UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16
OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2017
Commission File Number: 001-36826
ADVANCED ACCELERATOR APPLICATIONS S.A.
(Exact name of registrant as specified in its charter)
20 rue Diesel
01630 Saint Genis Pouilly, France
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F |
X |
Form 40-F |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes | No |
X |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes | No |
X |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ADVANCED ACCELERATOR APPLICATIONS S.A. | |||||
By: | /s/ Heinz Mäusli | ||||
Name: | Heinz Mäusli | ||||
Title: | Chief Financial Officer |
Date: November 17, 2017
ADVANCED ACCELERATOR APPLICATIONS S.A.
EXHIBIT INDEX
Exhibit No. |
Description |
99.1 | Press Release dated November 17, 2017 titled “Advanced Accelerator Applications Reports 39% Sales Growth for Third Quarter 2017” |
99.2 | IFRS Condensed Consolidated Interim Financial Statements for the Nine Months and Three Months ended September 30, 2017 and 2016 |
Exhibit 99.1
PRESS RELEASE
Advanced Accelerator Applications Reports 39% Sales Growth for Third Quarter 2017
$3.9 Billion All Cash Proposed Tender Offer by Novartis
European Approval of Lutetium Lu 177 Dotatate* (Lutathera®) for GEP-NETs
Recent Highlights:
· | Sales for the third quarter of 2017 increased 39% compared to the third quarter of 2016 |
· | NETSPOT® unit sales per month increased 14% (from 915 to 1040) from June to September 2017 |
· | Entered into a Memorandum of Understanding with Novartis, pursuant to which Novartis proposes to make a $3.9 billion cash tender offer to acquire all the outstanding shares of AAA |
· | European Commission approved marketing authorization for lutetium Lu 177 dotatate* (Lutathera®) for the treatment of unresectable or metastatic, progressive, well differentiated (G1 and G2), somatostatin receptor positive gastroenteropancreatic neuroendocrine tumors (GEP-NETs) in adults |
· | Received Prescription Drug User Fee Act (PDUFA) action date of January 26, 2018 for lutetium Lu 177 dotatate* (Lutathera®) New Drug Application (NDA) to the US Food and Drug Administration (FDA) |
· | FDA allowed an amendment to the protocol for the US Expanded Access Program (EAP) for lutetium Lu 177 dotatate* (Lutathera®) expanding enrollment to patients with progressive, advanced, inoperable NETs arising at all sites |
· | FDA allowed production of EAP doses at Millburn, New Jersey site |
· | 226 patients and 30 centers in the US, and 1,857 patients and 67 centers in Europe were participating in the lutetium Lu 177 dotatate* (Lutathera®) Expanded Access, compassionate use and named patient programs at October 31, 2017 |
November 17, 2017, Saint-Genis-Pouilly, France - Advanced Accelerator Applications S.A. (NASDAQ:AAAP) (AAA or the Company), a leader in nuclear medicine theragnostics, today announced its financial results for the third quarter ended September 30, 2017.
Stefano Buono, Chief Executive Officer of AAA, commented, “The last few months have been truly transformative for AAA. With European Commission’s approval of the marketing authorization for lutetium Lu 177 dotatate* (Lutathera®), and the continued growth of NETSPOT® and SomaKit TOC®, we have achieved our vision of becoming the first radiopharmaceutical theragnostics platform in the global oncology marketplace. We are progressing with the commercial launch of lutetium Lu 177 dotatate* (Lutathera®) in Europe, and are approaching the FDA PDUFA action date. The Novartis tender offer adds to this momentum, and we believe the proposed transaction will strategically position us to further accelerate development of our other theragnostic pipeline assets and maximize the impact of our platform on the oncology market.”
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Third Quarter 2017 Financial Results
Total sales for the third quarter of 2017 were €37.2 million (US$43.9 million(1)), a 39% increase compared to €26.7 million (US$31.5 million(1)) in the third quarter of 2016. The increase in sales was primarily driven by the PET product category, which increased by 72% to €27.0 million (US$31.9 million(1)), compared to €15.8 million (US$18.7 million(1)) in the prior year period. This includes €8.9 million (US$10.5 million(1)) in US sales of NETSPOT® in the third quarter. Therapeutic sales for the third quarter were €5.4 million (US$6.4 million(1)), compared to €5.4 million (US$6.4 million(1)). SPECT sales for the third quarter were €2.1 million (US$2.5 million(1)), compared to €2.3 million (US$2.7 million(1)) for the third quarter of 2016. Third quarter sales of other products were €2.7 million (US$3.2 million(1)), compared to €3.2 million (US$3.8 million(1)) for the same period in 2016.
Operating loss for the third quarter was €3.7 million (US$4.4 million(1)), compared to a loss of €5.1 million (US$6.0 million(1)) for the prior year period. The Company experienced higher personnel costs and operating expenses during the third quarter of 2017, primarily related to the launch of new products and ongoing pipeline development; although these increases were partially offset by higher revenues.
Net loss for the quarter was €22.7 million (US$26.8 million(1)), compared to a net loss of €6.2 million (US$7.3 million(1)) for the third quarter of 2016. The increase in net loss was primarily the result of changes in fair value of contingent consideration for prior owners of a AAA subsidiary.
Adjusted EBITDA (see corresponding reconciliation exhibit below) for the quarter was a gain of €0.1 million (US$0.1 million(1)) compared to a loss of €1.7 million (US$2.0 million(1)) for the same period in 2016.
Cash, cash equivalents and short-term investments at September 30, 2017 were €192.7 million (US$227.6 million(1)).
(1) Translated solely for convenience into US$ at the noon buying rate of €1.00 = $1.1813 at September 30, 2017.
Recent Operational Updates
On October 30, the Company announced that it has entered into a Memorandum of Understanding with Novartis, pursuant to which Novartis proposes to make a cash tender offer to acquire all the outstanding shares of AAA, including shares represented by American Depositary Shares (the “ADSs”), for US$41 per ordinary share and US$82 per ADS (each representing 2 ordinary shares), in a transaction that is valued at approximately US$3.9 billion. This represents a 47% premium to the 30 volume-weighted trading days prior to the unaffected share price on NASDAQ on September 27, 2017. The Memorandum of Understanding has been filed with the U.S. Securities and Exchange Commission.
On September 29, the Company announced that the European Commission has approved the marketing authorization of lutetium Lu 177 dotatate* (Lutathera®) for “the treatment of unresectable or metastatic, progressive, well differentiated (G1 and G2), somatostatin receptor positive GEP-NETs in adults”. This approval allows for the marketing of lutetium Lu 177 dotatate* (Lutathera®) in all 28 European Union member states, as well as Iceland, Norway and Liechtenstein.
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The FDA allowed production of lutetium Lu 177 dotatate* (Lutathera®) EAP doses at AAA’s Millburn, New Jersey site.
On August 28, the Company announced that the FDA has acknowledged receipt and considered complete the resubmission of the NDA for lutetium Lu 177 dotatate* (Lutathera®). The Agency provided a new PDUFA action date of January 26, 2018.
On September 6, the Company announced that the first patient was treated in a Phase I clinical study of lutetium Lu 177 dotatate* (Lutathera®) in patients with inoperable, somatostatin receptor positive, progressive pancreatic, gastrointestinal, or pulmonary NETs in Japan. The primary objective of this open-label, uncontrolled, single-center, bridging study is to evaluate the safety, tolerability, pharmacokinetics, and dosimetry of lutetium Lu 177 dotatate* (Lutathera®) in Japanese patients.
* USAN: lutetium Lu 177 dotatate/INN: lutetium (177Lu) oxodotreotide
-------
About USAN: lutetium Lu 177 dotatate / INN: lutetium (177Lu) oxodotreotide (Lutathera®)
USAN: lutetium Lu 177 dotatate/INN: lutetium (177Lu) oxodotreotide (Lutathera®) is an investigational 177Lu-labeled somatostatin analog peptide. USAN: lutetium Lu 177 dotatate/INN: lutetium (177Lu) oxodotreotide (Lutathera®) belongs to an emerging form of treatments called Peptide Receptor Radionuclide Therapy (PRRT), which involves targeting tumors with radiolabeled molecules that bind to specific receptors expressed by the tumor. The European Commission approved the marketing authorization of USAN: lutetium Lu 177 dotatate/INN: lutetium (177Lu) oxodotreotide (Lutathera®) for the treatment of unresectable or metastatic, progressive, well differentiated (G1 and G2), somatostatin receptor positive GEP-NETs in adults. An NDA submission to the US Food and Drug Administration (FDA) for lutetium Lu 177 dotatate (Lutathera®) is under review. The Prescription Drug User Fee Act (PDUFA) action date is January 26, 2018. This novel compound has received orphan drug designation from the European Medicines Agency (EMA) and the US Food and Drug Administration (FDA).
About Advanced Accelerator Applications S.A.
Advanced Accelerator Applications (NASDAQ:AAAP) is an innovative radiopharmaceutical company developing, producing and commercializing molecular nuclear medicine theragnostics. AAA’s theragnostic platform is based on radiolabeling a targeting molecule with either gallium Ga 68 for diagnostic use, or lutetium Lu 177 for therapy. AAA’s first theragnostic pairing for neuroendocrine tumors includes diagnostic drugs NETSPOT® in the US and SomaKit TOC® in Europe; and therapeutic USAN: lutetium Lu 177 dotatate/INN: lutetium (177Lu) oxodotreotide (Lutathera®), which is approved for use in Europe and currently under review with the FDA. Additional theragnostics in development target gastrointestinal stromal tumors (GIST), and prostate and breast cancer. AAA is also an established leader in molecular nuclear diagnostic radiopharmaceuticals for PET and SPECT, mainly used in clinical oncology, cardiology and neurology. Headquartered in Saint-Genis-Pouilly, France, AAA currently has 21 production and R&D facilities, and more than 550 employees in 13 countries (France, Italy, the UK, Germany, Switzerland, Spain, Poland, Portugal, The Netherlands, Belgium, Israel, the US and Canada). AAA is listed on the Nasdaq Global Select Market under the ticker “AAAP”. For more information, please visit: www.adacap.com.
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About Molecular Nuclear Medicine (“MNM”)
Molecular Nuclear Medicine is a medical specialty using trace amounts of active substances, called radiopharmaceuticals, to create images of organs and lesions, and to treat various diseases, like cancer. The technique works by injecting targeted radiopharmaceuticals into the patient’s body that accumulate in the organs or lesions and reveal specific biochemical processes. MNM can be divided in two branches: Molecular Nuclear Diagnostics and Molecular Nuclear Therapy. Molecular nuclear diagnostics employs a variety of imaging devices and radiopharmaceuticals. PET (Positron Emission Tomography) and SPECT (Single Photon Emission Computed Tomography) are highly sensitive imaging technologies that enable physicians to diagnose different types of cancer, cardiovascular diseases, neurological disorders and other diseases in their early stages. Molecular nuclear therapy uses radioactive sources (radionuclides) to treat a range of tumor types. Using short-range particles, this therapy can target tumors with little effect on normal tissues.
Reconciliation of adjusted EBITDA to net loss for the period from continuing operations for the three and nine months ended September 30, 2017 and 2016
Nine months | Three months | Nine months | ||||||||||||||||||
September 30, 2017 | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | ||||||||||||||||
in USD thousands(1) | In € thousands | In € thousands | ||||||||||||||||||
Net loss for the period from continuing operations | (51,898 | ) | (22,741 | ) | (6,243 | ) | (43,933 | ) | (10,651 | ) | ||||||||||
Adjustments | ||||||||||||||||||||
Finance income (including changes in fair value of contingent consideration) | (10,098 | ) | (1,214 | ) | (427 | ) | (8,548 | ) | (812 | ) | ||||||||||
Finance costs (including changes in fair value of contingent consideration) | 40,930 | 19,577 | 1,502 | 34,648 | 4,659 | |||||||||||||||
Income taxes | 1,977 | 689 | 25 | 1,674 | (422 | ) | ||||||||||||||
Depreciation and amortization | 13,273 | 3,817 | 3,411 | 11,236 | 9,838 | |||||||||||||||
Adjusted EBITDA | (5,816 | ) | 128 | (1,732 | ) | (4,923 | ) | 2,612 | ||||||||||||
Sales | 125,702 | 37,245 | 26,723 | 106,410 | 81,282 | |||||||||||||||
Adjusted EBITDA margin | -4.63 | % | 0.34 | % | -6.48 | % | -4.63 | % | 3.21 | % |
(1) Translated solely for convenience into dollars at the noon buying rate of EUR 1.00 = USD 1.1813 at September 29, 2017.
Additional Information
This press release is neither an offer to purchase nor a solicitation of an offer to sell securities. The tender offer for the outstanding ordinary shares and American Depositary Shares of AAA described in this press release has not commenced. At the time the tender offer is commenced, Novartis and an indirect wholly owned subsidiary of Novartis (“Purchaser”) will file, or will cause to be filed, a Schedule TO Tender Offer Statement with the U.S. Securities and Exchange Commission (the “SEC”) and AAA will file a Schedule 14D-9 Solicitation/Recommendation Statement with the SEC, in each case with respect to the tender offer. The Schedule TO Tender Offer Statement (including an offer to purchase, a related letter of transmittal and other offer documents) and the Schedule 14D-9 Solicitation/Recommendation Statement will contain important information that should be read
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carefully before any decision is made with respect to the tender offer. Those materials and all other documents filed by, or caused to be filed by, Novartis and Purchaser with the SEC will be available at no charge on the SEC’s website at www.sec.gov. The Schedule TO Tender Offer Statement and related materials may be obtained for free under the “Investors – Financial Data” section of Novartis website at https://www.novartis.com/investors/financial-data/sec-filings. The Schedule 14D-9 Solicitation/Recommendation Statement and such other documents may be obtained for free from the Company under the “Investor Relations” section of the Company’s website at http://investorrelations.adacap.com/.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements. All statements, other than statements of historical facts, contained in this press release, including statements regarding the Company's strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project," "target," "potential," "will," "would," "could," "should," "continue," and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements that appear in a number of places in this press release include the Company's current expectation regarding future events and various matters, including expected timing of filings with the FDA, approval dates and expansion of NETSPOT®. These forward-looking statements involve risks and uncertainties that may cause actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the timing of our submission of applications for regulatory approvals, FDA and other regulatory approvals for our product candidates, the occurrence of side effects or serious adverse events caused by or associated with our products and product candidates; our ability to procure adequate quantities of necessary supplies and raw materials for USAN: lutetium Lu 177 dotatate/INN: lutetium (177Lu) oxodotreotide (Lutathera®) and other chemical compounds acceptable for use in our manufacturing processes from our suppliers; our ability to organize timely and safe delivery of our products or product candidates by third parties; any problems with the manufacture, quality or performance of our products or product candidates; the rate and degree of market acceptance and the clinical utility of USAN: lutetium Lu 177 dotatate/INN: lutetium (177Lu) oxodotreotide (Lutathera®) and our other products or product candidates; our estimates regarding the market opportunity for USAN: lutetium Lu 177 dotatate/INN: lutetium (177Lu) oxodotreotide (Lutathera®), our other product candidates and our existing products; our anticipation that we will generate higher sales as we diversify our products; our ability to implement our growth strategy including expansion in the US; our ability to sustain and create additional sales, marketing and distribution capabilities; our intellectual property and licensing position; legislation or regulation in countries where we sell our products that affect product pricing, taxation, reimbursement, access or distribution channels; regulatory actions or litigation; and general economic, political, demographic and business conditions in Europe, the US and elsewhere. Except as required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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Contacts:
AAA Corporate Communications
Rachel Levine
Director of Communications
rachel.levine@adacap.com
Tel: + 1-212-235-2395
AAA Investor Relations
Jordan Silverstein
Head of Investor Relations
jordan.silverstein@adacap.com
Tel: + 1-212-235-2394
Media inquiries:
Makovsky & Company
Lee Davies
ldavies@makovsky.com
Tel: +212-508-9651
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
Three months | Nine months | |||||||||||||||
In € thousands | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | ||||||||||||
Sales | 37,245 | 26,723 | 106,410 | 81,282 | ||||||||||||
Raw materials and consumables used | (9,416 | ) | (6,072 | ) | (26,248 | ) | (17,268 | ) | ||||||||
Personnel costs | (14,213 | ) | (10,789 | ) | (40,747 | ) | (29,716 | ) | ||||||||
Other operating expenses | (14,813 | ) | (12,277 | ) | (47,912 | ) | (35,190 | ) | ||||||||
Other operating income | 1,325 | 683 | 3,574 | 3,504 | ||||||||||||
Depreciation and amortization | (3,817 | ) | (3,411 | ) | (11,236 | ) | (9,838 | ) | ||||||||
Operating loss | (3,689 | ) | (5,143 | ) | (16,159 | ) | (7,226 | ) | ||||||||
Finance income (including changes in fair value of contingent consideration) | 1,214 | 427 | 8,548 | 812 | ||||||||||||
Finance costs (including changes in fair value of contingent consideration) | (19,577 | ) | (1,502 | ) | (34,648 | ) | (4,659 | ) | ||||||||
Net finance loss | (18,363 | ) | (1,075 | ) | (26,100 | ) | (3,847 | ) | ||||||||
Loss before income taxes | (22,052 | ) | (6,218 | ) | (42,259 | ) | (11,073 | ) | ||||||||
Income taxes | (689 | ) | (25 | ) | (1,674 | ) | 422 | |||||||||
Loss for the period | (22,741 | ) | (6,243 | ) | (43,933 | ) | (10,651 | ) | ||||||||
Attributable to: | ||||||||||||||||
Owners of the Company | (22,741 | ) | (6,243 | ) | (43,933 | ) | (10,651 | ) | ||||||||
Loss per share | ||||||||||||||||
Basic (€ per share) | (0.26 | ) | (0.08 | ) | (0.50 | ) | (0.14 | ) | ||||||||
Diluted (€ per share) | (0.26 | ) | (0.08 | ) | (0.50 | ) | (0.14 | ) |
Some non-significant figures in the nine-month period ended September 30, 2016 were reclassified for comparison purposes, without impact to net results.
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
THREE AND NINE MONTHS ENDED SEPTEMBER 2017 AND 2016
Three months | Nine months | |||||||||||||||
In € thousands | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | ||||||||||||
Loss for the period | (22,741 | ) | (6,243 | ) | (43,933 | ) | (10,651 | ) | ||||||||
Other comprehensive income / (expense): | ||||||||||||||||
Items that may be reclassified subsequent to profit or loss | ||||||||||||||||
Exchange differences on translating foreign operations | (690 | ) | 25 | (56 | ) | (374 | ) | |||||||||
Items that will never be reclassified subsequent to profit or loss | ||||||||||||||||
Remeasurement of defined benefit liability | (13 | ) | 9 | 2 | (34 | ) | ||||||||||
Other comprehensive income / (expense) net of tax(1) | (703 | ) | 34 | (54 | ) | (408 | ) | |||||||||
Total comprehensive loss for the year | (23,444 | ) | (6,209 | ) | (43,987 | ) | (11,059 | ) | ||||||||
Total comprehensive loss attributable to: | ||||||||||||||||
Owners of the Company | (23,444 | ) | (6,209 | ) | (43,987 | ) | (11,059 | ) |
(1) | Negative tax effect of €8,000 for the three months ended September 30, 2017 and negative tax effect of €5,000 for the three months ended September 30, 2016. |
Negative tax effect of €19,000 for the nine months ended September 30, 2017 and positive tax effect of €17,000 for the nine months ended September 30, 2016.
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CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AT SEPTEMBER 30, 2017 AND DECEMBER 31, 2016
ASSETS (in € thousands) | September 30, 2017 | December 31, 2016 | ||
Non-current assets | 140,067 | 149,695 | ||
Goodwill | 33,384 | 34,070 | ||
Other intangible assets | 40,332 | 45,027 | ||
Property, plant and equipment | 58,338 | 63,915 | ||
Financial assets | 1,748 | 2,187 | ||
Other non-current assets | 5,650 | 3,941 | ||
Deferred Tax assets | 615 | 555 | ||
Current assets | 251,277 | 269,048 | ||
Inventories | 12,514 | 8,100 | ||
Trade and other receivables | 37,882 | 31,079 | ||
Other current assets | 8,202 | 7,789 | ||
Short-term investment | 22,000 | - | ||
Cash and cash equivalents | 170,679 | 222,080 | ||
TOTAL ASSETS | 391,344 | 418,743 | ||
EQUITY AND LIABILITIES (in € thousands) | September 30, 2017 | December 31, 2016 | ||
Equity attributable to owners of the Company | 266,622 | 299,461 | ||
Share capital | 8,833 | 8,795 | ||
Share premium | 361,708 | 360,085 | ||
Reserves and retained earnings | (59,986) | (44,125) | ||
Net loss for the period/year | (43,933) | (25,294) | ||
Total equity | 266,622 | 299,461 | ||
Non-current liabilities | 78,939 | 79,540 | ||
Non-current provisions | 11,265 | 12,725 | ||
Non-current financial liabilities | 10,161 | 12,302 | ||
Deferred tax liabilities | 3,726 | 4,649 | ||
Other non-current liabilities | 53,787 | 49,864 | ||
Current liabilities | 45,783 | 39,742 | ||
Current provisions | 4,745 | 1,135 | ||
Current financial liabilities | 3,371 | 4,017 | ||
Trade and other payables | 19,913 | 20,119 | ||
Other current liabilities | 17,754 | 14,471 | ||
Total liabilities | 124,722 | 119,282 | ||
TOTAL EQUITY AND LIABILITIES | 391,344 | 418,743 |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
Nine months | ||
In € thousands | September 30, 2017 | September 30, 2016 |
Cash flows from operating activities | ||
Net loss for the period | (43,933) | (10,651) |
Adjustments: | ||
Depreciation, amortization and impairment of non-current assets | 11,236 | 9,838 |
Share based payment expense | 9,487 | 4,220 |
(Gain) / Loss on disposal of property, plant and equipment | (33) | 265 |
Financial result | 26,100 | 3,847 |
Income tax expense | 1,674 | (422) |
Negative goodwill | - | (127) |
Subsidies income | (298) | - |
Subtotal | 4,233 | 6,970 |
Increase in inventories | (4,566) | (2,140) |
Increase in trade receivables | (7,465) | (4,836) |
Increase in trade payables | 287 | 1,900 |
Change in other receivables and payables | (648) | (5,259) |
Increase in provisions | 1,843 | 864 |
Change in working capital | (10,549) | (9,471) |
Income tax paid | (1,549) | (1,821) |
Net cash used in operating activities | (7,865) | (4,322) |
Cash flows from investing activities | ||
Acquisition of property, plant and equipment | (3,496) | (10,234) |
Acquisition of intangible assets | (520) | (1,241) |
Acquisition of financial assets | (71) | (62) |
Repayment of financial assets | 454 | 383 |
Acquisition of short-term investment | (22,000) | - |
Interest received | 1,153 | 389 |
Proceeds from disposal of property, plant and equipment | 66 | 86 |
Net proceeds from government grants | 440 | 37 |
Acquisition of subsidiaries, net of cash acquired | - | (22,453) |
Net cash used in investing activities | (23,974) | (33,095) |
Cash flows from financing activities | ||
Payment of deferred and contingent liabilities to former owners of acquired subsidiaries | (3,581) | (2,878) |
Exercise and subscription of warrants | 1,661 | - |
Proceeds from borrowings | 333 | - |
Repayment of borrowings | (3,147) | (4,397) |
Interest paid | (311) | (405) |
Other finance costs payments | (172) | - |
Net cash used in financing activities | (5,217) | (7,680) |
Net decrease in cash and cash equivalents | (37,056) | (45,097) |
Cash and cash equivalents at the beginning of the year | 222,080 | 118,886 |
Effect of exchange rate changes on cash and cash equivalents | (14,345) | (912) |
Cash and cash equivalents at the end of the period | 170,679 | 72,877 |
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EXHIBIT 99.2
Advanced Accelerator Applications S.A.
Advanced Accelerator Applications S.A.
20 rue Rudolf Diesel
01630 Saint Genis Pouilly
____________________________
IFRS CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Nine months and three months ended September 30, 2017 and 2016 |
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Advanced Accelerator Applications S.A.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine Months and three Months ended September 30, 2017 and 2016
Three months | Nine months | |||||
In € thousands | Notes | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
Sales | 4.1 | 37,245 | 26,723 | 106,410 | 81,282 | |
Raw materials and consumables used | (9,416) | (6,072) | (26,248) | (17,268) | ||
Personnel costs | 4.2 | (14,213) | (10,789) | (40,747) | (29,716) | |
Other operating expenses | 4.4 | (14,813) | (12,277) | (47,912) | (35,190) | |
Other operating income | 4.5 | 1,325 | 683 | 3,574 | 3,504 | |
Depreciation and amortization | (3,817) | (3,411) | (11,236) | (9,838) | ||
Operating loss | (3,689) | (5,143) | (16,159) | (7,226) | ||
Finance income (including changes in fair value of contingent consideration) |
4.7 | 1,214 | 427 | 8,548 | 812 | |
Finance costs (including changes in fair value of contingent consideration) |
4.7 | (19,577) | (1,502) | (34,648) | (4,659) | |
Net finance loss | (18,363) | (1,075) | (26,100) | (3,847) | ||
Loss before income taxes | (22,052) | (6,218) | (42,259) | (11,073) | ||
Income taxes | 4.8 | (689) | (25) | (1,674) | 422 | |
Loss for the period | (22,741) | (6,243) | (43,933) | (10,651) | ||
Attributable to: | ||||||
Owners of the Company | (22,741) | (6,243) | (43,933) | (10,651) | ||
Loss per share | ||||||
Basic (€ per share) | 5.9 | (0.26) | (0.08) | (0.50) | (0.14) | |
Diluted (€ per share) | 5.9 | (0.26) | (0.08) | (0.50) | (0.14) |
Some non-significant figures in the nine-month period and three-month period ended September 30, 2016 were reclassified for comparison purposes, without impact to net results.
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Advanced Accelerator Applications S.A.
Condensed Consolidated statements of comprehensive income
Nine Months and three Months ended September 30, 2017 and 2016
Three months | Nine months | ||||
In € thousands | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
Loss for the period | (22,741) | (6,243) | (43,933) | (10,651) | |
Other comprehensive income / (expense): | |||||
Items that may be reclassified subsequent to profit or loss | |||||
Exchange differences on translating foreign operations | (690) | 25 | (56) | (374) | |
Items that will never be reclassified subsequent to profit or loss | |||||
Remeasurement of defined benefit liability | (13) | 9 | 2 | (34) | |
Other comprehensive income / (expense) net of tax (1) | (703) | 34 | (54) | (408) | |
Total comprehensive loss for the period | (23,444) | (6,209) | (43,987) | (11,059) | |
Total comprehensive loss attributable to: | |||||
Owners of the Company | (23,444) | (6,209) | (43,987) | (11,059) |
(1) | Negative tax effect of €8 thousand for the three months ended September 30, 2017 and negative tax effect of €5 thousand for the three months ended September 30, 2016. |
Negative tax effect of €19 thousand for the nine months ended September 30, 2017 and positive tax effect of €17 thousand for the nine months ended September 30, 2016.
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Advanced Accelerator Applications S.A.
Condensed Consolidated statements of financial position
at September 30, 2017
ASSETS (In € thousands) | Notes | September 30, 2017 | December 31, 2016 |
Non-current assets | 140,067 | 149,695 | |
Goodwill | 5.2 | 33,384 | 34,070 |
Other intangible assets | 5.2 | 40,332 | 45,027 |
Property, plant and equipment | 5.3 | 58,338 | 63,915 |
Financial assets | 1,748 | 2,187 | |
Other non-current assets | 5.6 | 5,650 | 3,941 |
Deferred tax assets | 615 | 555 | |
Current assets | 251,277 | 269,048 | |
Inventories | 5.4 | 12,514 | 8,100 |
Trade and other receivables | 5.5 | 37,882 | 31,079 |
Other current assets | 5.6 | 8,202 | 7,789 |
Short-term investment | 5.7 | 22,000 | - |
Cash and cash equivalents | 5.7 | 170,679 | 222,080 |
TOTAL ASSETS | 391,344 | 418,743 | |
EQUITY AND LIABILITIES (In € thousands) | Notes | September 30, 2017 | December 31, 2016 |
Equity attributable to owners of the Company | 266,622 | 299,461 | |
Share capital | 8,833 | 8,795 | |
Share premium | 361,708 | 360,085 | |
Reserves and retained earnings | (59,986) | (44,125) | |
Net loss for the period / year | (43,933) | (25,294) | |
Total equity | 5.9 | 266,622 | 299,461 |
Non-current liabilities | 78,939 | 79,540 | |
Non-current provisions | 5.10 | 11,265 | 12,725 |
Non-current financial liabilities | 5.11 | 10,161 | 12,302 |
Deferred tax liabilities | 3,726 | 4,649 | |
Other non-current liabilities | 5.12 | 53,787 | 49,864 |
Current liabilities | 45,783 | 39,742 | |
Current provisions | 5.10 | 4,745 | 1,135 |
Current financial liabilities | 5.11 | 3,371 | 4,017 |
Trade and other payables | 19,913 | 20,119 | |
Other current liabilities | 5.12 | 17,754 | 14,471 |
Total liabilities | 124,722 | 119,282 | |
TOTAL EQUITY AND LIABILITIES | 391,344 | 418,743 |
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Advanced Accelerator Applications S.A.
Condensed Consolidated statement of changes in equity
Nine Months ended September 30, 2017
In € thousands | Share capital | Share premium | Translation
reserve |
Net
Income / (loss) for the period |
Group reserves | Total |
At January 1, 2017 | 8,795 | 360,085 | 5,898 | (25,294) | (50,023) | 299,461 |
Comprehensive loss for the period | ||||||
Loss for the period | - | - | - | (43,933) | - | (43,933) |
Other comprehensive income / (loss) for the period | - | - | (56) | - | 2 | (54) |
Total comprehensive income | - | - | (56) | (43,933) | 2 | (43,987) |
Transactions with owners of the Company | ||||||
Issue of ordinary shares (1) | 38 | 1,623 | - | - | - | 1,661 |
Appropriation of 2016 net loss | - | - | - | 25,294 | (25,294) | - |
Equity-settled share-based payments (2) | - | - | - | - | 9,487 | 9,487 |
Total transactions with owners of the Company | 38 | 1,623 | - | 25,294 | (15,807) | 11,148 |
At September 30, 2017 | 8,833 | 361,708 | 5,842 | (43,933) | (65,828) | 266,622 |
(1) | See note 5.9 |
(2) | See note 4.2 |
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Advanced Accelerator Applications S.A.
Condensed Consolidated statement of changes in equity
Nine Months ended September 30, 2016
In € thousands | Share capital | Share premium | Translation reserve | Net Income / (loss) for the period | Group reserves | Total | |
At January 1, 2016 | 7,856 | 213,982 | 4,859 | (17,001) | (39,942) | 169,754 | |
Comprehensive income / (loss) for the period | |||||||
Loss for the period | - | - | - | (10,651) | - | (10,651) | |
Other comprehensive income / (loss) for the period | - | - | (374) | - | (34) | (408) | |
Total comprehensive income | - | - | (374) | (10,651) | (34) | (11,059) | |
Transactions with owners of the Company | |||||||
Appropriation of 2015 net loss | - | - | - | 17,001 | (17,001) | - | |
Equity-settled share-based payments (1) | - | - | - | - | 4,220 | 4,220 | |
Total transactions with owners of the Company | - | - | - | 17,001 | (12,781) | 4,220 | |
At September 30, 2016 | 7,856 | 213,982 | 4,485 | (10,651) | (52,757) | 162,915 | |
(1) | See note 4.2 |
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Advanced Accelerator Applications S.A.
Condensed Consolidated statements of cash flows
Nine Months ended September 30, 2017 and 2016
Nine months ended | |||
In € thousands | Notes | September 30, 2017 | September 30, 2016 |
Cash flows from operating activities | |||
Net loss for the period | (43,933) | (10,651) | |
Adjustments: | |||
Depreciation, amortization and impairment of non-current assets | 11,236 | 9,838 | |
Share based payment expense | 9,487 | 4,220 | |
(Gain) / Loss on disposal of property, plant and equipment | (33) | 265 | |
Financial result | 26,100 | 3,847 | |
Income tax expense | 1,674 | (422) | |
Negative goodwill | - | (127) | |
Subsidies income | (298) | - | |
Subtotal | 4,233 | 6,970 | |
Increase in inventories | (4,566) | (2,140) | |
Increase in trade receivables | (7,465) | (4,836) | |
Increase in trade payables | 287 | 1,900 | |
Change in other receivables and payables | (648) | (5,259) | |
Increase in provisions | 1,843 | 864 | |
Change in working capital | (10,549) | (9,471) | |
Income tax paid | (1,549) | (1,821) | |
Net cash used in operating activities | (7,865) | (4,322) | |
Cash flows from investing activities | |||
Acquisition of property, plant and equipment | 5.3. | (3,496) | (10,234) |
Acquisition of intangible assets | (520) | (1,241) | |
Acquisition of financial assets | (71) | (62) | |
Repayment of financial assets | 454 | 383 | |
Acquisition of short-term investment | 5.7. | (22,000) | - |
Interest received | 1,153 | 389 | |
Proceeds from disposal of property, plant and equipment | 66 | 86 | |
Net proceeds from governments grants | 440 | 37 | |
Acquisition of subsidiaries, net of cash acquired | 5.1.1. | - | (22,453) |
Net cash used in investing activities | (23,974) | (33,095) | |
Cash flows from financing activities | |||
Payment of deferred and contingent liabilities to former owners of acquired subsidiaries | 5.12. | (3,581) | (2,878) |
Exercise and subscription of warrants | 5.9. | 1,661 | - |
Proceeds from borrowings | 333 | - | |
Repayment of borrowings | (3,147) | (4,397) | |
Interest paid | (311) | (405) | |
Other finance costs payments | (172) | - | |
Net cash used in financing activities | (5,217) | (7,680) | |
Net decrease in cash and cash equivalents | (37,056) | (45,097) | |
Cash and cash equivalents at the beginning of the period | 222,080 | 118,886 | |
Effect of exchange rate changes on cash and cash equivalents | (14,345) | (912) | |
Cash and cash equivalents at the end of the period | 170,679 | 72,877 |
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Advanced Accelerator Applications S.A.
Table of contents
1. | Description of the group’s business | 9 |
2. | Major events | 10 |
2.1. | Acquisitions | 10 |
2.2. | Other significant events of the first nine months of 2017 | 10 |
2.3. | Events after the reporting date | 12 |
3. | Significant accounting policies | 12 |
3.1. | Statement of Compliance | 12 |
3.2. | Basis of preparation | 12 |
3.3. | IFRS standards | 12 |
3.4. | Foreign currency translation | 15 |
3.5. | Changes in scope and method of consolidation | 16 |
4. | Notes to the condensed consolidated statement of income | 16 |
4.1. | Operating segments and entity-wide disclosures | 16 |
4.2. | Personnel costs | 17 |
4.3. | Share-based payments | 18 |
4.4. | Other operating expenses | 21 |
4.5. | Other operating income | 21 |
4.6. | Research and development expenditures | 21 |
4.7. | Finance income and finance costs | 22 |
4.8. | Income taxes | 22 |
5. | Notes to the condensed consolidated statement of financial position | 23 |
5.1. | Acquisition of business | 23 |
5.2. | Goodwill and Other intangible assets | 25 |
5.3. | Property, plant and equipment | 26 |
5.4. | Inventories | 26 |
5.5. | Trade and other receivables | 26 |
5.6. | Other non-current and current assets | 27 |
5.7. | Cash and cash equivalents | 27 |
5.8. | Retirement benefit schemes | 28 |
5.9. | Equity | 28 |
5.10. | Non-current and current provisions | 29 |
5.11. | Non-current and current financial liabilities | 29 |
5.12. | Other non-current and current liabilities | 30 |
5.13. | Financial assets and liabilities | 33 |
5.14. | Derivative instruments | 34 |
6. | Commitments | 35 |
7. | Consolidation scope | 35 |
8. | Related party disclosures | 35 |
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Advanced Accelerator Applications S.A.
Advanced Accelerator Applications S.A.
Notes to the Condensed Consolidated Interim Financial Statements
Nine Months and Three Months ended September 30, 2017 and 2016 |
Advanced Accelerator Applications S.A. (“AAA” or the “Company”) is incorporated in France. Its registered office is at 20 rue Rudolf Diesel, 01630 Saint Genis Pouilly, France. The condensed consolidated financial statements include those of the Company and its subsidiaries (“the Group”). Each company is referred to as a “Group entity”). The condensed consolidated financial statements were authorized for issue by the board of directors on November 16, 2017.
1. | Description of the group’s business |
AAA is a radiopharmaceutical company founded in 2002, that develops, produces and commercializes molecular nuclear medicine (“MNM”) theragnostics. MNM is a medical specialty that uses trace amounts of radioactive compounds to create functional images of organs and lesions, and to treat diseases such as cancer. Theragnostics is a patient management strategy involving the integration of diagnostics and therapeutics to advance early detection, treatment, and monitoring of diseases. AAA’s theragnostic platform is based on radiolabeling of a targeting molecule with either gallium Ga 68 for diagnostic use, or lutetium Lu 177 for therapy.
AAA’s primary development focus is on theragnostic pairs for oncology indications. AAA’s first theragnostic pairing addresses neuroendocrine tumors (“NETs”), an orphan indication, and includes diagnostic drugs NETSPOT® (in the US) and SomaKit TOC™ (in Europe), and therapeutic drug USAN: lutetium Lu 177 dotatate / INN: lutetium (177Lu) oxodotreotide (“Lutathera®”). In September 2017, the European Commission approved Lutathera® for the treatment of unresectable or metastatic, progressive, well differentiated (G1 and G2), somatostatin receptor positive gastroenteropancreatic NETs (“GEP-NETs”) in adults. A New Drug Application (“NDA”) for Lutathera® is under review with the US Food and Drug Administration (“FDA”). Lutathera® is currently administered on a compassionate use and named patient basis for the treatment of NETs and other tumors over-expressing somatostatin receptors in 10 European countries and in the US under an Expanded Access Program (“EAP”).
Other investigational oncology candidates being developed as theragnostic pairs include PSMA-R2, a selective, second-generation PSMA-targeted ligand for prostate cancer, and NeoBOMB1 a unique, new generation antagonist bombesin analogue targeting Gastrin Releasing Peptide Receptor (“GRPR”)-expressing malignancies, such as gastrointestinal stromal tumors (“GIST”), prostate cancer and breast cancer.
The Company is also a leader in the production and commercialization of molecular nuclear diagnostics (“MND”). AAA has a portfolio of nine drugs used in positron emission tomography (“PET”) and single-photon emission computed tomography (“SPECT”) imaging, with applications in clinical oncology, cardiology, neurology and inflammatory/infectious diseases. AAA’s leading diagnostic product is Gluscan®, our branded 18-fluorodeoxyglucose (“FDG”) PET imaging agent. Gluscan® assists in the diagnosis of serious medical conditions, primarily in oncology, by assessing glucose metabolism. Two other significant products include NETSPOT®, a kit for the preparation of gallium Ga 68 dotatate injection, for the localization of somatostatin receptor positive NETs in adult and pediatric patients using PET; and SomaKit TOC™, a kit for radiopharmaceutical preparation of gallium (Ga 68) edotreotide solution for injection, for localizing primary tumors and their metastases in adult patients with confirmed or suspected well-differentiated GEP-NETs. Additional MND product candidates include Annexin V-128, a SPECT product candidate for the imaging of apoptotic and necrotic lesions with potential applications in a broad range of indications.
In addition to its own portfolio of PET, SPECT and therapy products and product candidates, AAA manufactures several diagnostic products and product candidates for third parties, including GE Healthcare and Eli Lilly in Europe. AAA manufactures most its own products and product candidates, as well as those that it manufactures for third parties at 20 production sites in Europe and the US.
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2. | Major events |
2.1. | Acquisitions |
2.1.1. | Acquisitions for the period 2017 |
There was no acquisition in the first nine months of 2017.
2.1.2. | Acquisitions for the period 2016 |
Acquisition of the IDB Group
AAA acquired 100% of the shares of the IDB Group, incorporated in The Netherlands, in January 2016. The IDB Group consisted of seven entities (six in The Netherlands and one in Belgium). The six Dutch entities have since merged into one entity (IDB Holland BV), effective January 2017. The merger has no impact on the consolidated financial statements. IDB’s business activities include the development, production and wholesale of medical products and more specifically radiopharmaceutical products and medical and industrial radioactive substances. This transaction contributed to AAA’s international expansion and strengthened AAA’s global supply chain in preparation for the commercial launch of Lutathera®. Acquiring the IDB Group provides AAA with a reliable supply of Lu-177 to produce Lutathera® and other future product candidates.
Please refer to note 5.1 for details on the acquired entity.
Acquisition of the PetNet business in Germany
AAA Germany signed an asset purchase agreement in May 2016, to acquire, out of an insolvency procedure, assets and rights to operate F18 production sites in Munich and in Erlangen (both in Germany). The contract in Munich requires AAA Germany to provide a regular supply of F18 products to the owner of the site, the Klinikum of the University of Munich (KUM), for which AAA will be paid a guaranteed revenue stream until July 2028. The transaction closed in June 2016.
The main objectives of the transaction were to strengthen the Company’s presence in the German market and to potentially gain access to interesting R&D activities of the KUM in radiotherapy with prostate-specific membrane antigen (PSMA) and lutetium.
Please refer to note 5.1 for details on the acquired business.
2.2. | Other significant events of the first nine months of 2017 |
Product development
In January 2017, The New England Journal of Medicine published the results of the Phase 3 NETTER-1 study evaluating efficacy and safety of investigational drug Lutathera® in patients with advanced, progressive somatostatin receptor-positive midgut NETs.
In February 2017, NETSPOT® was included in the National Comprehensive Cancer Network® (NCCN®) Clinical Practice Guidelines in Oncology for NETs.
In April 2017, the Company initiated market launch of SomaKit TOC™ in several European markets.
In May 2017, the Company received a 2017 Industry Innovation Award from the National Organization for Rare Disorders (NORD®) for NETSPOT®, at the NORD Rare Impact Awards. NORD is a patient advocacy organization dedicated to individuals with rare diseases and the organizations that serve them. Each year, NORD’s Rare Impact Awards program recognizes individuals and organizations that have made a positive impact on patients’ lives.
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In July 2017, the Company announced that the Committee for Medicinal Products for Human Use (“CHMP”) of the European Medicines Agency (”EMA”) issued a positive opinion recommending the granting of a marketing authorization for Lutathera® for the treatment of unresectable or metastatic, progressive, well differentiated (G1 and G2), somatostatin receptor positive GEP-NETs in adults.
In July 2017, the Company announced that it completed the resubmission of the NDA for Lutathera® to the FDA. The Company also announced that the FDA allowed an amendment to the protocol for the US Expanded Access Program for Lutathera® to permit enrollment of patients with metastasized or locally advanced, inoperable NETs arising at all sites (including foregut, midgut and hindgut), and that have progressive disease during or after treatment with somatostatin analogues. In addition, the amendment includes the use of a 2.5% lysine/arginine amino acid solution as an additional option for renal protection.
In August 2017, AAA announced that the FDA acknowledged receipt and considered complete the resubmission of the NDA for Lutathera®. The Agency provided a new Prescription Drug User Fee Act (PDUFA) date of January 26, 2018.
In September 2017, AAA announced that the first patient had been treated in a Phase I clinical study of Lutathera® in patients with inoperable, somatostatin receptor positive, progressive pancreatic, gastrointestinal, or pulmonary NETs in Japan. The study is being conducted by the Company’s partner in Japan, FUJIFILM RI Pharma.
In September 2017, the European Commission approved the marketing authorization of (Lutathera®) for the treatment of unresectable or metastatic, progressive, well differentiated (G1 and G2), somatostatin receptor positive GEP-NETs in adults. This approval allows for the marketing of Lutathera® in all 28 European Union member states, as well as Iceland, Norway and Liechtenstein.
Manufacturing and distribution Agreements
In March 2017, the Company signed a 10-year agreement with the University of Missouri Research Reactor (MURR®) for exclusive supply of Lu 177 Chloride, a precursor ingredient for Lutathera® and other Lu 177-based therapeutics in development.
In May 2017, the Company entered into a non-exclusive manufacturing agreement and an exclusive distribution agreement for the supply of Blue Earth Diagnostics’ PET imaging product Axumin™ (fluciclovine (18F)) in France, Germany, Spain, Italy, and Portugal. Axumin is indicated in Europe for use in PET imaging to detect recurrence of prostate cancer in adult men with a suspected recurrence based on elevated blood prostate specific antigen (PSA) levels after primary curative treatment.
Equity Transactions
On May 24, 2107, the board of directors (BoD) has approved the allocation of 2,242,410 stock options to the employees of AAA of which only 2,169,385 options have been finally accepted by the employees. These options vest after three years and certain service conditions must be satisfied. They could potentially be converted into 2,169,385 ordinary shares. The exercise price has been established with the support of an external expert.
On May 24, 2017, shareholders authorized the BoD to execute a new warrant plan for the benefit of the non-executive board members.
On June 29, 2017 a total of 50,000 warrants have been purchased by some of our non-executive board members. One warrant entitles to purchase one ordinary share. They can be exercised for a period of three years following their subscription. Please see notes 4.3.3 for details.
Governance
On May 24, 2017, shareholders renewed the mandate of six of our non-executive board members. Mrs. Christine Mikail, J.D., was newly elected to the BoD and she replaces Dr. Yvonne Greenstreet, who did not seek reelection. On the same day, Mr. Claudio Costamagna was confirmed by the BoD as Chairman of the BoD. The mandate of all board members lasts until the approval by shareholders of the annual 2017 financial statements.
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Advanced Accelerator Applications S.A.
Other
At the end of April 2017, the Company offered the former owners of BioSynthema Inc. lump-sum payments to settle early the contingent consideration owed to them (see note 4.7. and 5.12.). Some have accepted the offer. On May 24, 2017, the BoD authorized management to make payment and to extend the validity of the offer for some more time at the same valuation terms.
2.3. | Events after the reporting date |
AAA has entered into a Memorandum of Understanding with Novartis, pursuant to which Novartis proposes to make a cash tender offer to acquire all the outstanding shares of AAA, including shares represented by American Depositary Shares (the “ADSs”), for $41 per ordinary share and $82 per ADS (each representing 2 ordinary shares), in a transaction that is valued at approximately $3.9 billion. This represents a 47% premium to the 30 volume-weighted trading days prior to the unaffected share price on NASDAQ on September 27, 2017. The acquisition by Novartis would result in the immediate vesting of all allocated stock options.
3. | Significant accounting policies |
3.1. | Statement of Compliance |
The condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
The condensed consolidated interim financial statements for the three and nine months ended September 30, 2017, and 2016, are presented and have been prepared in compliance with IAS 34, Interim Financial Reporting, regarding interim financial reporting information. This standard stipulates that condensed consolidated interim financial statements do not include all the information required under IFRS for the preparation of annual consolidated financial statements.
These condensed consolidated interim financial statements must therefore be read in conjunction with the consolidated financial statements for the year ended December 31, 2016. The Group’s activity related to the nine-month period ended September 30, 2017, and 2016, does not show any significant seasonal effect.
3.2. | Basis of preparation |
The condensed consolidated interim financial statements for the three and nine-month periods ended September 30, 2017, and 2016, are presented in Euro, the functional currency of the Company, rounded to the nearest thousand unless otherwise stated.
The condensed consolidated statement of income is presented on the basis of a classification of income and expenses by nature.
The condensed consolidated statement of cash flows has been prepared using the indirect method.
3.3. | IFRS standards |
New currently effective requirements
The accounting policies are consistent with those of the annual financial statements for the year ended December 31, 2016, as described in the consolidated financial statements for the year ended December 31, 2016, with the exception of the adoption as of January 1, 2017, of the standards and interpretations described below:
a) | Amendments to IAS 7 Statement of Cash Flows, disclosure initiative; |
b) | Amendments to IAS 12, recognition of Deferred Tax Assets for Unrealized Losses; and |
c) | Amendments to IFRS 12, disclosure of interests in Other Entities – clarification of the scope of the disclosure requirements in IFRS 12. |
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Advanced Accelerator Applications S.A.
The adoption of the above standards did not result in any significant impact on these condensed consolidated interim financial statements.
The nature and effects of the changes are explained below.
a) | Amendments to IAS 7, disclosure initiative |
The amendments require entities to provide disclosures about changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses).
b) | Amendments to IAS 12, recognition of Deferred Tax Assets for Unrealized Losses |
The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.
c) | Amendments to IFRS 12, disclosure of interests in Other Entities – clarification of the scope of the disclosure requirements in IFRS 12. |
The amendments clarify that the disclosure exemption in IFRS 12. B17, apply to an entity’s interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified (or included in a disposal group that is classified) as held for sale.
Forthcoming requirements
The Group has not applied the following new and revised IFRSs that have been issued, but are not yet effective:
IFRS 9 | Financial Instruments (1) |
IFRS 15 | Revenue from contract with customers (1) |
Amendments to IFRS 10 and IAS 28 | Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (3) |
Amendment to IFRS 2 | Classification and Measurement of Share-based Payment Transactions (1) |
Amendments to IFRS 4 | Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (1) |
Amendments to IAS 40 | Transfers of Investment Property (1) |
IFRIC Interpretation 22 | Foreign Currency Transactions and Advance Consideration (1) |
AIP IFRS 1 |
First-time Adoption of International Financial Reporting Standards - Deletion of short-term exemptions for first-time adopters (1)
|
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Advanced Accelerator Applications S.A.
AIP IAS 28 | Investments in Associates and Joint-Ventures - Clarification that measuring investees at fair value through profit or loss in an investment - by - investment choice (1) |
IFRS 16 | Leases (2) |
(1) | Effective for annual period beginning on or after January 1, 2018, with earlier application permitted for IFRS 9 and IFRS 15 |
(2) | Effective for annual period beginning on or after January 1, 2019, with earlier adoption permitted if IFRS 15 Revenue from Contracts with Customers has also been applied |
(3) | Effective date postponed indefinitely, with earlier application permitted |
These standards are further detailed below:
IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance and recognition and derecognition of financial instruments from IAS 39.
The application of IFRS 9 is not expected to have any significant impact on financial statements.
IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers.
The five steps in the model are:
· | Step 1: Identify the contract with the customer; |
· | Step 2: Identify the performance obligations in the contract; |
· | Step 3: Determine the transaction price; |
· | Step 4: Allocate the transaction price to the performance obligations in the contracts; and |
· | Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. |
Under IFRS 15, an entity recognizes revenue when (or as) a performance obligation is satisfied.
IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when it becomes effective.
Guidance is provided on topics such as the point at which revenue is recognized, accounting for variable consideration, costs of fulfilling and obtaining a contract and various related matters. New disclosures about revenue are also introduced.
Most of the Group’s revenue is derived from the sales of diagnostic products. For such products, the transfer of control occurs when the batch is delivered to the customer, which is also the date on which the sales revenue is recognized in the statement of income. The application of IFRS 15 is not expected to have any significant impact on the revenue recognition for these products.
Amendment to IFRS 2 Classification and Measurement of Share-based Payment Transactions. The amendments clarify that the approach used to account for vesting conditions when measuring equity-settled share-based payments also applies to cash-settled share-based payments. This amendment adds an exception to address the narrow situation where the net settlement arrangement is designed to meet an entity's obligation under tax laws or regulations to withhold a certain amount to meet the employee's tax obligation associated with the share-based payment.
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Advanced Accelerator Applications S.A.
This amount is then transferred, normally in cash, to the tax authorities on the employee’s behalf. To fulfil this obligation, the terms of the share-based payment arrangement may permit or require the entity to withhold the number of equity instruments that are equal to the monetary value of the employee’s tax obligation from the total number of equity instruments that otherwise would have been issued to the employee upon exercise (or vesting) of the share-based payment (‘net share settlement feature’).
Amendments to IFRS 4. The amendments address concerns arising from implementing the new financial instruments Standard, IFRS 9, before implementing the new insurance contracts standard that the board is developing to replace IFRS 4.
Amendments to IAS 40. The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in management’s intentions for the use of a property does not provide evidence of a change in use.
IFRIC Interpretation 22. The interpretation clarifies that in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the advance consideration.
AIP IAS 28. The amendments clarify that an entity that is a venture capital organization, or other qualifying entity, may elect, at initial recognition on an investment-by-investment basis, to measure its investments in associates and joint ventures at fair value through profit or loss.
IFRS 16 establishes principles for the recognition, measurement, presentation and disclosure of leases, with the objective of ensuring that lessees and lessors provide relevant information that faithfully represents those transactions.
IFRS 16 eliminates the classification of leases as either operating lease or finance lease for a lessee. Instead, all leases are treated in a similar way to finance leases applying IAS 17. Leases are capitalized recognizing the present value of the lease payments and showing them either as lease assets (right-of-use assets) or together with property, plant and equipment. If lease payments are made over time, the Company also recognizes a financial liability representing its obligation to make future lease payments.
IFRS 16 changes the nature of expenses related to off-balance sheet leases. It replaces the typical straight line operating lease expense with a depreciation charge for lease assets (included within operating costs) and an interest expense on lease liabilities (included within finance costs).
Accounting exemptions apply to short-term lease and to leases of low-value assets. The potential impact of the application of IFRS 16 is currently under review by the Group.
3.4. | Foreign currency translation |
In preparing the financial statements of the Group, the financial statements of subsidiaries, which report in a currency other than the Euro, are translated to Euro as follows:
· | Assets and liabilities, including goodwill and fair value adjustments arising on a business combination, are translated into Euro at the foreign exchange rates at the reporting date. |
· | Income statement items are translated into Euro at the exchange rate, which represents the average exchange rate for the period. |
· | All resulting translation differences are recognized directly in other comprehensive income. |
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Advanced Accelerator Applications S.A.
The table below shows the exchange rates used by the Group:
2017 | USD | CAD | ILS | CHF | GBP | PLN |
Closing Rate | 0.8490 | 0.6810 | 0.2411 | 0.8726 | 1.1411 | 0.2319 |
Average Rate nine months ended September 30, | 0.8979 | 0.6875 | 0.2477 | 0.9134 | 1.1453 | 0.2345 |
2016 | USD | CAD | ILS | CHF | GBP | PLN |
Closing Rate | 0.8960 | 0.6807 | 0.2381 | 0.9195 | 1.1614 | 0.2315 |
Average Rate nine months ended September 30, | 0.8936 | 0.6816 | 0.2333 | 0.9148 | 1.2374 | 0.2297 |
Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency using the exchange rate of that date.
Exchange differences on monetary assets and liabilities denominated in foreign currencies are recognized in operating income or financial result per the nature of the underlying transaction.
Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rate at the date of the transaction.
Non-monetary items denominated in foreign currencies that are measured at fair value are translated using the exchange rate at the date when the fair value was determined.
3.5. | Changes in scope and method of consolidation |
There were no changes in the scope and method of consolidation in 2017.
On January 6, 2016, and May 18, 2016, AAA respectively acquired the IDB Group and the PetNet business in Germany. These businesses have been consolidated since their dates of acquisition (see notes 2.1.2. and 5.1.2).
4. | Notes to the condensed consolidated statement of income |
4.1. | Operating segments and entity-wide disclosures |
Operating segment
In compliance with IFRS 8 Operating Segments, the segment information is based on internal management reports used by the board of directors (the chief operating decision maker of the Group) to review the performance of the business. There is only one operating segment in the Group and its performance is shown in the condensed consolidated interim statement of income.
Entity-wide disclosures
Other required entity-wide disclosures in accordance with IFRS 8 are presented below.
Sales by product category
Three months | Nine months | ||||
In € thousands | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
PET | 27,075 | 15,776 | 74,699 | 48,499 | |
Therapy (1) | 5,374 | 5,415 | 16,146 | 16,588 | |
SPECT | 2,084 | 2,314 | 6,850 | 6,941 | |
Other products | 2,712 | 3,218 | 8,715 | 9,254 | |
Total | 37,245 | 26,723 | 106,410 | 81,282 |
(1) | Includes a provision of €1.4 million at September 30, 2017 for probable payback to a public agency, due to a likely price reduction following marketing authorization for Lutathera®. |
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Advanced Accelerator Applications S.A.
Sales are presented net of pharmaceutical taxes.
Geographical information
The two tables that follow show the Group’s sales and non-current assets by country. In presenting the following information, sales disclosures are based on the location of customers and asset disclosures on the location of the sites of Group entities.
Sales by country
Three months | Nine months | ||||
In € thousands | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
France | 8,805 | 8,499 | 27,658 | 25,438 | |
United States (1) | 8,903 | 158 | 19,787 | 158 | |
Italy | 5,908 | 5,542 | 18,397 | 16,977 | |
Spain | 3,855 | 2,874 | 11,222 | 8,888 | |
United Kingdom | 2,580 | 3,134 | 9,003 | 11,487 | |
The Netherlands | 2,157 | 1913 | 6,255 | 5,864 | |
Germany | 1,872 | 1,494 | 5,071 | 3,039 | |
Switzerland | 1,681 | 1,350 | 5,037 | 4,260 | |
Portugal | 955 | 998 | 2,590 | 2,921 | |
Israel | 298 | 625 | 866 | 1,716 | |
Poland | 128 | 104 | 321 | 423 | |
Belgium | 103 | 32 | 203 | 111 | |
Total | 37,245 | 26,723 | 106,410 | 81,282 |
(1) | Sales start of NETSPOT® in the United States in August 2016, following FDA approval in June 2016. |
Non-current assets by country
The table of non-current assets by geographical location excludes financial, other non-current and deferred tax assets.
In € thousands | September 30, 2017 | December 31, 2016 |
United States | 25,730 | 28,966 |
The Netherlands | 24,963 | 26,441 |
France | 19,276 | 22,155 |
Spain | 18,259 | 18,816 |
Italy | 12,894 | 13,982 |
Israel | 12,072 | 12,841 |
Germany | 10,047 | 10,614 |
Canada | 5,627 | 5,824 |
Portugal | 1,356 | 1,531 |
Switzerland | 1,126 | 853 |
United Kingdom | 678 | 891 |
Poland | 26 | 98 |
Total | 132,054 | 143,012 |
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Advanced Accelerator Applications S.A.
4.2. | Personnel costs |
Personnel costs are analyzed as follows:
Three months | Nine months | ||||
In € thousands | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
Wages and salaries | 7,973 | 6,490 | 22,968 | 18,946 | |
Social charges | 1,754 | 2,098 | 6,033 | 5,282 | |
Share-based payments | 3,640 | 1,675 | 9,487 | 4,220 | |
Other personnel expenses | 846 | 526 | 2,259 | 1,268 | |
Total | 14,213 | 10,789 | 40,747 | 29,716 |
The table below shows AAA personnel by country as of September 30, 2017, and September 30, 2016.
September 30, 2017 | September 30, 2016 | |
Italy | 140 | 130 |
France | 122 | 111 |
United States | 79 | 43 |
Spain | 60 | 54 |
United Kingdom | 41 | 38 |
Germany | 39 | 31 |
Switzerland | 35 | 16 |
Israel | 14 | 15 |
Portugal | 13 | 16 |
The Netherlands | 13 | 11 |
Poland | 7 | 15 |
Total | 563 | 480 |
In the third quarter and nine months ended September 30, 2017 and 2016, the total remuneration of the Group’s senior executives was as follows:
Three months | Nine months | ||||
In € thousands | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
Short-term benefits | 538 | 708 | 1,682 | 1,617 | |
Share-based payments | 590 | 228 | 1,547 | 567 | |
Post employment defined benefits | 29 | 23 | 92 | 39 | |
Total | 1,157 | 959 | 3,321 | 2,223 |
4.3. | Share-based payments |
4.3.1. | Restricted (free) share plans |
Share-based payments include restricted (free) share plans for Group management. The fair value of the share grants was determined by reference to the share market price since the Initial Public Offering (IPO) and before, to the subscription price of share capital increases carried out closest to the dates of these free share grants.
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Advanced Accelerator Applications S.A.
There are no vesting conditions, except for a service condition.
Grant date | 11/2011 | 01/2012 | 12/2012 | 08/2013 | 11/2014 | 05/2015 | 08/2016 | 11/2016 |
Number of shares granted | 370,000 | 15,000 | 562,500 | 477,500 | 155,000 | 160,000 | 192,000 | 4,500 |
Fair value at grant date (€) | 4.0 | 4.0 | 4.0 | 5.0 | 5.0 | 6.1 | 15.40 | 14.36 |
Total fair value (€) | 1,480,000 | 60,000 | 2,250,000 | 2,387,500 | 775,000 | 976,000 | 2,956,800 | 64,620 |
Vesting period (in years) | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 |
An expense of €1.2 million was recognized in the condensed consolidated statement of income for the nine-month period ended September 30, 2017, and €0.7 million for the nine-month period ended September 30, 2016.
4.3.2. | Options |
2,169,385 stock options were granted to employees in May 2017. One option can be exercised to buy one ordinary share of the Company.
Movements in stock options in the nine-month period ended September 30, 2017, were as follows:
Number of options | Weighted average exercise price | |
At January 1, 2017 | 5,875,425 | $11.31 |
Options granted in the period | 2,169,385 | $18.30 |
Options exercised in the period | - | - |
Options lapsed in the period | - | - |
Options forfeited in the period | 277,225 | $13.06 |
At September 30, 2017 | 7,767,585 | $13.20 |
The options granted in November 2015, outstanding at September 30, 2017, had an exercise price of US$8.00 (€7.45 based on an exchange rate at the grant date) and a weighted average remaining contractual life of 8.11 years.
The options granted in August 2016, outstanding at September 30, 2017, had an exercise price of US$17.21 (€15.41 based on an exchange rate at the grant date) and a weighted average remaining contractual life of 8.91 years.
The options granted on December 22, 2016, outstanding at September 30, 2017, had an exercise price of US$13.89 (€13.30 based on an exchange rate at the grant date) and a weighted average remaining contractual life of 9.23 years.
The options granted on May 24, 2017, outstanding at September 30, 2017, had an exercise price of US$18.30 (€16.35 based on an exchange rate at the grant date) and a weighted average remaining contractual life of 9.65 years.
No options were exercisable at September 30, 2017.
An expense of €8.2 million was recognized in the condensed consolidated statement of income for the nine-month period ended September 30, 2017 and €3.5 million for the nine-month period ended September 30, 2016.
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Advanced Accelerator Applications S.A.
4.3.3. | Warrants |
Movements in equity-settled warrants over ordinary shares in the Company in the nine-month period ended September 30, 2017 were as follows:
Number of warrants | Weighted average exercise price | ||||
2015 plan | 2016 plan | 2017 plan | Total | ||
At January 1, 2017 | 225,000 | 112,500 | - | 337,500 | €8.93 |
Warrants granted in the period | - | 37,300 | 12,700 | 50,000 | €16.64 |
Warrants lapsed in the period | - | - | - | - | - |
Warrants exercised in the period | 225,000 | - | - | 225,000 | €6.10 |
At September 30, 2017 | - | 149,800 | 12,700 | 162,500 | €15.21 |
162,500 warrants are exercisable at reporting date. The 112,500 warrants from the first subscription to the 2016 plan are exercisable at a price of €14.58. The remaining 37,300 from the 2016 plan and the 12,700 warrants from the 2017 plan are exercisable at a price of €16.64.
Movements in equity-settled warrants over ordinary shares in the Company in the nine-month period ended September 30, 2016 were as follows:
Number of warrants | Weighted average exercise price | |||
2015 plan | 2016 plan | Total | ||
At January 1, 2016 | 225,000 | - | 225,000 | €6.10 |
Warrants granted in the period | - | - | - | - |
Warrants lapsed in the period | - | - | - | - |
Warrants exercised in the period | - | - | - | - |
At September 30, 2016 | 225,000 | - | 225,000 | €6.10 |
4.3.3.1. | 2015 Warrant plan |
The 225,000 warrants granted in 2015, to six board members for a consideration of €0.80 per warrant have been exercised in March 2017.
4.3.3.2. | 2016 Warrant plan |
AAA shareholders approved, on May 26, 2016, a warrant plan for the seven non-executive board members and delegated execution authorization to the BoD. Shareholders approved issuance of up to 149,800 warrants. The purchase of one warrant entitles to purchase one share. The shareholder resolution states that the board has 18 months to use the delegation and the beneficiaries of the plan have three years to exercise their right to buy shares should they decide to do so. The board made use of the shareholder delegation on May 26, 2016, and decided to put in place the warrant plan. The warrant subscription price and the share exercise price were determined with the support of an external valuation specialist.
As of October 7, 2016, 112,500 warrants have been subscribed by five non-executive board members. The exercise price was set at €14.58.
On June 15, 2017, the board of directors decided to set the subscription price for the remaining 37,300 warrants from this plan 2016 at €5.78 and the share exercise price at €16.64.
As of June 29, 2017, the remaining 37,300 warrants have been subscribed and the 2016 warrant plan has thus been entirely utilized. No more 2016 warrants remain for subscription.
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Advanced Accelerator Applications S.A.
4.3.3.3. | 2017 Warrant plan |
AAA shareholders approved, on May 24, 2017, a warrant plan for the seven non-executive board members and delegated authorization for its execution to the board. The shareholders approved issuance of up to 175,000 warrants. The purchase of one warrant entitles to purchase one share. The shareholder resolution states that the board has 18 months to use the delegation and the beneficiaries of the plan have three years to exercise their right to buy shares should they decide to so. The board made use of the shareholder delegation on May 24, 2017, and decided to put in place the warrant plan. The warrant subscription price and the share exercise price were determined with the support of an external valuation specialist.
The board of directors on June 15, 2017 decided to set the subscription price at €5.78 and the share exercise price at €16.64. The subscription period was June 20, 2017 to June 29, 2017.
As of June 29, 2017, 12,700 warrants have been subscribed, which means that a total of 162,300 warrants remain available for subscription in this plan. Any further subscription would be subject to a new valuation of the subscription price and determination of a new exercise price.
4.4. | Other operating expenses |
Other operating expenses principally concern non-inventoried purchases, consumable equipment & supplies, travelling expenses, communication costs, consulting and other external services relating to R&D, and other professional services:
Three months | Nine months | ||||
In € thousands
|
September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
Transport | 3,378 | 2,704 | 9,982 | 8,208 | |
External R&D services (1) | 1,939 | 1,349 | 9,412 | 5,147 | |
Consulting and other professional services | 3,204 | 2,084 | 9,102 | 5,302 | |
Lease and other administrative expenses | 1,367 | 1,583 | 5,018 | 3,952 | |
Repairs and maintenance | 1,334 | 965 | 3,726 | 3,163 | |
Communications | 1,207 | 888 | 3,394 | 2,253 | |
Travel expenses | 1,056 | 880 | 3,072 | 2,459 | |
Energy | 363 | 341 | 1,213 | 1,015 | |
Royalties and Licensing fees | 261 | 415 | 1,177 | 1,312 | |
Taxes | 275 | 267 | 652 | 741 | |
Allowance for doubtful accounts | 158 | (8) | 163 | 35 | |
Net loss on disposal of non-current assets | - | 179 | - | 265 | |
Other | 271 | 630 | 1,001 | 1,338 | |
Total | 14,813 | 12,277 | 47,912 | 35,190 |
(1) The increase of R&D expenses compared to the nine-month period ended September 30, 2016 is mostly due to the additionnal costs on Netter 1 and Bombesin.
4.5. | Other operating income |
Three months | Nine months | ||||
In € thousands | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
Government subsidies | 556 | 564 | 1,900 | 2,578 | |
Net gain on disposal of non-current assets | 25 | 4 | 33 | - | |
Other operating income | 744 | 15 | 1,641 | 926 | |
Total | 1,325 | 683 | 3,574 | 3,504 |
Government subsidies consist for the most part of the French research tax credit (Crédit d’Impôt Recherche = CIR).
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Advanced Accelerator Applications S.A.
4.6. | Research and development expenditures |
Three months | Nine months | |||||
In € thousands | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | ||
Personnel costs (including share-based payments for R&D personnel) | 1,639 | 803 | 3,511 | 2,384 | ||
Other operating costs (including depreciation and amortization) | 2,071 | 1,818 | 10,761 | 6,642 | ||
Total | 3,710 | 2,621 | 14,272 | 9,026 | ||
Total expenditures on R&D projects include external fees, personnel costs, depreciation and amortization on fixed and intangible assets, transport and consumables costs.
4.7. | Finance income and finance costs |
Three months | Nine months | ||||
In € thousands | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
Net foreign exchange gain | - | - | - | - | |
Unrealized gain on derivatives at fair value | 822 | - | 1,230 | - | |
Change in fair value of contingent consideration (1) | 101 | 264 | 6,163 | 458 | |
Other | 291 | 163 | 1,155 | 354 | |
Total finance income | 1,214 | 427 | 8,548 | 812 | |
Three months | Nine months | ||||
In € thousands | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
Net foreign exchange loss (3) | (4,116) | (466) | (18,488) | (1,707) | |
Unrealized loss on derivatives at fair value | (410) | (28) | (410) | (67) | |
Change in fair value of contingent consideration (2) | (14,628) | (755) | (14,853) | (2,089) | |
Interest expenses | (103) | (253) | (337) | (430) | |
Other | (320) | - | (560) | (366) | |
Total finance costs | (19,577) | (1,502) | (34,648) | (4,659) |
(1) | The €6.2 million gain is due to the renegociation of the BioSynthema Inc. share purchase agreement to former owners (Refer Note 5.12) |
(2) | The changes relate primarily to the estimated fair values of the contingent considerations payable to the former owners of BioSynthema (now Advanced Accelerator Applications USA, Inc.) and Atreus (now Advanced Accelerator Applications Canada Inc.). Refer to note 5.12 for further details. It includes €14.5 million loss mainly related to the approval of the market authorization of Lutathera® obtained in September 2017 for Europe (see note 2.2.). |
(3) | The net foreign exchange loss is mainly an unrealized loss due to the conversion to Euros of cash held in US$. |
4.8. | Income taxes |
Income tax expense represents the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income of the nine-month period ended September 30, 2017.
Three months | Nine months | ||||
In € thousands | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
Current tax (1) | (1,168) | (598) | (2,979) | (2,072) | |
Deferred tax (2) | 479 | 573 | 1,305 | 2,494 | |
Total | (689) | (25) | (1,674) | 422 |
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Advanced Accelerator Applications S.A.
(1) | The increase in current income tax of €0.9 million is mainly due to an increase in taxable profit recognized on Adva nced Accelerator Applications International partly offset by the remaining carry forward losses in the current period. |
(2) | The year-to-date decrease for €1.2 million is mainly related to Advanced Accelerator Applications USA, Inc. The deferred tax income was limited in 2017, to align the deferred tax asset to the deferred tax liability. |
5. | Notes to the condensed consolidated statement of financial position |
5.1. | Acquisition of business |
5.1.1. | Acquisition of business in the nine months ended September 30, 2017 |
None.
5.1.2. | Acquisition of business in the nine months ended September 30, 2016 |
Acquisition of the PetNet business in Germany
AAA Germany signed in May 2016, an asset purchase agreement to acquire, out of an insolvency procedure, assets and rights to operate F 18 production sites in Munich and in Erlangen (both in Germany). The contract in Munich requires AAA Germany to supply F 18 products to the owner of the site, the Klinikum of the University of Munich (KUM). AAA will be paid a guaranteed revenue stream until July 2028 for this supply.
In June 2016, AAA Germany acquired from PetNet Solutions GmbH, a cooling system, which is installed in the Munich site.
The main objectives of these acquisitions are to improve the Company’s competitive position in the German market and to potentially gain access to interesting new product development efforts, which are fully in line with AAA’s own R&D efforts.
The total consideration for the purchase of all assets is €2.2 million. It is an asset deal, in accordance with IFRS 3. AAA also agreed, with the insolvency administrators, to pay the salaries of the persons employed at these two sites as of May 2016.
Recognized amounts of identifiable assets acquired and liabilities assumed at acquisition date (June 1st, 2016) (in thousands) |
€ | |
Customer relationships | 2,126 | |
Property, plant and equipment | 579 | |
Inventory | 151 | |
Other current assets | 16 | |
Deferred tax assets | 636 | |
Deferred tax liabilities | (698) | |
Non-current provisions | (364) | |
Other current liabilities | (99) | |
Total net assets acquired | 2,347 | |
Negative goodwill * | (127) | |
Total consideration | 2,220 | |
Satisfied by:
|
||
Cash | 2,220 | |
Total consideration transferred | 2,220 | |
Net cash outflow due to this acquisition: | ||
Cash consideration | 2,220 | |
2,220 |
* Recognized in other income.
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Advanced Accelerator Applications S.A.
The amounts of revenue and loss of the PetNet business since the acquisition date included in the consolidated statement of comprehensive income for the year ended December 31, 2016, are €1.4 million and €0.1 million respectively.
As of December 31, 2016, the purchase price allocation is considered preliminary. The initial accounting for this acquisition may be revised within one year following the acquisition date. No new information on facts and circumstances that already existed at the date of acquisition was obtained.
Acquisition of the IDB Group
AAA acquired 100% of the shares of the IDB Group, incorporated in The Netherlands, in January 2016. The IDB Group consisted of seven entities (six in The Netherlands and one in Belgium). The six Dutch entitites have since merged into one entity (IDB Holland BV), effective as of January 2017. The merger has no impact on the consolidated financial statements. IDB’s business activities include the development, production and wholesale of medical products and more specifically radiopharmaceutical products and medical and industrial radioactive substances. This transaction contributed to AAA’s international expansion and strengthened AAA’s global supply chain in preparation for the commercial launch of lutetium Lu 177 dotatate (Lutathera®). Acquiring the IDB Group provided AAA with a reliable supply of Lu-177 to produce lutetium Lu 177 dotatate (Lutathera®) and a business for other future product candidates.
Recognized amounts of identifiable assets acquired and liabilities assumed at acquisition date (in thousands)
|
€
| |
Intangible assets | 14,292 | |
Property, plant and equipment | 3,406 | |
Inventory | 490 | |
Trade and other receivables | 905 | |
Other current assets | 340 | |
Cash and cash equivalent | 3,467 | |
Deferred tax liabilities | (4,150) | |
Trade and other payable | (800) | |
Other current liabilities | (449) | |
Total net assets acquired | 17,501 | |
Goodwill | 10,814 | |
Total consideration | 28,315 | |
Satisfied by: | ||
Cash | 23,700 | |
Contingent consideration arrangement | 4,615 | |
Total consideration transferred | 28,315 | |
Net cash outflow due to this acquisition: | ||
Cash consideration | 23,700 | |
Less: cash and cash equivalents acquired | (3,467) | |
20,233 |
Intangible assets acquired consist of customer relationships valued at €6 million and trademarks and licenses valued at €8.3 million using the multi-period excess earning method.
Under the contingent consideration arrangement, AAA was obligated to pay the sellers an additional earn-out. AAA has made a first payment of €1.7 million at the end of April 2016, and a second payment of €1.0 million in June 2016. A final payment of €1.75 million was made in January 2017.
AAA paid also in April 2016, €0.3 million based on the net financial position at the acquisition date.
A Goodwill has been recognized in the acquisition of the IDB Group because the consideration paid included expectations regarding future revenue growth, ease of market development and increased control of distribution channels.
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Advanced Accelerator Applications S.A.
These benefits are not recognized separately from Goodwill because they do not meet the recognition criteria for identifiable intangible assets. Goodwill resulting from this acquisition is not expected to be deductible for tax purposes.
5.2. | Goodwill and Other intangible assets |
5.2.1. | Change in the period |
The carrying amount of the Goodwill and other intangible assets was €79.1 million at December 31, 2016 and decreased to €73.7 million at September 30, 2017. The change is mainly attributable to amortization for the period and translation differences.
5.2.2. | Allocation of Goodwill and Other non-amortized intangible assets to Cash-Generating Units (CGUs) |
The Group has allocated Goodwill and other intangible assets to its CGUs. The CGUs correspond to each of the countries in which the Group operates. The carrying amount of goodwill and other non-amortized intangible assets allocated is as follows:
September 30, 2017 | ||||
In € thousands | Goodwill | Acquired IPR&D | Accumulated impairment | Total |
United States | 3,841 | 11,207 | - | 15,048 |
The Netherlands | 10,814 | - | - | 10,814 |
Israel | 8,689 | - | - | 8,689 |
Spain | 6,261 | - | - | 6,261 |
Canada | 567 | 5,060 | - | 5,627 |
Gipharma | 1,947 | - | - | 1,947 |
Germany | 1,065 | - | - | 1,065 |
Italy | 200 | - | - | 200 |
Portugal | 1,855 | - | (1,855) | - |
Total | 35,239 | 16,267 | (1,855) | 49,651 |
December 31, 2016 | ||||
In € thousands | Goodwill | Acquired IPR&D | Accumulated impairment | Total |
United States | 4,290 | 12,523 | - | 16,813 |
The Netherlands | 10,814 | - | - | 10,814 |
Israel | 8,906 | - | - | 8,906 |
Spain | 6,261 | - | - | 6,261 |
Canada | 587 | 5,237 | - | 5,824 |
Gipharma | 1,947 | - | - | 1,947 |
Germany | 1,065 | - | - | 1,065 |
Italy | 200 | - | - | 200 |
Portugal | 1,855 | - | (1,855) | - |
Total | 35,925 | 17,760 | (1,855) | 51,830 |
Goodwill decreased from €34.1 million at December 31, 2016 to €33.4 million at September 30, 2017. The decrease is mainly due to translation differences on the goodwill of the CGUs in Israël and in the United States.
5.2.3. | Impairment review of intangible assets |
The carrying amounts of Goodwill and other intangible assets with indefinite useful lives are reviewed for impairment annually, at year end, and whenever events or circumstances indicate that assets may be impaired. An impairment charge is recognized when the recoverable value of an intangible becomes lower than its carrying amount.
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Advanced Accelerator Applications S.A.
No trigger event occurred during the period that would indicate the need for impairment.
Details on the latest annual impairment tests that were carried out, including sensitivity analysis and principal assumptions used are disclosed in the consolidated financial statements for the year ended December 31, 2016
5.3. | Property, plant and equipment |
For the nine-month period ended September 30, 2017 the Group didn’t make any major acquisition. The new AAA Iberica’s Murcia site has been operational since February 15, 2017.
5.4. | Inventories |
In € thousands | September 30, 2017 | December 31, 2016 | |
Raw materials | 8,180 | 4,932 | |
Finished goods | 1,514 | 1,311 | |
Generators (1) | 895 | 347 | |
Work in Progress | 652 | 308 | |
Other | 1,273 | 1,202 | |
Total | 12,514 | 8,100 | |
(1) | Generators are assets used in the production process and held at hospitals. The useful lives of those assets are less than one year. |
5.5. | Trade and other receivables |
Trade and other receivables are as follows:
In € thousands | September 30, 2017 | December 31, 2016 | |
Gross value | 38,847 | 31,887 | |
Allowance for doubtful accounts | (965) | (808) | |
Total | 37,882 | 31,079 | |
Aging of trade and other receivables
In € thousands | September 30, 2017 | December 31, 2016 |
Not overdue | 24,516 | 18,629 |
Past due up to 30 days | 4,939 | 4,761 |
Past due for 30-60 days | 2,144 | 2,414 |
Past due for 60-90 days | 2,143 | 1,396 |
Past due for 90-180 days | 2,525 | 1,730 |
Past due for more than 180 days | 2,580 | 2,957 |
Allowance for doubtful accounts | (965) | (808) |
Total | 37,882 | 31,079 |
AAA is not significantly exposed to credit risk. A large portion of the customers are public hospitals which represent a relatively low risk.
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Advanced Accelerator Applications S.A.
5.6. | Other non-current and current assets |
Other non-current and current assets are as follows:
In € thousands | September 30, 2017 | December 31, 2016 |
R&D tax credit receivable | 7,714 | 6,116 |
Tax receivables (incl. VAT) and other receivables | 353 | 242 |
Allowance on R&D tax credits (1) | (2,417) | (2,417) |
Total other non-current assets | 5,650 | 3,941 |
R&D tax credit receivable | 3,328 | 3,328 |
Tax receivables (incl. VAT) and other receivables | 3,203 | 5,002 |
Derivative assets | 1,215 | - |
Prepaid expenses | 3,123 | 2,122 |
Allowance on R&D tax credits (1) | (2,667) | (2,663) |
Total other current assets | 8,202 | 7,789 |
(1) | AAA is currently being audited for the fiscal years 2013, 2014, and 2015, by the French tax authorities. The preliminary report established by the assigned CIR expert challenges the eligibility of several of our R&D projects and expenses. The claims include, but are not limited to, not recognizing the required innovativeness of our projects and missing or insufficient documentation. The financial consequences of this audit remain uncertain. With the support of qualified external experts from a company specializing in CIR matters, we have reviewed all our projects and expenses for the period from 2013 to 2016. As a consequence of this review, and on the recommendation of these experts, we have taken a provision of €5.1 million in our financial statements closed at December 31, 2016 and September 30, 2017. This provision corresponds to our current best estimate of the CIR amount we may eventually not be able to claim. |
5.7. | Short-term investment, Cash and cash equivalents |
Short-term investment is as follows:
In € thousands | September 30, 2017 | December 31, 2016 |
Short-term investment (EUR origin) | 22,000 | - |
Total | 22,000 | - |
Cash and cash equivalents are as follows:
In € thousands | September 30, 2017 | December 31, 2016 |
Term saving deposits (1) | 109,298 | 175,532 |
Cash | 61,381 | 46,548 |
Total | 170,679 | 222,080 |
(1) | Include very insignificant risk of a negative change in value and have maturity dates of typically less than three months. |
Cash and cash equivalents are held in the following currencies:
In € thousands | September 30, 2017 | December 31, 2016 |
US Dollar | 89,643 | 161,813 |
Other currencies | 81,036 | 60,267 |
Total | 170,679 | 222,080 |
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Advanced Accelerator Applications S.A.
5.8. | Retirement benefit schemes |
The defined benefit obligation at September 30, 2017, is estimated, using the latest actuarial valuation at December 31, 2016. There have not been any other significant fluctuations or one-time events since that time that would require adjustments to the actuarial assumptions made at December 31, 2016 (see note 5.10.).
5.9. | Equity |
The Group’s policy is to manage its capital to ensure to be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance. The capital structure consists of financial liabilities as detailed in Notes 5.11 offset by cash and bank balances and equity (comprising issued capital, reserves and retained earnings). The Group is not subject to any externally imposed capital requirements.
At September 30, 2017, the share capital consists of 88,333,157 fully paid-up ordinary shares, with a nominal value of €0.10 per share.
Increase of share capital
The increase in share capital, which occurred from January 1, 2017, through September 30, 2017, is described below:
Date | Nature of operation | Note | Number of shares | Price per share | Raised capital (in K€) | Nominal value | Share capital (in K€) |
Dec 31, 2016 | Outstanding shares | 87,952,657 | 0.10 | 8,795 | |||
March 3, 2017 | Exercise of 225,000 warrants at a €6.1 price | (1) | 225,000 | 6.10 | 1,373 | 0.10 | 23 |
May 28, 2017 | Issuance of common shares (free shares allocated to employees) | 155,500 | 0.10 | 15 | |||
Total | 88,333,157 | 1,373 | 0.10 | 8,833 |
(1) | On March 3, 2017, the 225,000 warrants granted in 2015 to six board members for a consideration of €0.80 per warrant have been exercised at a price of €6.10. |
Basic and diluted loss per share
Three months | Nine months | ||||||
Net loss (In € thousands) |
Average number of shares outstanding |
Loss per share (€) |
Net loss (In € thousands) |
Average number of shares outstanding |
Loss per share (€) | ||
Nine-month period ended September 30, 2017 | (22,741) | (43,933) | |||||
Basic loss per share | 88,333,157 | (0.26) | 88,199,152 | (0.50) | |||
Diluted earnings per share | 88,333,157 | (0.26) | 88,199,152 | (0.50) | |||
Nine-month period ended September 30, 2016 | (6,243) | (10,651) | |||||
Basic loss per share | 78,556,211 | (0.08) | 78,556,211 | (0.14) | |||
Diluted earnings per share | 78,556,211 | (0.08) | 78,556,211 | (0.14) |
There are no free shares vested but not yet issued included in the average number of shares outstanding.
Free shares and options granted to employees and warrants to board members but not yet vested and/or exercised at September 30, 2017, and September 30, 2016, are not considered for diluted losses per share calculation as they would reduce loss per share.
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Advanced Accelerator Applications S.A.
5.10. | Non-current and current provisions |
The provisions are analyzed as follows:
In € thousands | September 30, 2017 | December 31, 2016 |
Decommissioning obligations | 7,718 | 7,884 |
Retirement indemnities and other employee benefits | 3,044 | 2,909 |
Other | 503 | 1,932 |
Total non-current provisions | 11,265 | 12,725 |
Other (1) (2) | 4,745 | 1,135 |
Total current provisions | 4,745 | 1,135 |
(1) | Includes a provision of €2.9 million (€1.6 million at December 31, 2016) for potential payback to a public agency, due to a probable price reduction following marketing authorization and €0.3 million (€0.05 million at December 31, 2016) for closing of the production site in Poland during the year 2017. |
(2) | Includes a provision of €0.7 million (€0.7 million at December 31, 2016) relating to a payment request made by a public agency. AAA is disputing the legal base for this request. The provisioned amount represents AAA’s best estimate of the probable outcome of this matter. |
5.11. | Non-current and current financial liabilities |
Financial liabilities by category
In € thousands | September 30, 2017 | December 31, 2016 |
Liabilities to banks and other financial institutions | 7,492 | 8,945 |
Finance lease obligations | 2,669 | 3,357 |
Total non-current financial liabilities | 10,161 | 12,302 |
Current portion of liabilities to banks and other financial institutions | 2,458 | 3,017 |
Current portion of finance lease obligations | 913 | 1,000 |
Total current financial liabilities | 3,371 | 4,017 |
Financial liabilities include, as of September 30, 2017, €3.7 million guaranteed by equipment, business goodwill or land, and by a mortgage for a building (€5.1 million as of December 31, 2016); the loans amounting to €1.7 million have an OSEO-issued guarantee (€2.5 million as of December 31, 2016). OSEO is now part of the Banque Publique d’Investissement (BPI).
Financial liabilities by date of maturity
September 30, 2017 | ||||
In € thousands | < 1 year | 1-5 years | > 5 years | Total |
Liabilities to banks and other financial institutions | 2,459 | 4,018 | 3,473 | 9,950 |
Finance lease obligations | 912 | 2,622 | 48 | 3,582 |
Total | 3,371 | 6,640 | 3,521 | 13,532 |
December 31, 2016 | ||||
In € thousands | < 1 year | 1-5 years | > 5 years | Total |
Liabilities to banks and other financial institutions | 3,015 | 5,471 | 3,476 | 11,962 |
Finance lease obligations | 1,002 | 3,018 | 337 | 4,357 |
Total | 4,017 | 8,489 | 3,813 | 16,319 |
Financial liabilities by type of interest rate
September 30, 2017 | December 31, 2016 | ||||
In € thousands | Average interest rate | € | Average interest rate | € | |
Fixed rates | 2.10% | 9,732 | 2.36% | 11,674 | |
Floating rates | 1.95% | 3,800 | 1.96% | 4,645 | |
Total | 13,532 | 16,319 |
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Advanced Accelerator Applications S.A.
5.12. | Other non-current and current liabilities |
In € thousands | September 30, 2017 | December 31, 2016 |
Due to former owners of acquired companies (1) | 53,325 | 49,342 |
Government subsidies | 438 | 484 |
Derivatives liabilities | 24 | 38 |
Total other non-current liabilities | 53,787 | 49,864 |
Due to former owners of acquired companies (1) | 5,858 | 4,731 |
Tax, personnel and social charges | 8,546 | 7,870 |
Derivatives liabilities | 409 | - |
Other (2) | 2,941 | 1,870 |
Total other current liabilities | 17,754 | 14,471 |
(1) | The Group is obligated to pay contingent considerations to the former owners of acquired companies, as defined under each acquisition agreement. |
(2) | The other current liabilities include mainly deferred income. |
Debt due to former owners of acquired companies
In € million | September 30, 2017 | December 31, 2016 |
Advanced Accelerator Applications USA, Inc. | 52.7 | 46.2 |
Atreus Pharmaceuticals Corporation | 5.8 | 5.5 |
SteriPET® business of GE Healthcare S.r.L | 0.7 | 0.6 |
IDB Group | - | 1.8 |
Due to former owners of acquired companies | 59.2 | 54.1 |
For the nine months ended September 30, 2017
In € million |
Resulting net (charge) |
Payments made during the period |
Advanced Accelerator Applications USA, Inc. (1) | (8.3) | 1.8 |
Atreus Pharmaceuticals Corporation (2) | (0.3) | - |
SteriPET® business of GE Healthcare S.r.L | - | - |
IDB Group | - | 1.8 |
Total | (8.6) | 3.6 |
(1) | The resulting finance charge is mainly due to the estimated fair values of the contingent considerations payable to the former owners of BioSynthema (now Advanced Accelerator Applications USA, Inc.). It includes €14.5 million loss mainly related to the approval of the market authorization of Lutathera® obtained in September 2017 for Europe (see note 2.2.). The loss is partially offset by the €6.2 million of finance gain due to the renegotiation of the BioSynthema Inc. share purchase agreement to former owners. |
(2) | The resulting finance charge is mainly due to the unwinding of the discounting partly offset by the foreign exchange rate variations. |
Advanced Accelerator Applications USA, Inc.
The principal contingent consideration concerns Advanced Accelerator Applications USA, Inc. Contingent consideration included four fixed tranches payable in cash and shares of the Company on reaching certain milestones defined in the contract. These milestones are based on different stages of the development of lutetium Lu 177 dotatate (Lutathera®). As of September 30, 2017, and at December 31, 2016, the first two milestones defined in the contract have been met and paid.
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Advanced Accelerator Applications S.A.
The contingent consideration also includes a variable tranche based on a percentage of future lutetium Lu 177 dotatate (Lutathera®) worldwide sales. At September 30, 2017, and at December 31, 2016, the main assumptions used in calculating the amount of this fixed and variable contingent consideration are the following:
European Union
Main assumptions | September 30, 2017 | December 31, 2016 |
Probability of occurrence | 100% | 80% |
Future sales of lutetium Lu 177 dotatate (Lutathera®): determined using the most recent Group business plans |
GEP-NET label | Midgut label |
Discount rate, this reflects the time value of money and the estimated risks of not realizing the future cash flows |
10% | 10% |
The United States, Canada, Japan and Switzerland
Main assumptions | September 30, 2017 | December 31, 2016 |
Probability of occurrence applied by the Company since September 2015, when the clinical Phase 3 results were published |
80% |
80% |
Future sales of lutetium Lu 177 dotatate (Lutathera®): determined using the most recent Group business plans |
Midgut label | Midgut label |
Discount rate, this reflects the time value of money and the estimated risks of not realizing the future cash flows |
10% | 10% |
On July 20, 2017, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) issued a positive opinion recommending the granting of a marketing authorization for lutetium (177Lu) oxodotreotide* (Lutathera®) for the treatment of unresectable or metastatic, progressive, well differentiated (G1 and G2), somatostatin receptor positive gastroenteropancreatic neuroendocrine tumors (GEP-NETs) in adults. On September 26, 2017, The European Commission (EC), followed the CHMP opinion and approved the product for the European Union, Iceland, Norway and Liechtenstein. The sales price and reimbursement for lutetium (177Lu) oxodotreotide* (Lutathera®) will now have to be negotiated on a country by country basis with the competent local authorities.
The assumptions regarding the contingent consideration from sales in the USA, Canada, Japan and Switzerland have not been changed for now. In other words, the forecasted sales in the US and the resulting contingent consideration on these sales are based on a midgut label only. The FDA being independent from EMA, we have no information allowing us to believe that the FDA will follow the EMA indications.
The contingent consideration at September 30, 2017 resulting from a larger label than midgut in the USA and a probability of occurrence of 100% in the USA would have been approximately €118.6 million, an increase of about €66.0 million compared to the figure presented in these financial statements.
Additional sensitivity analyses
In € million | Amount | Variation |
Sensitivity on probability | ||
Probability of occurrence at 100% (applied to the USA for midgut label and future milestone payments) | 59.2 | 6.6 |
Sensitivity on discount rate | ||
Plus one percentage point | 50.2 | (2.4) |
Less one percentage point | 55.3 | 2.6 |
Sensitivity on exchange rate - Euro against foreign currencies | ||
Plus five percent | 51.3 | (1.4) |
Less five percent | 54.2 | 1.6 |
Sensitivity on sales price | ||
Plus ten percent | 57.5 | 4.8 |
Less ten percent | 47.8 | (4.9) |
Other items could have an impact on the contingent consideration such as the timing of market authorization in the various jurisdictions, the expected volumes to be sold or the future selling prices.
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Advanced Accelerator Applications S.A.
Atreus Pharmaceuticals Corporation
On December 18, 2014, the group acquired the remaining 49.9% non-controlling interest in Atreus Pharmaceuticals Corporation. AAA therefore owns 100% of the capital of Atreus Pharmaceuticals Corporation. The consideration to be paid for this acquisition is composed of fixed anniversary and milestone payments prior to having obtained marketing authorization for Annexin and of a contingent consideration based on a low single-digit percentage royalties on sales of Annexin for a duration of 10 years following marketing authorization.
As of September 30, 2017, and at December 31, 2016, the main assumptions used in calculating the amount of this fixed and variable contingent consideration are the following:
· | First regulatory approval obtained in 2022; |
· | Future sales of Annexin determined using the most recent Group business plans and based on the two following labels : cardiotoxicity and spondyloarthritis (SpA); |
· | Probability of occurrence ; and |
September 30, 2017 | December 31, 2016 | |
2017 anniversary payments | 100% | 70% |
2018 anniversary payments | 65% | 50% |
2019 anniversary payments | 48% | 50% |
2020 anniversary payments | 34% | 20% |
2021 anniversary payments | 34% | 20% |
Milestone payments | 30% | 30% |
Royalty payments | 30% | 30% |
These percentages were estimated by the Company based on the current Phase II development program; and
· | Discount rate of 10% to reflect the time value of money and the estimated risk of not realizing future cash flows. |
On December 2016, the Company revised the business plan on future sales of Annexin. As the Company progresses in its clinical trial, it has a better visibility of potential applications for Annexin. The Company has updated its epidemiology data and competitive set to better align with its recent analysis leading to minimal changes compared to previous version. As of September 30, 2017, the Company revised the probability of occurrence.
Sensitivity analysis
In € million | Amount | Variation |
Sensitivity on probability | ||
Probability of occurrence at 100% | 18.3 | 12.5 |
Sensitivity on discount rate | ||
Plus one percentage point | 5.4 | (0.4) |
Less one percentage point | 6.3 | 0.5 |
Sensitivity on exchange rate - Euro against foreign currencies | ||
Plus five percent | 5.7 | (0.1) |
Less five percent | 6.0 | 0.2 |
Other items could have an impact on the contingent consideration such as the timing of market authorization in the various jurisdictions, the expected volumes to be sold or the future selling prices.
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Advanced Accelerator Applications S.A.
5.13. | Financial assets and liabilities |
The fair values and the carrying amounts of financial assets and liabilities are summarized as follows:
September 30, 2017 | ||||||||
In € thousands | Carrying amount | Fair value | ||||||
Level | Designated at fair value | Loans and receivables | Available- for-sale |
Other financial liabilities | Total | |||
Financial assets | ||||||||
Derivative assets | (2) | 1,215 | - | - | - | 1,215 | 1,215 | |
Total measured at fair value | 1,215 | - | - | - | 1,215 | 1,215 | ||
Trade receivables and other Receivables |
(2) | - | 37,882 | - | - | 37,882 | 37,882 | |
Guarantee deposits | (2) | - | 1,630 | - | - | 1,630 | 1,630 | |
Short-term investment | (2) | - | 22,000 | - | - | 22,000 | 22,000 | |
Cash and cash equivalents | (2) | - | 170,679 | - | - | 170,679 | 170,679 | |
Loans to related parties | (2) | - | 55 | - | - | 55 | 55 | |
Total not measured at fair value | - | 232,246 | - | - | 232,246 | 232,246 | ||
Total financial assets | 1,215 | 232,246 | - | - | 233,461 | 233,461 | ||
Financial liabilities | ||||||||
Debt due to former owners of acquired companies |
(3) | 59,183 | - | - | - | 59,183 | 59,183 | |
Derivative liabilities | (2) | 433 | - | - | - | 433 | 433 | |
Total measured at fair value | 59,616 | - | - | - | 59,616 | 59,616 | ||
Financial liabilities | (2) | - | - | - | 13,532 | 13,532 | 13,404 | |
Trade payables | (2) | - | - | - | 19,913 | 19,913 | 19,913 | |
Total not measured at fair value | 33,445 | 33,445 | 33,317 | |||||
Total financial liabilities | 59,616 | - | - | 33,445 | 93,061 | 92,933 |
(1) | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. |
(2) | Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly. |
(3) | Level 3 inputs are unobservable inputs for the asset or liability. |
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Advanced Accelerator Applications S.A.
December 31, 2016 | ||||||||
In € thousands | Carrying amount | Fair value | ||||||
Level | Designated at fair value | Loans and receivables | Available- for-sale |
Other financial liabilities | Total | |||
Financial assets | ||||||||
Total measured at fair value | - | - | - | - | - | - | ||
Trade receivables and other Receivables
|
(2) | - | 31,079 | - | - | 31,079 | 31,079 | |
Guarantee deposits | (2) | - | 2,061 | - | - | 2,061 | 2,061 | |
Cash and cash equivalents | (2) | - | 222,080 | - | - | 222,080 | 222,080 | |
Loans to related parties | (2) | - | 62 | - | - | 62 | 62 | |
Total not measured at fair value | - | 255,282 | - | - | 255,282 | 255,282 | ||
Total financial assets | - | 255,282 | - | - | 255,282 | 255,282 | ||
Financial liabilities | ||||||||
Debt due to former owners of acquired companies |
(3) | 54,073 | - | - | - | 54,073 | 54,073 | |
Derivatives liabilities | (2) | 38 | - | - | - | 38 | 38 | |
Total measured at fair value | 54,111 | - | - | - | 54,111 | 54,111 | ||
Financial liabilities | (2) | - | - | - | 16,319 | 16,319 | 16,281 | |
Trade payables | (2) | - | - | - | 20,119 | 20,119 | 20,119 | |
Total not measured at fair value | 36,438 | 36,438 | 36,400 | |||||
Total financial liabilities | 54,111 | - | - | 36,438 | 90,549 | 90,511 |
(1) | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; |
(2) | Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and |
(3) | Level 3 inputs are unobservable inputs for the asset or liability. |
5.14. | Derivative instruments |
The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities.
The table below summarizes the contracts outstanding at period / year-end:
September 30, 2017 (in € thousands) | Notional amount in Euros | Book value in Euros | Fair value in Euros |
Interest rate SWAP: EUR loan | 972 | (24) | (24) |
Total Over-the-Counter interest rate options | 972 | (24) | (24) |
Currency options: USD | 85,985 | 805 | 805 |
Total Over-the-Counter currency options | 85,985 | 805 | 805 |
Total derivative financial instruments | 86,957 | 781 | 781 |
December 31, 2016 (in € thousands) | Notional amount in Euros | Book value in Euros | Fair value in Euros |
Interest rate SWAP: EUR loan | 1,281 | (38) | (38) |
Total Over-the-Counter interest rate options | 1,281 | (38) | (38) |
Total derivative financial instruments | 1,281 | (38) | (38) |
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Advanced Accelerator Applications S.A.
6. | Commitments |
The table below summarizes the main minimum lease payments at the end of the period:
September 30, 2017 | ||||
In € thousands | < 1 year | 1-5 years | > 5 years | Total |
Minimum lease payments | 510 | 1,230 | - | 1,740 |
In addition, the Group signed a 10-year exclusive supply agreement for lutetium 177 with the University of Missouri Research Reactor (MURR®), which includes minimum product fee payments.
In August 2017, the Company entered into an exclusive agreement with a financial advisor in connection with a possible transaction on the outstanding shares of the Company, materialized by the signature of the Memorandum of Understanding with Novartis on October 30, 2017 (Refer Note 2.3 Events after the reporting date). The financial advisor would provide advisory services and will be paid success fees in cash based upon a stipulated percentage of the transaction price. No such transaction has occurred as of the date of issuance of these Condensed Consolidated Interim Financial Statements.
7. | Consolidation scope |
Entity | Registered
office in |
% Interest 2017 | % Interest 2016 |
Advanced Accelerator Applications SA | France | Parent Company | Parent Company |
Advanced Accelerator Applications Unipessoal Lda | Portugal | 100% | 100% |
Advanced Accelerator Applications Polska sp zoo | Poland | 100% | 100% |
Advanced Accelerator Applications (Italy) Srl | Italy | 100% | 100% |
G.I. Pharma Srl | Italy | 100% | 100% |
Advanced Accelerator Applications International SA | Switzerland | 100% | 100% |
Advanced Accelerator Applications (Switzerland) SA | Switzerland | 100% | 100% |
Advanced Accelerator Applications GmbH (Ex - Umbra Medical AG) | Germany | 100% | 100% |
Eifel Property GmbH | Germany | 100% | 100% |
Advanced Accelerator Applications Ibérica S.L. | Spain | 100% | 100% |
Catalana De Dispensacion | Spain | 100% | 100% |
Barnatron SA | Spain | 100% | 100% |
Marshall Isotopes Ltd | Israel | 100% | 100% |
Marshel (R.R) Investments Ltd | Israel | 100% | 100% |
Advanced Accelerator Applications Canada Inc. | Canada | 100% | 100% |
Advanced Accelerator Applications USA, Inc (Ex - BioSynthema Inc.) | United States | 100% | 100% |
IDB Radiopharmacy BV (Merged with IDB Holland BV) | The Netherlands | N/A | 100% |
IDB Holding BV (Merged with IDB Holland BV) | The Netherlands | N/A | 100% |
IDB Holland BV | The Netherlands | 100% | 100% |
Beheermaatschappij Weelde BV (Merged with IDB Holland BV) | The Netherlands | N/A | 100% |
Meerdonk Holding BV (Merged with IDB Holland BV) | The Netherlands | N/A | 100% |
Renswoude Holding BV (Merged with IDB Holland BV) | The Netherlands | N/A | 100% |
IDB België BVBA | Belgium | 100% | 100% |
Imaging Equipment Ltd | United Kingdom | 100% | 100% |
8. | Related party disclosures |
In conformity with IAS 24, the total remuneration of Group senior executives is disclosed in note 4.2.
The board of directors decided in March 2017, to increase the Group senior executive salaries as of February 2017, by 1.5%, the same as the average salary increase used throughout the Company. Furthermore, the Shareholders decided in their meeting in May 2017, to increase the non-executive Directors remuneration for the year 2017, by 7.2%, from €695 thousands in 2016, to €745 thousands in 2017.
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