MISSISSAUGA,
ON, Feb. 20, 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 fourth
quarter and year ended December 31,
2013.
"In 2013 and early 2014, we significantly
advanced our three FDA approved commercial products that will
contribute to Nuvo revenues. Pennsaid 2% was approved and
launched in the U.S., Pliaglis was launched in the E.U. and the
U.S. and approved in Brazil and we
licensed Synera for the U.S. market," said Dan Chicoine, Nuvo's Chairman and Co-CEO.
"We believe our immunotherapy drug WF10 will provide relief to the
millions of U.S. allergy sufferers with moderate to severe symptoms
and we will be commencing a confirmatory Phase 2 study with results
expected in Q4 2014. Also, throughout 2014, we will seek
additional global and regional out-licensing partners who have the
capability to commercialize our broad pipeline of topical products
and technologies."
2013 and Recent Corporate
Developments:
Pennsaid and Pennsaid 2%
- The U.S. Food and Drug Administration (FDA) approved the
marketing of Pennsaid 2% in the U.S. on January 16, 2014 and it was launched by our U.S
licensee on February 10, 2014;
- The Company entered into a supply and distribution agreement
with NovaMedica LLC providing it with the exclusive rights to
market Pennsaid and Pennsaid 2% in Russia and some of the Community of
Independent States; and
- The Company commenced legal action against Mallinckrodt, Inc. (Mallinckrodt) seeking not less than US$100M damages and a declaration that it is
entitled to terminate Mallinckrodt's
license rights which would result in the U.S. rights to market
Pennsaid and Pennsaid 2% reverting to the Company.
Pliaglis
- Galderma Pharma S.A. (Galderma), the Company's global Pliaglis
marketing partner, initiated its commercial sale of Pliaglis in the
E.U. and U.S.; and
- Galderma received marketing approval in Brazil which entitles the Company to a
US$2.0 million milestone
payment.
Synera
- The Company out-licensed the U.S. Synera rights to Galen for a
US$4.5M upfront payment and royalties
and potential milestone payments.
WF10
- The U.S. Patent Office granted a U.S. Patent for the treatment
of allergic rhinitis and allergic asthma with WF10; and
- The Company announced plans to commence a confirmatory Phase 2
study in Germany for the treatment
of allergic rhinitis with WF10, with study results anticipated in
Q4 2014.
Capital Markets
- The Company completed a share consolidation reducing the number
of its issued and outstanding common shares to approximately 8.8
million; and
- The Company amended its loan agreement with Paladin Labs Inc.
and drew an additional $4.0 million
of debt financing.
Financial Results
Revenue, consisting of product sales, royalties, license fee
revenue and research and other contract revenue for the three
months ended December 31, 2013 was
$3.7 million compared to $3.6 million for the three months ended
December 31, 2012. This slight
increase was attributable to a $0.4
million increase in royalty revenue from Pennsaid in the
U.S. and an increase in licensing fees, partially offset by lower
product sales in the quarter. Total revenue for the year was
$18.4 million compared to
$24.7 million for the year ended
December 31, 2012.
The Company reported a gross margin on product
sales of $0.2 million for the three
months ended December 31, 2013
compared to $0.4 million for the
three months ended December 31,
2012. The decrease in gross margin on product sales
was attributable to lower product sales. For the year, the
Company reported a negative gross margin on product sales of
$0.3 million compared to positive
gross margin of $1.6 million in
2012.
Total operating expenses for the three months
ended December 31, 2013 were
$4.6 million compared to $4.0 million for the three months ended
December 31, 2012. The increase
in operating expenses was primarily due to termination costs
incurred in the quarter partially offset by cost savings realized
from the closure of the Company's office in Salt Lake City the first quarter of 2013.
Total operating expenses for the year ended December 31, 2013 were $17.7 million compared to $21.2 million for the year ended December 31, 2012.
Research and development (R&D) expenses
increased to $1.9 million for the
three months ended December 31, 2013
compared to $1.5 million for the
three months ended December 31,
2012. The increase in the quarter primarily related to
increased spending on WF10 drug development programs and
termination costs. R&D expenses were $7.0 million for the year ended December 31, 2013 compared to $6.8 million for the year ended December 31, 2012.
S&M expenses were $nil for the three months
ended December 31, 2013 compared to
$0.3 million for the comparative
period in 2012. S&M expenses relate entirely to the
Company's marketing costs for Synera in the U.S. The Company
terminated its S&M efforts subsequent to the sale of Synera to
Galen in the third quarter of 2013.
General and administrative (G&A) expenses
were $2.5 million for the three
months ended December 31, 2013
compared to $2.1 million for the
three months ended December 31,
2012. The increase in the quarter primarily related to
termination costs. G&A expenses increased to $9.5 million for year ended December 31, 2013 compared to $9.1 million for the year ended December 31, 2012.
Net loss for the three months ended December 31, 2013 was $1.9
million compared to $11.2
million for the three months ended December 31, 2012. The decreased loss was a
result of significant transactions in the 2012 comparative period
including the impairment charge on intangible assets and goodwill,
partially offset by the increased gain on the ZARS Contingent
Consideration. Net loss for the year ended December 31, 2013 was $10.4 million compared to $13.6 million for the year ended December 31, 2012.
Cash and cash equivalents were $12.6 million as at December 31, 2013 compared to $12.1 million as at December 31, 2012. The US$2.0 million milestone payment for Pliaglis is
not due from Galderma until the first quarter of 2014.
Cash used in operating activities for the three
months ended December 31, 2013 was
$1.7 million compared to cash
provided by operating activities of $1.0
million for the three months ended December 31, 2012. The increase in cash
used in operating activities related to a significant recovery of
non-cash working capital in the comparative period from the receipt
of the US$5.0 million ($5.1 million) milestone payment from
Galderma. Cash used in operating activities was $1.7 million for the year ended December 31, 2013 compared to $5.1 million for the year ended December 31, 2012.
Net cash used in financing activities totaled
$0.5 million for the three months
ended December 31, 2013 compared to
$0.4 million for the three months
ended December 31, 2012. During
both periods, the Company made repayments on finance and other
obligations. Net cash provided by financing activities
totaled $2.2 million for the year
ended December 31, 2013 compared to
$2.7 million for the year ended
December 31, 2012.
The number of common shares outstanding as at
December 31, 2013 was 8,849,619.
Pennsaid U.S.
According to IMS Health, a provider of dispensed prescription data,
during the fourth quarter of 2013, U.S. prescriptions of Pennsaid
were 31,000 with an average 1.29 bottles of Pennsaid dispensed per
script. This represents a decrease of approximately 9% over
the number of prescriptions in the third quarter of 2013. For
the year, approximately 144,000 Pennsaid prescriptions were
dispensed, a decrease of 51% over 2012 and for each prescription,
approximately 1.31 bottles of Pennsaid were dispensed.
About Nuvo Research Inc.
Nuvo (TSX:NRI) is a specialty pharmaceutical company focused on
improving patient's lives by developing and commercializing
innovative products that address unmet medical needs. The
Company has a diverse portfolio of products in the areas of topical
pain and immunology.
Nuvo's marketed products include Pennsaid (a
topical treatment for the signs and symptoms of osteoarthritis of
the knee), Pennsaid 2% (a topical treatment for the pain of
osteoarthritis of the knee), Pliaglis (a topical local anesthetic)
and the heated lidocaine/tetracaine patch (HLT Patch). For
additional Company information visit www.nuvoresearch.com.
Forward-Looking Statements
Certain statements in this news release constitute
forward-looking statements within the meaning of applicable
securities laws. Forward-looking statements include, but are
not limited to, statements concerning the Company's future
objectives, strategies to achieve those objectives, 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 "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 the need for
additional financing, the current economic environment, dependence
on sales and marketing partnerships, competitive developments, 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. Certain
statements included in this news release may be considered
"financial outlook" for purposes of applicable securities laws, and
such financial outlook may not be appropriate for purposes other
than this news release. 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.
NUVO RESEARCH INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
|
|
|
|
|
|
As at December 31,
2013 |
As at December 31,
2012 |
(Canadian dollars in thousands) |
|
$ |
$ |
ASSETS |
|
|
|
CURRENT |
|
|
|
Cash and cash equivalents |
|
12,621 |
12,149 |
Accounts receivable |
|
4,189 |
3,771 |
Inventories |
|
990 |
1,156 |
Other current assets |
|
541 |
1,056 |
TOTAL CURRENT ASSETS |
|
18,341 |
18,132 |
|
|
|
|
Property, plant and equipment |
|
1,411 |
1,614 |
Intangible assets |
|
1,869 |
8,739 |
TOTAL ASSETS |
|
21,621 |
28,485 |
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
CURRENT |
|
|
|
Accounts payable and accrued liabilities |
|
3,925 |
3,360 |
Current portion of finance lease and other
obligations |
|
2,114 |
1,900 |
Current portion of deferred revenue |
|
57 |
341 |
TOTAL CURRENT LIABILITIES |
|
6,096 |
5,601 |
Finance lease and other obligations |
|
3,327 |
1,358 |
Deferred revenue |
|
- |
57 |
TOTAL LIABILITIES |
|
9,423 |
7,016 |
|
|
|
|
EQUITY |
|
|
|
Common shares |
|
229,068 |
228,705 |
Contributed surplus |
|
13,573 |
13,495 |
Accumulated other comprehensive income |
|
1,086 |
420 |
Deficit |
|
(231,529) |
(221,151) |
TOTAL EQUITY |
|
12,198 |
21,469 |
TOTAL LIABILITIES AND EQUITY |
|
21,621 |
28,485 |
NUVO RESEARCH INC.
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
|
|
|
|
Three Months Ended
December 31, |
Twelve Months Ended
December 31, |
|
|
2013 |
2012 |
2013 |
2012 |
(Canadian dollars in thousands, except
per share and share figures) |
|
$ |
$ |
$ |
$ |
REVENUE |
|
|
|
|
|
Product sales |
|
1,327 |
2,155 |
4,432 |
8,936 |
Cost of goods sold |
|
1,175 |
1,770 |
4,769 |
7,275 |
Gross margin |
|
152 |
385 |
(337) |
1,661 |
|
|
|
|
|
|
Other revenue |
|
|
|
|
|
Royalties |
|
1,761 |
1,278 |
6,098 |
8,284 |
Licensing fees |
|
609 |
85 |
7,607 |
7,252 |
Research and other contract
revenue |
|
4 |
46 |
272 |
178 |
Net revenue |
|
2,526 |
1,794 |
13,640 |
17,375 |
OPERATING EXPENSES |
|
|
|
|
|
Research and development expenses |
|
1,899 |
1,539 |
7,027 |
6,849 |
Sales and marketing expenses |
|
- |
290 |
649 |
4,892 |
General and administrative
expenses |
|
2,497 |
2,084 |
9,467 |
9,123 |
Interest expense |
|
218 |
131 |
649 |
381 |
Interest income |
|
(28) |
(1) |
(78) |
(16) |
Total operating expenses |
|
4,586 |
4,043 |
17,714 |
21,229 |
OTHER EXPENSES (INCOME) |
|
|
|
|
|
Impairment of intangible assets and
goodwill |
|
- |
11,868 |
6,358 |
11,868 |
Litigation settlement |
|
- |
- |
- |
(277) |
Loss (gain) on disposal of property,
plant and equipment |
|
10 |
(2) |
10 |
(2) |
Gain on ZARS contingent
consideration |
|
- |
(2,760) |
- |
(2,300) |
Foreign currency loss (gain) |
|
(161) |
(205) |
(181) |
224 |
Net loss before income
taxes |
|
(1,909) |
(11,150) |
(10,261) |
(13,367) |
Income taxes |
|
33 |
22 |
117 |
196 |
NET LOSS |
|
(1,942) |
(11,172) |
(10,378) |
(13,563) |
Other comprehensive income (loss)
to be reclassified to net income (loss) in subsequent
periods |
|
|
|
|
|
Unrealized gains (losses) on
translation of foreign operations |
|
137 |
244 |
666 |
(544) |
TOTAL COMPREHENSIVE LOSS |
|
(1,805) |
(10,928) |
(9,712) |
(14,107) |
Net loss per common share
- |
|
|
|
|
|
Basic and
diluted |
|
$(0.22) |
$(1.27) |
$(1.18) |
$(1.54) |
Average number of
common shares outstanding
(in thousands) |
|
|
|
|
|
basic and
diluted |
|
8,812 |
8,794 |
8,808 |
8,792 |
NUVO RESEARCH INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
Three months
ended
December 31 |
Twelve months
ended
December 31 |
|
|
2013 |
2012 |
2013 |
2012 |
(Canadian dollars in thousands) |
|
$ |
$ |
$ |
$ |
OPERATING ACTIVITIES |
|
|
|
|
|
Net loss |
|
(1,942) |
(11,172) |
(10,378) |
(13,563) |
Items not involving current cash
flows: |
|
|
|
|
|
|
Impairment of intangible assets and goodwill |
|
- |
11,868 |
6,358 |
11,868 |
|
Gain on ZARS contingent consideration |
|
- |
(2,760) |
- |
(2,300) |
|
Depreciation and amortization |
|
185 |
157 |
1,338 |
674 |
|
Deferred license revenue recognized |
|
(85) |
(85) |
(341) |
(1,092) |
|
Deferred royalty revenue, net of royalties
earned |
|
- |
(69) |
- |
(385) |
|
Stock-based compensation |
|
302 |
158 |
631 |
734 |
|
Unrealized foreign exchange loss (gain) |
|
(151) |
(182) |
(126) |
133 |
|
Inventory write-downs |
|
24 |
123 |
44 |
123 |
|
Loss (gain) on disposal of property, plant and
equipment |
|
10 |
(2) |
10 |
(2) |
|
Interest and accretion of long-term other
obligations |
|
20 |
17 |
68 |
72 |
|
Other |
|
(3) |
(3) |
(16) |
11 |
|
|
(1,640) |
(1,950) |
(2,412) |
(3,727) |
Net change in non-cash working
capital |
|
(14) |
2,997 |
677 |
(1,348) |
CASH PROVIDED (USED) IN OPERATING
ACTIVITIES |
|
(1,654) |
1,047 |
(1,735) |
(5,075) |
INVESTING ACTIVITIES |
|
|
|
|
|
Acquisition of property, Plant and
equipment |
|
(40) |
(111) |
(229) |
(149) |
Proceeds on disposal of property,
plant and equipment |
|
- |
- |
- |
8 |
CASH USED IN INVESTING
ACTIVITIES |
|
(40) |
(111) |
(229) |
(141) |
FINANCING ACTIVITIES |
|
|
|
|
|
Proceeds from other obligations |
|
- |
- |
4,000 |
4,000 |
Repayment of finance lease and other
obligations |
|
(536) |
(486) |
(1,882) |
(1,347) |
Issuance of common shares |
|
77 |
39 |
77 |
61 |
CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES |
|
(459) |
(447) |
2,195 |
2,714 |
Effect of exchange
rate changes on cash and cash equivalents |
|
128 |
170 |
241 |
(73) |
Net change in cash and cash
equivalents during the period |
|
(2,025) |
659 |
472 |
(2,575) |
Cash and cash equivalents, beginning
of period |
|
14,646 |
11,490 |
12,149 |
14,724 |
CASH AND CASH EQUIVALENTS, END OF
PERIOD |
|
12,621 |
12,149 |
12,621 |
12,149 |
|
|
|
|
|
|
Interest paid |
|
204 |
117 |
551 |
269 |
Interest received |
|
29 |
- |
69 |
21 |
Income taxes paid |
|
28 |
22 |
105 |
182 |
SOURCE Nuvo Research Inc.