(All figures are in U.S. dollars)
- Drove 60% increase in EPS to $0.08
- Demonstrated a focus on execution as EBITDA increased 38% to
$3.1 million
- Total operating expenses declined 25% to $2.5 million
- Bolstered isotretinoin portfolio through extended
distribution and supply agreement with Sun Pharmaceutical to
December 31, 2026
- Partner, Moberg Pharma AB, submitted regulatory filling for
clinical Phase 3 study
- Strong balance sheet with $21.9
million in cash at March 31,
2022
MISSISSAUGA, ON, May 12, 2022
/CNW/ - Cipher Pharmaceuticals Inc. (TSX: CPH) ("Cipher" or
"the Company") today announced its financial and operating
results for the three months ended March 31, 2022. Unless
otherwise noted, all figures are in U.S. dollars.
Q1 2022 Financial Highlights
(All figures in U.S.
dollars, compared to Q1 2021, unless otherwise noted)
- As at March 31, 2022, the Company
had $21.9 million (CDN$27.31 million) in cash or
$0.85 (CDN$1.06) per share
- 463,100 shares were repurchased and cancelled under the Normal
Course Issuer Bid at an average price of CDN$2.05
- Total operating expenses decreased 25% to $2.5 million, compared to $3.4 million
- EBITDA2 increased 38% to $3.1
million, compared to $2.2
million
- Net income increased to $2.1
million from $1.3 million
- Earnings per common share increased 60% to $0.08 from $0.05
Management Commentary
Craig Mull, Interim CEO
commented, "We are pleased to report that our first quarter
results delivered a meaningful increase in profitability,
highlighted by a 60% increase in our earnings per share. Our strong
results have been driven by our reduced cost structure in addition
to improved distribution and supply agreements."
Through 2021 and continuing into 2022, a key focus for Cipher
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. During the first
quarter, Cipher announced an extension of the distribution and
supply agreement with Sun Pharmaceutical Industries ("Sun Pharma")
through December 31, 2026. This
extension will provide Cipher with an additional four years of
visibility into stable revenue and cashflow on the isotretinoin
portfolio.
In March, the Company's partner, Moberg Pharma AB, ("Moberg")
submitted a regulatory filing for the next clinical Phase 3 study
for MOB-015 (nail fungus treatment) to the U.S. Food and Drug
Administration ("FDA"). Cipher holds the exclusive Canadian
rights to MOB-015. In Canada, according to IQVIA, the total
prescription market for Onychomycosis was greater than $75
million CDN at December 31, 2021, with a single product
having over 90% market share.
Commenting on the Moberg filing, Mr. Mull said, "We are
pleased to see the continued progress that Moberg is making to
commercialize MOB-015. The product is showing promising results and
we look forward to competing in this large market with an
innovative topical product that would provide a new safe and
effective treatment option for the many Canadians who suffer from
this common nail infection."
"With disciplined cost reductions and the extension of the
agreement with Sun Pharma, we believe that that Cipher now has a
stable runway for growth. Aligned with our stated strategy, we
remain focused on identifying and evaluating profitable product and
company acquisitions that will accelerate our growth and drive
shareholder value and are continuing to build cash reserves in
anticipation of such transactions," concluded Mr. Mull.
Q1 2022 Financial Review
(All figures are in U.S.
dollars)
Total revenue was $5.4 million for Q1 2022, compared
to $5.4 million for Q1 2021.
Licensing revenue was $2.1 million
for the three months ended March 31,
2022, compared to $2.8 million
for the three months ended March 31,
2021.
Licensing revenue from Absorica in the US was $1.4 million for the three months ended
March 31, 2022, a decrease of
$0.9 million or 39% compared to
$2.3 million for the three months
ended March 31, 2021. Licensing
revenue in Q1 2021 contained a full quarter of Brand Absorica
sales. Absorica's market share was approximately 4.3%
compared to 4.2% for the Q1 2021, according to Symphony
Health. Market share including Sun's Absorica LD was
approximately 5.2%.
Licensing revenue from Lipofen and the authorized generic
version of Lipofen was $0.7 million
for Q1 2022, a 73% increase compared to revenue of $0.4 million for Q1 2021.
Product revenue increased by $0.6
million or 24% to $3.3 million
for Q1 2022, compared to $2.7 million
for the comparable period in 2021. Product revenue from Epuris was
$3.1 million for Q1 2022, an increase
of 19% from $2.6 million in the
comparative period.
Product revenue for Ozanex, Beteflam, Actikerall, Brinavess,
Aggrastat and Vaniqa was $0.2 million
for Q1, 2022, compared to $0.1
million for the three months ended March 31, 2021.
Selling, general and administrative expenses were $1.3 million for Q1 2022, compared to
$1.2 million for Q1 2021.
Total operating expenses were $2.5
million for Q1 2022, compared to $3.4
million for Q1 2021.
Net income was $2.1 million, or $0.08 per basic and diluted share, in Q1
2022, compared to $1.3 million,
or $0.05 per basic and diluted share, in Q1 2021.
Adjusted EBITDA for Q1 2022 was $3.1 million, compared
to $3.6 million in Q1 2021.
The Company had $21.9 million in cash and no debt
at March 31, 2022. The Company generated $2.1
million in cash from operating activities for the three months
ended March 31, 2022.
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 a
distribution partnership that 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 March 31,
2022, and Management's Discussion and Analysis (the
"MD&A") for the three months ended March 31,
2022, 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 May 13, 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) 484-0477
or (888) 458-4121 and use conference 6137413.
A live audio webcast will be available
at https://produceredition.webcasts.com/starthere.jsp?ei=1548662&tp_key=a2eab0e46f
- 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
May 20, 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.
1) At the March 31, 20221 exchange rate – 1.2496
2) 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)
|
Three months
ended
March 31, 2022
|
Three months ended
March 31, 2021
|
|
$
|
$
|
Income and
comprehensive income from continuing operations
|
2,149
|
1,339
|
Add back:
|
|
|
Depreciation and amortization
|
155
|
196
|
Interest expense, net
|
(7)
|
37
|
Income taxes
|
774
|
657
|
EBITDA
|
3,071
|
2,229
|
Change in fair value of
derivative financial instrument
|
—
|
11
|
Loss (gain) from the
translation of Canadian cash balances
|
(17)
|
43
|
Provision for legal
settlement
|
—
|
1,250
|
Share-based
compensation
|
38
|
44
|
Adjusted
EBITDA
|
3,092
|
3,577
|
Adjusted EBITDA per
share – basic
|
0.12
|
0.13
|
Adjusted EBITDA per
share – dilutive
|
0.12
|
0.13
|
SOURCE Cipher Pharmaceuticals Inc.