-Focus on Canadian Operations, supported by Toprol-XL® Franchise Revenues and Vimovo® Royalties-
-Discontinuation of U.S. Commercial Operations, with Significant Reductions in Operating Expenses-
-Actively Exploring Strategic Alternatives for Business-
MISSISSAUGA, Ontario, May 8, 2018 /PRNewswire/
-- Aralez Pharmaceuticals Inc. (NASDAQ: ARLZ) (TSX: ARZ) ("Aralez" or the "Company") today
announced that, based on its continuing exploration and evaluation of numerous opportunities to streamline the business, reduce
costs, and improve its capital structure and liquidity, it has determined that a new strategic direction is in the best
interests of the Company and its stakeholders. This strategic direction will involve (i) a focus on the Company's strong Canadian
business, supported by Toprol-XL and its authorized generic (the "Toprol-XL Franchise") as well as Vimovo royalties, and (ii) the
discontinuation of the remaining U.S. commercial business.
Despite a successful launch of Zontivity® in the U.S., the Company has concluded that the momentum from Zontivity
alone is insufficient to sustain the U.S. commercial infrastructure. Additionally, the disappointing launch and subsequent
discontinuation of Yosprala® as well as capital constraints impeding our ability to execute strategic business
development have also contributed to our inability to fully leverage the cost of our U.S. sales force. Consequently, decisive
actions are being taken to wind down our U.S. commercial business immediately and ultimately close the U.S. operations.
Aralez Canada has demonstrated solid revenue performance and continues to generate positive Adjusted EBITDA1.
Going forward, Aralez Canada will focus on driving organic growth in Canada with
Blexten™ and Cambia®, as well as future product and line extension launches, supported by ongoing
revenue from its many other products, revenue from the Toprol-XL Franchise as well as Vimovo royalties. This new strategic
direction will benefit from a significantly reduced cost structure. Following completion of the transition, Aralez expects that
cash operating expenses2 will be reduced to approximately $25 million on an annualized
basis. For reference, the Company's first quarter 2018 cash operating expenses were approximately $22
million. In addition, the Company will maintain its tax efficient structure.
While these changes are intended to improve the financial profile of the Company, the Company cautions that it has very
recently experienced increased generic competition with respect to the Toprol-XL Franchise, with a new generic entrant to the
market, which may have a negative impact on future business. In response, the Company is evaluating market dynamics and
exploring opportunities to mitigate this risk.
The Company also continues to explore and evaluate a range of strategic business opportunities to enhance liquidity, including
(i) active discussions for the continued commercialization of Zontivity with a focus on divesting or out-licensing the U.S.
rights, (ii) active discussions to divest the U.S. rights to Yosprala, Fibricor® and Bezalip® SR,
and (iii) broader strategic and refinancing alternatives for its business. To this end, Moelis & Company LLC has been engaged
to serve as the Company's financial and strategic advisor.
"We have developed a comprehensive restructuring plan focused on optimizing our Canadian portfolio and significantly reducing
our cost base, strengthening the organization, and improving our balance sheet and cash flow," said Adrian Adams, Chief Executive Officer of Aralez. "The difficult but necessary decision to close the U.S.
commercial business comes after careful assessment of our overall business and is consistent with our ongoing efforts to operate
as efficiently as possible, while continuing to explore and evaluate strategic business opportunities in the interest of all
stakeholders."
Further details will be provided on the Company's webcast later this morning, May 8, 2018 at
8:00 a.m. ET to present first quarter 2018 financial results and discuss business changes. The
Company also refers readers to its earnings press release issued concurrently with this press release and its Quarterly Report on
Form 10-Q for the quarter ended March 31, 2018 to be filed later today.
The Company expects to record a restructuring charge because of the implementation of this plan in 2018, mainly related to
severance costs and contract termination costs related to the shutdown of the U.S. commercial business, with additional charges
possible following decisions on divestments and closures of office locations.
About Aralez Pharmaceuticals Inc.
Aralez Pharmaceuticals Inc. (NASDAQ: ARLZ) (TSX: ARZ) is a specialty pharmaceutical company focused on delivering
meaningful products to improve patients' lives while creating shareholder value by acquiring, developing and commercializing
products in various specialty areas. Aralez's Global Headquarters is in Mississauga, Ontario,
Canada and the Irish Headquarters is in Dublin, Ireland. More information about Aralez
can be found at www.aralez.com .
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain statements that constitute "forward-looking statements" within the meaning of
applicable securities laws. Forward-looking statements include, but are not limited to, statements regarding new strategic
direction for the Company, including a focus on the Company's strong Canadian business, supported by Toprol-XL Franchise as well
as Vimovo royalties; wind down of the U.S. commercial business immediately and ultimate closure of the U.S. business; solid
revenue and positive Adjusted EBITDA of Aralez Canada; focus on driving organic growth in Canada, as well as future product and line extension launches; objectives and benefits of the Company's new
strategic direction, including reduced cost structure, and timing thereof; expectations and estimates regarding cost savings;
maintaining a tax efficient structure; increased generic competition and evaluation of market dynamics and exploring
opportunities to mitigate risk; exploration and evaluation of range of strategic business opportunities to enhance liquidity,
including (i) active discussions for the continued commercialization of Zontivity with a focus on divesting or out-licensing the
U.S. rights, (ii) active discussions to divest the U.S. rights to Yosprala, Fibricor, and Bezalip SR and (iii) broader strategic
and refinancing alternatives for its business; optimizing the Canadian portfolio and significantly reducing the cost base,
strengthening the organization, and improving the balance sheet and cash flow; estimates and expectations regarding restructuring
charges, including additional charges, and timing thereof; the Company's strategies, plans, objectives, goals, prospects, future
performance or results of current and anticipated products; and other statements that are not historical facts, and such
statements are typically identified by use of terms such as "may," "will," "would," "should," "could," "expect," "plan,"
"intend," "anticipate," "believe," "estimate," "predict," "likely," "potential," "continue" or the negative or similar words,
variations of these words or other comparable words or phrases, although some forward-looking statements are expressed
differently.
You should be aware that the forward-looking statements included herein represent management's current judgment and
expectations, and are based on current estimates and assumptions made by management in light of its experience and perception of
historical trends, current conditions and expected future developments, as well as other factors that it believes are appropriate
and reasonable under the circumstances, but there can be no assurance that such estimates and assumptions will prove to be
correct and, as a result, the forward-looking statements based on those estimates and assumptions could prove to be incorrect.
Accordingly, actual results, level of activity, performance or achievements or future events or developments could differ
materially from those expressed or implied in the forward-looking statements.
In addition, the Company's operations involve risks and uncertainties, many of which are outside of the Company's control, and
any one or any combination of these risks and uncertainties could also affect whether the forward-looking statements ultimately
prove to be correct and could cause the Company's actual results, level of activity, performance or achievements or future events
or developments to differ materially from those expressed or implied by the forward-looking statements. These risks and
uncertainties include, without limitation, risks related to the Company's implementation of new strategic direction, including
restructuring costs associated therewith and timing thereof; failure to realize the expected benefits of the Company's
initiatives to reduce costs and improve profitability, including from new strategic direction; the Company's financing and
liquidity; competition, including increased generic competition (including with respect to the Toprol-XL Franchise); strategic
alternatives not being available on reasonable terms, or at all; the Company's inability to maintain key personnel necessary to
manage the business; the Company's failure to successfully commercialize its products and product candidates; costs and delays in
the development and/or approval of the Company's product candidates, including as a result of the need to conduct additional
studies or due to issues with third-party API or finished product manufacturers, or the failure to obtain such approval of the
Company's product candidates for all expected indications or in all targeted territories; with respect to certain products,
dependence on reimbursement from third-party payors and the possibility of a failure to obtain coverage or reduction in the
extent of reimbursement; the inability to maintain or enter into, and the risks resulting from the Company's dependence upon,
collaboration or contractual arrangements necessary for the development, manufacture, commercialization, marketing, sales and
distribution of any products, including the Company's dependence on AstraZeneca AB and Horizon Pharma USA, Inc. for the sales and marketing of Vimovo and the Company's dependence on AstraZeneca AB for the
manufacture and supply of Toprol-XL and the authorized generic; the Company's dependence on maintaining and renewing contracts
with customers, distributors and other counterparties (certain of which may be under negotiation from time to time), including
the Company's inability to renew existing contracts or enter into new contracts on favorable terms, and the risks that we may not
be able to maintain the Company's existing terms with certain customers, distributors and other counterparties; the Company's
ability to protect its intellectual property and defend its patents, including if generic competitors successfully appeal the
recent District Court decision with respect to certain Vimovo patents; regulatory obligations and oversight; failure to
successfully identify, execute, integrate, maintain and realize expected benefits from new acquisitions, such as the acquisitions
of Tribute, Zontivity and the Toprol-XL Franchise; fluctuations in the value of certain foreign currencies, including the
Canadian dollar, in relation to the U.S. dollar, and other world currencies; changes in laws and regulations, including tax laws
and unanticipated tax liabilities and laws and regulations regarding the pricing of pharmaceutical products; general adverse
economic, market and business conditions; and those risks detailed from time-to-time under the caption "Risk Factors" and
elsewhere in the Company's Securities and Exchange Commission (SEC) filings and reports and Canadian securities law filings,
including in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 and on
Form 10-Q for the three month period ended March 30, 2018, which are or will be available on EDGAR
at www.sec.gov, on SEDAR at www.sedar.com, and on the Company's website at www.aralez.com,
and those described from time to time in the Company's future reports filed with the SEC and applicable securities regulatory
authorities in Canada. You should not place undue importance on forward-looking statements and
should not rely upon this information as of any other date. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.
Aralez Pharmaceuticals US Inc. Contact:
Nichol L. Ochsner
Executive Director, Investor Relations & Corporate Communications
609-917-9330
nochsner@aralez.com
1 As defined in our earnings press release for the quarter ended March 31, 2018,
filed concurrently herewith.
2 Cash operating expenses, a non-GAAP measure, includes SG&A expenses excluding stock-based compensation,
depreciation and restructuring and transaction related costs.
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SOURCE Aralez Pharmaceuticals Inc.