TSX:DND 11.73 +0.12 +1.03% Volume: 55,158 October 22, 2014
Investor-Relations
Investor Relations

News Details

Cipher reports record financial results for Q3 2013

10/30/2013

Revenue increases to $5.6 million and earnings per share rise to $0.14 

Toronto Stock Exchange Symbol: DND

MISSISSAUGA,, ON, Oct. 30, 2013 /CNW/ - Cipher Pharmaceuticals Inc. (TSX: DND) ("Cipher") today announced its financial and operational results for the three and nine months ended September 30, 2013.

Q3 2013 Highlights

  • Net revenue increased to $5.6 million, from $2.1 million in Q3 2012.
  • EBITDA1 of $3.6 million versus $1.0 million in Q3 2012.
  • Net income was $3.4 million, or $0.14 per share, compared with net income of $0.08 million, or $0.03 per share, in Q3 2012.
  • Cash balance increased to $20.0 million at quarter end, compared with $15.8 million at December 31, 2012 and $17.8 million at June 30, 2013.
  • Launched Epuris (isotretinoin) capsules in the Canadian market.

"Absorica performed well again in the third quarter, with market share increasing to 17.3%2 by September from 13.1% in June, resulting in strong increases in our revenue, earnings and cash," said Larry Andrews, President and CEO of Cipher. "While Epuris was only launched recently, feedback from the Canadian dermatology community has been very encouraging. With a healthy financial position, we continue to pursue growth through product portfolio expansion and new out-licensing agreements for our current products in other regions."

Financial Review

Net revenue for Q3 2013 was $5.6 million, compared with $2.1 million in Q3 2012.  The year-over-year increase was mainly driven by the success of Absorica, which contributed $4.5 million of net revenue in Q3 2013 versus $0.5 million in Q3 2012.  Net revenue from Lipofen® was $0.6 million in Q3 2013, compared with $1.3 million in Q3 2012. The comparable period in 2012 benefited from $0.4 million in revenue from a retroactive increase in Cipher's royalty percentage. Net revenue from the Company's extended release tramadol product (ConZip®/Durela®) increased to $0.5 million in Q3 2013, compared with $0.3 million in Q3 2012.

Research and Development expense in Q3 2013 was $0.4 million, a slight increase over $0.3 million in Q3 2012. Selling, General and Administrative ("SG&A") expenses for Q3 2013 increased to $1.7 million, compared to $0.8 million in Q3 2012. The year-over-year increase in SG&A reflects the build out of the Company's commercial infrastructure in Canada to support the launch of Epuris and future products. 

Net income in Q3 2013 grew to $3.4 million, or $0.14 per share ($0.13 per share on a fully diluted basis), compared with net income of $0.8 million, or $0.03 per share, in Q3 2012.

The Company's cash position increased at quarter end. As at September 30, 2013, Cipher had cash and cash equivalents of $20.0 million, compared with $15.8 million at December 31, 2012.

___________________________
1 EBITDA - Non-IFRS Financial Measure: the term EBITDA (earnings before interest, taxes, depreciation and amortization) does not have any standardized meaning under International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similar measures presented by other companies. The Company defines EBITDA as earnings before interest expense, income taxes, depreciation of property and equipment, amortization of intangible assets and non-cash share-based compensation.

2 Source: IMS Health. Market share calculated based on total isotretinoin prescriptions.

Product Update

Absorica/Epuris (CIP-ISOTRETINOIN)
Absorica was released in the U.S. market in late November 2012.  The product has performed well to date, achieving 17.3% market share by September 2013, compared to 13.1% in June 2013, based on total isotretinoin prescriptions.  In addition, the overall U.S. isotretinoin market continues to show growth. Prescriptions increased by 15%3 in the nine months of 2013 and by 19%4 in Q3 2013, over the comparable periods in the prior year. While total U.S. prescriptions increased year-over-year, they declined from Q2 2013 to Q3 2013. This is consistent with the historical seasonal pattern that has seen total U.S. isotretinoin prescriptions decrease by approximately 11% from Q2 (the summer months) to Q3. Based on Absorica's strong sales performance to-date, Cipher expects to achieve a US$10.0 million milestone payment by the end of Q1 2014 at the latest (50% of which would be shared with its technology partner, Galephar Pharmaceutical Research).

In September 2013, Cipher's partner Ranbaxy received a Paragraph IV Certification Notice of filing from Watson Laboratories Inc. ("Watson") of an Abbreviated New Drug Application ("ANDA") to the FDA for a generic version of Absorica. Ranbaxy and Cipher intend to vigorously defend Absorica's intellectual property rights and pursue all available legal and regulatory pathways in defense of the product.  Cipher has been advised by Ranbaxy that this development has no impact on current sales and marketing plans for the product, and that Ranbaxy plans to continue to invest in Absorica to increase sales and market penetration.

CIP-ISOTRETINOIN was approved by Health Canada in Q4 2012 under the trade name Epuris. Cipher launched Epuris in early July 2013, supported by a field sales force of six full-time representatives and one part-time representative.

Lipofen® (CIP-FENOFIBRATE)
In Q3 2013, new prescriptions for Lipofen® were 6% below Q3 2012 levels. Kowa Pharmaceuticals America, Cipher's U.S. marketing partner for Lipofen®, plans to continue to promote the product in a second detail position for the remainder of 2013.

ConZip®/Durela® (CIP-TRAMADOL ER)
Cipher's extended-release tramadol is marketed in the U.S. by Vertical Pharmaceuticals under the trade name ConZip®. In Q1 2013, Vertical expanded its sales force from 60 to 75 representatives, which has contributed to modestly improved performance. In Q3 2013, prescriptions grew 3% compared to Q3 2012.  In Canada, Medical Futures launched the product in March 2012 under the trade name Durela®, with a dedicated sales force comprising 22 representatives. Following its strong performance in Q2 2013, the product continued to demonstrate steady improvement, with a 25% growth in sales during Q3 2013.

In Q2 2013, Cipher out-licensed the Latin American distribution rights for CIP-TRAMADOL ER to Tecnofarma International Ltd. Cipher is working closely with Tecnofarma in preparing regulatory submissions for certain countries in Latin America.

Cipher is also actively pursuing marketing partners for CIP-TRAMADOL ER and CIP-ISOTRETINOIN in other territories.

Other Products
In Q3 2012, Cipher obtained exclusive license and distribution rights in Canada to market the Betesil® Patch, a novel, patent-protected, self-adhesive medicated plaster for the treatment of inflammatory skin conditions such as plaque psoriasis. The efficacy and safety of the Betesil® Patch has been established in three successful phase III trials, and the product is currently marketed in several European countries. Cipher is working with its partner, Institut Biochimique SA, on a New Drug Submission for the product, and will provide additional detail on expected timelines and plans in the coming months.

In addition, the Company is seeking other late-stage to commercial-stage product candidates targeting specialty markets to support its commercial marketing and sales presence in Canada.

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3 Source: IMS Health

4 Source: IMS Health

Notice of Conference Call
Cipher will hold a conference call today, October 30, 2013, at 8:30 a.m (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. A live audio webcast of the call will be available at www.cipherpharma.com. The webcast will be archived for 90 days.

About Cipher Pharmaceuticals Inc.

Cipher Pharmaceuticals (TSX: DND) is a growing specialty pharmaceutical company with three commercial products and a fourth in development. Our product candidates are typically improved formulations of successful, currently marketed drugs. We in-license a product, manage the required clinical development and regulatory approval process, and either out-license it to a marketing partner, or, in Canada, we may market the product ourselves. Our core capabilities are in clinical and regulatory affairs, product licensing, supply chain management, and marketing and sales. Since the Company was founded in 2000, we have achieved final regulatory approval in the U.S. and Canada for all three of our original products and completed six marketing partnerships, generating growing licensing revenue.

Cipher Pharmaceuticals Inc.      
Balance Sheets      
       
As at September 30, 2013 and December 31, 2012    
(in thousands of Canadian dollars - unaudited)    
       
       
       
  September 30,   December 31,
  2013   2012
  $   $
ASSETS      
       
Current assets      
  Cash and cash equivalents 20,035   15,843
  Accounts receivable 9,220   3,185
  Inventory 318   -
  Prepaid expenses and other assets 200   212
  29,773   19,240
       
  Property and equipment, net 21   25
       
  Intangible assets, net 1,859   2,690
       
  31,653   21,955
       
LIABILITIES      
       
Current liabilities      
  Accounts payable and accrued liabilities 5,747   2,808
  Current portion of deferred revenue 2,392   2,392
  8,139   5,200
       
  Deferred revenue 2,611   4,349
  10,750   9,549
       
SHAREHOLDERS' EQUITY      
       
  Share capital 9,514   50,339
  Contributed surplus 3,464   33,227
  Retained earnings (Deficit) 7,925   (71,160)
  20,903   12,406
       
  31,653   21,955
       
 






     

 

Cipher Pharmaceuticals Inc.              
Statements of Operations and Comprehensive Income            
               
Three and nine month periods ended September 30, 2013 and 2012        
(in thousands of Canadian dollars, except per share data - unaudited)        
               
               
               
  Three months     Nine months  
  September 30,   September 30,   September 30,   September 30,
  2013   2012   2013   2012
  $   $   $   $
               
Revenues              
  Licensing revenue 5,592   2,118   14,344   5,558
  Product revenue 44   -   132   -
               
  5,636   2,118   14,476   5,558
               
Expenses              
  Cost of product sold 12   -   39   -
  Research and development 388   335   1,037   1,154
  Selling, general and administrative 1,660   799   4,823   2,676
  Amortization of intangible assets 277   277   831   747
  Interest income (64)   (47)   (179)   (108)
               
  2,273   1,364   6,551   4,469
               
Income before income taxes 3,363   754   7,925   1,089
               
Provision for (recovery of) income taxes              
  Current 891   225   2,100   352
  Deferred (891)   (225)   (2,100)   (352)
               
Income and comprehensive income for the period 3,363   754   7,925   1,089
               
               
Basic earnings per share 0.14   0.03   0.32   0.04
               
Diluted earnings per share 0.13   0.03   0.31   0.04
               

 


Cipher Pharmaceuticals Inc.              
Statements of Changes in Equity              
               
Nine month periods ended September 30, 2013 and 2012            
(in thousands of Canadian dollars - unaudited)              
               
               
               
          Retained   Total
  Share   Contributed   Earnings   Shareholders'
  Capital   Surplus   (Deficit)   Equity
  $   $   $   $
               
Balance, January 1, 2013 50,339   33,227   (71,160)   12,406
               
Income and comprehensive income for the period -   -   7,925   7,925
               
Exercise of stock options 194   (93)   -   101
               
Shares issued under the share purchase plan 141   -   -   141
               
Share-based compensation - stock option plan -   330   -   330
               
Reduction of stated capital (41,160)   (30,000)   71,160   -
               
               
Balance, September 30, 2013 9,514   3,464   7,925   20,903
               
               
               
Balance, January 1, 2012 50,172   33,032   (73,704)   9,500
               
Income and comprehensive income for the period -   -   1,089   1,089
               
Exercise of stock options 8   (8)       -
               
Shares issued under the share purchase plan 114   -   -   114
               
Share-based compensation - stock option plan -   151   -   151
               
Balance, September 30, 2012 50,294   33,175   (72,615)   10,854
               

 


Cipher Pharmaceuticals Inc.              
Statements of Cash Flows              
               
Three and nine month periods ended September 30, 2013 and 2012             
(in thousands of Canadian dollars - unaudited)              
               
               
               
  Three months   Nine months
  September 30,   September 30,   September 30,   September 30,
  2013   2012   2013   2012
  $   $   $   $
               
Cash provided by (used in)              
               
Operating activities              
  Income for the period 3,363   754   7,925   1,089
  Items not affecting cash:              
    Depreciation of property and equipment 3   3   12   16
    Amortization of intangible assets 277   277   831   747
    Share-based compensation - share purchase plan 7   6   21   17
    Share-based compensation - stock option plan 141   51   330   151
  3,791   1,091   9,119   2,020
               
  Changes in non-cash operating items:              
    Accounts receivable (1,158)   (417)   (6,035)   (975)
    Inventory 10   -   (318)   -
    Prepaid expenses and other assets (130)   (27)   12   170
    Accounts payable and accrued liabilities 227   795   2,939   898
    Deferred revenue (607)   (698)   (1,738)   4,018
               
Net cash generated from operating activities  2,133   744   3,979   6,131
               
Investing activities              
  Purchase of property and equipment (3)   -   (8)   (12)
  Acquisition of intangible rights -   (100)   -   (771)
               
Net cash used in investing activities  (3)   (100)   (8)   (783)
               
Financing activities              
  Proceeds from shares issued under the share purchase plan 41   34   120   97
  Proceeds from exercise of stock options 89   -   101   -
               
Net cash generated from financing activities  130   34   221   97
               
               
Increase in cash and cash equivalents  2,260   678   4,192   5,445
Cash and cash equivalents, beginning of period  17,775   14,403   15,843   9,636
               
Cash and cash equivalents, end of period  20,035   15,081   20,035   15,081
               
               

 

 

 

SOURCE Cipher Pharmaceuticals Inc.

For further information:

Craig Armitage
Investor Relations
TMX Equicom
(416) 815-0700 ext 278
(416) 815-0080 fax
carmitage@tmxequicom.com   

Larry Andrews
President and CEO
Cipher Pharmaceuticals
(905) 602-5840 ext 324
(905) 602-0628 fax
landrews@cipherpharma.com