Financial overview

Business highlights

• Transaction with Sosei Heptares: Idorsia sells its Asia Pacific (ex-China) operations – including selected license rights to products – for a total consideration of CHF 400 million.
• Cost reduction initiative with the target of a reduction in cash-burn at headquarters by approximately 50% expected to become fully effective in early 2024.

Commercial highlights

• QUVIVIQ™ (daridorexant): Total net sales of CHF 11.8 million in the first half 2023.
• QUVIVIQ in the US: CVS coverage secured in July 2023 – with Express Scripts QUVIVIQ is now covered by two of the largest insurance plans in the commercial space. Bids submitted for Medicare Part-D with expected coverage in the new year. Team now focused on converting strong demand into sales.
• QUVIVIQ in Europe: Demand continues to grow in Germany and Italy. Promising launch in Switzerland in June 2023.
• PIVLAZ^® (clazosentan) in Japan: Net sales of CHF 32.4 million in the first half 2023. As a result of the Sosei Heptares deal, Idorsia will no longer report sales of PIVLAZ in Japan and territories granted to Sosei Heptares.

Pipeline highlights

• Daridorexant – Approved by Health Canada for the management of adult patients with insomnia under the tradename QUVIVIQ.
• Aprocitentan – New Phase 3 data presented at the European Society of Hypertension Annual Meeting 2023 – NDA under review with the US FDA – PDUFA December 19, 2023 – and MAA under review with the European Medicines Agency.
• Portfolio review initiated – Objective to prioritize assets that can be advanced rapidly and with reasonable financial investment.

Financial highlights

• Net revenue HY 2023 at CHF 51 million.
• US GAAP operating expenses HY 2023 at CHF 426 million and non-GAAP operating expenses HY 2023 at CHF 393 million.
• Guidance for 2023: The company is committed to manage operating expenses to deliver
  US GAAP operating loss of around CHF 735 million and non-GAAP operating loss of around CHF 650 million – unforeseen events excluded.
• Profitability target: Suspended – target to be provided again during 2024.

US GAAP results

US GAAP net revenue of CHF 51 million in the first half of 2023 (CHF 22 million in the first half of 2022) consisted of product sales of QUVIVIQ (CHF 12 million) and PIVLAZ (CHF 32 million), contract revenue recognized in connection with Mochida Pharmaceutical Co., Ltd (CHF 3 million) and Neurocrine Biosciences, Inc. (CHF 2 million), and revenue share from Johnson & Johnson (CHF 2 million).

US GAAP operating expenses in the first half of 2023 amounted to CHF 426 million (CHF 427 million in the first half of 2022), of which CHF 5 million related to cost of sales (CHF 1 million in the first half of 2022), CHF 172 million to R&D expenses (CHF 192 million in the first half of 2022) and CHF 249 million to SG&A expenses (CHF 234 million in the first half of 2022).

US GAAP net loss in the first half of 2023 amounted to CHF 405 million (CHF 419 million in the first half of 2022). The decrease of the net loss was driven by higher net revenues and lower operating expenses, largely in the R&D functions, which was partially offset by higher financial expenses.

The US GAAP net loss resulted in a net loss per share of CHF 2.28 (basic and diluted) in the first half of 2023, compared to a net loss per share of CHF 2.36 (basic and diluted) in the first half of 2022.

Non-GAAP* measures

* Idorsia measures, reports and issues guidance on non-GAAP operating performance. Idorsia believes that these non-GAAP financial measurements more accurately reflect the underlying business performance and therefore provide useful supplementary information to investors. These non-GAAP measures are reported in addition to, not as a substitute for, US GAAP financial performance.

Non-GAAP net loss in the first half of 2023 amounted to CHF 369 million: the CHF 36 million difference versus US GAAP net loss was mainly due to depreciation and amortization (CHF 8 million), share-based compensation (CHF 24 million), and a loss on marketable securities (CHF 5 million).

The non-GAAP net loss resulted in a net loss per share of CHF 2.07 (basic and diluted) in the first half of 2023, compared to a net loss per share of CHF 2.23 (basic and diluted) in the first half of 2022.

Transaction with Sosei Heptares
On July 20, 2023, Idorsia sold its operating businesses in the Asia Pacific (ex-China) region to Sosei Heptares for a total consideration of CHF 400 million.

The territories within the scope of the transaction are Australia, Brunei, Cambodia, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea, Thailand, Taiwan, and Vietnam.

The transaction includes the acquisition by Sosei Heptares of Idorsia’s affiliates in Japan and South Korea, the assignment of the license for PIVLAZ (clazosentan) for the Asia Pacific (ex-China) region, the co-exclusive license for daridorexant for the Asia Pacific (ex-China) region and the assignment of all potential milestones in connection with the co-exclusive license of daridorexant granted to Mochida Pharmaceutical. The transaction also includes an option for Sosei Heptares – upon payment of separate option fees – to license cenerimod and lucerastat for the development and commercialization in the territories.

With the completion of the transaction with Sosei Heptares on July 20, 2023, the full-year financial operating results of Idorsia will no longer include details from the operations in Japan and South Korea. The net sales, operating expenses and other financial and tax expenses incurred in the first 6.5 months, as well as the gain from the sale will be recorded on separate line items “results of discontinued operations” and “gain from sale of discontinued operations” recorded below the line item “net income (loss) from continuing operations”.

Bridge loan

In order to bridge the completion of the transaction with Sosei Heptares, Idorsia secured a loan with Jean-Paul Clozel, CEO, Member of the Board of Directors and Idorsia’s largest shareholder, for up to CHF 75 million. Idorsia drew down a first tranche of CHF 20 million in June and an additional tranche of CHF 30 million in July. The loan was fully repaid on July 21, 2023.

Cost reduction initiative

On July 21, 2023, Idorsia announced that it has launched a cost reduction initiative with the target to reduce cash-burn at headquarters by approximately 50%. The company will review the research and development pipeline and product portfolio with the objective to prioritize assets that can be advanced rapidly and with reasonable financial investment. Following the portfolio review, those projects not aligned to the company priorities will be either paused or prepared for partnership or out-licensing.

Up to 500 positions could become redundant, mainly in Research & Development and the associated support functions, at headquarters in Allschwil, Switzerland. A consultation process with employee representatives at headquarters has been initiated. Upon completion of the consultation process, Idorsia intends to conclude the initiative before the end of 2023 with the reduction of costs becoming fully effective early in 2024.

Consequently, a one-off charge – the size of which is still to be determined, in part, upon conclusion of employee representative consultations – will be included in the 2023 financial statements.

Profitability Target

Idorsia had set a target to become profitable in 2025 with global revenue above CHF 1 billion. With the transaction with Sosei Heptares in the APAC (ex-China) region, a slower than expected ramp up of QUVIVIQ sales, a portfolio review and ongoing discussions with potential partners, together with the announced cost reduction initiative, there are many moving parts, and the company has therefore suspended its 2025 profitability target.