Cipher earns $1.6-million (U.S.) in Q3
2020-11-12 19:36 ET - News Release
Mr. Craig Mull reports
CIPHER PHARMACEUTICALS REPORTS THIRD QUARTER 2020 FINANCIAL RESULTS
Cipher Pharmaceuticals Inc. has released its financial and operating results for the three and nine months ended Sept. 30, 2020. Unless otherwise noted, all figures are in U.S. dollars.
Q3 2020 Financial Highlights
(All figures in U.S. dollars, compared to Q3 2019 unless otherwise noted)
Total revenue was $4.9 million compared to $5.8 million
Total operating expenses excluding impairment of intangible assets decreased 18% to $2.5 million
Net Income increased to $1.6 million compared to a loss of $2.1 million
EBITDA2 was $2.7 million or 55% of net revenue compared to a loss of $0.4 million
EPS was $0.06 (CDN$0.08) compared to a loss of $0.08
Management Commentary
"The COVID-19 pandemic continued to impact the economy during the third quarter of 2020. Cipher is navigating through this environment while executing on business improvements and cost reductions. Cipher demonstrated strong profitability during the third quarter and sequential growth in revenue despite market conditions that have not fully normalized. Our focus continues to be on driving profitability, strengthening the balance sheet and looking for the right opportunities for growth," said Mr. Craig Mull, Interim CEO.
"Epuris continued to perform well in the quarter, revenue was $1.8 million compared to $1.9 million in the third quarter of 2019. Epuris finished the quarter with a 41% market share in the Canadian market, up from 40% in the comparative period. Licensing revenue for Absorica was $2.3 million, a decrease of $0.3 million compared to Q3 2019. Absorica's market share for the three months ended September 30, 2020 was approximately 6% compared to approximately 8% for the three months ended September 30, 2019, according to Symphony. Market share including Sun's Absorica LD was approximately 7%."
"Third quarter results show sequential growth in revenue and strong year over year growth in earnings. Starting in Q4, we will be ramping up our strategic promotional efforts to drive market share on our core brands. Excluding an impairment charge total operating costs decreased 18% in the third quarter over last year. This optimized cost structure resulted in EBITDA increasing to $2.7 million or 55% of net revenue compared to a loss of $0.4 million last year. Our focus for the rest of the year will be on continuing strategic promotional marketing efforts in the Canadian market."
Management Update on Pipeline projects
Tattoo program ("DTR001"): "In our tattoo program ("DTR001"), the US patent office issued a Notice of Allowance for the US patent application covering Tattoo dermal compositions (topical, transdermal and intradermal). We have received encouraging results from the proof of concept studies and identified a lead candidate compound. Planning is currently underway for the next focused preclinical animal study that will incorporate test parameters that could potentially broaden and reinforce the existing IP portfolio." said Mr. Craig Mull, Interim CEO.
MOB-015 ("Nail fungus"): "Our development partner, Moberg, has developed a proprietary formulation that can deliver a higher concentration of active drug to the nail bed than competing products on the market. To date, Moberg has conducted two Phase III studies for MOB-015 that have met the primary endpoint. Although the overall cure rates were low, there was a significant antifungal effect, as demonstrated in the secondary endpoints of the studies where the mycological cure was achieved in 84% of patients, which is unprecedented for a topical treatment and even higher than reported for oral treatments. Cipher is continuing discussions with Moberg on next steps."
Alitretinoin: "We also continue to work with our development partner, Galephar, on a number of interesting projects including Alitretinoin, a drug for severe hand eczema, for the U.S. market. Cipher and Galephar are working closely and expect to receive feedback from a recent clinical protocol submission to the FDA. Cipher continues to evaluate the market potential for this product."
Q3 2020 Financial Review
(All figures are in U.S. dollars)
Total revenue was $4.9 million for Q3 2020, compared to $5.8 million for the prior year. The main driver for the $1.0 million decrease in revenue was a decrease in Licensing revenue.
Licensing revenue was $2.9 million for the three months ended September 30, 2020, compared to $3.6 million for the three months ended September 30, 2019. Licensing revenue from Absorica in the U.S. was $2.3 million, up sequentially from $1.8 million but down from $2.6 million for the three months ended September 30, 2019. Absorica ended the quarter with a 6.0% market share, or 7% including Sun's Absorica LD.
Product revenue was $2.0 million for Q3 2020, compared to $2.2 million in Q3 2019. Product revenue from Epuris was $1.8 million during the quarter compared to $1.9 million the prior period. According to Symphony, Epuris had a prescription market share of approximately 41% in Canada for the three months ended June 30, 2020, compared to 40% for the three months ended September 30, 2019.
Total operating expenses decreased 61% to $2.5 million for Q3 2020 compared to $6.5 million for Q3 2019. The decrease was primarily driven by a decrease in impairment of intangible assets and restructuring costs. Excluding an impairment charge total operating costs decreased 18% in the third quarter over last year.
SG&A expense was $1.6 million for Q3 2020, an increase of $0.4 million compared to the prior period. The increase in SG&A was primarily driven by an increase in costs related to legal and consulting spend.
Net income was $1.6 million, or $0.06 per basic and diluted share (CDN$0.08) in Q3 2020, compared to a loss of $2.1 million, or a loss of $0.08 per basic and diluted share, in Q3 2019. EBITDA was $2.7 million or 55% of net revenue for the quarter, compared to a loss of $0.4 million in Q3 2020. Adjusted EBITDA for Q3 2020 was $2.8 million or 58% of net revenue, compared to $3.7 million in Q3 2019.
The Company generated $5.5 million in cash from operating activities during the nine-month period ended September 30, 2020. As of September 30, 2020, the Company had cash of $4.7 million and $1.7 million drawn on the credit facility. The Company's credit facility has been paid off as at October 30, 2020.
Update on normal course issuer bid (" NCIB") program
As announced in the August 12, 2020 press release, Cipher has purchased for cancellation 30,000 common shares during the quarter ended September 30, 2020 under the NCIB program.
Financial Statements and MD&A
Cipher's Financial Statements for the third quarter ended September 30, 2020, and Management's Discussion and Analysis (the "MD&A") for the three and nine months ended September 30, 2020, 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 November 13, 2020, at 8:30 a.m. (ET) to discuss its financial results and other corporate developments.
To access the conference call by telephone, dial (416) 764-8688 or (888) 390-0546 and use conference ID 46246305.
A live audio webcast will be available at https://producereditio