Cipher Pharmaceuticals Reports First Quarter 2019 Financial Results
Revenue increased by 12% to $5.1 million
OAKVILLE, ON, May 10, 2019 /CNW/ - Cipher Pharmaceuticals Inc. (TSX:CPH) ("Cipher" or "the Company") today announced its financial and operating results for the three months ended March 31st, 2019. Unless otherwise noted, all figures are in U.S. dollars.
Q1 2019 Financial and Corporate Highlights
(all figures compared to the relative prior year period, unless otherwise noted)
The Company continues to execute on its corporate strategy focusing on long-term growth. Utilizing cash flows from its profitable global licensing business, Cipher is building a diversified portfolio of prescription products with near term value catalysts. For 2019, the Company is focussed on execution against three priorities: achieving key milestones across the portfolio, optimizing resource deployment to strengthen EBITDA and cash and delivering organic growth and profitability in the Canadian business.
Key highlights during and subsequent to the quarter include:
- Total revenue increased 12% to $5.1 million for the three months ended March 31, 2019 up from $4.6 million for the three months ended March 31, 2018.
- Product revenue increased by 5% to $1.9 million for the three months ended March 31, 2019 up from $1.8 million for the three months ended March 31, 2018 (adjusted for foreign exchange fluctuations).
- Net income from continuing operations increased to $0.8 million for the three months ended March 31, 2019 up from a loss of $1.0 million for the three months ended March 31, 2018.
- Adjusted EBITDA increased 80% to $1.8 million for the three months ended March 31, 2019 up from $1.0 million for the three months ended March 31, 2018.
- Generated $1.6 million in cash from operating activities while retiring $2.0 million in debt.
Q1 2019 Financial Review
(All figures are in U.S. dollars)
Total revenue was $5.1 million for Q1 2019 compared to $4.6 million for Q1 2018. The year-over-year increase mainly reflects higher licensing revenue from Absorica®.
Licensing revenue for Q1 2019 was $3.3 million compared to $2.8 million for Q1 2018. Absorica licensing revenue was $2.7 million for Q1 2019, compared to $2.1 million for Q1 2018. Licensing revenue from Lipofen® products was consistent with the comparative period at $0.5 million. Licencing revenue from tramadol products (Conzip® and Durela®) was consistent with the comparative period at $0.1 million.
Product revenue was unchanged at $1.8 million for Q1 2019 compared to Q1 2018. Adjusting for the impact of foreign exchange in Q1 2019 compared to Q1 2018, product revenue would have increased by 5% to $1.9 million.
The increase was primarily driven by Epuris®, which generated revenue of $1.6 million in the period compared to $1.4 million in Q1 2018. According to IQVIA, Epuris total prescriptions for the quarter grew by 29.4% compared to Q1 2018 and achieved market share of more than 37% during the quarter, compared to 31% for the same period last year.
Total operating expenses decreased to $3.6 million for Q1 2019 compared to $5.8 million for Q1 2018. The decrease related to a $1.8 million impairment charge on intangible assets in Q1 2018 and a $0.4 million decrease in selling, general and administrative expenses related to transaction costs that were incurred in the comparative period.
Income from continuing operations was $0.8 million, or $0.03 per basic and diluted share in Q1 2019, compared to a loss from continuing operations of $1.0 million, or $0.04 per basic and diluted share in Q1 2018. Adjusted EBITDA for Q1 2019 increased to $1.8 million compared to $1.0 million in Q1 2018.
The Company had $7.9 million in cash at March 31, 2019 compared with $10.4 million at the end of 2018. The Company generated $1.6 million in cash from operating activities and used approximately $2.5 million in cash during the quarter for debt payments and a milestone payment. The Company had $15.5 million in debt at March 31, 2019.
"The first quarter of 2019 was focussed on execution against key value catalysts for our business. We are pleased with the progress that we are making against our priorities for 2019. We are on track with the achievement of key milestones for our recent transactions, our lead brand within our Canadian Commercial business, Epuris is growing year to date at over 29% in total prescriptions and our EBITDA is strengthening through optimized resource deployment."
Cipher anticipates several key milestones in 2019 that will continue the growth of its Canadian commercial platform, including:
- Regulatory approval for plecanatide from Health Canada in Q4 2019
- Regulatory approval for A-101 from Health Canada in Q4 2019
- Commercial launch of XYDALBA (dalbavancin)
- North American top line results for MOB-015 in Q4 2019
- Advance DTR-001 through IND enabling studies
The Company expects its licensing business to continue to provide a solid base of high-margin royalty revenue.
Financial Statements and MD&A
Cipher's Financial Statements for the three months ended March 31, 2019 and Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2019 are available on the Company's website at www.cipherpharma.com in the "Investors" section under "Financial Reports" and on SEDAR at www.sedar.com.
Notice of Conference Call
Cipher will hold a conference call today, May 10, 2019, at 8:30 a.m. (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial (416) 764-8609 or (888) 390-0605 and use conference ID 57384393. A live audio webcast will be available at https://event.on24.com/wcc/r/1993654/201373E95BBD2B7681680DAEA05EDB66 or the Investor Relations section of the Company's website at http://www.cipherpharma.com. An archived replay of the webcast will be available for 90 days.
About Cipher Pharmaceuticals Inc.
Cipher (TSX:CPH) is a specialty pharmaceutical company with a robust and diversified portfolio of commercial and early to late-stage products. Cipher acquires products that fulfill unmet medical needs, manages the required clinical development and regulatory approval process, and markets those products either directly in Canada or indirectly through partners in Canada, the U.S., and South America. Cipher is focused on a three-pronged growth strategy – including acquisitions, in-licensing, and selective investments in drug development – to assemble a broad portfolio of prescription products that serve unmet medical needs. For more information, visit www.cipherpharma.com.
This document includes forward-looking statements within the meaning of applicable securities laws. These forward-looking statements include, among others, statements with respect to our objectives, goals and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, expectations, anticipations, estimates and intentions and statements relating to Cipher's acquisition of Cardiome Pharma Corp. ("Cardiome") pursuant to which Cipher acquired the Canadian business portfolio of Cardiome, including statements in respect of the anticipated strategic and/or financial benefits of the arrangement, anticipated regulatory approvals of products and the timing thereof. The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective", "hope" and "continue" (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. We caution readers not to place undue reliance on these statements as a number of important factors, many of which are beyond our control, could cause our actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, our ability to enter into in-licensing, development, manufacturing and marketing and distribution agreements with other pharmaceutical companies and keep such agreements in effect; our dependency on a limited number of products; our dependency on protection from patents that will expire; integration difficulties and other risks if we acquire or in-license technologies or product candidates; reliance on third parties for the marketing of certain products; the product approval process is highly unpredictable; the timing of completion of clinical trials, regulatory submissions and regulatory approvals; reliance on third parties to manufacture our products and events outside of our control that could adversely impact the ability of our manufacturing partners to supply products to meet our demands; we may be subject to future product liability claims; unexpected product safety or efficacy concerns may arise; we generate license revenue from a limited number of distribution and supply agreements; the pharmaceutical industry is highly competitive; requirements for additional capital to fund future operations; products in Canada may be subject to pricing regulation; dependence on key managerial personnel and external collaborators; no assurance that we will receive regulatory approvals in the U.S., Canada or any other jurisdictions and current uncertainty surrounding health care regulation in the U.S.; certain of our products are subject to regulation as controlled substances; limitations on reimbursement in the healthcare industry; limited reimbursement for products by government authorities and third-party payor policies; products may not be included on list of drugs approved for use in hospitals; hospital customers may make late payments or not make any payments; various laws pertaining to health care fraud and abuse; reliance on the success of strategic investments and partnerships; the publication of negative results of clinical trials; unpredictable development goals and projected time frames; rising insurance costs; ability to enforce covenants not to compete; risks associated with the industry in which it operates; we may be unsuccessful in evaluating material risks involved in completed and future acquisitions; we may be unable to identify, acquire or integrate acquisition targets successfully; legacy risks from operations conducted in the U.S.; inability to meet covenants under our long term debt arrangement; compliance with privacy and security regulation; our policies regarding returns, allowances and chargebacks may reduce revenues; certain current and future regulations could restrict our activities; additional regulatory burden and controls over financial reporting; reliance on third parties to perform certain services; general commercial litigation, class actions, other litigation claims and regulatory actions; the difficulty for shareholders to realize in the United States upon judgments of U.S. courts predicated upon civil liability of the Company and its directors and officers who are not residents of the United States; the potential violation of intellectual property rights of third parties; our efforts to obtain, protect or enforce our patents and other intellectual property rights related to our products; changes in U.S., Canadian or foreign patent laws; litigation in the pharmaceutical industry concerning the manufacture and supply of novel and generic versions of existing drugs; inability to protect our trademarks from infringement; shareholders may be further diluted if we issue securities to raise capital; volatility of our share price; the actions of a significant shareholder; we do not currently intend to pay dividends; our operating results may fluctuate significantly; and our debt obligations will have priority over the common shares of the Company in the event of a liquidation, dissolution or winding up.
We caution that the foregoing list of important factors that may affect future results is not exhaustive. When reviewing our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward-looking statements, may be found in the "Risk Factors" section of this MD&A and the Annual Information Form for the year ended December 31, 2018, and elsewhere in our filings with Canadian securities regulators. Except as required by Canadian securities law, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf; such statements speak only as of the date made. The forward-looking statements included herein are expressly qualified in their entirety by this cautionary language.
|2)||EBITDA is a non-IFRS financial measure. The term EBITDA (earnings before interest, taxes, depreciation and amortization,) does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing a further understanding of operations from management's perspective. The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation of property and equipment, amortization of intangible assets, loss on debt extinguishment, non-cash share-based compensation, changes in fair value of derivative financial instruments, impairment of intangible assets and goodwill and foreign exchange gains and losses from the translation of Canadian cash balances.|
|(IN THOUSANDS OF U.S. DOLLARS)||Three months ended|
March 31, 2019
|Three months ended|
March 31, 2018
|Income (loss) from continuing operations||816||(951)|
|Depreciation and amortization||299||226|
|Interest expense, net||222||130|
|Change in fair value of derivative financial instrument||(12)||(321)|
|Loss (gain) from the translation of Canadian cash balances||(26)||41|
|Impairment of intangible assets||—||1,832|
SOURCE Cipher Pharmaceuticals Inc.