- Demonstrated growth in FY 2021 as EBITDA increased 46% to
$11.8 million
- Disciplined cost structure led to an 18% reduction in
SG&A
- 81% increase in EPS to $0.29
in FY2021
- Strengthened cash flow from operations; Cash at December 31, 2021 was $20.5 million
- Subsequent to year-end, bolstered isotretinoin portfolio
through extended distribution and supply agreement with Sun
Pharmaceutical to December 31,
2026
MISSISSAUGA, ON, March 17, 2022 /CNW/ - Cipher
Pharmaceuticals Inc. (TSX: CPH) ("Cipher" or "the
Company") today announced its financial and operating results
for the year ended December 31, 2021. Unless otherwise noted,
all figures are in U.S. dollars.
Full Year 2021 Financial Highlights
(All figures
in U.S. dollars, compared to 2020, unless otherwise noted)
- Total revenue increased to $21.9
million in 2021, compared to $21.6
million
- SG&A decreased 18.3% to $5.1
million, compared to $6.3
million
- Total operating expenses decreased 32% to $10.1 million, compared to $14.9 million
- EBITDA2 increased 46% to $11.8 million, compared to $8.1 million
- Adjusted EBITDA2 increased 1.7% to $13.9 million from $13.7
million
- Earnings per common share increased 81% to $0.29 from $0.16
- Earnings per common share excluding legal provision and loss on
disposal of assets increased to $0.37
(CDN$0.47) from $0.16 in 2020, an increase of 131%
- As at December 31, 2021, the
Company had $20.5 million
(CDN$261 million) in cash
or $0.79 (CDN$1.00) per share
- 1,210,800 shares were repurchased and cancelled under the
Normal Course Issuer Bid at an average price of CDN$1.77
Q4 2021 Financial Highlights
(All figures in U.S.
dollars, compared to Q4 2020, unless otherwise noted)
- Total revenue was $5.9 million
compared to $6.1 million
- SG&A decreased 45% to $1.0
million to $1.9 million
- Total operating expenses decreased 76% to $2.0 million from $8.0
million, in part due to an impairment charge of $5.3 million in 2020 relating to Trulance
- Adjusted EBITDA2 increased to $4.1 million from $3.9
million
- Net income increased to $2.8
million from a loss of $0.1
million
- Earnings per common share increased to $0.11 from $0.00
Management Commentary
"Fiscal 2021 results demonstrated positive momentum, as
revenue, adjusted EBITDA and EPS all showed growth over the prior
year. Our continued efforts to reduce the cost structure resulted
in our earnings per share increasing 81% to $0.29 from $0.16 in
the prior year. We generated $13.8
million in cash from operating activities in the twelve
months ending December 31, 2021,
ending the year with $20.5 million in
cash on the balance sheet and no long-term debt. With our pristine
balance sheet and strong cash flow from operating activities, we
feel the company is in an excellent position for its next phase of
growth," said Mr. Craig Mull,
Interim CEO.
A key focus for Cipher during 2021 was to negotiate extended
distribution and supply agreements with key partners for the
Company's portfolio, with an emphasis on improving visibility and
long-term profitability. Commenting on distribution agreements,
Mr. Mull said, "In February
2021, we entered into a co-promotion agreement with Verity
Pharmaceuticals for the marketing, sales & co-promotion of
Brinavess and Aggrastat. This partnership will help us to manage
our costs efficiently and drive profitability within our hospital
business. In September 2021, Cipher
entered into a distribution and supply agreement with ANI
Pharmaceuticals, Inc. Under the ANI Agreement, ANI was granted the
exclusive right to market, sell and distribute Lipofen and
fenofibrate in the United States.
The ANI Agreement is for a period of five years and ANI has the
right to extend the term for two additional two-year
periods."
"Furthermore, in the second quarter we launched Absorica AG with
our marketing partner Sun Pharmaceutical Industries, Inc. ("Sun
Pharma") in order to broaden Cipher's isotretinoin portfolio and
maximize its value. Subsequent to year-end, we were pleased to
announce an extension of the distribution and supply agreement with
Sun Pharma through December 31, 2026.
We believe that this four-year extension is testament to the
success of our strategy and provides Cipher with enhanced
visibility into stable revenue and cashflow for years to come."
Mr. Mull added.
Cipher also intends to assume direct distribution of Durela in
Canada, which is expected to
commence April 1, 2022.
"Overall, 2021 was a transformational year for Cipher. The
Company fortified its balance sheet, improved distribution
agreements and is generating substantial cash flow from operations.
Our key priorities for 2022 include continuing to allocate our
capital efficiently with the goal of driving shareholder value. We
remain focused on investing in commercial products to drive organic
growth, evaluating profitable product and company acquisitions,
advancing the development pipeline and continuing to buy back
common shares through our normal course issuer bid ("NCIB"). Cipher
enters 2022 in an excellent position to utilize multiple levers to
drive shareholder value, while maintaining a highly disciplined
approach to our cost structure," concluded Mr. Mull.
2021 Corporate Highlights
During the year ended December 31,
2021, the Company assigned the lease for its corporate
operations head office to an arms' length third party and paid an
inducement payment of CDN$775,000.
The term of the lease was 10 years and three months and commenced
on January 1, 2019. The Company
incurred a non-recurring loss on extinguishment of lease expense in
the year ended December 31, 2021, of
$100,000. In addition, the Company
recorded a loss on disposal of assets related to the unamortized
leasehold improvements, furniture and fixtures and the associated
office lease – right of use of $658,000. It is expected that the assignment of
the lease will result in a net savings of approximately
CDN$2.2 million over the remainder of
the lease term.
On September 8, 2021, the Company
announced the renewal of its NCIB for up to 1,541,455 common
shares, representing 10% of its public float.
On March 25, 2021, the Company
announced that it had received approval from the Toronto Stock
Exchange to amend its NCIB in order to enter into an automatic
repurchase plan with its designated broker.
On February 10, 2021, the Company
entered into an exclusive co-promotion agreement with Verity
Pharmaceuticals Inc. for the marketing, sales and co-promotion of
Brinavess and Aggrastat.
On January 15, 2021, the Company
received an arbitration ruling in connection with the impairment of
the Trulance intangible asset as at December
31, 2020. During the three months ended June 30, 2021, the Company executed a settlement
agreement in full settlement of the dispute with Bausch Health
Ireland Ltd. ("Bausch Health") and paid the full settlement amount
of $1.5 million. An amount of
$1.25 million was accrued in the
quarter ending March 31, 2021 in
addition to $0.24 million that was
previously accrued as at December 31,
2020.
Q4 2021 Financial Review
(All figures are in U.S.
dollars)
Total revenue was $5.9 million for Q4 2021, compared
to $6.1 million for Q4 2020.
Licensing revenue was $2.8 million
for the three months ended December 31,
2021, compared to $3.9 million
for the three months ended December
31, 2020.
Licensing revenue from Absorica in the US was $1.6 million for the three months ended
December 31, 2021, a decrease of
$1.4 million or 47% compared to
$3.0 million for the three months
ended December 31, 2020.
Licensing revenue from Lipofen and the authorized generic
version of Lipofen, was $1.3 million
for Q4 2021, an increase of $0.5
million compared to revenue of $0.8
million for Q4 2020.
Licensing revenue from the extended-release tramadol product
(Conzip and Durela) was $0.1 million
which remained relatively unchanged from the comparative
period.
Product revenue increased by $0.8
million or 36% to $3.1 million
for Q4 2021, compared to $2.3 million
for the comparable period in 2020.
Selling, general and administrative expenses were $1.0 million for Q4 2021 compared to $1.9 million for Q4 2020, a decrease of
$0.8 million or 45%. The
decrease was primarily driven by lower legal fees which were
incurred in Q4 2020 related to the Trulance settlement.
Total operating expenses were $2.0
million for Q4 2021 compared to $8.0
million for Q4 2020. The decrease was primarily driven by
the impairment of intangible assets related to Trulance of
$5.3 million.
Income from continuing operations was $2.8 million, or
$0.11 per basic and diluted
share, in Q4 2021, compared to a loss from continuing operations
of $0.1 million, or $0.00 per basic and diluted
share, in Q4 2020. Adjusted EBITDA for Q4 2021 was $4.1
million, compared to $3.9 million in Q4 2020.
The Company had $20.5 million in cash and no debt
at December 31, 2021. The Company generated $13.8
million in cash from operating activities for the year ended
December 31, 2021.
Outlook
Cipher anticipates several key milestones in 2022 that will
continue to enhance long term value, including:
- Full-year benefit of the cost reduction plan
- Reinforced commitment to our hospital business with
distribution partnership is expected to result in improved growth
and profitability
- Collaboration with Galephar on key products in the Lucy product
portfolio
- Continue to repurchase shares for cancellation under our normal
course issuer bid
- Work closely with Moberg on continued development of
MOB-015
- Selectively pursue product and business acquisitions in a
prudent manner with a focus on high growth potential and near-term
profitability
Financial Statements and MD&A
Cipher's Financial Statements for the year ended December
31, 2021, and Management's Discussion and Analysis (the
"MD&A") for the three and twelve months
ended December 31, 2021, 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 on March 18, 2022,
at 8:30 a.m. (ET) to discuss its financial results and
other corporate developments.
- To access the conference call by telephone, dial (647) 794-4605
or (888) 204-4368 and use conference 1673781.
A live audio webcast will be available at
https://produceredition.webcasts.com/starthere.jsp?ei=1533942&tp_key=62d3cb0b34
- or the Investor Relations section of the Company's website at
http://www.cipherpharma.com.
- An archived replay of the webcast will be available until
March 25, 2022.
About Cipher Pharmaceuticals Inc.
Cipher Pharmaceuticals (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 currently markets those products
either directly in Canada or indirectly through partners
in Canada, the U.S., and South America. For more
information, visit www.cipherpharma.com.
Forward-Looking Statements
This document includes
forward-looking statements within the meaning of applicable
securities laws. These forward-looking statements include, among
others, statements with respect to the impact of the Company's cost
reduction plan, the potential for improved profitability of our
hospital business, increased adoption of ABSORICA LD, discussions
with Galephar regarding new product opportunities, the impact of
the partnership with Verity on the Company's ability to manage its
costs efficiently and drive profitability within its hospital
business, our objectives and goals and strategies to achieve those
objectives and goals, as well as statements with respect to our
beliefs, plans, expectations, anticipations, estimates and
intentions. 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, the
extent and impact of the coronavirus (COVID-19) outbreak on our
business including any impact on our contract manufacturers and
other third party service providers, our ability to enter into
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 we
operate; 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
fact that we have 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 the Company's Annual Information Form for the year ended
December 31, 2020, 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.
- At the December 31, 2021
exchange rate – 1.2678
- EBITDA and adjusted EBITDA are non-IFRS financial
measures. 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, non-cash share-based
compensation, changes in fair value of derivative financial
instruments, provision for legal settlement, loss on disposal of
assets and loss on extinguishment of lease, impairment of
intangible assets, restructuring costs and foreign exchange gains
and losses from the translation of Canadian cash balances.
The Following is a summary of how EBITDA and Adjusted EBITDA are
calculated:
|
|
|
|
|
(IN THOUSANDS OF U.S.
DOLLARS)
|
|
|
2021
|
2020
|
|
|
|
$
|
$
|
Income from
continuing operations
|
|
|
7,758
|
4,386
|
Add back:
|
|
|
|
|
Depreciation and
amortization
|
|
|
701
|
1,205
|
Interest expense,
net
|
|
|
92
|
363
|
Income
taxes
|
|
|
3,301
|
2,150
|
EBITDA
|
|
|
11,852
|
8,104
|
Change in fair value
of derivative financial instrument
|
|
|
(5)
|
(4)
|
Restructuring
costs
|
|
|
—
|
154
|
Loss from the
translation of Canadian cash and lease balances
|
|
|
(83)
|
32
|
Impairment of
intangible assets
|
|
|
—
|
5,275
|
Provision for legal
settlement
|
|
|
1,250
|
—
|
Loss on disposal of
assets and extinguishment of lease
|
|
|
758
|
—
|
Share-based
compensation
|
|
|
139
|
122
|
Adjusted
EBITDA
|
|
|
13,911
|
13,683
|
Adjusted EBITDA per
share – basic
|
|
|
0.52
|
0.51
|
Adjusted EBITDA per
share – dilutive
|
|
|
0.52
|
0.51
|
The following is a summary of how the Q4 2021 and 2020 EBITDA
and Adjusted EBITDA are calculated:
(IN THOUSANDS OF U.S.
DOLLARS)
|
|
|
Q4
2021
|
Q4
2020
|
|
|
|
$
|
$
|
Income (loss) from
continuing operations
|
|
|
2,807
|
(100)
|
Add back:
|
|
|
|
|
Depreciation and
amortization
|
|
|
153
|
299
|
Interest expense,
net
|
|
|
5
|
85
|
Income
taxes
|
|
|
1,105
|
(1,705)
|
EBITDA
|
|
|
4,070
|
(1,421)
|
Change in fair value
of derivative financial instrument
|
|
|
—
|
(8)
|
Restructuring
costs
|
|
|
—
|
7
|
Loss from the
translation of Canadian cash and lease balances
|
|
|
(16)
|
43
|
Impairment of
intangible assets
|
|
|
—
|
5,275
|
Share-based
compensation
|
|
|
18
|
(18)
|
Adjusted
EBITDA
|
|
|
4,072
|
3,878
|
Adjusted EBITDA per
share – basic
|
|
|
0.16
|
0.14
|
Adjusted EBITDA per
share – dilutive
|
|
|
0.15
|
0.14
|
SOURCE Cipher Pharmaceuticals Inc.