Horizon Therapeutics Plc 2020 Irish Statutory Accounts
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Horizon Therapeutics plc 2020 Irish Statutory Accounts (“Irish Annual Report”) CONTENTS Page DIRECTORS AND OTHER INFORMATION 2 DIRECTORS' REPORT 3 – 87 INDEPENDENT AUDITOR’S REPORT 88 – 94 CONSOLIDATED PROFIT AND LOSS ACCOUNT 95 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 96 CONSOLIDATED BALANCE SHEET 97 – 98 CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY 99 CONSOLIDATED STATEMENT OF CASH FLOWS 100 – 101 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 102 – 155 PARENT COMPANY FINANCIAL STATEMENTS 156 – 168 DIRECTORS AND OTHER INFORMATION Board of Directors at December 31, 2020 Timothy Walbert Michael Grey William F. Daniel Jeff Himawan, Ph.D. Susan Mahony, Ph.D. Gino Santini James Shannon, M.D. H. Thomas Watkins Pascale Witz Secretary and Registered Office Jennifer Lee Connaught House 1st Floor 1 Burlington Road Dublin 4 D04 C5Y6 Ireland Registered Number: 507678 Auditor PricewaterhouseCoopers Chartered Accountants and Statutory Audit Firm One Spencer Dock North Wall Quay Dublin 1 D01 X9R7 Ireland Solicitor Matheson 70 Sir John Rogerson’s Quay Grand Canal Dock Dublin 2 D02 R296 Ireland 2 DIRECTORS’ REPORT The directors present their report and the audited financial statements of the Company (as defined below) for the financial year ended December 31, 2020. Basis of Presentation The Company is a public limited company formed under the laws of Ireland. The Company operates through a number of international and U.S. subsidiaries with principal business purposes to either perform research and development or manufacturing operations, serve as distributors of the Company’s medicines, hold intellectual property assets or provide services and financial support to the Company. The directors have elected to prepare the consolidated financial statements in accordance with Section 279 of the Companies Act 2014, which provides that a true and fair view of the state of affairs and profit or loss may be given by preparing the financial statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), as defined in Section 279 of the Companies Act 2014, to the extent that the use of those principles in the preparation of the financial statements does not contravene any provision of the Irish Companies Acts (collectively, the “Companies Act”) or of any regulations made thereunder. Principal Activities Unless otherwise indicated or the context otherwise requires, references to the “Company”, “Horizon”, “we”, “us” and “our” refer to Horizon Therapeutics plc and its consolidated subsidiaries. We are focused on researching, developing and commercializing medicines that address critical needs for people impacted by rare, autoimmune and serious inflammatory diseases. Our pipeline is purposeful: it applies scientific expertise and courage to bring clinically meaningful therapies to patients. Horizon believes science and compassion must work together to transform lives. We have two reportable segments, the orphan segment and the inflammation segment. As of December 31, 2020, our portfolio consisted of eleven medicines in the areas of rare disease, gout, ophthalmology and inflammation. Effective in the first quarter of 2020, we (i) reorganized our commercial operations and moved responsibility ® for and reporting of RAYOS to the inflammation segment and (ii) renamed the orphan and rheumatology segment the orphan segment. Turnover generated by TEPEZZA®, which was approved by the U.S. Food and Drug Administration (“FDA”) on January 21, 2020, are reported as part of the renamed orphan segment. As of December 31, 2020, our marketed medicines portfolio consisted of the following: Orphan TEPEZZA (teprotumumab-trbw), for intravenous infusion KRYSTEXXA® (pegloticase injection), for intravenous infusion RAVICTI® (glycerol phenylbutyrate) oral liquid PROCYSBI® (cysteamine bitartrate) delayed-release capsules and granules, for oral use ACTIMMUNE® (interferon gamma-1b) injection, for subcutaneous use BUPHENYL® (sodium phenylbutyrate) tablets and powder, for oral use QUINSAIR™ (levofloxacin) solution for inhalation Inflammation PENNSAID® (diclofenac sodium topical solution) 2% w/w, (“PENNSAID 2%”), for topical use DUEXIS® (ibuprofen/famotidine) tablets, for oral use RAYOS (prednisone) delayed-release tablets, for oral use VIMOVO® (naproxen/esomeprazole magnesium) delayed-release tablets, for oral use 3 Acquisitions and Divestitures Since January 1, 2019, we completed the following acquisitions and divestitures: • On March 15, 2021, we completed our acquisition of Viela Bio, Inc., or Viela, in which we acquired all of the issued and outstanding shares of Viela’s common stock for $53.00 per share in cash, which represents a fully diluted equity value of approximately $3.05 billion, or approximately $2.67 billion net of Viela’s cash and cash equivalents. Viela has one on-market medicine in the United States and a deep mid-stage biologics pipeline for autoimmune and severe inflammatory diseases, with four candidates currently in nine development programs. See the “Research and Development” section below and Note 30 of the Notes to Consolidated Financial Statements included in this report for further details. • On October 27, 2020, we sold our rights to develop and commercialize RAVICTI and BUPHENYL in Japan to Medical Need Europe AB, part of the Immedica Group, or Immedica. • On April 1, 2020, we acquired Curzion Pharmaceuticals, Inc., or Curzion, a privately held development-stage biopharma company, and its development-stage oral selective lysophosphatidic acid 1 receptor (LPAR1) antagonist, CZN001 (renamed HZN-825), for an upfront payment with additional payments contingent on the achievement of development and regulatory milestones. • On June 28, 2019, we sold our rights to MIGERGOT to Cosette Pharmaceuticals, Inc., for an upfront payment and potential additional contingent consideration payments (the “MIGERGOT transaction”). • Effective January 1, 2019, we amended its license and supply agreements with Jagotec AG and Skyepharma AG, which are affiliates of Vectura Group plc (“Vectura”). Under these amendments, we agreed to transfer all economic benefits of LODOTRA® in Europe to Vectura. Business Review Impact of COVID-19 On March 11, 2020, the World Health Organization made the assessment that a novel strain of coronavirus, which causes the COVID-19 disease, had become a pandemic. On March 13, 2020, The President of the United States declared the COVID-19 pandemic a national emergency and many states and municipalities in the United States took aggressive actions to reduce the spread of the disease, including limiting non-essential gatherings of people, ceasing all non-essential travel, ordering certain businesses and government agencies to cease non-essential operations at physical locations and issuing “shelter-in-place” orders which direct individuals to shelter at their places of residence (subject to limited exceptions). Similarly, the Irish government limited gatherings of people and encouraged employees to work from their homes, and may implement more aggressive policies in the future. In mid-March 2020 we implemented work-from-home policies for all employees and moved to a “virtual” model with respect to our physician, patient and partner support activities. As certain U.S. states started to reduce restrictions, we saw physicians’ offices beginning to reopen, which reopening varied on a state-by-state basis. As a result, our sales representatives in some areas have transitioned to being back out in the field and are working on ways to re-engage patients and physicians. However, as COVID-19 cases have increased in certain areas, certain U.S. states have reimplemented restrictions and some physician offices re-established limits on in-person visits. While our financial results during the year ended December 31, 2020, were strong and we continue to have a significant amount of available liquidity, we anticipate the COVID-19 pandemic to continue to have a negative impact on turnover into 2021. In addition, our clinical trials have been and may in the future be affected by the COVID-19 pandemic as referred to below. Economic and health conditions in the United States and across most of the world are continuing to change rapidly because of the COVID-19 pandemic. Although COVID-19 is a global issue that is altering business and consumer activity, the pharmaceutical industry is considered a critical and essential industry in the United States and many other countries and, therefore, we do not currently expect any significant extended shut downs of suppliers or distribution channels, except for the short-term disruption in TEPEZZA supply described below. In respect of our other medicines, we believe we have sufficient stock of raw materials and finished goods and we expect patients to be able to continue to receive their medicines at a site of care, for our infused medicines, and from their current pharmacies, alternative pharmacies or, if necessary, by direct shipment from our third- party providers that have such capability, for our other medicines. 4 TEPEZZA The launch of our infused medicine for thyroid eye disease, or TED, TEPEZZA, which was approved by the FDA on January 21, 2020, significantly exceeded our expectations. In early 2019, we initiated our pre-launch disease awareness, market development and market access efforts with multi-functional field-based teams beginning to engage with key stakeholders in July of 2019. We believe these pre-launch efforts, the severity and acute nature of TED, and