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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(MARK ONE)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 001-35238

 

HORIZON THERAPEUTICS PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)

 

 

Ireland

 

Not Applicable

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

Connaught House, 1st Floor

1 Burlington Road, Dublin 4, D04 C5Y6, Ireland

 

Not Applicable

(Address of principal executive offices)

 

(Zip Code)

011 353 1 772 2100

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Ordinary shares, nominal value $0.0001 per share

HZNP

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b–2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

  

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Number of registrant’s ordinary shares, nominal value $0.0001, outstanding as of August 1, 2019: 186,447,820

 

 

 

 


HORIZON THERAPEUTICS PLC

INDEX

 

 

 

 

 

Page

 

 

 

No.

PART I. FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements

 

1

 

Condensed Consolidated Balance Sheets as of June 30, 2019 and as of December 31, 2018 (Unaudited)

 

1

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2019 and 2018 (Unaudited)

 

2

 

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2019 and 2018 (Unaudited)

 

3

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018 (Unaudited)

 

4

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

33

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

50

Item 4.

Controls and Procedures

 

51

PART II. OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

 

52

Item 1A.

Risk Factors

 

52

Item 6.

Exhibits

 

96

 

Signatures

 

99

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except share data)

 

 

As of

 

As of

 

 

June 30,

 

December 31,

 

 

2019

 

2018

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

$

865,997

 

$

958,712

 

Restricted cash

 

3,739

 

 

3,405

 

Accounts receivable, net

 

395,018

 

 

464,730

 

Inventories, net

 

51,019

 

 

50,751

 

Prepaid expenses and other current assets

 

85,728

 

 

68,218

 

Total current assets

 

1,401,501

 

 

1,545,816

 

Property and equipment, net

 

24,808

 

 

20,101

 

Developed technology, net

 

1,813,950

 

 

1,945,639

 

Other intangible assets, net

 

4,229

 

 

4,630

 

Goodwill

 

413,669

 

 

413,669

 

Deferred tax assets, net

 

6,080

 

 

3,148

 

Other assets

 

43,767

 

 

8,959

 

Total assets

$

3,708,004

 

$

3,941,962

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Long-term debt—current portion

$

 

$

 

Accounts payable

 

42,672

 

 

30,284

 

Accrued expenses

 

188,192

 

 

215,739

 

Accrued trade discounts and rebates

 

398,657

 

 

457,763

 

Deferred revenues—current portion

 

7,311

 

 

4,901

 

Total current liabilities

 

636,832

 

 

708,687

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

Exchangeable notes, net

 

341,682

 

 

332,199

 

Long-term debt, net of current

 

1,025,096

 

 

1,564,485

 

Deferred tax liabilities, net

 

109,443

 

 

107,768

 

Other long-term liabilities

 

74,078

 

 

38,717

 

Total long-term liabilities

 

1,550,299

 

 

2,043,169

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

Ordinary shares, $0.0001 nominal value; 600,000,000 and 300,000,000 shares authorized at June 30, 2019 and December 31, 2018, respectively;

186,470,230 and 169,244,520 shares issued at June 30, 2019 and December

31, 2018, respectively, and 186,085,864 and 168,860,154 shares outstanding at

June 30, 2019 and December 31, 2018, respectively

 

19

 

 

17

 

Treasury stock, 384,366 ordinary shares at June 30, 2019 and December 31, 2018

 

(4,585

)

 

(4,585

)

Additional paid-in capital

 

2,743,793

 

 

2,374,966

 

Accumulated other comprehensive loss

 

(1,666

)

 

(1,523

)

Accumulated deficit

 

(1,216,688

)

 

(1,178,769

)

Total shareholders’ equity

 

1,520,873

 

 

1,190,106

 

Total liabilities and shareholders' equity

$

3,708,004

 

$

3,941,962

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

1


HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(In thousands, except share and per share data)

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

Net sales

$

320,647

 

 

$

302,835

 

 

$

601,018

 

 

$

526,716

 

 

Cost of goods sold

 

89,163

 

 

 

91,337

 

 

 

177,305

 

 

 

201,625

 

 

Gross profit

 

231,484

 

 

 

211,498

 

 

 

423,713

 

 

 

325,091

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

28,314

 

 

 

24,265

 

 

 

50,039

 

 

 

41,910

 

 

Selling, general and administrative

 

167,095

 

 

 

176,674

 

 

 

339,394

 

 

 

356,273

 

 

Loss on sale of assets

 

10,963

 

 

 

 

 

 

10,963

 

 

 

 

 

Impairment of long-lived assets

 

 

 

 

 

 

 

 

 

 

33,647

 

 

Total operating expenses

 

206,372

 

 

 

200,939

 

 

 

400,396

 

 

 

431,830

 

 

Operating income (loss)

 

25,112

 

 

 

10,559

 

 

 

23,317

 

 

 

(106,739

)

 

OTHER EXPENSE, NET:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(22,033

)

 

 

(31,030

)

 

 

(49,563

)

 

 

(61,484

)

 

Loss on debt extinguishment

 

(11,878

)

 

 

 

 

 

(17,464

)

 

 

 

 

Foreign exchange gain (loss)

 

76

 

 

 

(5

)

 

 

15

 

 

 

(115

)

 

Other (expense) income, net

 

(1,272

)

 

 

346

 

 

 

(1,083

)

 

 

497

 

 

Total other expense, net

 

(35,107

)

 

 

(30,689

)

 

 

(68,095

)

 

 

(61,102

)

 

Loss before (benefit) expense for income taxes

 

(9,995

)

 

 

(20,130

)

 

 

(44,778

)

 

 

(167,841

)

 

(Benefit) expense for income taxes

 

(4,875

)

 

 

4,621

 

 

 

(6,795

)

 

 

5,566

 

 

Net loss

$

(5,120

)

 

$

(24,751

)

 

$

(37,983

)

 

$

(173,407

)

 

Net loss per ordinary share—basic and diluted

$

(0.03

)

 

$

(0.15

)

 

$

(0.21

)

 

$

(1.05

)

 

Weighted average ordinary shares outstanding—basic and diluted

 

185,327,383

 

 

 

165,536,826

 

 

 

178,866,391

 

 

 

164,921,722

 

 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

$

344

 

 

$

(897

)

 

$

(143

)

 

$

(434

)

 

Pension remeasurements

 

 

 

 

289

 

 

 

 

 

 

289

 

 

Other comprehensive income (loss)

 

344

 

 

 

(608

)

 

 

(143

)

 

 

(145

)

 

Comprehensive loss

$

(4,776

)

 

$

(25,359

)

 

$

(38,126

)

 

$

(173,552

)

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2


 

HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated Other

 

 

 

 

 

 

Total

 

 

 

Ordinary Shares

 

 

Treasury Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Shareholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2018

 

 

169,244,520

 

 

$

17

 

 

 

384,366

 

 

$

(4,585

)

 

$

2,374,966

 

 

$

(1,523

)

 

$

(1,178,769

)

 

$

1,190,106

 

Cumulative effect adjustments from adoption of ASU 2016-02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64

 

 

 

64

 

Issuance of ordinary shares - public offering

 

 

14,081,632

 

 

 

1

 

 

 

 

 

 

 

 

 

326,848

 

 

 

 

 

 

 

 

 

326,849

 

Issuance of ordinary shares in conjunction with vesting of restricted stock

   units and stock option exercises

 

 

1,804,196

 

 

 

 

 

 

 

 

 

 

 

 

10,042

 

 

 

 

 

 

 

 

 

10,042

 

Ordinary shares withheld for payment of employees’ withholding tax liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,171

)

 

 

 

 

 

 

 

 

(17,171

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,548

 

 

 

 

 

 

 

 

 

27,548

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(487

)

 

 

 

 

 

(487

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(32,863

)

 

 

(32,863

)

Balances at March 31, 2019

 

 

185,130,348

 

 

$

18

 

 

 

384,366

 

 

$

(4,585

)

 

$

2,722,233

 

 

$

(2,010

)

 

$

(1,211,568

)

 

$

1,504,088

 

Issuance of ordinary shares - public offering

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(55

)

 

 

 

 

 

 

 

 

(55

)

Issuance of ordinary shares in conjunction with vesting of restricted stock

   units and stock option exercises

 

 

781,026

 

 

 

1

 

 

 

 

 

 

 

 

 

1,986

 

 

 

 

 

 

 

 

 

1,987

 

Ordinary shares withheld for payment of employees’ withholding tax liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,203

)

 

 

 

 

 

 

 

 

(7,203

)

Issuance of ordinary shares in conjunction with ESPP program

 

 

558,856

 

 

 

 

 

 

 

 

 

 

 

 

5,465

 

 

 

 

 

 

 

 

 

5,465

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21,367

 

 

 

 

 

 

 

 

 

21,367

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

344

 

 

 

 

 

 

344

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,120

)

 

 

(5,120

)

Balances at June 30, 2019

 

 

186,470,230

 

 

$

19

 

 

 

384,366

 

 

$

(4,585

)

 

$

2,743,793

 

 

$

(1,666

)

 

$

(1,216,688

)

 

$

1,520,873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated Other

 

 

 

 

 

 

Total

 

 

 

Ordinary Shares

 

 

Treasury Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Shareholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2017

 

 

164,785,083

 

 

$

16

 

 

 

384,366

 

 

$

(4,585

)

 

$

2,248,979

 

 

$

(983

)

 

$

(1,141,975

)

 

$

1,101,452

 

Cumulative effect adjustments from adoption of ASUs 2014-09 and 2016-16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,586

 

 

 

1,586

 

Issuance of ordinary shares in conjunction with vesting of restricted stock

   units and stock option exercises

 

 

574,810

 

 

 

1