Acerus Pharmaceuticals Corporation (“Acerus” or the “Company”)
(TSX:ASP; OTCQB:ASPCF) today reported its financial results for the
three and six-month period ended June 30, 2021. Unless otherwise
noted, all amounts are in US dollars and are prepared in accordance
with International Financial Reporting Standards (“IFRS”).
Second Quarter Highlights
- The second quarter included full US
product sales for NATESTO®, following the Company’s buyback of the
rights from Aytu BioPharma on April 1, 2021, resulting in a 219%
increase in product revenue compared to the second quarter of
fiscal 2020
- Total NATESTO® prescriptions
(“TRx”) grew by 45% in the second quarter of fiscal 2021 compared
to the prior-year period
- Within the urology segment,
NATESTO® TRx grew 63% year-over-year, reflecting the effectiveness
of Acerus’ commercial activities
- The Company announced a NATESTO®
revenue-sharing agreement with Amneal Pharmaceuticals effective
July 2021, leveraging Amneal’s extensive relationships with
endocrinology healthcare providers in the US
- Acerus announced a new pharmacy
benefit manager contract for NATESTO® in the US, increasing
coverage to 85% of commercial lives
- The Company completed a $15 million
subordinated secured loan facility (the “Loan Facility”) providing
capital to execute many ongoing growth initiatives
“Acerus posted strong results this quarter
following the strategic steps taken to accelerate our expansion in
the US market this year,” said Ed Gudaitis, President and Chief
Executive Officer of Acerus. “Revenue was triple that of the 2020
second quarter due to our buyback of the NATESTO rights from Aytu,
allowing us to leverage our growing market position and book
revenue when realized. In addition, we posted gross profit of $0.5
million and are executing a plan that should continue this solid
performance during the remainder of fiscal 2021. While investing in
marketing and R&D to strengthen our presence in the US, we
expect such moves will pay off handily in higher top line growth.
Prescriptions are up, we’ve implemented a revenue-sharing agreement
with Amneal, and we now have increased PBM coverage – all leading
to a positive outlook for this year and beyond.”
Summary of Results for the Three Months
Ended June 30, 2021 compared to the Three Months Ended June 30,
2020, unless otherwise noted
The Company reported revenue of $0.6 million for
the second quarter of 2021 compared with $0.2 million in the
prior-year period, an increase of 219%. The improvement was
primarily due to the assumption of full NATESTO® product sales and
revenue recognition as a result of purchasing the rights from Aytu
Biopharma on April 1, 2021, as previously reported.
Gross profit was $0.5 million in the second
quarter of 2021 versus a gross loss of $0.1 million in 2020. The
year-over-year increase reflect higher sales in 2021, while 2020
results included the impact of fixed, non-cash costs of $0.2
million related to the amortization of intangible assets and
depreciation of property and equipment.
Second quarter research and development
("R&D") expenses were $0.9 million versus $0.4 million in the
prior-year period. The increase was primarily due to higher
clinical trials-related expense for NATESTO® in the US, including
an Ambulatory Blood Pressure Monitoring Trial that was launched in
the first quarter of 2021 (and expected to last until the end of
2022).
Selling, general and administrative expense
(“SG&A”) increased by $1.7 million, to $6.3 million, largely
reflecting $0.7 million of marketing and advertising campaign
expenses related to US growth initiatives and a $0.7 million charge
to write off the accrued receivables related to the present value
of the expected royalty stream from the sale of ESTRACE® recorded
in the fourth quarter of 2020.
Second quarter earnings before interest, tax,
depreciation and amortization (“EBITDA”)1 was a loss of $6.5
million compared to a loss of $4.9 million in the second quarter of
2020. Adjusted EBITDA1 was a loss of $6.2 million for the current
year second quarter compared to a loss of $4.7 million in the
prior-year period.
The Company incurred a net loss of $7.1 million,
or $(0.00) per share, for the quarter compared to a loss of $5.6
million, or $(0.01) per share, in the second quarter of 2020.
Cash as of June 30, 2021 was $2.6 million
compared with $9.2 million on December 31, 2020, reflecting
proceeds of $7.0 million drawn on the $15.0 million subordinated
demand loan facility with First Generation Capital, offset by cash
used in operations as well as principal and interest repayments
totaling $1.6 million on the senior debt with SWK Funding LLC.
COMPANY UPDATES AND OUTLOOK
NATESTO®
With the full buy back of NATESTO® rights for
the US market completed April 1, 2021, the Company continues to
execute on its strategy focusing on the US market. Acerus also
announced in the second quarter a NATESTO® co-promotion agreement
with Amneal Pharmaceuticals (“Amneal”) that leverages that
company’s extensive relationships with endocrinology healthcare
providers in the US. Under the terms of the agreement, Amneal will
sell NATESTO® to its existing endocrinology targets through June
30, 2024. In compensation for such marketing efforts, Amneal will
receive a commission for most of the net profits attributed to
endocrinology targets in the three active promotional years, with
Acerus retaining a low double-digit percentage of such net profits
during this time. Amneal will also receive a three-year trailing
royalty following the active promotion period, with compensation to
Amneal decreasing from a majority of the net profits to a minority
of the net profits. The co-promotion agreement is now live
(effective July 1, 2021), and Amneal reps are actively involved in
selling to their call points.
On June 28, 2021, the Company announced a
significant improvement in commercial insurance coverage for
NATESTO® in the United States. A leading national Pharmacy Benefits
Manager (“PBM”) added NATESTO® to its Preferred Drug List as a
Preferred Brand, allowing for enhanced patient access and
potentially increased physician prescriptions to the more than 13
million men in the US who have been diagnosed with
hypogonadism.
Commercial preparations continue regarding the
reintroduction of NATESTO® into the Canadian market. The Company
currently expects to re-launch NATESTO® in Canada in the fourth
quarter
RECIPHARM LITIGATION
On June 18, 2020, Acerus announced it had
commenced litigation against Recipharm Limited (“Recipharm”), a
wholly-owned subsidiary of Recipharm AB, in the Commercial Court of
London. Acerus previously alleged that the suspension of
Recipharm’s manufacturing license in August 2018 was a violation of
its contractual obligations and led to a shortage of Estrace® in
Canada. On June 15, 2021, the Company won at a preliminary issue
trial in which Recipharm alleged that Acerus’ claim for damages was
barred by the terms of the companies’ manufacturing contract. In
agreeing with Acerus that its claim for damages was not barred, the
Commercial Court of London directed the matter to proceed to a full
trial in the coming months. Recipharm was granted permission to
appeal the court’s decision on August 3, 2021 with the main
proceedings being stayed pending appeal.
avanafil
Health Canada’s review of the avanafil New Drug
Submission (“NDS”) is ongoing, and the Company continues to respond
to questions and clarification requests. As disclosed in the
Company’s 2020 fourth quarter earnings report, the review process
can take up to a year from receipt of the NDS (December 2020).
Conference Call Shareholders
are reminded that the conference call to discuss the Company’s
results for the three- and six-month period ending June 30, 2021
will be held on today, August 10, 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 2381183#. 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, August 17, 2021
by dialing 905-694-9451 or 1-800-408-3053, using access code:
9081508#.
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 the 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 and the impact of
charges related to a product recall. 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 endedJune 30, |
|
|
For the six months endedJune 30, |
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Net loss |
|
$ |
(7,070 |
) |
|
$ |
(5,610 |
) |
|
$ |
(19,896 |
) |
|
$ |
(10,273 |
) |
Adjustments: |
|
|
|
|
|
|
Amortization of intangible assets |
|
|
38 |
|
|
|
179 |
|
|
|
75 |
|
|
|
358 |
|
Depreciation of property and equipment |
|
|
221 |
|
|
|
64 |
|
|
|
443 |
|
|
|
128 |
|
Depreciation of right of use asset |
|
|
3 |
|
|
|
12 |
|
|
|
3 |
|
|
|
24 |
|
Interest expense and other financing costs* |
|
|
408 |
|
|
|
382 |
|
|
|
700 |
|
|
|
1,228 |
|
Interest income |
|
|
(2 |
) |
|
|
(32 |
) |
|
|
(7 |
) |
|
|
(63 |
) |
Change in fair value of derivative |
|
|
(57 |
) |
|
|
59 |
|
|
|
12 |
|
|
|
(104 |
) |
Loss on modification of debt |
|
|
- |
|
|
|
|
64 |
|
|
|
- |
|
EBITDA |
|
$ |
(6,459 |
) |
|
$ |
(4,946 |
) |
|
$ |
(18,606 |
) |
|
$ |
(8,702 |
) |
|
|
|
|
|
|
|
Termination Fees |
|
|
50 |
|
|
|
- |
|
|
|
6,254 |
|
|
|
- |
|
Share based compensation |
|
|
176 |
|
|
|
203 |
|
|
|
467 |
|
|
|
248 |
|
Foreign exchange (gain) loss |
|
|
(25 |
) |
|
|
151 |
|
|
|
(40 |
) |
|
|
(93 |
) |
Charges related to product recall |
|
|
- |
|
|
|
(71 |
) |
|
|
- |
|
|
|
(71 |
) |
Gain on sale of property and equipment |
|
|
56 |
|
|
|
- |
|
|
|
56 |
|
|
|
- |
|
Adjusted EBITDA |
|
$ |
(6,202 |
) |
|
$ |
(4,663 |
) |
|
$ |
(11,869 |
) |
|
$ |
(8,618 |
) |
|
|
|
|
|
|
|
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.
Contacts:Company
Contactir@aceruspharma.com
Chris WittyAcerus Investor Relations (646)
438-9385cwitty@darrowir.com
|
|
|
|
Acerus Pharmaceuticals Corporation |
Condensed Interim Consolidated Statements of Financial
Position |
As at June 30, 2021 and December 31, 2020 |
Unaudited |
(expressed in thousands of U.S. dollars) |
|
|
|
|
|
|
June 30,2021 |
|
|
December 31,2020 |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets |
|
|
|
Cash |
|
$ |
2,603 |
|
|
$ |
9,153 |
|
Trade and other receivables |
|
|
1,321 |
|
|
|
528 |
|
Contract asset |
|
|
- |
|
|
|
936 |
|
Inventory |
|
|
2,463 |
|
|
|
2,313 |
|
Prepaid and other assets |
|
|
1,218 |
|
|
|
1,104 |
|
Total current assets |
|
|
7,605 |
|
|
|
14,034 |
|
|
|
|
|
Property and equipment, net |
|
|
375 |
|
|
|
806 |
|
Right of use asset |
|
|
317 |
|
|
|
- |
|
Intangible assets, net |
|
|
2,067 |
|
|
|
2,142 |
|
Total assets |
|
$ |
10,364 |
|
|
$ |
16,982 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT) |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
Accounts payable and accrued liabilities |
|
$ |
6,525 |
|
|
$ |
5,435 |
|
Termination fee payable |
|
|
2,670 |
|
|
|
- |
|
Current portion of long-term debt |
|
|
2,120 |
|
|
|
1,439 |
|
Current portion of lease liability |
|
|
4 |
|
|
|
229 |
|
Total current liabilities |
|
|
11,319 |
|
|
|
7,103 |
|
|
|
|
|
Termination fee payable |
|
|
2,798 |
|
|
|
- |
|
Lease liability |
|
|
307 |
|
|
|
- |
|
Long-term debt |
|
|
4,978 |
|
|
|
6,580 |
|
Subordinated Loan Facility |
|
|
5,747 |
|
|
|
- |
|
Derivative financial instruments |
|
|
156 |
|
|
|
139 |
|
Total liabilities |
|
|
25,305 |
|
|
|
13,822 |
|
|
|
|
|
Shareholders' equity (deficit) |
|
|
|
Share capital |
|
$ |
198,163 |
|
|
$ |
198,163 |
|
Contributed surplus |
|
|
15,230 |
|
|
|
13,435 |
|
Accumulated other comprehensive loss |
|
|
(13,949 |
) |
|
|
(13,949 |
) |
Deficit |
|
|
(214,385 |
) |
|
|
(194,489 |
) |
Total shareholders' equity (deficit) |
|
|
(14,941 |
) |
|
|
3,160 |
|
Total liabilities & shareholders' equity
(deficit) |
|
$ |
10,364 |
|
|
$ |
16,982 |
|
Acerus Pharmaceuticals Corporation |
Condensed Interim Consolidated Statements of Loss and Comprehensive
Loss |
For the three and six months ended June 30, 2021 and 2020 |
Unaudited |
(expressed in thousands of U.S. dollars, except per share and share
data) |
|
|
For the three months endedJune 30, |
|
For the six months endedJune 30, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
Product revenue |
|
$ |
562 |
|
|
$ |
176 |
|
|
$ |
796 |
|
|
$ |
321 |
|
Termination Fees |
|
|
(50 |
) |
|
|
- |
|
|
|
(6,254 |
) |
|
|
- |
|
|
|
|
512 |
|
|
|
176 |
|
|
|
(5,458 |
) |
|
|
321 |
|
Cost of goods sold |
|
|
45 |
|
|
|
224 |
|
|
|
236 |
|
|
|
425 |
|
Gross margin (loss) |
|
|
467 |
|
|
|
(48 |
) |
|
|
(5,694 |
) |
|
|
(104 |
) |
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
Research and development |
|
|
928 |
|
|
|
400 |
|
|
|
1,901 |
|
|
|
1,022 |
|
Selling, general and administrative |
|
|
6,285 |
|
|
|
4,602 |
|
|
|
11,572 |
|
|
|
8,179 |
|
Total operating expenses |
|
|
7,213 |
|
|
|
5,002 |
|
|
|
13,473 |
|
|
|
9,201 |
|
Operating loss |
|
|
(6,746 |
) |
|
|
(5,050 |
) |
|
|
(19,167 |
) |
|
|
(9,305 |
) |
|
|
|
|
|
|
|
|
|
Other expenses(income) |
|
|
|
|
|
|
|
|
Interest on long-term debt and other financing costs |
|
|
408 |
|
|
|
382 |
|
|
|
700 |
|
|
|
1,228 |
|
Interest income |
|
|
(2 |
) |
|
|
(32 |
) |
|
|
(7 |
) |
|
|
(63 |
) |
Foreign exchange (gain)/loss |
|
|
(25 |
) |
|
|
151 |
|
|
|
(40 |
) |
|
|
(93 |
) |
Change in fair value of derivative financial instruments |
|
|
(57 |
) |
|
|
59 |
|
|
|
12 |
|
|
|
(104 |
) |
Loss on modification of debt |
|
|
- |
|
|
|
- |
|
|
|
64 |
|
|
|
- |
|
Total other expenses |
|
|
324 |
|
|
|
560 |
|
|
|
729 |
|
|
|
968 |
|
Loss for the period before income taxes |
|
|
(7,070 |
) |
|
|
(5,610 |
) |
|
|
(19,896 |
) |
|
|
(10,273 |
) |
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net loss and comprehensive loss for the
period |
|
|
(7,070 |
) |
|
|
(5,610 |
) |
|
$ |
(19,896 |
) |
|
$ |
(10,273 |
) |
|
|
|
|
|
|
|
|
|
Loss per common share |
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share |
|
$ |
(0.00 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
1,537,588,081 |
|
|
|
1,010,456,066 |
|
|
|
1,537,588,081 |
|
|
|
833,440,004 |
|
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