Acerus Pharmaceuticals Corporation (“Acerus” or the “Company”)
(TSX: ASP; OTCQB: ASPCF) today reported its financial results for
the three and twelve-month period ended December 31, 2020. Unless
otherwise noted, all amounts are in US dollars and are prepared in
accordance with International Financial Reporting Standards
(“IFRS”).
Recent Highlights
- Significant
growth in US NATESTO® total prescriptions during the fourth quarter
of 2020 – driven by the specialist (urologist and endocrinologist)
segment
- Rights offering
completed in November 2020, strengthening the balance sheet
- Shipments of
NATESTO® to South Korea and Taiwan resumed in the fourth
quarter
- The Company
entered into an agreement with Torreya Partners LLC to identify
strategic options for product acquisition and growth capital
- NATESTO®
expected to be available in Canada by mid-2021
“Fiscal 2020 was clearly a year of both
challenge and opportunity for Acerus, putting us on solid footing
for 2021 and beyond,” said Ed Gudaitis, President and Chief
Executive Officer of Acerus. “While the global pandemic negatively
impacted our ability to conduct business in North America and
elsewhere, we laid the groundwork – even under such circumstances –
for improved growth and bottom-line results going forward. I’m
particularly pleased with the success of our NATESTO® rollout in
the United States, where we saw prescription growth of 23% in the
fourth quarter versus the third, and where we are encouraged by
ongoing momentum thus far in the new year.
“With COVID-19 restrictions slowly subsiding
around the globe, we feel even more optimistic about the quarters
to come. We continue to execute on our strategy to bolster our
presence in the US, return to the Canadian market, and expand our
product offerings. Given improving demand dynamics and strengthened
economic outlook, we believe Acerus is well positioned for higher
returns in 2021.”
Summary of Results for the Three Months
Ended December 31, 2020 (compared to the Three Months Ended
December 31, 2019, unless otherwise noted)
- Total revenue
in the quarter was $0.3 million compared to $0.5 million in the
fourth quarter of 2019. While product revenue was comparable
year-over-year, the 2019 quarter included revenue of $0.2 million
from the licensing of NATESTO® to non-North American markets.
- Gross margin in
the fourth quarter of 2020 was negative $0.6 million compared to
$0.2 million in the prior-year period, reflecting a $0.5 million
charge for spoilage of slow-moving raw materials in the current
year quarter.
- Research and
development ("R&D") expense increased slightly to $0.7 million
for the current quarter from $0.5 million in the prior-year
period.
- Selling,
general and administrative expenses (“SG&A”) increased by $2.5
million, to $5.6 million, from $3.1 million in the prior-year
period. This increase in SG&A was principally due to (i) a
non-cash charge of $1.6 million on the value of ESTRACE® intangible
assets, as the rights were sold to a third party in the fourth
quarter of 2020 (see below); and (ii) increased costs of $0.8
million related to the launch of the US operations in 2020.
- Earnings before
interest, tax, depreciation and amortization (“EBITDA”)1 was a loss
of $6.5 million compared to a loss of $3.1 million for the
prior-year period. Adjusted EBITDA1 was a loss of $4.7 million for
the quarter compared to a loss of $3.3 million in the prior-year
period.
- The Company
incurred a net loss of $7.1 million, or $(0.01) per share, for the
quarter compared to a loss of $3.9 million, or $(0.01) per share,
for the fourth quarter of 2019.
Summary of Results for the Year Ended
December 31, 2020 (compared to the Year Ended December 31, 2019,
unless otherwise noted)
- Total revenue
for the twelve months ended December 31, 2020 and 2019 were $1.1
million and $3.8 million, respectively, reflecting the decline in
ESTRACE® revenue due to previously-announced manufacturing issues
at the Company’s contract manufacturer, the voluntary recall of
NATESTO® in the third quarter of 2019, the impact of COVID-19 on
expansion in the US, and the end of the Company’s UrivarxTM
distribution agreement in the second quarter of 2019.
- The Company
reported a gross loss of $1.0 million in 2020 compared with a gross
profit of $1.6 million in 2019, reflecting the fourth quarter
adjustments noted above and the impact of fixed costs on overall
gross margin.
- R&D
expenses were $2.5 million in 2020, a decline of $0.3 million from
the $2.8 million in 2019. The decrease was attributable to delays
in ongoing and new clinical trials and other research due to
COVID-19 restrictions.
- SG&A was
$19.4 million in 2020, or $6.6 million higher than the $12.8
million reported in 2019. This increase was principally due to a
$7.5 million rise in costs associated with the launch and operation
of the Company’s US organization in partnership with Syneos Health,
partially offset by a $0.9 million decline in non-cash disposal and
impairment charges on intangible assets.
- EBITDA1 loss
was $21.7 million for the year compared with an EBITDA1 loss of
$12.7 million for 2019, reflecting the items noted above. Adjusted
EBITDA1 was a loss of $19.6 million for the year ended December 31,
2020 compared to a loss of $9.3 million in 2019.
- The Company
incurred a 2020 net loss of $24.4 million, or $(0.03) per share,
compared to $16.1 million, or $(0.06) per share, in the prior
year.
Strengthening the Balance
Sheet
Cash as of December 31, 2020 was $9.2 million
compared with $4.8 million on September 30, 2020 and $5.9 million
as of December 31, 2019.
The increase in the fourth quarter reflects the
closing of the previously-announced rights offering in November
2020 that raised C$13.2 million, partially offset by cash used in
operations. Please refer to the Company’s press releases dated
November 25 and 27, 2020 regarding details of the rights
offering.
COMPANY UPDATE AND OUTLOOK
The Company has engaged Torreya Partners LLC to
assist it in identifying and financing strategic opportunities to
leverage its US infrastructure and ultimately provide additional
revenue-generating assets to further grow the Company’s US-based
organization.
NATESTO® The Company continues
to execute on its strategy of focusing on the US market for
NATESTO®. Acerus, in conjunction with its US commercial provider
Syneos Health Inc. (“Syneos”), has deployed a team of 32 personnel
based in the United States, who conduct a substantial majority of
the Corporation’s commercial operations in the United States. Total
fourth quarter 2020 prescription growth in the specialty physician
segment (urology, endocrinology) was significant, up approximately
23% sequentially over the third quarter of 2020 and the Company is
confident that this momentum – even in the face of COVID-19
restrictions limiting in-person physician visits, positions the
Company for stronger top line growth in 2021.
The Company remains optimistic about a return of
NATESTO® to the Canadian market in the first half of 2021.
Manufacturing is ongoing on a new batch of NATESTO® for this market
in anticipation of the return to the Canadian market.
Shipments to South Korea and Taiwan resumed in
the fourth quarter of 2020, and further shipments are expected in
the first quarter of 2021.
avanafil Health Canada Approval
StatusOn April 20, 2020, the Company announced that it had
received a Notice of Deficiency from Health Canada related to its
avanafil New Drug Submission (“NDS”). Health Canada requested the
provision of additional quality information related to the avanafil
drug substance in alignment with International Council for
Harmonization (ICH) technical guidance adopted by Health Canada.
The Company worked closely with Metuchen Pharmaceuticals LLC, the
licensor of the product, and VIVUS Inc., the licensor of avanafil
to Metuchen, to address the deficiency noted by Health Canada.
In November of 2020, additional information was
provided to Health Canada and, on December 11, 2020, Health Canada
confirmed that the submission had passed screening and was accepted
into review, which may take up to a year to complete.
ESTRACE® UpdateIn January of
2019, the Company announced that it had reported an anticipated
shortage of ESTRACE® on the “Drug Shortages Canada” website in
relation to supply issues arising from the Company’s contract
manufacturer.
Since that time, the Company has been working
with another contract manufacturer to transfer production of
ESTRACE®; this transfer is ongoing and expected to be completed in
the second quarter of 2021. The Company also made the decision to
find a partner with a presence in Women’s Health to drive the
return of ESTRACE® in Canada and, as such, entered into an
agreement in the fourth quarter to sell the rights to ESTRACE® to
an established Canadian pharmaceutical company. This entity will
assume the marketing authorization for ESTRACE® in Canada and will
be responsible for all commercial activities. Acerus will receive a
five-year royalty stream based on gross sales of the drug in
Canada; the agreement will come into full effect in 2021 pending
the completion of the aforementioned transfer of ESTRACE® to the
new contract manufacturer.
The Company’s legal action against Recipharm
Ltd., the original UK contract manufacturer remains active and
additional court proceedings in the UK are expected in the first
half of 2021.
Conference Call Shareholders
are reminded that the conference call to discuss the Company’s
results for the fourth quarter and year ended December 31, 2020
will be held on Thursday, March 11, 2021 at 10:00 a.m. Eastern
Time.
To access the call live, please dial
416-406-0743 or 1-800-952-5114 and use access code 4028136#.
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 Thursday March 18, 2021
by dialing 905-694-9451 or 1-800-408-3053, using access code:
1138760#.
About Acerus Acerus
Pharmaceuticals Corporation is a Canadian-based specialty
pharmaceutical company focused on the commercialization and
development of innovative prescription products that improve
patient experience, with a primary focus in the field of 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 EBITDAThe
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 (in USD'000s).
|
|
|
For the three months
ended December 31, |
|
For the year ended
December 31, |
|
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
Net (loss) |
|
$ |
(7,103 |
) |
$ |
(3,883 |
) |
|
$ |
(24,424 |
) |
$ |
(16,129 |
) |
Adjustments: |
|
|
|
|
|
|
|
Amortization
of intangible assets |
|
|
180 |
|
|
176 |
|
|
|
717 |
|
|
818 |
|
|
Depreciation of property and equipment |
|
60 |
|
|
63 |
|
|
|
245 |
|
|
254 |
|
|
Depreciation
of right of use asset |
|
|
13 |
|
|
12 |
|
|
|
48 |
|
|
47 |
|
|
Interest expense and other financing costs* |
|
362 |
|
|
664 |
|
|
|
1,975 |
|
|
2,532 |
|
|
Interest
income |
|
|
(2 |
) |
|
(11 |
) |
|
|
(67 |
) |
|
(17 |
) |
|
Change in
fair value of derivative |
|
|
(22 |
) |
|
(97 |
) |
|
|
(182 |
) |
|
(161 |
) |
EBITDA |
|
$ |
(6,512 |
) |
$ |
(3,076 |
) |
|
$ |
(21,688 |
) |
$ |
(12,656 |
) |
|
|
|
|
|
|
|
|
Licensing and other revenue |
|
|
- |
|
|
(193 |
) |
|
|
- |
|
|
(193 |
) |
Royalty expense/Buyout |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
Share based compensation |
|
|
230 |
|
|
13 |
|
|
|
654 |
|
|
176 |
|
Foreign exchange (gain) |
|
|
(96 |
) |
|
(167 |
) |
|
|
(112 |
) |
|
(261 |
) |
Gain on remeasurement of lease liability |
|
|
(75 |
) |
|
- |
|
|
|
(75 |
) |
|
- |
|
Charges related to product recall |
|
|
71 |
|
|
77 |
|
|
|
- |
|
|
1,053 |
|
Loss on sale of intangible asset |
|
|
1,629 |
|
|
- |
|
|
|
1,629 |
|
|
- |
|
Impairment loss on intangible asset |
|
|
- |
|
|
- |
|
|
|
- |
|
|
2,536 |
|
Adjusted EBITDA |
|
$ |
(4,753 |
) |
$ |
(3,346 |
) |
|
$ |
(19,592 |
) |
$ |
(9,345 |
) |
* This figure includes interest
expense, amortization of deferred financing costs and accretion
expense related to our outstanding debts.
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 10, 2021 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 Contactir@aceruspharma.com
Investor Relations Contact
Chris WittyAcerus Investor Relations (646)
438-9385cwitty@darrowir.com
|
|
|
Acerus Pharmaceuticals Corporation |
|
|
Consolidated Statements of Financial Position |
|
|
As at December 31, 2020 and 2019 |
|
|
(expressed in thousands of U.S. dollars) |
|
|
|
|
|
|
|
|
December 31, 2020 |
December 31, 2019 |
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current assets |
|
|
|
Cash |
$ |
9,153 |
|
$ |
5,860 |
|
|
Trade and
other receivables |
|
528 |
|
|
171 |
|
|
Contract
asset |
|
936 |
|
|
473 |
|
|
Inventory |
|
2,313 |
|
|
1,494 |
|
|
Prepaid and other assets |
|
1,104 |
|
|
1,237 |
|
Total current assets |
|
14,034 |
|
|
9,235 |
|
|
|
|
|
Property and equipment, net |
|
806 |
|
|
1,051 |
|
Right of use asset |
|
- |
|
|
263 |
|
Intangible assets, net |
|
2,142 |
|
|
4,891 |
|
Total assets |
$ |
16,982 |
|
$ |
15,440 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT) |
|
|
|
|
Current liabilities |
|
|
|
Accounts
payable and accrued liabilities |
$ |
5,435 |
|
$ |
7,408 |
|
|
Current
portion of long-term debt |
|
1,439 |
|
|
- |
|
|
Current
portion of lease liability |
|
229 |
|
|
101 |
|
Total current liabilities |
|
7,103 |
|
|
7,509 |
|
|
|
|
|
Lease liability |
|
- |
|
|
510 |
|
Long-term debt |
|
6,580 |
|
|
19,990 |
|
Derivative financial instruments |
|
139 |
|
|
262 |
|
Total liabilities |
|
13,822 |
|
|
28,271 |
|
|
|
|
|
Shareholders' equity (deficit) |
|
|
|
Share
capital |
$ |
198,163 |
|
$ |
158,402 |
|
|
Warrants |
|
- |
|
|
1,420 |
|
|
Contributed
surplus |
|
13,435 |
|
|
11,361 |
|
|
Accumulated
other comprehensive loss |
|
(13,949 |
) |
|
(13,949 |
) |
|
Deficit |
|
(194,489 |
) |
|
(170,065 |
) |
Total shareholders' equity (deficit) |
|
3,160 |
|
|
(12,831 |
) |
Total liabilities & shareholders' equity
(deficit) |
$ |
16,982 |
|
$ |
15,440 |
|
Acerus Pharmaceuticals Corporation |
|
|
|
|
|
|
|
Consolidated Statements of Loss and Comprehensive Loss |
|
|
|
|
|
|
For the years ended December 31, 2020 and 2019 |
|
|
|
|
|
|
|
(expressed in
thousands of U.S. dollars, except per share and share data) |
|
|
|
|
|
|
|
|
For the
three months ended December 31, |
|
For the year
ended December 31, |
|
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
Product revenue |
|
|
$ |
271 |
|
|
$ |
321 |
|
|
$ |
1,085 |
|
|
$ |
3,575 |
|
Licensing and other revenue |
|
|
|
- |
|
|
|
193 |
|
|
|
- |
|
|
|
193 |
|
|
|
|
|
|
271 |
|
|
|
514 |
|
|
|
1,085 |
|
|
|
3,768 |
|
Cost of goods sold |
|
846 |
|
|
|
352 |
|
|
|
2,014 |
|
|
|
2,199 |
|
Gross margin (loss) |
|
|
|
(575 |
) |
|
|
162 |
|
|
|
(929 |
) |
|
|
1,569 |
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
Research and
development |
|
|
|
744 |
|
|
|
522 |
|
|
|
2,526 |
|
|
|
2,829 |
|
|
Selling, general and administrative |
|
|
5,617 |
|
|
|
3,134 |
|
|
|
19,430 |
|
|
|
12,776 |
|
Total operating expenses |
|
|
|
6,361 |
|
|
|
3,656 |
|
|
|
21,956 |
|
|
|
15,605 |
|
Operating loss |
|
|
|
(6,936 |
) |
|
|
(3,494 |
) |
|
|
(22,885 |
) |
|
|
(14,036 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other expenses/(income) |
|
|
|
|
|
|
|
|
|
|
Interest on
long-term debt and other financing costs |
|
|
|
362 |
|
|
|
664 |
|
|
|
1,975 |
|
|
|
2,532 |
|
|
Interest
income |
|
|
|
(2 |
) |
|
|
(11 |
) |
|
|
(67 |
) |
|
|
(17 |
) |
|
Foreign
exchange (gain)loss |
|
|
|
(96 |
) |
|
|
(167 |
) |
|
|
(112 |
) |
|
|
(261 |
) |
|
Change in
fair value of derivative financial instruments |
|
|
|
(22 |
) |
|
|
(97 |
) |
|
|
(182 |
) |
|
|
(161 |
) |
|
Gain on remeasurement of lease liability |
|
(75 |
) |
|
|
- |
|
|
|
(75 |
) |
|
|
- |
|
Total other expenses |
|
|
|
167 |
|
|
|
389 |
|
|
|
1,539 |
|
|
|
2,093 |
|
Loss for the year before income taxes |
|
|
(7,103 |
) |
|
|
(3,883 |
) |
|
|
(24,424 |
) |
|
|
(16,129 |
) |
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net loss |
|
|
|
(7,103 |
) |
|
|
(3,883 |
) |
|
$ |
(24,424 |
) |
|
$ |
(16,129 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income, net of income tax |
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
- |
|
|
|
(117 |
) |
|
|
- |
|
|
|
(98 |
) |
Total comprehensive loss |
|
|
|
(7,103 |
) |
|
|
(4,000 |
) |
|
$ |
(24,424 |
) |
|
$ |
(16,227 |
) |
|
|
|
|
|
|
|
|
|
|
|
Loss per common share |
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share |
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.06 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
Basic and
diluted |
|
|
|
975,848,903 |
|
|
|
261,225,290 |
|
|
|
975,848,903 |
|
|
|
255,002,276 |
|
Acerus Pharmaceuticals (TSX:ASP)
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From Mar 2024 to Apr 2024
Acerus Pharmaceuticals (TSX:ASP)
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From Apr 2023 to Apr 2024