- Quarter Highlighted by significant Product
Sales growth and
announcement of Proposed Split into Two Independent Public
Companies -
MISSISSAUGA, Nov. 10, 2015 /CNW/ - Nuvo Research Inc.
(TSX:NRI), a specialty pharmaceutical company with growing revenues
and a diverse portfolio of topical and immunology products, today
announced its financial and operational results for the third
quarter ended September 30, 2015.
Third Quarter and Recent Corporate
Developments:
Financial Highlights
- Product sales increased significantly in the quarter to
$5.2 million from $2.9 million in Q2 and $1.5 million in the comparative period in
2014;
- Total revenue in the quarter increased to $5.7 million from $3.2
million in Q2 and $3.0 million
in the comparative period in 2014;
- Gross margins on product sales in the quarter increased to 51%
from 35% in Q2 and 19% in the comparative period in 2014;
and
- Cash and short-term investments were $50.8 million compared to $51.8 million at the end of Q2 and $58.3 million at December
31, 2014. The $1.0 million
decrease in cash in the quarter related to spending of $1.2 million on the clinical trials for WF10 and
Pennsaid 2%. For the nine-month period, the decrease in cash was
$7.5 million of which $3.5 million related to spending on the clinical
trials.
Corporate Developments
- In September, the Company announced a proposed transaction to
separate Nuvo into two publicly traded companies. One company, Nuvo
Pharmaceuticals (Nuvo Pharma) would be a pure-play commercial
healthcare company with growing revenue and EBITDA to be owned 100%
by Nuvo shareholders. The second company, Crescita Therapeutics
(Crescita) would be a pure-play biotech development company also
initially owned 100% by Nuvo shareholders. Crescita would have a
diversified pipeline of product candidates and sufficient cash
resources to execute its current business plan for the next 24
months. If the transaction is approved by shareholders, the Company
expects the proposed transaction (Crescita Transaction) would be
completed in Q1 2016 (subject to the satisfaction of all other
conditions); and
- In November, the Company announced that Samira Sakhia had been
appointed to its Board of Directors. Ms. Sakhia was most recently
the Chief Financial Officer of Canada's premier specialty pharmaceutical
company, Paladin Labs Inc. for 14 years.
Pennsaid® 2%
- U.S. prescriptions of Pennsaid 2% increased from approximately
76,000 in Q2 to 97,000 in Q3 according to IMS Health. Under the
terms of an exclusive manufacturing agreement, the Company earns
revenue from U.S. product sales of Pennsaid 2% to Horizon Pharma
plc (Horizon), which acquired the U.S. Pennsaid 2% rights from the
Company in Q4 2014. Since its launch by Horizon on January 1, 2015, U.S. prescriptions for Pennsaid
2% have increased significantly from 18,000 prescriptions in Q4
2014 when it was being marketed by the Company's former U.S.
licensee;
- In July, the Company initiated a Phase 3 clinical trial in
Germany of Pennsaid 2% for the
treatment of acute pain to support regulatory approval applications
for Pennsaid 2% in Canada and the
EU. Topline results are expected in Q1 2016; and
- NovaMedica LLC advised the Company that the Pennsaid 2%
clinical trial it sponsored in Russia was successful and that it intends to
apply for Russian regulatory approval to market Pennsaid 2%.
Development Business
WF10™
- 72 patients have completed the Company's placebo-controlled
Phase 2 trial using WF10 for the treatment of allergic rhinitis.
Their symptoms have been recorded during exposure to grass
and ragweed pollens in the field and in an environmental exposure
chamber. Topline results are expected to be available in late
2015 or Q1 2016.
Onychomycosis Product
- In August, the United States Patent and Trademark Office
(USPTO) granted a new U.S. patent covering highly permeating
topical formulations of an antifungal drug, terbinafine, being
developed for treating onychomycosis, a prevalent fungal infection
of the nail.
IBUFOAM
- In September, the USPTO granted a new U.S. patent covering
novel topical foam formulations that include dimethyl sulfoxide
(DMSO) together with certain drug actives. The claims cover Nuvo's
novel topical IBUFOAM drug candidate that contains DMSO and the
NSAID Ibuprofen and which is being developed for the treatment of
acute pain.
Table of Selected Financial Results
For further
details on the results, please refer to the Management, Discussion
and Analysis (MD&A) and Consolidated Financial Statements which
are available on the Company's website (www.nuvoresearch.com).
|
Three months
ended
|
Nine months
ended
|
|
September
30,
2015
|
September
30,
2014
|
Change
|
September
30,
2015
|
September
30,
2014
|
Change
|
(Canadian dollars
in thousands,
except gross margin and per share figures)
|
$
|
$
|
$
|
$
|
$
|
$
|
Product
Sales
|
5,225
|
1,523
|
3,702
|
12,042
|
4,884
|
7,158
|
Gross Margin % on
Product Sales
|
51%
|
19%
|
|
42%
|
19%
|
|
Other
Revenue
|
491
|
1,487
|
(996)
|
1,467
|
4,746
|
(3,279)
|
Total Operating
Expenses
|
7,292
|
6,706
|
586
|
21,565
|
18,383
|
3,182
|
Net Income
(loss)
|
(1,194)
|
49,783
|
(50,977)
|
(7,416)
|
44,733
|
(52,149)
|
Per Share –
basic
|
(0.11)
|
4.84
|
|
(0.68)
|
4.55
|
|
|
diluted
|
(0.11)
|
4.71
|
|
(0.68)
|
4.47
|
|
Q3 Financial Highlights
Product sales, which represent the Company's sales of Pennsaid
2%, Pennsaid, WF10 and HLT bulk to its licensees and distributors,
were $5.2 million for the three
months ended September 30, 2015
compared to $1.5 million for the
three months ended September 30,
2014. The increase in product sales was primarily related to
higher sales of Pennsaid 2% to Horizon which were $5.0 million for the three months ended
September 30, 2015 compared to
$0.8 million of Pennsaid 2% sales to
the Company's former U.S. licensee for the three months ended
September 30, 2014, slightly offset
by lower Pennsaid product sales. Total product sales for the
nine months ended September 30, 2015
were $12.0 million compared to
$4.9 million in the comparative
period.
Other revenue, consisting of royalties, license fee revenue and
research and other contract revenue for the three months ended
September 30, 2015 was $0.5 million compared to $1.5 million for the three months ended
September 30, 2014. The
decrease in other revenue was primarily related to a decrease in
royalty revenues as the Company no longer receives a royalty on
Pennsaid 2% net sales in the U.S. Other revenue for the nine
months ended September 30, 2015 was
$1.5 million compared to $4.7 million in the comparative period.
Total operating expenses for the three months ended September 30, 2015 increased to $7.3 million versus $6.7
million for the three months ended September 30, 2014. The increase in total
operating expenses was primarily related to the increase in cost of
goods sold due to increased product sales which was slightly offset
by the revaluation of cash-settled stock-based compensation (SBC)
costs which are primarily included in general and administrative
(G&A) costs for the quarter. Total operating expenses for the
nine months ended September 30, 2015
increased to $21.6 million from
$18.4 million in the comparative
period.
Cost of goods sold (COGS) for the three months ended
September 30, 2015 was $2.6 million compared to $1.2 million for the three months ended
September 30, 2014. The
increase in COGS in the quarter was associated with increased
Pennsaid 2% product sales. The increase in product sales
improved the gross margin to $2.6
million or 51% for the three months ended September 30, 2015 compared to a gross margin of
$0.3 million or 19% for the three
months ended September 30,
2014. For the nine months ended September 30, 2015, COGS was $7.0 million compared to $3.9 million in the comparative period.
Gross margin on product sales for the nine months ended
September 30, 2015 increased by
$4.1 million to $5.0 million or 42% compared to $0.9 million or 19% for the nine months ended
September 30, 2014.
Research and development (R&D) expenses decreased slightly
to $1.8 million for the three months
ended September 30, 2015 compared to
$1.9 million for the three months
ended September 30, 2014. The
costs in the current quarter related the Pennsaid 2% Phase 3 trial
for the treatment of acute pain to support regulatory approval
applications for Pennsaid 2% in international jurisdictions and the
2015 WF10 Trial to assess the efficacy, safety and tolerability of
WF10 for the treatment of moderate to severe allergies to grass and
ragweed pollens. In the comparative period, the Company
incurred costs relating to the 2014 WF10 Trial. For the nine
months ended September 30, 2015,
R&D expenses increased to $8.1
million compared to $5.3
million for the nine months ended September 30, 2014.
G&A expenses decreased to $3.0
million for the three months ended September 30, 2015 compared to $3.5 million for the three months ended
September 30, 2014. The
decrease in the quarter related to a decrease in SBC primarily from
the adjustment to market value for the outstanding Share
Appreciation Rights and Deferred Share Units at September 30, 2015. This decrease was
partially offset by an increase in professional fees related to the
proposed Crescita Transaction. G&A expenses for the nine
months ended September 30, 2015 were
$6.8 million compared to $8.7 million for the nine months ended
September 30, 2014.
Net loss was $1.2 million for the
three months ended September 30, 2015
compared to net income of $49.8
million for the three months ended September 30, 2014. The net income in the
comparative period included a significant gain of $52.3 million from the Company's litigation
settlement. Net loss was $7.4
million for the nine months ended September 30, 2015 compared to net income of
$44.7 million for the nine months
ended September 30, 2014.
Cash and short-term investments were $50.8 million at September
30, 2015, a decrease of $7.5
million compared to $58.3
million at December 31,
2014. The cash burn of $7.5
million was primarily attributed to costs associated with
2015 WF10 Trial and Pennsaid 2% Phase 3 clinical trial slightly
offset by increased margins on product sales.
The number of common shares outstanding as at September 30, 2015 was 10,984,683.
Management to Host Conference Call/Webcast
Management
will host a conference call to discuss the proposed transaction
tomorrow (Wednesday, November 11,
2015) at 8:00 a.m. ET.
To participate in the conference call, please dial 1 (888) 231-8191
or (647) 427-7450, reference number 77291639. 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
November 18, 2015 by calling 1 (855)
859-2056 or (416) 849-0833, reference number 77291639.
A live audio webcast of the conference call will be available
through www.nuvoresearch.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's Proposal to Split Nuvo into Two Separate Public
Companies
On September 15,
2015, Nuvo announced that it will seek to split Nuvo into
two separate, publicly traded companies, Nuvo Pharma and Crescita.
The strategy is intended to enhance long-term value for Nuvo
shareholders. Nuvo Pharma will be a pure-play commercial
healthcare company with growing revenue, EBITDA and EBITDA growth
potential. Crescita will be a pure-play biotech development
company with a diversified pipeline of product candidates.
The companies will be distinct and separately traded public
companies. Nuvo's shareholders will receive 100% of the
shares of both companies. Nuvo's cash balance will provide
both companies with sufficient cash resources to execute their
current business plans for the next 24 months. Complete details of
the proposed transaction and each company will be set forth in an
information circular that will be mailed to Nuvo's shareholders in
connection with a special meeting that will be called by Nuvo to
approve the proposed transaction. Completion of the proposed
transaction is subject to certain conditions, including final
approval by the Nuvo Board of Directors, confirmation of the
potential tax-free nature of the transaction for Canadian and
U.S. shareholders, regulatory approval requirements and the
approval of Nuvo's shareholders. If approved by shareholders,
Nuvo expects the proposed transaction would be completed in Q1 2016
(subject to the satisfaction of all conditions). However,
there can be no assurances regarding the ultimate timing of the
proposed transaction or that the proposed transaction will be
completed.
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 currently has four commercial products,
a pipeline of topical and transdermal products focusing on pain and
dermatology and multiple 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 and an immune system modulation platform that supports the
development of drug products that modulate chronic inflammation
processes resulting in a therapeutic benefit. For additional
company information visit www.nuvoresearch.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, statements concerning the potential spin-off of Nuvo's drug
development business, the benefits of the spin-off to Nuvo's
shareholders and to each company, the taxable nature of the
spin-off, the expected financial results and condition of each
company, each company's future objectives and strategies to achieve
those objectives, the future prospects of each company as an
independent company, potential regulatory approval for Pennsaid 2%
in Russia, and other statements
concerning the Company's future objectives, strategies to achieve
those objectives, as well as 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", "potentially" 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, uncertainties that may
delay or negatively impact the spin-off or cause the spin-off to
not occur; uncertainties related to each company's ability to
realize the anticipated benefits of the spin-off, including new
focus and anticipated growth; disruptions to operations as a result
of effecting the spin-off; risks and uncertainties related to
obtaining approvals, rulings and consents, or satisfying other
requirements, necessary or desirable to permit or facilitate
completion of the spinoff future factors that may arise making it
inadvisable to proceed with, or advisable to delay, all or part of
the spin-off, the impact of the spinoff on the trading prices for,
and market for trading in, the shares of each company, as well as
other risk factors included in the Company's Annual Information
Form dated February 19, 2015 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
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 Research Inc.