- Quarter Highlighted by growth in Product
Sales and Gross Margin -
MISSISSAUGA, ON, Feb. 17, 2016 /PRNewswire/ - Nuvo Research Inc.
(TSX:NRI), a life sciences company with growing revenues and a
diverse portfolio of topical products, today announced its
financial and operational results for the fourth quarter and year
ended December 31, 2015.
Fourth Quarter and Recent Corporate
Developments:
Financial Highlights
- Product sales increased in the quarter to $7.2 million from $5.2
million in Q3 and $1.6 million
in the comparative period in 2014;
- Total Revenue, consisting of product sales, royalties, license
fee revenue and research and other contract revenue for the three
months ended December 31, 2015 was
$7.8 million compared to $3.4 million for the three months ended
December 31, 2014;
- Gross margin on product sales in the quarter increased to
$3.9 million or 55% from $2.6 million or 51% in Q3 compared to a negative
margin of $15,000 or (1%) in the
comparative period in 2014;
- Net income for the three months ended December 31, 2015 was $0.3
million compared to a net loss of $6.1 million for the three months ended
December 31, 2014; and
- Cash and short-term investments were $48.7 million at December
31, 2015 compared to $50.8
million at the end of Q3 and $58.3
million at December 31,
2014.
Corporate Developments
Proposed Reorganization of the Company
- The Company will hold a special meeting of shareholders on
February 18, 2016 at which
shareholders will be asked to approve the previously announced
reorganization of Nuvo into two separate publicly traded companies.
If approved, one company, Nuvo Pharmaceuticals Inc. (Nuvo Pharma)
would be a revenue and EBITDA generating commercial healthcare
company to be owned 100% by Nuvo shareholders. The second company,
Crescita Therapeutics Inc. (Crescita) would be a drug development
company also initially owned 100% by Nuvo shareholders. Completion
of the reorganization is subject to a number of conditions
including shareholder and court approval. If the proposed
transaction is approved by shareholders and all other conditions
are satisfied, Nuvo expects the transaction to be completed in Q1
2016.
Disposal of Immunology Group
- In February 2016, Nuvo's Board of
Directors unanimously approved a proposal to initiate a divestiture
or orderly wind down of the Company's Immunology Group. While the
Company continues to explore a possible sale of the Immunology
Group, if a divestiture transaction does not materialize, the wind
down of the Immunology operations is expected to be completed by
the end of 2016.
Pennsaid® 2%
- According to IMS Health, U.S. prescriptions of Pennsaid 2%
increased from approximately 97,000 in Q3 to 116,000 in Q4. 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. Approximately 320,000 Pennsaid 2%
prescriptions were dispensed in the year ended December 31, 2015 compared to 59,000
prescriptions in the year ended December 31,
2014;
- In February 2016, the Company
amended its manufacturing agreement with Horizon for the production
of Pennsaid 2% to extend the term to December 31, 2029 from the initial term which
ended on December 31, 2022. The
amendment included volume-tiered pricing;
- In November 2015, NovaMedica LLC
advised the Company that their Pennsaid 2% clinical trial was
successful and that they have submitted their application to obtain
regulatory approval in Russia;
and
- In July 2015, 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 E.U. Topline
results are expected in Q1 2016.
Pliaglis
- In December 2015, the Company
reacquired the Pliaglis development and marketing rights for the
U.S., Canada and Mexico.
WF10™
- In December 2015, the Company
announced topline results of the phase 2 WF10 trial. Patients dosed
with WF10 did not report a reduction in symptoms that was
significantly better than patients dosed with a saline placebo at
any of the endpoints being measured in the trial. Management
believes that the results do not justify the further development of
WF10 for the treatment of allergic rhinitis and has discontinued
all WF10 development.
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.nuvoresearch.com).
|
Three months
ended
|
Year
ended
|
|
December
31,
2015
|
December
31,
2014
|
Change
|
December
31,
2015
|
December
31,
2014
|
Change
|
(Canadian dollars
in thousands,
except gross margin and per share figures)
|
$
|
$
|
$
|
$
|
$
|
$
|
Product
Sales
|
7,166
|
1,586
|
5,580
|
19,208
|
6,470
|
12,738
|
Gross Margin % on
Product Sales
|
55%
|
(1%)
|
|
47%
|
14%
|
|
Other
Revenue
|
677
|
1,841
|
(1,164)
|
2,144
|
6,587
|
4,443
|
Operating
Expenses
|
7,860
|
8,697
|
(837)
|
29,425
|
27,080
|
2,345
|
Net income
(loss)
|
296
|
(6,143)
|
6,439
|
(7,120)
|
38,590
|
(45,710)
|
Per share -
basic
|
0.03
|
(0.58)
|
|
(0.65)
|
3.85
|
|
Per share -
diluted
|
0.03
|
(0.56)
|
|
(0.65)
|
3.71
|
|
Q4 Financial Highlights
Total revenue, consisting of
product sales, royalties, license fee revenue and research and
other contract revenue for the three months ended December 31, 2015 was $7.8
million compared to $3.4
million for the three months ended December 31, 2014. 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 from
Pennsaid and Pennsaid 2% in the U.S. as the Company no longer earns
a royalty on net sales in the U.S market. Total revenue for
the year was $21.4 million compared
to $13.1 million in the comparative
period.
Total operating expenses for the three months ended December 31, 2015 decreased to $7.9 million compared to $8.7 million for the three months ended
December 31, 2014. The decrease
in operating expenses was primarily due to a decrease in
stock-based compensation (SBC) expenses, partially offset by an
increase in cost of goods sold (COGS) and the costs related to the
proposed reorganization of the Company. Total operating
expenses for the year ended December 31,
2015 were $29.4 million
compared to $27.1 million for the
year ended December 31, 2014.
COGS for the three months ended December
31, 2015 was $3.2 million
compared to $1.6 million for the
three months ended December 31, 2014.
The increase in COGS was primarily related to an increase in
Pennsaid 2% product sales to Horizon. The increase in product
sales improved the gross margin to $3.9
million or 55% for the three months ended December 31, 2015 compared to a negative margin
of $15,000 or (1)% for the three
months ended December 31, 2014.
For the year ended December 31,
2015, COGS increased to $10.3
million compared to $5.5
million for the year ended December
31, 2014. The gross margin on product sales was 47%
for the year ended December 31, 2015
compared to 14% for the year ended December
31, 2014.
Research and development (R&D) expenses decreased to
$2.2 million for the three months
ended December 31, 2015 compared to
$2.8 million for the three months
ended December 31, 2014. The
decrease in the quarter was primarily attributable to a reduction
in SBC expenses. R&D expenses were $10.3 million for the year ended December 31, 2015 compared to $8.1 million for the year ended December 31, 2014.
General and administrative (G&A) expenses decreased to
$2.5 million for the three months
ended December 31, 2015 compared to
$4.3 million for the three months
ended December 31, 2014. The
decrease in the quarter was primarily related to a decrease in SBC
expenses, slightly offset by an increase in professional fees
associated with the proposed reorganization of the Company.
G&A expenses decreased to $9.3
million for the year ended December
31, 2015 compared to $13.0
million for the year ended December
31, 2014.
Other income was $0.3 million for
the three months ended December 31,
2015 which was related to foreign exchange gain. In
the comparative period, the Company recognized other expenses of
$0.8 million primarily related to an
impairment charge of $1.7 million on
intangible assets that was partially offset by a $0.5 million foreign exchange gain and a gain
related to the sale of unused land at the Company's manufacturing
site in Varennes, Québec.
Other income was $1.0 million for the
year ended December 31, 2015 compared
to $52.6 million for the year ended
December 31, 2014, which included the
gain on the litigation settlement.
Net income for the three months ended December 31, 2015 was $0.3
million compared to a net loss of $6.1 million for the three months ended
December 31, 2014. The
improvement in the quarter related to an increased gross margin on
product sales and lower SBC expenses that was only slightly offset
by costs associated with the proposed reorganization of the
Company. The Company incurred a net loss of $7.1 million for the year ended December 31, 2015 compared to net income of
$38.6 million in the comparative
year, which included the gain on the litigation settlement.
Cash and short-term investments was $48.7
million at December 31, 2015
compared to $58.3 million at
December 31, 2014.
The number of common shares outstanding as at December 31, 2015 was 11,145,709.
About Nuvo Research Inc.
Nuvo (TSX:NRI) is a growing
specialty pharmaceutical company with a diverse portfolio of
products and technologies for pain and topical indications.
Nuvo's products range from FDA approved, commercial products to
development stage drug candidates and technology platforms.
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 Company's future objectives, strategies
to achieve those objectives, plans for and timing of the potential
development of the Company's product candidates, the proposed
reorganization of the Company into two separate publicly traded
companies, 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", "proposed",
"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; uncertainties
that may delay or negatively impact the proposed reorganization or
cause the proposed reorganization to not occur, including the
failure to obtain any required approvals; risks relating to the
Company's ability to successfully identify, negotiate, implement
and/or integrate potential acquisitions of businesses or products;
as well as other risk factors included in 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. 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 or completeness of these
forward-looking statements. Although the forward-looking statements
contained in this press release are 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.