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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 September 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 October 28, 2020: 220,710,086

 

 

 


HORIZON THERAPEUTICS PLC

INDEX

 

 

 

 

 

Page

 

 

 

No.

PART I. FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements

 

1

 

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

 

1

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

 

2

 

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

 

3

 

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

 

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

7

Item 2.

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

 

33

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

55

Item 4.

Controls and Procedures

 

55

PART II. OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

 

56

Item 1A.

Risk Factors

 

56

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

103

Item 6.

Exhibits

 

104

 

Signatures

 

106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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

 

 

September 30,

 

December 31,

 

 

2020

 

2019

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

$

1,725,403

 

$

1,076,287

 

Restricted cash

 

3,573

 

 

3,752

 

Accounts receivable, net

 

705,898

 

 

408,685

 

Inventories, net

 

77,104

 

 

53,802

 

Prepaid expenses and other current assets

 

220,341

 

 

143,577

 

Total current assets

 

2,732,319

 

 

1,686,103

 

Property and equipment, net

 

156,287

 

 

30,159

 

Developed technology and other intangible assets, net

 

1,847,880

 

 

1,702,628

 

Goodwill

 

413,669

 

 

413,669

 

Deferred tax assets, net

 

566,605

 

 

555,165

 

Other assets

 

50,115

 

 

48,310

 

Total assets

$

5,766,875

 

$

4,436,034

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

$

38,978

 

$

21,514

 

Accrued expenses

 

421,827

 

 

235,234

 

Accrued trade discounts and rebates

 

322,798

 

 

466,421

 

Total current liabilities

 

783,603

 

 

723,169

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

Exchangeable Senior Notes, net

 

 

 

351,533

 

Long-term debt, net

 

1,002,846

 

 

1,001,308

 

Deferred tax liabilities, net

 

97,647

 

 

94,247

 

Other long-term liabilities

 

85,968

 

 

80,328

 

Total long-term liabilities

 

1,186,461

 

 

1,527,416

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

Ordinary shares, $0.0001 nominal value; 600,000,000 shares authorized at September 30, 2020 and December 31, 2019; 220,995,108 and 188,402,040 shares issued at September 30, 2020 and December 31, 2019, respectively, and 220,610,742 and 188,017,674 shares outstanding at September 30, 2020 and December 31, 2019, respectively

 

22

 

 

19

 

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

 

(4,585

)

 

(4,585

)

Additional paid-in capital

 

4,208,845

 

 

2,797,602

 

Accumulated other comprehensive loss

 

(1,028

)

 

(1,905

)

Accumulated deficit

 

(406,443

)

 

(605,682

)

Total shareholders’ equity

 

3,796,811

 

 

2,185,449

 

Total liabilities and shareholders' equity

$

5,766,875

 

$

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 INCOME (LOSS)

(UNAUDITED)

(In thousands, except share and per share data)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Net sales

$

636,427

 

 

$

335,466

 

 

$

1,455,115

 

 

$

936,484

 

 

Cost of goods sold

 

151,475

 

 

 

89,949

 

 

 

370,406

 

 

 

267,254

 

 

Gross profit

 

484,952

 

 

 

245,517

 

 

 

1,084,709

 

 

 

669,230

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

30,206

 

 

 

24,572

 

 

 

138,483

 

 

 

74,611

 

 

Selling, general and administrative

 

226,164

 

 

 

172,326

 

 

 

696,271

 

 

 

511,720

 

 

Loss on sale of assets

 

 

 

 

 

 

 

 

 

 

10,963

 

 

Total operating expenses

 

256,370

 

 

 

196,898

 

 

 

834,754

 

 

 

597,294

 

 

Operating income

 

228,582

 

 

 

48,619

 

 

 

249,955

 

 

 

71,936

 

 

OTHER EXPENSE, NET:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on debt extinguishment

 

(14,602

)

 

 

(41,371

)

 

 

(31,856

)

 

 

(58,835

)

 

Interest expense, net

 

(12,185

)

 

 

(20,428

)

 

 

(48,100

)

 

 

(69,991

)

 

Foreign exchange (loss) gain

 

(753

)

 

 

(40

)

 

 

306

 

 

 

(25

)

 

Other income (expense), net

 

717

 

 

 

890

 

 

 

1,791

 

 

 

(193

)

 

Total other expense, net

 

(26,823

)

 

 

(60,949

)

 

 

(77,859

)

 

 

(129,044

)

 

Income (loss) before benefit for income taxes

 

201,759

 

 

 

(12,330

)

 

 

172,096

 

 

 

(57,108

)

 

Benefit for income taxes

 

(91,081

)

 

 

(30,564

)

 

 

(27,143

)

 

 

(37,359

)

 

Net income (loss)

$

292,840

 

 

$

18,234

 

 

$

199,239

 

 

$

(19,749

)

 

Net income (loss) per ordinary share—basic

$

1.38

 

 

$

0.10

 

 

$

1.00

 

 

$

(0.11

)

 

Weighted average ordinary shares outstanding—basic

 

212,320,219

 

 

 

186,470,141

 

 

 

198,413,779

 

 

 

181,949,838

 

 

Net income (loss) per ordinary share—diluted

$

1.31

 

 

$

0.09

 

 

$

0.95

 

 

$

(0.11

)

 

Weighted average ordinary shares outstanding—diluted

 

223,743,903

 

 

 

194,171,967

 

 

 

208,678,460

 

 

 

181,949,838

 

 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

$

858

 

 

$

(809

)

 

$

877

 

 

$

(952

)

 

Other comprehensive income (loss)

 

858

 

 

 

(809

)

 

 

877

 

 

 

(952

)

 

Comprehensive income (loss)

$

293,698

 

 

$

17,425

 

 

$

200,116

 

 

$

(20,701

)

 

 

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

 

Issuance of ordinary shares - public offering

 

 

13,570,000

 

 

 

1

 

 

 

 

 

 

 

 

 

919,513

 

 

 

 

 

 

 

 

 

919,514

 

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

and the vesting of restricted stock and performance stock units

 

 

760,255

 

 

 

 

 

 

 

 

 

 

 

 

8,111

 

 

 

 

 

 

 

 

 

8,111

 

Issuance of ordinary shares in conjunction with Exchangeable Senior Notes

 

 

6,673,046

 

 

 

1

 

 

 

 

 

 

 

 

 

190,022

 

 

 

 

 

 

 

 

 

190,023

 

Ordinary shares withheld for payment of employees’ withholding tax liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,743

)

 

 

 

 

 

 

 

 

(6,743

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,356

 

 

 

 

 

 

 

 

 

30,356

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

858

 

 

 

 

 

 

858

 

Net income