Key Updates

Business highlights

  • Positive results in the second pivotal Phase 3 study of daridorexant
  • Results from the first pivotal Phase 3 study of daridorexant presented at SLEEP 2020
  • Daridorexant dose response in Japanese patients with insomnia confirmed
  • Commercial preparation advancing:
    • US commercial operations and leadership team established
    • Syneos Health appointed as commercialization partner to launch daridorexant in the US
  • Issuance of 23.8 million new shares receiving gross proceeds of CHF 535.5 million – increased liquidity will be used to prepare for the launch of daridorexant and further fund Idorsia’s diversified pipeline

Financial highlights

  • US GAAP operating expenses 9M 2020 at CHF 354 million
  • Non-GAAP operating expenses 9M 2020 at CHF 302 million
  • Updated guidance for 2020: US GAAP operating expenses around CHF 500 million and non-GAAP operating expenses around CHF 460 million (both measures exclude unforeseen events, potential milestone payments and any potential payments related to the Axovan arbitration)

Financial Results as of September 30, 2020

US GAAP results

 

Nine Months

Third Quarter

in CHF millions, except EPS (CHF) and number of shares (millions)

2020

2019

2020

2019

Revenues

66

20

8

7

Operating expenses

(354)

(375)

(118)

(123)

Operating income (loss)

(288)

(355)

(110)

(116)

Net income (loss)

(308)

(352)

(118)

(120)

Basic EPS

(2.25)

(2.68)

(0.83)

(0.91)

Basic weighted average number of shares

136.8

131.2

142.6

131.2

Diluted EPS

(2.25)

(2.68)

(0.83)

(0.91)

Diluted weighted average number of shares

136.8

131.2

142.6

131.2

 

US GAAP revenue of CHF 66 million in the first nine months of 2020 consisted of contract revenue recognized in connection with the collaboration agreements with Neurocrine Biosciences, Inc. (CHF 49 million), Janssen Biotech, Inc. (CHF 8 million), Roche (CHF 4 million), Mochida Pharmaceutical Co., Ltd (CHF 3 million) and Santhera Pharmaceuticals Ltd (CHF 2 million) – see further update with regards to Santhera below – compared to a revenue of CHF 20 million in the first nine months of 2019.

US GAAP operating expenses in the first nine months of 2020 amounted to CHF 354 million (CHF 375 million in 9M 2019), of which CHF 290 million relates to R&D (CHF 327 million in 9M 2019), which includes a one-off expense of CHF 32 million as explained in the legal update in the HY 2020 financial reporting and repeated below, and CHF 64 million to SG&A expenses (CHF 47 million in 9M 2019).

US GAAP net loss in the first nine months of 2020 amounted to CHF 308 million compared to CHF 352 million in the first nine months of 2019. The decrease of the net loss was mainly driven by higher contract revenues and lower operating expenses.

The US GAAP net loss resulted in a net loss per share of CHF 2.25 (basic and diluted) in the first nine months of 2020 compared to a net loss per share of CHF 2.68 (basic and diluted) in the first nine months of 2019.

Non-GAAP* measures

 

Nine Months

Third Quarter

in CHF millions, except EPS (CHF) and number of shares (millions)

2020

2019

2020

2019

Revenues

66

20

8

7

Operating expenses

(302)

(347)

(109)

(113)

Operating income (loss)

(236)

(328)

(102)

(107)

Net income (loss)

(245)

(326)

(107)

(104)

Basic EPS

(1.79)

(2.49)

(0.75)

(0.79)

Basic weighted average number of shares

136.8

131.2

142.6

131.2

Diluted EPS

(1.79)

(2.49)

(0.75)

(0.79)

Diluted weighted average number of shares

136.8

131.2

142.6

131.2

* 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 nine months of 2020 amounted to CHF 245 million: the CHF 63 million difference versus US GAAP net loss was mainly due to depreciation and amortization (CHF 14 million), share-based compensation (CHF 16 million), an accrual in relation to the ongoing arbitration as explained below (CHF 23 million) and a negative non-cash financial result (CHF 11 million).

The non-GAAP net loss resulted in a net loss per share of CHF 1.79 (basic and diluted) in the first nine months of 2020 compared to a net loss per share of CHF 2.49 (basic and diluted) in the first nine months of 2019.

Legal update on milestones regarding clazosentan and related ongoing arbitration

Following the demerger from Actelion and the transfer of a share purchase agreement with the former shareholders Axovan Ltd. (the "Axovan vendors"), Idorsia holds a license agreement to develop and commercialize clazosentan.

In 2018, approximately 65% of Axovan vendors (Claimants) entered an arbitration against Actelion claiming that the acquisition of Actelion by J&J and/or the demerger triggers the accelerated payment of all outstanding milestones under the license agreement. These claims are being vigorously contested by Actelion and by Idorsia, which is required pursuant to the demerger agreement to indemnify Actelion in respect of the claims.

In the first half 2020, Idorsia acquired all outstanding future milestone claims from approximately 26% of Axovan vendors at around 30% of their potential nominal value for a one-time payment of CHF 9 million. The company assessed that this transaction with non-claimants is the best estimate to assess all other vendors’ claims, resulting in an accrual of CHF 23 million and a total R&D expense CHF 32 million. At this stage, it is difficult to predict the outcome of the ongoing arbitration which is substantially completed. This accrual may or may not cover the outcome of the ongoing arbitration that could result in a payment between CHF 0 and CHF 94 million.

Update on Santhera

Idorsia currently owns 1.7 million shares in Santhera. Idorsia recognized in its financial statements ending 30 September 2020 contract revenue of CHF 2.4 million corresponding to the fair market value of 336,667 Santhera shares, with CHF 10 milllion of an exchangeable note not being recorded as contract revenue since its recoverability will depend on Santhera's ability to raise sufficient cash. For the nine months ended 30 September 2020, Idorsia booked in its financial result an unrealized loss of CHF 6.8 million corresponding to the change in the fair market value of its 1.7 million Santhera shares.

Financial Guidance

“We confirm the outlook issued ahead of the capital increase on October 8, 2020, anticipating non-GAAP operating expenses for 2020 of 460 million Swiss francs – excluding unforeseen events, potential milestone payments and any payments related to the Axovan arbitration. The lower spend was mainly caused by COVID-19 which initially impacted the recruitment pace in our late-stage pipeline studies. Furthermore, the capital increase was a great success broadening our shareholder base as well as extending our cash runway well into the launch of daridorexant. Moving forward, other financing instruments should become available to fund the company until break-even.” (October 2020)

André C. Muller
Chief Financial Officer

Financial Charts

Financial charts for the first nine months of 2020 are presented in the company presentation.