Acerus Reports First Quarter 2022 Financial Results
TORONTO, May 10, 2022 (GLOBE NEWSWIRE) -- Acerus Pharmaceuticals Corporation (“Acerus” or the “Company”) (TSX: ASP; OTCQB: ASPCF) today reported its financial results for the three-month period ended March 31, 2022. Unless otherwise noted, all amounts are in US dollars and are prepared in accordance with International Financial Reporting Standards (“IFRS”).
Recent Highlights
- Total Natesto® prescriptions in the US rose 43% year-over-year in the first quarter of 2022 and were up approximately 26% sequentially over the fiscal 2021 fourth quarter
- The rollout of Natesto® across the US remains on track, underscored by focused operational execution of the Company’s growth strategy
- As previously announced, Acerus completed the acquisition of Serenity Pharmaceuticals LLC (“Serenity”) on March 7, 2022, including the global rights to its Noctiva™ brand; the re-launch of Noctiva™ in the US is anticipated to take place by the first quarter of 2023
- After the end of the quarter, on April 29, the Company’s shares began trading on the Toronto Stock Exchange post a 1-for-200 share consolidation
“The first quarter continued a trend of substantial change and growth here at Acerus, marked by further penetration of Natesto® in the US market and the acquisition of Serenity – positioning us for stronger performance in the coming year,” said Edward Gudaitis, President and Chief Executive Officer of Acerus Pharmaceuticals. “Natesto® prescriptions climbed 43% year-over-year, reflecting the success of our sales force and sound operational execution as well as the assistance of our distribution partners. Approximately 30% of prescriptions are now being dispensed through our Pharmacy Partner Program and over 75% of scripts are being written for commercially insured patients.
“After the end of the quarter, we also completed a much-anticipated share consolidation. This process, and the resulting stock price, opens up Acerus to a much broader, professional class of institutional investors. Given our improving outlook for 2022 and beyond – strengthened by the anticipated reintroduction of Noctiva™ – now is the time to set the table for the next stage of growth. As we pursue a path to profitability, we look forward to attracting more investors along with more customers, leveraging our portfolio of unique medications designed to enhance the lives of millions in North America and across the globe.”
Summary of Results for the Three Months Ended March 31, 2022 (Q1-2022) compared to the Three Months Ended March 31, 2021 (Q1-2021) unless otherwise noted
Total revenue in the quarter was $0.8 million compared to negative $6.0 million in the first quarter of 2021, which included a $6.2 million termination fee related to the Aytu buyback of product rights for NATESTO® in the US market. Product revenue rose $0.6 million year-over-year, reflecting increased shipments of NATESTO®. The first quarter of 2021 was the last period reported under the prior Aytu revenue-sharing agreement.
Gross profit for the first quarter of 2022 was $0.5 million compared to negative $6.2 million in the prior-year period, reflecting the aforementioned termination fee of $6.2 million.
Research and development ("R&D") expense rose by $0.3 million, to $1.3 million, for the current quarter from $1.0 million in the prior-year period, reflecting increased expense for NATESTO® clinical trials in the US. This higher level of R&D is expected to continue for the next few quarters, after which the clinical trials should be completed and R&D expenditures are anticipated to return to historical levels.
First quarter selling, general and administrative expenses (“SG&A”) declined by $0.7 million, to $4.6 million, from $5.3 million in the first quarter of 2021, reflecting higher than normal expenses last year tied to the terminated Aytu co-promotion agreement and subsequent launch of the Company’s US growth strategy for NATESTO®.
EBITDA1 was a loss of $5.3 million in the first quarter of 2022 compared to a loss of $12.1 million in the prior-year period; Adjusted EBITDA1 was a loss of $5.1 million in 2022 compared to a loss of $5.7 million in 2021.
The Company incurred a net loss of $7.0 million, or $(0.00) per share, for the quarter compared to a loss of $12.8 million, or $(0.01) per share, in the first quarter of 2021. Subsequent to quarter end, the Company announced it had completed a 1:200 share consolidation that had been approved by the Company’s shareholders at its last Annual General Meeting. Future earnings per share will be adjusted to reflect the new share balance.
Cash as of March 31, 2022 was $3.6 million compared with $2.2 million as of December 31, 2021, reflecting $13.3 million of advances under a secured grid promissory note with First Generation Capital Inc., a company affiliated with the Chairman of the Board of Directors of Acerus (“First Generation”), partially offset by (i) $6.5 million to settle the prior senior secured loan facility with SWK loan facility; (ii) $4.4 million of cash used in operations; and (iii) $1.0 million of cash used in the quarter for the acquisition of Serenity.
Subsequent to the end of the quarter, a further $2.5 million was advanced, increasing the total balance on the First Generation facility to $35.8 million.
As previously noted in the Company’s March 15, 2022 press release, Acerus will need to raise approximately US$60 million over the next two years to fund the up-front fee, expand its sales force and marketing initiatives (including direct to consumer), grow the existing Natesto® business, and resume Noctiva™ production. The first tranche of this fundraising activity will need to occur in the second quarter of 2022 to settle the promissory note related to the up-front fee and fund the expenditures noted.
COMPANY UPDATE AND OUTLOOK
Noctiva™
Following the acquisition of assets from Serenity, including all rights and intellectual property related to the Noctiva™ brand, Acerus has begun the process of planning for its reintroduction to the US market, where it already has FDA approval. The rollout strategy for Noctiva™ – including all related marketing, distribution and production – is expected to take until the end of the year, with a re-launch of the product anticipated in the first quarter of 2023.
Natesto®
The Company is executing its commercial strategy focused on expanding in the US market. Total Natesto prescriptions rose 43% compared to the first quarter of 2021 and the Company expects continued growth in year over year prescriptions for the balance of 2022. The Company expects to expand its US sales footprint later in 2022 in anticipation of the return of Noctiva to the US market. Acerus believes that there is significant overlap in physician call points for both Natesto and Noctiva and this synergy will allow for better utilization and productivity of both existing and anticipated new sales staff hires.
Commercial preparations are in place for the reintroduction of Natesto® into the Canadian market, which has been somewhat hampered by manufacturing and supply chain disruptions. The rollout is still anticipated to commence in the second half of 2022.
Acerus and medac GmbH have mutually agreed to terminate their Natesto® license agreement. The Company determined that the incremental cost of obtaining Natesto® approval in Europe (including additional studies required that were not needed for US or Canadian approval) impacted the economics of the license agreement to the point that Acerus will be better served by deploying the needed capital initially to growing Natesto® and launching Noctiva™ in the US market. The Company will be evaluating licensing partners for both Natesto® and Noctiva™ for the European market in future quarters.
avanafil
Acerus is on track, working with Petros Pharmaceuticals, the licensor of avanafil to Acerus, and Sanofi to update the regulatory dossier for resubmission to Health Canada. Such resubmission is expected to be made soon, with the anticipated introduction of avanafil to the Canadian market occurring in 2023.
Conference Call
Shareholders are reminded that the conference call to discuss the Company’s results for the first quarter will be held on May 10, 2022 at 10:00 a.m. Eastern Time.
To access the call live, please dial 416-406-0743 or 1-800-898-3989 and use access code 3384602#. Listeners are encouraged to dial in 10 minutes before the call begins to avoid delays. A replay of the conference call will be available until 11:59 p.m. Eastern Time on Tuesday, May 17, 2022 by dialing 905-694-9451 or 1-800-408-3053, using access code: 1602409#.
About Acerus
Acerus Pharmaceuticals Corporation is a specialty pharmaceutical company focused on the commercialization and development of innovative prescription products that improve patient experience, with a primary focus in the fields of Urology and Men’s Health. The Company commercializes its products via its own salesforce in the United States and Canada, and through a global network of licensed distributors in other territories.
Acerus’ shares trade on TSX under the symbol ASP and on OTCQB under the symbol ASPCF. For more information, visit www.aceruspharma.com and follow us on Twitter and LinkedIn.
1 Non-IFRS Financial Measures - EBITDA and Adjusted EBITDA
The non-IFRS measures included in this press release are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. When used, these measures are defined in such terms as to allow the reconciliation to the closest IFRS measure. These measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from our perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. Despite the importance of these measures to management in goal setting and performance measurement, we stress that these are non-IFRS measures that may have limits in their usefulness to investors.
We use non-IFRS measures, such as EBITDA and Adjusted EBITDA to provide investors with a supplemental measure of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the valuation of issuers. We also use non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets, and to assess our ability to meet our future debt service, capital expenditure and working capital requirements.
The definition and reconciliation of EBITDA and Adjusted EBITDA used and presented by the Company to the most directly comparable IFRS measures follows below:
EBITDA is defined as net (loss)/income adjusted for income tax, depreciation of property and equipment, amortization of intangible assets, interest on long-term debt and other financing costs, interest income, licensing revenue and changes in fair values of derivative financial instruments. Management uses EBITDA to assess the Company’s operating performance.
Adjusted EBITDA is defined as EBITDA adjusted for, as applicable, royalty expenses associated with triggering events, milestones, share based compensation, impairment of intangible asset, foreign exchange (gain)/loss, charges related to product recall and gain on extinguishment of payables. We use Adjusted EBITDA as a key metric in assessing our business performance when we compare results to budgets, forecasts and prior years. Management believes Adjusted EBITDA is an alternative measure of cash flow generation than, for example, cash flow from operations, particularly because it removes cash flow fluctuations caused by extraordinary changes in working capital. A reconciliation of net (loss)/income to EBITDA (and Adjusted EBITDA) is set out below.
| For the three months ended March 31, |
|||||||||
| 2022 | 2021 | ||||||||
| Net loss | $ | (6,950 | ) | $ | (12,826 | ) | |||
| Adjustments: | |||||||||
| Amortization of intangible assets | 10 | 37 | |||||||
| Depreciation of property and equipment | 39 | 222 | |||||||
| Depreciation of right of use asset | 8 | - | |||||||
| Interest expense and other financing costs* | 1,472 | 292 | |||||||
| Interest income | (1 | ) | (5 | ) | |||||
| Change in fair value of derivative | 79 | 69 | |||||||
| Loss on modification of debt | - | 64 | |||||||
| EBITDA | $ | (5,343 | ) | $ | (12,147 | ) | |||
| Termination Fees | - | 6,204 | |||||||
| Share based compensation | 237 | 291 | |||||||
| Foreign exchange (gain) loss | 39 | (15 | ) | ||||||
| Adjusted EBITDA | $ | (5,067 | ) | $ | (5,667 | ) | |||
Notice Regarding Forward-Looking Statements
Information in this press release that is not current or historical factual information may constitute forward looking information within the meaning of securities laws. Implicit in this information are assumptions regarding our future operational results. These assumptions, although considered reasonable by the company at the time of preparation, may prove to be incorrect. Readers are cautioned that actual performance of the company is subject to a number of risks and uncertainties, including with respect to the commercial performance of NATESTO® globally and in the U.S., and could differ materially from what is currently expected as set out above. For more exhaustive information on these risks and uncertainties you should refer to our annual information form dated March 14, 2022 which is available at www.sedar.com. Forward-looking information contained in this press release is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time, whether as a result of new information, future events or otherwise, except as required by applicable securities law.
Company Contact
ir@aceruspharma.com
Investor Relations Contact
Chris Witty
Acerus Investor Relations
(646) 438-9385
cwitty@darrowir.com
| Acerus Pharmaceuticals Corporation | |||||||||||
| Condensed Interim Consolidated Statements of Financial Position | |||||||||||
| As at March 31, 2022 and December 31, 2021 | |||||||||||
| Unaudited | |||||||||||
| (expressed in thousands of U.S. dollars) | |||||||||||
| March 31, 2022 |
December 31, 2021 |
||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash | $ | 3,562 | $ | 2,159 | |||||||
| Trade and other receivables | 639 | 422 | |||||||||
| Inventory | 4,439 | 4,605 | |||||||||
| Prepaid and other assets | 1,765 | 1,463 | |||||||||
| Total current assets | 10,405 | 8,649 | |||||||||
| Property and equipment, net | 416 | 365 | |||||||||
| Right of use asset | 294 | 302 | |||||||||
| Intangible assets, net | 36,657 | 336 | |||||||||
| Total assets | $ | 47,772 | $ | 9,652 | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable and accrued liabilities | $ | 10,697 | $ | 7,448 | |||||||
| Provisions | 2,250 | - | |||||||||
| Promissory note | 5,661 | - | |||||||||
| Termination fee payable | 2,553 | 2,456 | |||||||||
| Current portion of long-term debt | - | 2,153 | |||||||||
| Current portion of lease liability | 21 | 16 | |||||||||
| Total current liabilities | 21,182 | 12,073 | |||||||||
| Termination fee payable | 1,424 | 2,101 | |||||||||
| Lease liability | 326 | 300 | |||||||||
| Long-term debt | 29,315 | 21,137 | |||||||||
| Derivative financial instruments | 135 | 55 | |||||||||
| Total liabilities | 52,382 | 35,666 | |||||||||
| Shareholders' equity (deficit) | |||||||||||
| Share capital | $ | 198,346 | $ | 198,163 | |||||||
| Contributed surplus | 46,249 | 18,078 | |||||||||
| Accumulated other comprehensive loss | (13,949 | ) | (13,949 | ) | |||||||
| Deficit | (235,256 | ) | (228,306 | ) | |||||||
| Total shareholders' equity (deficit) | (4,610 | ) | (26,014 | ) | |||||||
| Total liabilities & shareholders' equity (deficit) | $ | 47,772 | $ | 9,652 | |||||||
| Acerus Pharmaceuticals Corporation | ||||||||||
| Condensed Interim Consolidated Statements of Loss and Comprehensive Loss | ||||||||||
| For the three months ended March 31, 2022 and 2021 | ||||||||||
| Unaudited | ||||||||||
| (expressed in thousands of U.S. dollars, except per share and share data) | ||||||||||
| For the three months ended March 31, |
||||||||||
| 2022 | 2021 | |||||||||
| Revenue | ||||||||||
| Product revenue | $ | 782 | $ | 234 | ||||||
| Termination Fees | - | (6,204 | ) | |||||||
| 782 | (5,970 | ) | ||||||||
| Cost of goods sold | 251 | 191 | ||||||||
| Gross margin (loss) | 531 | (6,161 | ) | |||||||
| Expenses | ||||||||||
| Research and development | 1,290 | 973 | ||||||||
| Selling, general and administrative | 4,602 | 5,287 | ||||||||
| Total operating expenses | 5,892 | 6,260 | ||||||||
| Operating loss | (5,361 | ) | (12,421 | ) | ||||||
| Other expenses (income) | ||||||||||
| Interest on long-term debt and other financing costs | 1,472 | 292 | ||||||||
| Interest income | (1 | ) | (5 | ) | ||||||
| Foreign exchange loss (gain) | 39 | (15 | ) | |||||||
| Change in fair value of derivative financial instruments | 79 | 69 | ||||||||
| Loss on modification of debt | - | 64 | ||||||||
| Total other expenses | 1,589 | 405 | ||||||||
| Loss for the year before income taxes | (6,950 | ) | (12,826 | ) | ||||||
| Income tax expense | - | - | ||||||||
| Net loss and comprehensive loss for the period | $ | (6,950 | ) | $ | (12,826 | ) | ||||
| Loss per common share | ||||||||||
| Basic and diluted net loss per common share | $ | (0.00 | ) | $ | (0.01 | ) | ||||
| Weighted average common shares outstanding | ||||||||||
| Basic and diluted | 1,538,248,284 | 1,537,588,081 | ||||||||
