MISSISSAUGA, ON, Nov. 10, 2014 /CNW/ - Nuvo Research Inc.
(TSX:NRI), a specialty pharmaceutical company with a diverse
portfolio of topical and immunology products, today announced its
financial and operational results for the third quarter ended
September 30, 2014.
Third Quarter and Recent Corporate Developments:
Pennsaid® 2%
- In September 2014, the Company
reached a full settlement with Mallinckrodt Inc. (Mallinckrodt) of the Company's claims and
Mallinckrodt's counterclaim relating to
Mallinckrodt's license from the Company
of rights to market and sell Pennsaid and Pennsaid 2% in the U.S.
Under the terms of the settlement, Mallinckrodt will return all U.S. Pennsaid and
Pennsaid 2% rights to the Company or its designee and has paid the
Company US$10 million;
- In October 2014, the Company sold
its Pennsaid 2% U.S. rights to Horizon Pharma plc (Horizon) for
US$45 million. Mallinckrodt will continue to sell Pennsaid and
Pennsaid 2% in the U.S. until December 31,
2014, after which Horizon will begin selling Pennsaid 2%.
The Company will manufacture Pennsaid 2% for Horizon pursuant to a
long-term supply agreement; and
- On November 3, 2014, the Company
announced its plans to conduct a Phase 3 clinical study in
Germany of Pennsaid 2% for the
treatment of acute pain to support regulatory approval applications
for Pennsaid 2% in international jurisdictions. Commencement of the
study, which is subject to German regulatory approval, is expected
in Q2 2015 with top-line results expected Q4 2015.
WF10™
- The Company has fully enrolled 183 patients in its ongoing
Phase 2 WF10 clinical trial for the treatment of allergic rhinitis.
It expects the trial to be completed by the end of 2014 with
top-line results available in the first quarter of 2015.
Paladin Loan Repayment
- On October 16, 2014, the Company
paid $3.7 million to Paladin Labs
Inc. (Paladin) in full repayment of its outstanding loan. All
related obligations of the Company have been satisfied and all
security in support of the loan has been discharged.
Table of Selected Financial Results
For further
details on the results, please refer to Nuvo's Management,
Discussion and Analysis (MD&A) and Consolidated Interim
Financial Statements which are available on the Company's website
(www.nuvoresearch.com).
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
September
30,
|
|
September
30,
|
September
30,
|
|
|
2014
|
2013
|
Change
|
2014
|
2013
|
Change
|
(Canadian dollars
in thousands,
except per share and share figures)
|
$
|
$
|
$
|
$
|
$
|
$
|
Revenue
|
3.0
|
9.1
|
(6.1)
|
9.6
|
14.7
|
(5.1)
|
Operating
Expenses
|
6.7
|
5.7
|
1.0
|
18.4
|
16.7
|
1.7
|
Net income
(loss)
|
49.7
|
(2.9)
|
52.6
|
44.7
|
(8.4)
|
53.1
|
Per share -
basic
|
4.85
|
(0.34)
|
|
4.57
|
(0.96)
|
|
Per share -
diluted
|
4.80
|
(0.34)
|
|
4.52
|
(0.96)
|
|
Q3 Financial Highlights
Revenue, consisting of product
sales, royalties, license fee revenue and research and other
contract revenue for the three months ended September 30, 2014 was $3.0 million compared to $9.1 million for the three months ended
September 30, 2013. In the
quarter, product sales and royalty revenue increased by
$0.6 million to $2.9 million versus the comparative period.
The decrease in total revenue in the period related to $6.8 million in license fee revenue in the
comparative period related to the US$4.5
million Galen Upfront Payment from the sale of Synera for
the U.S. market and the US$2.0
million milestone payment related to the marketing approval
for Pliaglis in Brazil. Total
revenue for the nine months ended September
30, 2014 was $9.6 million
compared to $14.7 million in the
comparative period.
Total operating expenses for the three months ended September 30, 2014 increased to $6.7 million from $5.7
million for the three months ended September 30, 2013. The increase was
primarily due to higher general and administrative (G&A) costs
in the quarter. Total operating expenses for the nine months
ended September 30, 2014 increased to
$18.4 million from $16.7 million in the comparative
period.
Cost of goods sold (COGS) for the three months ended
September 30, 2014 was $1.2 million compared to $1.1 million for the three months ended
September 30, 2013. In the
three-month period, the slight increase in COGS was associated with
increased Pennsaid and Pennsaid 2% product sales. The
increase in product sales improved the gross margin on product
sales to $0.3 million for the three
months ended September 30, 2014
compared to a negative margin of $0.3
million for the three months ended September 30, 2013. For the quarter and
year-to-date, the gross margin as a percentage of product sales was
19%. For the nine months ended September 30, 2014, COGS increased to
$3.9 million compared to $3.6 million for the nine months ended
September 30, 2013.
Research and development (R&D) expenses were $1.9 million for the three months ended
September 30, 2014 compared to
$1.7 million for the three months
ended September 30, 2013. In
the quarter, the costs associated with the Company's Phase 2
clinical trial for WF10 were slightly offset by the savings
realized from the closure of the Company's facility in Salt Lake City and the Topical Products and
Technology (TPT) Group office in 2013. For the nine months
ended September 30, 2014, R&D
expenses increased to $5.3 million
compared to $5.1 million for the nine
months ended September 30, 2013.
G&A expenses were $3.5 million
for the three months ended September 30,
2014 compared to $2.3 million
for the three months ended September
30, 2013. The increase was primarily related to
stock-based compensation which increased by $1.4 million in the three-month period, partially
offsetting this was a decrease in non-cash charges related to
amortization of the Company's intangible assets. For the nine
months ended September 30, 2014,
G&A expenses increased to $8.7
million compared to $7.0
million for the nine months ended September 30, 2013.
Other income was $53.4 million for
the three months ended September 30,
2014 compared to other expenses of $6.4 million for the three months ended
September 30, 2013. In the
three month period, the Company reached a full settlement with
Mallinckrodt of Nuvo's claims and
Mallinckrodt's counterclaim for
US$10 million in cash and the return
all U.S. rights to Pennsaid and Pennsaid 2% (Pennsaid
Rights). The total gain on the litigation settlement for the
three months ended September 30, 2014
was $52.3 million which includes the
net cash settlement payment of $8.8
million and the non-cash portion related to the value of the
Pennsaid Rights of $43.5 million, net
of legal expenses and direct costs to sell. Other income was
$53.5 million for the nine months
ended September 30, 2014 compared to
other expenses of $6.3 million for
the nine months ended September 30,
2013.
Cash and cash equivalents were $9.7
million as at September 30,
2014, compared to $12.6
million as at December 31,
2013. Subsequent to the quarter, the Company received
US$10 million from its litigation
settlement with Mallinckrodt and
US$45 million from the Pennsaid 2%
U.S. asset sale. After the payment of fees related to the
litigation and asset sale and the payment of the Paladin loan, the
Company has approximately $60 million
in cash as at November 10, 2014.
Cash provided by operations was $5.3
million for the three months ended September 30, 2014 compared to $3.9 million for the three months ended
September 30, 2013. The
increase in cash provided by operations related to the increase in
net income that was partially offset by the change in non-cash
items. The significant increase in net income relates to the
$52.3 million gain on the litigation
settlement, of which $43.5 million
was a non-cash item. Cash provided by operations was
$0.7 million for the nine months
ended September 30, 2014 compared to
cash used in operation of $0.9
million for the nine months ended September 30, 2013.
Cash provided by financing activities totaled $33,000 for the three months ended September 30, 2014 compared to $3.5 million for the three months ended
September 30, 2013. In the
current three-month period, the Company received $0.5 million from the exercise of 165,000
warrants at $3.00 per unit offset by
payments towards the Company's loan. Cash provided by
financing activities was $1.8 million
for the nine months ended September 30,
2014 compared to $2.7 million
for the nine months ended September
30, 2013.
The number of common shares outstanding as at September 30, 2014 was 10,405,619.
About Nuvo Research Inc.
Nuvo (TSX:NRI) is a specialty
pharmaceutical company with a diverse portfolio of products and
technologies. The Company operates two distinct business
units: the Topical Products and Technology (TPT) Group and the
Immunology Group. The TPT Group has four U.S. Food and Drug
Administration (FDA) approved commercial products, a pipeline of
topical and transdermal products focusing on pain and dermatology
and four drug delivery platforms that support the development of
patented formulations that can deliver actives into or through the
skin. The Immunology Group has two commercial products, a
development program for the treatment of allergic rhinitis and an
immune system modulation platform that has the potential to support
treatments for a broad range of immune system related
disorders. For additional company information visit
www.nuvoresearch.com.
Forward-Looking Statements
Certain statements in
this MD&A constitute forward-looking statements within the
meaning of applicable securities laws. Forward-looking statements
include, but are not limited to the Company's anticipated use of
proceeds from the sale of Pennsaid 2% U.S. rights to Horizon Pharma
plc, the litigation settlement with Mallinckrodt Inc. and from the
March 2014 Private Placement, the
Company's future share price and the Company's possible election to
accelerate the expiry date of any of the warrants or the brokers
warrants 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
"outlook", "objective", "may", "will", "expect", "intend",
"estimate", "anticipate", "believe", "should", "plans" or
"continue", 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 general business and economic
uncertainties and adverse market conditions as well as other risk
factors included in the Company's Annual Information Form dated
February 20, 2014 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. This list is not
exhaustive of the factors that may impact the Company's
forward-looking statements. 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. The
factors underlying current expectations are dynamic and subject to
change. Although the forward-looking information contained in this
news 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 news release are qualified by
these cautionary statements. The forward-looking statements
contained herein are made as of the date of this news 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 Research Inc.