obligation to update any of the forward-looking statements contained in this press release or any other forward-looking statements it may make. Past performance is not an indicator of future results and the results of Takeda in this press release may not be indicative of, and are not an estimate, forecast or projection of Takeda’s future results.

Certain Non-IFRS Financial Measures

This press release and materials distributed in connection with this press release include certain IFRS financial measures not presented in accordance with International Financial Reporting Standards (“IFRS”), such as Underlying Revenue, Core Earnings, Underlying Core Earnings, Core Net Profit, Underlying Core Net Profit, Underlying Core EPS, Net Debt, EBITDA, Adjusted EBITDA and Operating Free Cash Flow. Takeda’s management evaluates results and makes operating and investment decisions using both IFRS and non-IFRS measures included in this press release. These non-IFRS measures exclude certain income, cost and cash flow items which are included in, or are calculated differently from, the most closely comparable measures presented in accordance with IFRS. By including these non-IFRS measures, management intends to provide investors with additional information to further analyze Takeda’s performance, core results and underlying trends. Takeda’s non-IFRS measures are not prepared in accordance with IFRS and such non-IFRS measures should be considered a supplement to, and not a substitute for, measures prepared in accordance with IFRS (which we sometimes refer to as “reported” measures). Investors are encouraged to review the reconciliation of non-IFRS financial measures to their most directly comparable IFRS measures.

Further information on certain of Takeda’s Non-IFRS measures is posted on Takeda’s investor relations website at https://www.takeda.com/investors/reports/quarterly-announcements/quarterly-announcements-2018/

Medical information

This press release contains information about products that may not be available in all countries, or may be available under different trademarks, for different indications, in different dosages, or in different strengths. Nothing contained herein should be considered a solicitation, promotion or advertisement for any prescription drugs including the ones under development.

Financial information

Takeda’s financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). The financial statements of Shire plc (“Shire”) are presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Therefore, the respective financial information of Takeda and Shire are not directly comparable.

The Shire acquisition closed on January 8, 2019, and our consolidated results for the fiscal year ended March 31, 2019 include Shire’s results from January 8, 2019 to March 31, 2019. References to “Legacy Takeda” businesses are to our businesses held prior to our acquisition of Shire. References to “Legacy Shire” businesses are to those businesses acquired through the Shire acquisition.

Furthermore, this presentation refers to Takeda’s Adjusted EBITDA and Shire’s Non-GAAP EBITDA. Takeda’s Adjusted EBITDA is not a measure presented in accordance with IFRS, and Shire’s Non-GAAP EBITDA is not a measure presented in accordance with U.S. GAAP. The most closely comparable measure presented in accordance with IFRS (for Takeda) is net profit for the year and in accordance with U.S. GAAP (for Shire) is net income. Please see slides 58 and 74 for a further description of Takeda’s Adjusted EBITDA and Shire’s Non-GAAP EBITDA and a reconciliation to the respective most closely comparable measures presented in accordance with IFRS and U.S. GAAP. Takeda’s Adjusted EBITDA and Shire’s Non-GAAP EBITDA are not directly comparable, because (1) Takeda’s results are based on IFRS and Shire’s results are based on U.S. GAAP and (2) Takeda’s Adjusted EBITDA and Shire’s Non-GAAP EBITDA are defined differently.

Contacts

Investor Relations
Takeda Pharmaceutical Company Limited
Takashi Okubo, +81-(0)3-3278-2306
takeda.ir.contact@takeda.com

Media Relations
Takeda Pharmaceutical Company Limited
Kazumi Kobayashi, +81 (0)3-3278-2095
kazumi.kobayashi@takeda.com