ACTELION DELIVERS STRONG NINE MONTHS RESULTS

ACTELION DELIVERS STRONG NINE MONTHS RESULTS

ALLSCHWIL/BASEL, SWITZERLAND - 21 October 2014 - Actelion Ltd (SIX: ATLN) today announced its results for the first nine months of 2014.

PRODUCT HIGHLIGHTS
Opsumit - strong uptake in all markets launched
Selexipag - regulatory US/EU filing in coming months
Tracleer - solid sales in non-Opsumit markets
Veletri -  rapidly becoming i.v. epoprostenol of choice

FINANCIAL HIGHLIGHTS
Product sales of CHF 1,488 million, up 17% at Constant Exchange Rates (CER)
Core earnings of CHF 630 million, up 34% at CER (up 21% ex US rebate reversals)
Core EPS of CHF 4.77, an increase of 42% at CER
Upgraded 2014 financial guidance - Core earnings growth now expected to be in the low twenties percentage range at CER
 
      % variance
in CHF million
(except for per share data) 9M 2014 9M 2013  in CHF at CER(1)
Total product sales 1,488 1,322 13 17
US-GAAP Operating income 519 397 31 39
Core earnings (Core operating income) 630 496 27 34
US-GAAP EPS (fully diluted) 4.87 2.65 84 95
Core EPS (fully diluted) 4.77 3.54 35 42

As of 30 September 2014, Actelion had cash and cash equivalents of CHF 1.1 billion. In addition, Actelion holds 3 million treasury shares.

(1) CER percentage changes are calculated by reconsolidating both the 9M 2014 and 9M 2013 results at constant currencies (the average monthly exchange rates for 9M 2013).

Jean-Paul Clozel, MD, Chief Executive Officer, commented: "Actelion continues to make significant progress. We are launching Opsumit successfully around the globe and we are very close to filing selexipag with healthcare authorities in the EU and the US. With these two new assets we can strengthen our leadership in PAH and continue to create value for all stakeholders."
Otto Schwarz, Chief Operating Officer, commented: "With sales of CHF 59 million during the third quarter 2014, Opsumit's strong launch momentum continues as we gain ERA market share and continue to roll out the product in all major markets. Opsumit's highly differentiated label drives its rapid adoption in daily medical practice. By the end of the third quarter, Opsumit was available to patients in 16 markets including the most recent additions: Australia, Belgium, Iceland, Italy, and Luxembourg."
André C. Muller, Chief Financial Officer, commented: "Strong product sales across the portfolio and around the globe, as well as ongoing cost control have resulted in core earnings growth of 21 percent - excluding the impact of reversals for US rebates accrued in prior years. These strong results have again increased our expectations for core earnings growth for the full year."
Barring unforeseen events, Actelion now expects 2014 core earnings growth to be in the low twenties percentage range at constant exchange rates. Excluding the impact of US rebate reversals, Actelion now expects 2014 core earnings growth to be in the mid-teen percentage range, also at constant exchange rates. Actelion will review its 2015 guidance early next year.

FINANCIAL REVIEW

CORE PERFORMANCE
Actelion continues to measure, report and issue guidance on its core operating results, which more accurately reflect the underlying business performance.
Core results exclude contract revenues, as well as costs related to employee stock-based compensation programs, depreciation, amortization, impairments, certain income tax effects and other items that management deems exceptional.
A full reconciliation between US GAAP and core results can be found on www.actelion.com.

Key highlights - year-to-date
      % variance
in CHF million 9M 2014 9M 2013 in CHF at CER(1)
Total product sales 1,488 1,322 13 17
Core R&D expenditure 254 251 1 3
Core earnings(2) 630 496 27 34
Core net income 554 407 36 43
Diluted core EPS (CHF)(3) 4.77 3.54 35 42
 
Key highlights - quarterly
      % variance
in CHF million Q3 2014 Q3 2013 in CHF at CER(1)
Total product sales 496 438 13 16
Core R&D expenditure 88 83 6 7
Core earnings(2) 209 165 27 31
Core net income 176 137 28 32
Diluted core EPS (CHF)(3) 1.52 1.20 27 31

CER percentage changes are calculated by reconsolidating both the CY 2014 and PY 2013 results at constant exchange rates (the average monthly exchange rates PY 2013).
Actelion continues to measure, report and issue guidance on its core 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 to investors. These non-GAAP measures are reported in addition to, not as a substitute for, US GAAP financial performance.
Core EPS for 9M 2013 was recalculated to apply the prevailing tax rate for each adjustment (formerly CHF 3.60, using an average blended rate).

PRODUCT SALES
Product sales for the first nine months of 2014 were CHF 1,488 million, up 17% at CER compared to the first nine months of 2013. Excluding the net impact  (CHF 69 million) at CER of US rebate reversals (9M 2014: CHF 74 million; 9M 2013: CHF 8 million), product sales increased by 12% at CER.
Sales by product - year-to-date
      % variance
in CHF million 9M 2014 9M 2013 in CHF at CER
Opsumit 112 0 - -
Tracleer 1,153 1,138 1 5
Veletri 46 25 82 93
Ventavis 86 83 4 8
Valchlor 7 0 - -
Zavesca 81 73 12 15
Others 4 3 - -
Total product sales 1,488 1,322 13 17

Sales by product - quarterly
      % variance
in CHF million Q3 2014 Q3 2013 in CHF at CER
Opsumit 59 0 - -
Tracleer 361 371 (3) (1)
Veletri 16 11 43 48
Ventavis 28 30 (6) (4)
Valchlor 4 0 - -
Zavesca 27 25 9 11
Others 1 1 - -
Total product sales 496 438 13 16

Sales by region - year-to-date
      % variance
in CHF million 9M 2014 9M 2013 in CHF at CER
United States 673 560 20 25
Europe 542 496 9 11
Japan 136 137 (1) 11
Rest of the world 138 130 6 12
Total product sales 1,488 1,322 13 17

Sales by region - quarterly
      % variance
in CHF million Q3 2014 Q3 2013 in CHF at CER
United States 231 193 20 22
Europe 174 159 10 12
Japan 44 46 (5) 2
Rest of the world 47 41 16 17
Total product sales 496 438 13 16
PAH franchise
Opsumit®
Opsumit (macitentan) sales for the first nine months of 2014 amounted to CHF 112 million, reflecting a strong momentum in all markets where the product has been launched with reimbursement. Global launch activities are progressing rapidly with launches in Australia, Belgium, Iceland, Italy and Luxembourg during the third quarter. To date, Opsumit has been successfully introduced in the US, Germany, Austria (reimbursement achieved 1 Sep 2014), Switzerland, Canada, the UK, Ireland, Denmark, Norway, Sweden, the Netherlands, Luxembourg, Iceland, Italy, Belgium and Australia. Launches are planned in France, Spain, and Japan, among other countries, in 2015.
Tracleer®
Tracleer (bosentan) sales amounted to CHF 1,153 million for the first nine months of 2014, an increase of 5% at CER compared to the same period in 2013. This increase was largely the result of US rebate reversals related to patient assistance programs, as well as US price increases. Demand for Tracleer in markets where Opsumit is not yet available remains solid. Overall, underlying units were flat compared to the same period last year. Actelion's branded bosentan generic, Stayveer®, was successfully launched by Marklas in Poland and the Czech Republic.
Veletri®
Veletri (epoprostenol for injection) sales amounted to CHF 46 million for the first nine months of 2014, an increase of 93% at CER compared to the same period in 2013. This increase was driven by continued strong uptake in Japan (as Epoprostenol "ACT"), and supported by an increasing share of the intravenous epoprostenol market in the US as well as launches in various European markets during the first half of 2014 and, in Australia, where the product was launched in the third quarter of 2014.
Ventavis®
Ventavis (iloprost) had sales in the US of CHF 86 million for the first nine months of 2014, an increase of 8% at CER. This increase was driven entirely by price and rebate reversals, as sales volumes continue to be eroded by competitive pressures. These pressures are expected to intensify as a consequence of potential generic entries, but Actelion is ready to defend its position in the market.
Specialty Products
Valchlor®
Valchlor (mechlorethamine) sales for the first nine months of 2014 amounted to CHF 7 million. Valchlor was first launched in the US in November 2013 for Stage IA and IB mycosis fungoides-type cutaneous T-cell lymphoma (CTCL) in patients who have received prior skin-directed therapy. In March 2014, the expansion of the sales team was completed, and the company is now working with dermatologists beyond the CTCL Centers of Excellence.
Zavesca®
Zavesca (miglustat) sales amounted to CHF 81 million for the first nine months of 2014, an increase of 15% at CER compared to the same period in 2013. This performance was driven predominantly by strong patient demand outside the US in the Niemann-Pick type C indication. In the type 1 Gaucher disease market, the performance of Zavesca remains strong, with relatively stable demand and positive price movement in the US.
A generic miglustat - for the type 1 Gaucher disease (GD1) indication only - has been approved in Spain and Denmark. Further national approvals are expected to follow. Hence, in these markets generic competition has to be expected later in Q4 and in 2015. In Europe, less than 25% of all patients receiving Zavesca are treated for GD1 disease. The company is preparing to protect its Niemann-Pick Type C (NP-C) business, which still has orphan drug protection for several years.

CORE OPERATING EXPENSES
      % variance
in CHF million 9M 2014 9M 2013 in CHF at CER
Core cost of sales 155 154 1 4
Core R&D expenses 254 251 1 3
Core SG&A expenses 449 421 6 10
Core operating expenses 858 827 4 7
Core cost of sales
Core cost of sales for the first nine months of 2014 amounted to CHF 155 million, an increase of 4% at CER compared to the same period in 2013, in-line with higher product sales.

Core R&D expenses
Core R&D expenses - which exclude stock-based compensation expenses, amortization and depreciation - were CHF 254 million for the first nine months of 2014, an increase of 3% at CER compared to the same period of 2013, as clinical development costs increased slightly.

Core SG&A expenses
Core selling, general and administration expenses - which exclude stock-based compensation expenses, amortization, depreciation and the impact of doubtful debt provisions - were CHF 449 million for the first nine months of 2014, an increase of 10% at CER compared to the same period of 2013. This increase was driven entirely by costs related to the launches of Opsumit, Valchlor and Veletri in various markets around the globe. The G&A portion continues to remain flat, as Actelion carefully manages operating expenses.

CORE EARNINGS
      % variance
in CHF million 9M 2014 9M 2013 in CHF at CER
Product sales 1,488 1,322 13 17
Core operating expenses (858) (827) 4 7
Core earnings 630 496 27 34

Core earnings amounted to CHF 630 million for the first nine months of 2014, compared to CHF 496 million during the same period of 2013, an increase of 34% at CER. Excluding the net core earnings impact (at CER) of CHF 63 million US rebate reversals (9M 2014: CHF 67 million; 9M 2013: CHF 7 million), core earnings rose by 21%, driven by a solid underlying operational performance and a continued focus on cost management.

CORE NET INCOME AND CORE EARNINGS PER SHARE
      % variance
in CHF million 9M 2014 9M 2013 in CHF at CER
Core earnings 630 496 27 34
Core financial expenses (10) (10) - -
Core tax expenses (67) (78) - -
Core net income 554 407 36 43
Diluted core EPS (CHF) 4.77 3.54 35 42
A full reconciliation between US GAAP and core results is available from www.actelion.com.
The core financial result is mainly composed of the interest expense of CHF 8 million on the CHF 235 million bond, as well as a net loss of CHF 2 million from hedging and valuation positions.
The core tax expense of CHF 67 million translates into a core tax rate of 11%. This tax rate is a result of a mix of profit in the main countries in which the company operates.
Diluted core earnings per share were CHF 4.77 for the first nine months of 2014, an increase of 42% at CER compared to the same period of 2013. Core EPS for the first nine months of 2013 of CHF 3.54 was recalculated to apply the prevailing tax rate for each adjustment (formerly CHF 3.60, using an average blended rate).

US GAAP RESULTS
      % variance
in CHF million 9M 2014 9M 2013 in CHF at CER
Net revenue 1,490 1,324 13 17
Operating income 519 397 31 39
Net income 566 304 86 97
Basic earnings per share (CHF) 5.09 2.73 87 98
Diluted earnings per share (CHF) 4.87 2.65 84 95

US GAAP operating income includes the following items excluded from core earnings (core operating income):
Depreciation and amortization of CHF 75 million (9M 2013: CHF 58 million)
Stock-based compensation expenses of CHF 38 million (9M 2013: CHF 37 million)
Reversal of doubtful debt allowance of CHF 2 million (9M 2013: CHF 10 million)
Accretion expenses of CHF 1 million related to the Valchlor contingent consideration
Operating income for 9M 2013 included an arbitration settlement of CHF 13 million

US GAAP net income includes the following items excluded from core net income:
Interest of CHF 10 million on the concluded Asahi litigation
Tax benefit of CHF 121 million due to release of the US valuation allowance related to the Asahi litigation
Tax effect of CHF 11 million on non-core operating expenses (9M 2013: CHF 26 million)

CASH FLOW RECONCILED WITH NET CASH POSITION*
*Unrestricted net cash position includes unrestricted cash and cash equivalents plus short-term deposits minus long-term financial debt.
in CHF million Nine months ended 30 September 2014 Nine months ended 30 September 2013
Operating cash flow (excluding litigation settlement) 455 445
Acquisition of tangible, intangible and other assets (21) (20)
Acquisition of a business - (226)
Litigation settlement (458) -
Operating free cash flow (24) 199
Cash released (restricted) for litigation 609 (250)
Dividend (133) (113)
Second-line share repurchase program - (417)
First-line share purchase (449) 97
Proceeds from exercises of stock options 206 148
Other items 19 (5)
Free cash flow 227 (341)
Rounding differences may occur.
Operating cash flow excluding the litigation settlement remained strong at CHF 455 million during the first nine months of 2014.
The company paid a litigation settlement of CHF 458 million in March 2014, out of restricted cash of CHF 609 million. The remainder has been released.
On 15 May 2014, Actelion paid a dividend of CHF 1.20 per share amounting to a total of  CHF 133 million to its shareholders.
The company bought 4.8 million shares (CHF 449 million) during the first nine months of 2014 in connection with the first line share purchase program announced in December 2013 in order to manage the dilution arising from stock-based compensation. During the first nine months of 2014, Actelion employees exercised 4 million stock options resulting in proceeds of CHF 206 million.
Free cash flow amounted for the first nine months of 2014 to CHF 227 million, resulting in an unrestricted gross cash position of CHF 1,105 million and unrestricted net cash position of  CHF 870 million.

ABBREVIATED BALANCE SHEET
in CHF million Nine months ended 30 September 2014 Twelve months ended 31 December 2013 Variance in CHF
Gross cash position* - Unrestricted 1,105 878 227
Gross cash position - Restricted - 613 (613)
Trade and other receivables, net 438 406 32
Other current assets 94 123 (29)
Tangible assets 365 381 (16)
Intangible assets 447 465 (19)
Goodwill 132 126 6
Other non-current assets 148 38 110
Total assets 2,729 3,030 (301)
Litigation provision - 456 (456)
Other current liabilities 415 516 (101)
Financial debt 235 235 0
Other non-current liabilities 123 114 10
Total liabilities 773 1,321 (548)
Share capital and accumulated reserves 2,225 2,252 (26)
Treasury shares (270) (543) 273
Total shareholders' equity 1,955 1,709 246
Total liabilities and shareholders' equity 2,729 3,030 (301)
*Gross cash position includes cash, cash equivalents and short-term deposits.
Rounding differences may occur.

CLINICAL DEVELOPMENT UPDATE
Actelion's promising R&D pipeline comprises novel compounds addressing a broad range of diseases, including cardiovascular and immunological disorders as well as central nervous system disorders and infectious disease.
Actelion's late-stage product candidates includes the novel antibiotic cadazolid under investigation for Clostridium difficile-associated diarrhea (CDAD).

Phase Compound Indication Study Status
III Selexipag Pulmonary arterial hypertension GRIPHON Filing in preparation
III Cadazolid Clostridium difficile-associated diarrhea IMPACT Ongoing
III Macitentan Eisenmenger syndrome MAESTRO Ongoing
II Ponesimod Multiple sclerosis Extension study Ongoing
II Macitentan CTEPH MERIT Ongoing
I Lucerastat Lipid storage disorders - Phase II in preparation
I Macitentan Glioblastoma - Ongoing
I S1P1 modulator Immunological disorders - Ongoing

UPCOMING EVENTS
FY 2014 Financial Results reporting on 16 February 2015
3M 2015 Financial Results reporting on 21 April 2015
Annual General Meeting 2015 on 08 May 2015
HY  2015 Financial Results reporting on 21 July 2015

###

NOTES TO EDITORS

ABOUT ACTELION LTD.
Actelion Ltd. is a leading biopharmaceutical company focused on the discovery, development and commercialization of innovative drugs for diseases with significant unmet medical needs.
Actelion is a leader in the field of pulmonary arterial hypertension (PAH). Our portfolio of PAH treatments covers the spectrum of disease, from WHO Functional Class (FC) II through to FC IV, with oral, inhaled and intravenous medications. Although not available in all countries, Actelion has treatments approved by health authorities for a number of specialist diseases including Type 1 Gaucher disease, Niemann-Pick type C disease, Digital Ulcers in patients suffering from systemic sclerosis, and mycosis fungoides type cutaneous T-cell lymphoma.
Founded in late 1997, with now over 2,400 dedicated professionals covering all key markets around the world including Europe, the US, Japan, China, Russia and Mexico, Actelion has its corporate headquarters in Allschwil / Basel, Switzerland
Actelion shares are traded on the SIX Swiss Exchange (ticker symbol: ATLN) as part of the Swiss blue-chip index SMI (Swiss Market Index SMI®). All trademarks are legally protected.

For further information please contact:
Andrew Weiss
Senior Vice President, Head of Investor Relations & Corporate Communications
Actelion Pharmaceuticals Ltd, Gewerbestrasse 16, CH-4123 Allschwil
+41 61 565 62 62
www.actelion.com

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