- Revenue and gross margin increase -
- Nuvo to Host Conference Call/Audio Webcast May 12th at 8:30 a.m. ET -
MISSISSAUGA, ON, May 11, 2016 /PRNewswire/ - Nuvo Pharmaceuticals
Inc. (Nuvo or the Company) (TSX:NRI), formerly Nuvo Research Inc.,
a commercial healthcare company with a portfolio of commercial
products and pharmaceutical manufacturing capabilities, today
announced its financial and operational results for the first
quarter ended March 31, 2016.
For further details on the results, please refer to Nuvo's
Management, Discussion and Analysis (MD&A) and Condensed
Consolidated Interim Financial Statements which are available on
the Company's website (www.nuvopharmaceuticals.com).
First Quarter and Recent Corporate
Developments:
Corporate Reorganization
- On March 1, 2016, the Company was
reorganized into two separate publicly traded companies
(Reorganization). As part of the Reorganizaton, Nuvo's
development stage assets and $35.0
million of cash were transferred to Crescita Therapeutics
Inc. (Crescita). Crescita also obtained the rights to the
commercial stage asset Pliaglis. The Company retained the
rights to three commercial stage assets, Pennsaid, Pennsaid 2% and
the HLT Patch and the balance of its cash. On March 7, 2016, the Company and Crescita commenced
trading independently on the Toronto Stock Exchange.
Financial Highlights(1)
- Total revenue for the first quarter of 2016 increased to
$7.8 million from $7.7 million for the fourth quarter of 2015 and
$4.3 million for the first quarter in
2015;
- Product sales increased in the first quarter of 2016 to
$7.3 million from $7.1 million in the fourth quarter of 2015 and
$3.7 million in the first quarter of
2015;
- Pennsaid® 2% product sales in the first quarter of
2016 increased to $7.0 million from
$5.9 million in the fourth quarter of
2015 and compared to $2.2 million in
the first quarter of 2015;
- Gross margin on product sales in the first quarter of 2016
increased to $4.2 million or 57% from
$4.0 million or 57% for the fourth
quarter of 2015 compared to a gross margin of $1.3 million or 35% in the first quarter in
2015;
- Net income from continuing operations for the first quarter of
2016 was $1.9 million compared
$4.7 million for the fourth quarter
of 2015 and $2.0 million for the
first quarter of 2015; and
- Cash and short-term investments were $14.0 million at March 31,
2016.
(1) The financial information presented herein
reflects results from continuing operations with Nuvo's previously
disclosed segment, Crescita, presented as a discontinued
operation.
Pennsaid 2%
- U.S. prescriptions of Pennsaid 2% decreased slightly to 109,000
in the first quarter of 2016 compared to 116,000 prescriptions in
the fourth quarter of 2015 according to IMS Health. In April 2016, prescriptions increased to an average
of approximately 9,700 per week compared to approximately 8,300 per
week in Q1 2016;
- In March, the Company appointed Jesse
Ledger to the newly created position of Vice President,
Business Development. Mr. Ledger will be responsible for all
business development activities with an initial focus on maximizing
the value of the Company's Pennsaid 2% franchise through global
out-licensing.
- In March, the Company announced topline results from its
Pennsaid 2% trial for the treatment of ankle sprains. The trial
enrolled 126 patients (the full analysis set or FAS) of which 116
patients followed the protocol (the per protocol set or PP). The
trial did not meet its primary endpoint which was pain on movement
(POM) at day 5 in the FAS patient group, but did meet a number of
secondary endpoints including POM at day 5 in the PP patient group
and POM at day 3 in both the FAS and PP patient groups. The Company
has decided to repeat the trial with minor revisions to the
protocol and endpoints and will release more information on timing
and costing as it becomes available; and
- In February, the Company amended its exclusive manufacturing
agreement with Horizon Pharma plc (NASDAQ:HZNP) for the production
of Pennsaid 2% to extend the term to December 31, 2029 from the initial term which
ended on December 31, 2022. Under the
terms of the agreement, the Company earns revenue from U.S. product
sales of Pennsaid 2% to Horizon.
Q1 Financial Review
Table of Selected Financial Results
For further
details on the results, please refer to Nuvo's Management,
Discussion and Analysis (MD&A) and Consolidated Financial
Statements which are available on the Company's website
(www.nuvopharmaceuticals.com).
|
March
31, 2016
|
March
31, 2015
|
Change
|
(Canadian dollars
in thousands,
except gross margin)
|
$
|
$
|
$
|
Product
Sales
|
7,325
|
3,715
|
3,610
|
Gross Margin % on
Product Sales
|
57%
|
35%
|
22%
|
Other
Revenue
|
517
|
618
|
(101)
|
Operating
Expenses
|
5,378
|
2,599
|
2,779
|
Net income from
continuing operations
|
1,928
|
2,025
|
(97)
|
Adjusted
EBITDA
|
2,843
|
1,114
|
1,729
|
Total revenue, consisting of product sales, royalties and
research and other contract revenue for the three months ended
March 31, 2016 was $7.8 million compared to $4.3 million for the three months ended
March 31, 2015. The increase in
revenue primarily related to an increase in Pennsaid 2% product
sales in the U.S., slightly offset by a decrease in royalty
revenue.
Total operating expenses for the three months ended March 31, 2016 were $5.4
million, an increase from $2.6
million for the three months ended March 31, 2015. The increase for the
current period was primarily due to the revaluation of cash-settled
stock-based compensation (SBC) costs which are primarily included
in G&A costs for both years and an increase in cost of goods
sold (COGS) due to increased product sales. Included in SBC,
in the current quarter, was $0.5
million related to deferred stock units (DSUs) that were
settled as part of the Reorganization.
COGS for the three months ended March 31,
2016 was $3.1 million compared
to $2.4 million for the three months
ended March 31, 2015. The
increase in COGS in the current year was associated with increased
Pennsaid 2% product sales. The increase in product sales
improved the gross margin on product sales to $4.2 million or 57% for the three months ended
March 31, 2016 compared to a gross
margin of $1.3 million or 35% for the
three months ended March 31,
2015.
R&D expenses were $0.2 million
for the three months ended March 31,
2016 compared to $0.4 million
for the three months ended March 31,
2015. The decrease in spending in the current year related to
a decrease in costs associated with the Pennsaid 2% Phase 3 trial
for the treatment of ankle sprains to support regulatory approval
applications for Pennsaid 2% in Canada, the E.U. and Australia.
G&A expenses were $2.1 million
for the three months ended March 31,
2016 compared to a $48,000
recovery of G&A for the three months ended March 31, 2015. The increase in the current
year primarily related to a $1.7
million increase in SBC primarily from the adjustment to
market value for the outstanding DSUs prior to settlement as part
of the Reorganization, and share appreciation rights (SARs) as at
March 31, 2016. The current
quarter included SBC expense of $0.9
million compared to a recovery of $0.8 million in the comparative quarter.
The Company experienced a net foreign currency loss of
$0.5 million for the three months
ended March 31, 2016 compared to a
$0.3 million gain for the three
months ended March 31, 2015.
Net income from continuing operations was $1.9 million for the three months ended
March 31, 2016 compared to
$2.0 million for the three months
ended March 31, 2015. In the
current year, the increase in gross margin and decrease in R&D
expenses was offset by an increase in SBC expense due to the
revaluation of SARs and DSUs to market value.
Adjusted EBITDA increased to $2.8
million for the three months ended March 31, 2016 compared to $1.1 million for the three months ended
March 31, 2015. The increase in
Adjusted EBITDA is primarily related to an increase in gross margin
slightly offset by a foreign currency loss recognized in the
current period compared to a foreign currency gain in the
comparative period.
Cash and short-term investments was $14.0
million as at March 31, 2016
compared to $48.7 million at
December 31, 2015. The decrease
in cash is related to the $35.0
million that was transferred to Crescita as part of the
Reorganization of the Company and expenses related to the
Reorganization.
The number of common shares outstanding as at March 31, 2016 was 11,487,184.
Non-IFRS Financial Measures
Adjusted EBITDA
EBITDA is a non-IFRS financial measure. The term EBITDA does
not have any standardized meaning under IFRS and therefore may not
be comparable to similar measures presented by other
companies. The Company defines Adjusted EBITDA as net income
from continuing operations before net interest income, plus taxes,
depreciation, amortization and SBC. Management believes
Adjusted EBITDA is a useful supplemental measure from which to
determine the Company's ability to generate cash available for
working capital, capital expenditures and income taxes.
The following is a summary of how EBITDA and Adjusted EBITDA are
calculated:
|
Three Months
ended
March 31,
2016
|
Three Months
ended
March 31,
2015
|
|
$
|
$
|
Net income from
continuing operations
|
1,928
|
2,025
|
Add back:
|
|
|
|
Interest
income
|
(56)
|
(149)
|
|
Income tax
expense
|
-
|
7
|
|
Depreciation and
amortization
|
58
|
81
|
EBITDA
|
1,930
|
1,964
|
Add back:
|
|
|
|
SBC
|
913
|
(850)
|
Adjusted
EBITDA
|
2,843
|
1,114
|
Management to Host Conference Call/Webcast
Management
will host a conference call to discuss the results tomorrow
(Thursday, May 12, 2016) at
8:30 a.m. ET. To participate in
the conference call, please dial 1 (888) 231-8191 or (647)
427-7450, reference number 95512267. Please call in 15
minutes prior to the call to secure a line. You will be put
on hold until the conference call begins.
A taped replay of the conference call will be available two
hours after the live conference call and will be accessible until
May 19, 2016 by calling 1 (855)
859-2056 or (416) 849.0833, reference number 95512267.
A live audio webcast of the conference call will be available
through www.nuvopharmaceuticals.com. Please connect at least 15
minutes prior to the conference call to ensure adequate time for
any software download that may be required to hear the webcast.
About Nuvo Pharmaceuticals
Inc.
Nuvo (TSX:NRI) is a commercial healthcare company with
a portfolio of commercial products and pharmaceutical manufacturing
capabilities. Nuvo has three commercial products that are
available in a number of countries; Pennsaid 2%, Pennsaid and the
heated lidocaine/tetracaine patch. Pennsaid 2% is sold in the U.S.
by Horizon Pharma plc (NASDAQ:HZNP) and is available for partnering
in certain other territories around the world. Nuvo
manufactures Pennsaid for the global market and Pennsaid 2% for the
U.S. market at its FDA, Health Canada and EU approved manufacturing
facility in Varennes, Québec.
For additional information, please visit
www.nuvopharmaceuticals.com.
Forward-Looking Statements
Certain statements in
this press release constitute forward-looking information and/or
forward-looking statements (collectively, "forward-looking
statements") within the meaning of applicable securities laws.
Forward-looking statements include, but are not limited to, the
future approval, marketing and sale of Pennsaid 2% in certain
jurisdictions, as well as statements with respect to management's
beliefs, plans, estimates, and intentions, and similar statements
concerning anticipated future events, results, circumstances,
performance or expectations that are not historical facts.
Forward-looking statements generally can be identified by the use
of forward-looking terminology such as "may", "will", "expect",
"intend", "believe", "should" or "plans", or similar expressions
suggesting future outcomes or events. Such forward-looking
statements reflect management's current beliefs and are based on
information currently available to management. Forward-looking
statements involve risks and uncertainties that could cause actual
results to differ materially from those contemplated by such
statements. Factors that could cause such differences include, but
are not limited to, general business and economic uncertainties and
adverse market conditions; as well as other risk factors included
in the Company's Management Information Circular dated December 31, 2015 and the Company's Annual
Information Form dated February 17,
2016 under the heading "Risks Factors", and as described
from time to time in the reports and disclosure documents filed by
the Company with Canadian securities regulatory agencies and
commissions. These and other factors should be considered carefully
and readers should not place undue reliance on the Company's
forward-looking statements. As a result of the foregoing and other
factors, no assurance can be given as to any such future results,
levels of activity or achievements and neither the Company nor any
other person assumes responsibility for the accuracy and
completeness of these forward-looking statements. Although the
forward-looking information contained in this press release is
based upon what management believes are reasonable assumptions,
there can be no assurance that actual results will be consistent
with these forward-looking statements. All forward-looking
statements in this press release are qualified by these cautionary
statements. The forward-looking statements contained herein are
made as of the date of this press release and, except as required
by applicable law, the Company undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise.
SOURCE Nuvo Pharmaceuticals Inc.