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2019-01-01 2019-06-30

nte

 

 

 

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, 2020

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 July 31, 2020: 206,460,371

 

 

 


                                                                        HORIZON THERAPEUTICS PLC

INDEX

 

 

 

 

 

Page

 

 

 

No.

PART I. FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements

 

1

 

Condensed Consolidated Balance Sheets as of June 30, 2020 and as of December 31, 2019 (Unaudited)

 

1

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2020 and 2019 (Unaudited)

 

2

 

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2020 and 2019 (Unaudited)

 

3

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019 (Unaudited)

 

4

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

5

Item 2.

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

 

30

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

51

Item 4.

Controls and Procedures

 

51

PART II. OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

 

52

Item 1A.

Risk Factors

 

52

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

97

Item 6.

Exhibits

 

98

 

Signatures

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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,

 

 

2020

 

2019

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

$

718,062

 

$

1,076,287

 

Restricted cash

 

3,625

 

 

3,752

 

Accounts receivable, net

 

543,755

 

 

408,685

 

Inventories, net

 

66,099

 

 

53,802

 

Prepaid expenses and other current assets

 

157,548

 

 

143,577

 

Total current assets

 

1,489,089

 

 

1,686,103

 

Property and equipment, net

 

138,801

 

 

30,159

 

Developed technology and other intangible assets, net

 

1,891,100

 

 

1,702,628

 

Goodwill

 

413,669

 

 

413,669

 

Deferred tax assets, net

 

564,643

 

 

555,165

 

Other assets

 

40,889

 

 

48,310

 

Total assets

$

4,538,191

 

$

4,436,034

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Exchangeable Senior Notes—current

$

174,504

 

$

 

Accounts payable

 

106,015

 

 

21,514

 

Accrued expenses

 

415,545

 

 

235,234

 

Accrued trade discounts and rebates

 

288,592

 

 

466,421

 

Total current liabilities

 

984,656

 

 

723,169

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

Exchangeable Senior Notes, net

 

 

 

351,533

 

Long-term debt, net

 

1,002,318

 

 

1,001,308

 

Deferred tax liabilities, net

 

99,164

 

 

94,247

 

Other long-term liabilities

 

90,201

 

 

80,328

 

Total long-term liabilities

 

1,191,683

 

 

1,527,416

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

Ordinary shares, $0.0001 nominal value; 600,000,000 shares authorized at June 30, 2020 and December 31, 2019; 199,991,807 and 188,402,040 shares issued at June 30, 2020 and December 31, 2019, respectively, and 199,607,441 and 188,017,674 shares outstanding at June 30, 2020 and December 31, 2019, respectively

 

20

 

 

19

 

Treasury stock, 384,366 ordinary shares at June 30, 2020 and December 31, 2019

 

(4,585

)

 

(4,585

)

Additional paid-in capital

 

3,067,586

 

 

2,797,602

 

Accumulated other comprehensive loss

 

(1,886

)

 

(1,905

)

Accumulated deficit

 

(699,283

)

 

(605,682

)

Total shareholders’ equity

 

2,361,852

 

 

2,185,449

 

Total liabilities and shareholders' equity

$

4,538,191

 

$

4,436,034

 

 

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,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Net sales

$

462,779

 

 

$

320,647

 

 

$

818,688

 

 

$

601,018

 

 

Cost of goods sold

 

121,515

 

 

 

89,163

 

 

 

218,931

 

 

 

177,305

 

 

Gross profit

 

341,264

 

 

 

231,484

 

 

 

599,757

 

 

 

423,713

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

81,068

 

 

 

28,314

 

 

 

108,277

 

 

 

50,039

 

 

Selling, general and administrative

 

222,332

 

 

 

167,095

 

 

 

470,107

 

 

 

339,394

 

 

Loss on sale of assets

 

 

 

 

10,963

 

 

 

 

 

 

10,963

 

 

Total operating expenses

 

303,400

 

 

 

206,372

 

 

 

578,384

 

 

 

400,396

 

 

Operating income

 

37,864

 

 

 

25,112

 

 

 

21,373

 

 

 

23,317

 

 

OTHER EXPENSE, NET:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(18,571

)

 

 

(22,033

)

 

 

(35,915

)

 

 

(49,563

)

 

Loss on debt extinguishment

 

(17,254

)

 

 

(11,878

)

 

 

(17,254

)

 

 

(17,464

)

 

Foreign exchange gain

 

283

 

 

 

76

 

 

 

1,059

 

 

 

15

 

 

Other income (expense), net

 

632

 

 

 

(1,272

)

 

 

1,074

 

 

 

(1,083

)

 

Total other expense, net

 

(34,910

)

 

 

(35,107

)

 

 

(51,036

)

 

 

(68,095

)

 

Income (loss) before expense (benefit) for income taxes

 

2,954

 

 

 

(9,995

)

 

 

(29,663

)

 

 

(44,778

)

 

Expense (benefit) for income taxes

 

82,964

 

 

 

(4,875

)

 

 

63,938

 

 

 

(6,795

)

 

Net loss

$

(80,010

)

 

$

(5,120

)

 

$

(93,601

)

 

$

(37,983

)

 

Net loss per ordinary share—basic and diluted

$

(0.42

)

 

$

(0.03

)

 

$

(0.49

)

 

$

(0.21

)

 

Weighted average ordinary shares outstanding—basic and diluted

 

192,705,535

 

 

 

185,327,383

 

 

 

191,426,864

 

 

 

178,866,391

 

 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

$

344

 

 

$

344

 

 

$

19

 

 

$

(143

)

 

Other comprehensive income (loss)

 

344

 

 

 

344

 

 

 

19

 

 

 

(143

)

 

Comprehensive loss

$

(79,666

)

 

$

(4,776

)

 

$

(93,582

)

 

$

(38,126

)

 

 

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, 2019

 

 

188,402,040

 

 

$

19

 

 

 

384,366

 

 

$

(4,585

)

 

$

2,797,602

 

 

$

(1,905

)

 

$

(605,682

)

 

$

2,185,449

 

Issuance of ordinary shares in conjunction with the exercise of stock options

and the vesting of restricted stock and performance stock units

 

 

2,560,573

 

 

 

 

 

 

 

 

 

 

 

 

7,049

 

 

 

 

 

 

 

 

 

7,049

 

Ordinary shares withheld for payment of employees’ withholding tax liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(46,664

)

 

 

 

 

 

 

 

 

(46,664

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

56,421

 

 

 

 

 

 

 

 

 

56,421

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(325

)

 

 

 

 

 

(325

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,591

)

 

 

(13,591

)

Balances at March 31, 2020

 

 

190,962,613

 

 

$

19

 

 

 

384,366

 

 

$

(4,585

)

 

$

2,814,408

 

 

$

(2,230

)

 

$

(619,273

)

 

$

2,188,339

 

Issuance of ordinary shares in conjunction with the exercise of stock options

and the vesting of restricted stock and performance stock units

 

 

1,427,108

 

 

 

 

 

 

 

 

 

 

 

 

18,838

 

 

 

 

 

 

 

 

 

18,838

 

Issuance of ordinary shares in conjunction with ESPP program

 

 

376,718

 

 

 

 

 

 

 

 

 

 

 

 

7,979

 

 

 

 

 

 

 

 

 

7,979

 

Issuance of ordinary shares in conjunction with Exchangeable Senior Notes

 

 

7,225,368

 

 

 

1

 

 

 

 

 

 

 

 

 

205,649

 

 

 

 

 

 

 

 

 

205,650

 

Ordinary shares withheld for payment of employees’ withholding tax liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,345

)

 

 

 

 

 

 

 

 

(6,345

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,057

 

 

 

 

 

 

 

 

 

27,057

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

344

 

 

 

 

 

 

344

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(80,010

)

 

 

(80,010

)

Balances at June 30, 2020

 

 

199,991,807

 

 

$

20

 

 

 

384,366

 

 

$

(4,585

)

 

$

3,067,586

 

 

$

(1,886

)

 

$

(699,283

)

 

$

2,361,852

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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