Cipher Pharmaceuticals Reports Q1 2018 Results
Published: May 10, 2018
Cipher Pharmaceuticals (TSX:CPH) ("Cipher" or "the Company") today announced its financial and operational results for the three months ended March 31, 2018. Unless otherwise noted, all figures are in U.S. dollars.
Q1 2018 Financial Highlights
(all figures compared to Q1 2017, unless otherwise noted)
- Total net revenue decreased to $4.6 million from $8.1 million.
- Licensing revenue decreased to $2.8 million compared with $6.9 million.
- Product revenue increased to $1.8 million, up 45% from $1.3 million.
- Loss from continuing operations of $1.0 million, or $0.04 per basic and diluted share, compared with loss from continuing operations of $1.6 million, or $0.06 per basic and diluted share.
- Adjusted EBITDA1 of $1.0 million, compared with $5.1 million.
- $28.0 million in cash at March 31, 2018, compared with $28.2 million at the end of 2017.
Q1 2018 Financial Review
(All figures are in U.S. dollars)
Total revenue was $4.6 million for Q1 2018, compared to $8.1 million for Q1 2017.
Licensing revenue for Q1 2018 was $2.8 million, compared to $6.9 million for Q1 2017. Absorica® licensing revenue decreased to $2.1 million for Q1 2018, compared with $5.6 million for Q1 2017. Following changes to Cipher's partner's promotional program at the end of November 2017, market share and prescriptions for Absorica decreased as expected in December 2017 and Q1 2018. Absorica's market share, which peaked at 22% during 2017, ended March 2018 at approximately 12%2, similar to the market share levels experienced prior to the promotional campaign. In addition to the impact of reduced prescriptions in Q1 2018, royalty revenue from Absorica was affected by a reduction in shipments from Cipher's partner to their distributors as inventory levels were adjusted to reflect the previously mentioned decrease in demand.
Licensing revenue from Lipofen® and the authorized generic version of Lipofen decreased as expected to $0.5 million for Q1 2018, compared with $1.2 million in Q1 2017. Licencing revenue from tramadol products (Conzip® and Durela®) was unchanged year over year at $0.1 million.
Product revenue increased by 45% to $1.8 million for Q1 2018, compared to $1.3 million for Q1 2017. The increase was primarily driven by Epuris®, which generated revenue of $1.4 million in the period, compared to $1.1 million in Q1 2017. Epuris achieved market share of more than 31%2 during the quarter, compared with 26% for the same period last year.
Total operating expenses increased to $5.8 million for Q1 2018, compared to $3.5 million for Q1 2017, primarily due to a $1.8 million non-cash impairment charge for Dermadexin and Pruridexin, as well as costs incurred in executing four transactions in the period.
Loss from continuing operations was $1.0 million, or $0.04 per basic and diluted share, in Q1 2018, compared with loss from continuing operations of $1.6 million, or $0.06 per basic and diluted share, in Q1 2017. Adjusted EBITDA1 for Q1 2018 decreased to $1.0 million, compared to $5.1 million in Q1 2017. The decrease in Adjusted EBITDA is due mainly to lower total revenue in Q1 2018.
"As previously disclosed, our Q1 results were affected by a decrease in licensing revenue from Absorica, reflecting lower prescription and shipment levels in the quarter following the completion of our partner's promotional campaign in November 2017," said Robert Tessarolo, President and CEO of Cipher. "Absorica prescriptions have stabilized and market share has leveled off to approximately pre-promotion levels."
Mr. Tessarolo added: "A major highlight of the first quarter was the 45% revenue growth from our Canadian commercial business. We have several catalysts in our current portfolio to support this continued organic growth, led by Epuris, Actikerall and the recently launched OZANEX™, and we are adding to our portfolio through business development. We are focused on achieving the key milestones from these transactions, while continuing our investment in business development, which has proved highly productive to date."
Cipher is executing a three-pronged growth strategy to deliver reliable growth to shareholders. The Company is particularly focused on building its Canadian commercial business, which has generated significant organic growth over the past several years. Cipher is experiencing continued growth in its key brands and expects to add six new products from its existing pipeline to its Canadian commercial portfolio in 2018 and 2019. Management continues to pursue new in-licensing opportunities and acquisitions to further expand its near-term product pipeline.
The Company expects its global licensing business to provide a solid base of high-margin royalty revenue in 2018, which provides non-dilutive financing to support the growth of its Canadian commercial platform.
In 2017, Cipher introduced a revised corporate strategy to build a portfolio of prescription products across a broad range of therapeutic areas that meet an unmet medical need. For the fiscal year to date, Cipher has launched one new product in Canada and announced four transactions that demonstrate meaningful progress in the execution of its growth strategy to assemble a diversified portfolio of prescription products that will deliver reliable growth for shareholders.
Key highlights include:
- In January 2018, Cipher launched OZANEX™, a novel bactericidal topical antibiotic cream indicated for impetigo in patients aged 2 months and older. The early response from Health Care Professionals has been encouraging, and Cipher has already achieved extensive coverage on private healthcare plans.
- In February 2018, Cipher acquired the exclusive Canadian rights from Synergy Pharmaceuticals Inc. to TRULANCE®, an FDA-approved once-daily tablet for adults with chronic idiopathic constipation and irritable bowel syndrome with constipation. Cipher expects to file a New Drug Submission (NDS) with Health Canada in the second half of 2018.
- In March 2018, Cipher announced a definitive arrangement agreement to acquire the Canadian business portfolio of Cardiome Pharma Corp., which includes two commercial products (Brinavess® and Aggrastat®) and two late-stage pipeline products (Xydalba™ and Trevyent®) used in the hospital vertical. Cardiome's shareholders approved the transaction at a shareholder meeting on May 9, 2018, and the companies expect this acquisition to close in Q2 2018.
- In April 2018, Cipher acquired the exclusive Canadian rights to A-101 40%, a topical solution indicated for the treatment of raised seborrheic keratoses. A-101 40% was approved by the FDA in December 2017 and will be marketed by Aclaris Therapeutics, Inc. in the U.S. under the tradename Eskata™. Cipher plans to file its NDS with Health Canada in the second half of 2018.
Financial Statements and MD&A
Cipher's Financial Statements and Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2018 are available on the Company's website at www.cipherpharma.com in the "Investors" section under "Quarterly Reports" and on SEDAR at www.sedar.com.
Notice of Conference Call
Cipher will hold a conference call today, May 10, 2018, at 8:30 a.m. (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. A live audio webcast will be available at https://bit.ly/2r3HMlD 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.
Craig Armitage, LodeRock Advisors, (416) 347-8954, firstname.lastname@example.org
SOURCE Cipher Pharmaceuticals Inc.