- Nuvo continues to generate net income and
cash from operating activities -
- Nuvo to Host Conference Call/Audio
Webcast November 11th at
8:00 a.m. ET -
MISSISSAUGA, ON, Nov. 10, 2016 /CNW/ - Nuvo Pharmaceuticals Inc.
(Nuvo or the Company) (TSX:NRI), formerly Nuvo Research Inc., a
commercial healthcare company with a portfolio of commercial
products and pharmaceutical manufacturing capabilities, today
announced its financial and operational results for the third
quarter ended September 30, 2016.
For further details on the results, please refer to Nuvo's
Management, Discussion and Analysis (MD&A) and Condensed
Consolidated Interim Financial Statements which are available on
the Company's website (www.nuvopharmaceuticals.com).
Third Quarter and Business Update (1)
Pennsaid® 2%
- U.S. prescriptions of Pennsaid 2% were 103,000 in the third
quarter of 2016 compared to 97,000 prescriptions in the third
quarter of 2015 according to IMS Health. For the first nine months
of 2016, U.S. prescriptions of Pennsaid 2% were 338,000 compared to
204,000 for the first nine months of 2015.
- In November, the Company commenced a new placebo-controlled,
multi-centre Phase 3 trial (the Trial) in Germany to study Pennsaid 2% for the treatment
of acute ankle sprains. Topline results of the Trial are expected
to be available in Q2 2017. The Trial will be conducted to support
regulatory applications for marketing approval of Pennsaid 2% for
the treatment of acute pain in the E.U., Canada and Australia.
Management Appointment
- In September, the board of directors of the Company appointed
Mary-Jane Burkett to the position of
Vice President and Chief Financial Officer. Ms. Burkett joined Nuvo
in 2012 and most recently was the Corporate Controller.
Q3 Financial Summary
- Total revenue in the third quarter of 2016 was $5.5 million, consistent with the third quarter
of 2015. Total revenue for first nine months of 2016 was
$21.5 million compared to
$12.8 million for the comparative
nine-month period.
- Adjusted EBITDA(2) decreased to $1.4 million for the third quarter of 2016
compared to $2.6 million for the
third quarter of 2015. For the first nine months of 2016, Adjusted
EBITDA was $7.6 million compared to
$4.0 million for the comparative
nine-month period.
- Net income from continuing operations for the third quarter of
2016 was $1.3 million compared to
$2.1 million for the third quarter of
2015. Net income from continuing operations was $5.7 million for the first nine months of 2016
compared to $3.6 million for the
comparative nine-month period.
- Cash and short-term investments were $17.4 million at September
30, 2016 compared to $16.0
million at June 30, 2016.
(1) The
financial information presented herein reflects results from
continuing operations with Nuvo's previously disclosed segment,
Crescita, presented as a discontinued operation.
|
(2)
Adjusted EBITDA is a non-IFRS financial measure defined by the
Company below.
|
"This quarter demonstrates the anticipated non-linear growth of
our Pennsaid 2% U.S. revenue due to Horizon's product ordering
patterns," said John London, Nuvo's
President & CEO. "We believe the most important long-term
indicators of Pennsaid 2% U.S. growth are prescription trends and
Horizon's dedication to the brand. After prescriptions
declined in June and July, a typical seasonal trend, U.S.
prescriptions have steadily increased in each of August, September
and October. Horizon continues to treat Pennsaid 2% as an
important product and believes that Pennsaid 2% should continue to
grow in the U.S." Mr. London added, "Our Q3 financial results
demonstrate that even at lower sales levels, Nuvo is still
profitable and generating cash."
Pennsaid® 2%
Pennsaid 2% Phase 3 Trial
The Company's Pennsaid 2% Phase 3 Trial (the Trial) is being
conducted in Germany and commenced in November of this year.
The Trial is being conducted to support regulatory
applications for marketing approval of Pennsaid 2% for the
treatment of acute pain in the
E.U., Canada and Australia. The Company
believes that most other jurisdictions will base their marketing
approval on the current U.S. Food and Drug Administration (FDA)
approval of Pennsaid 2% for the treatment of the pain of
osteoarthritis (OA) of the knee and will not require additional
clinical efficacy data. The Company expects the Trial to be
completed and topline results available in Q2 2017. The Trial
will cost approximately $1.5 million to be paid by the
Company over the second half of 2016 and the first half of
2017.
Out-licensing Update
Nuvo is in a number of active discussions with potential commercial
licensees of Pennsaid 2% for various global territories. Nuvo
anticipates signing licensing agreements covering multiple
countries beginning in 2017. Nuvo projects that incremental
revenue from licensing agreements signed in 2017 will commence in
2018 and 2019, subject to obtaining regulatory approvals for
Pennsaid 2% in the related territories.
Merger and Acquisition (M&A) Transactions
Nuvo is in active discussions relating to potential M&A
transactions to acquire additional, accretive commercial assets to
further diversify the Company's product portfolio (including
Pennsaid, Pennsaid 2% and the HLT Patch) and maximize the Company's
manufacturing capabilities at our GMP approved site in Varennes, Québec. Nuvo is charting a
course to further diversify its revenue streams through a
combination of organic growth from Pennsaid 2%, international
licensing and financially responsible M&A transactions.
Q3 Financial Review
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.nuvopharmaceuticals.com).
|
Three months
ended
|
Nine months
ended
|
|
September
30,
2016
|
September
30,
2015
|
Change
|
September
30,
2016
|
September
30,
2015
|
Change
|
(from continuing
operations, Canadian
dollars in millions, except gross margin)
|
$
|
$
|
$
|
$
|
$
|
$
|
Product
Sales
|
5.0
|
5.0
|
-
|
19.6
|
11.5
|
8.1
|
Gross Margin % on
Product Sales
|
49%
|
50%
|
(1%)
|
55%
|
42%
|
13%
|
Other
Revenue
|
0.5
|
0.5
|
-
|
1.8
|
1.3
|
0.5
|
Total Operating
Expenses
|
4.4
|
3.8
|
0.6
|
15.3
|
9.9
|
5.4
|
Net Income
(loss)
|
1.3
|
2.1
|
(0.8)
|
5.7
|
3.6
|
2.1
|
Adjusted
EBITDA
|
1.4
|
2.6
|
(1.2)
|
7.6
|
4.0
|
3.6
|
Total revenue, consisting of product sales, royalties and
contract revenue for the three months ended September 30, 2016 was $5.5 million consistent with the comparative
three-month period. Total revenue for the nine months ended
September 30, 2016 was $21.5 million compared to $12.8 million for the comparative nine-month
period.
Total operating expenses comprised of cost of goods sold (COGS),
research and development (R&D) expenses, general and
administrative (G&A) expenses and net interest income were
$4.4 million for the three months
ended September 30, 2016, an increase
from $3.8 million for the three
months ended September 30,
2015. Total operating expenses for the nine months ended
September 30, 2016 increased to
$15.3 million from $9.9 million in the comparative nine-month
period.
COGS was consistent at $2.5
million for the three months ended September 30, 2016 and 2015. Gross margin
on product sales was $2.5 million or
49% for the three months ended September 30,
2016 versus $2.5 million or
50% for the three months ended September 30,
2015. COGS for the nine months ended September 30, 2016 was $8.8 million compared to $6.7 million for the nine months ended
September 30, 2015 with the increase
attributable to higher product sales. Gross margin on product
sales was $10.8 million or 55% for
the nine months ended September 30,
2016 compared to a gross margin of $4.8 million or 42% for the nine months ended
September 30, 2015.
R&D expenses were $0.4 million
for the three months ended September 30,
2016 compared to $0.3 million
for the three months ended September
30, 2015. The increase in spending in the three months
ended September 30, 2016 related to
the Trial for the treatment of acute ankle sprains. R&D
expenses incurred in the three months ended September 30, 2015 related entirely to a similar
trial conducted in 2015. R&D expenses were $0.8 million for the nine months ended
September 30, 2016 compared to
$1.0 million for the nine months
ended September 30, 2015.
G&A expenses were $1.5 million
for the three months ended September 30,
2016 compared to $1.1 million
for the three months ended September
30, 2015. In the current three-month period, a
$0.4 million decrease in stock-based
compensation (SBC) was more than offset by $0.1 million for transition services fees
provided by Crescita, $0.4 million of
professional fees incurred by the Company for a merger transaction
the Company is no longer pursuing and an increase in general
corporate costs primarily related to the allocation of certain
corporate G&A costs to Crescita in the comparative three-month
period. G&A expenses were $5.8
million for the nine months ended September 30, 2016 compared to $2.5 million for the nine months ended
September 30, 2015.
The Company experienced a net foreign currency gain of
$0.1 million for the three months
ended September 30, 2016 compared to
a net foreign currency gain of $0.4
million for the three months ended September 30, 2015. For the nine months
ended September 30, 2016, the Company
experienced a net foreign currency loss of $0.5 million compared to a net foreign currency
gain of $0.7 million in the
comparative nine-month period.
Net income from continuing operations was $1.3 million for the three months ended
September 30, 2016 compared to
$2.1 million for the three months
ended September 30, 2015. The
decrease in net income from continuing operations was primarily
related to an increase in G&A expenses, a decrease in net
interest income and a lower foreign exchange gain. Net income
from continuing operations was $5.7
million for the nine months ended September 30, 2016 compared to $3.6 million for the nine months ended
September 30, 2015.
Adjusted EBITDA decreased to $1.4
million for the three months ended September 30, 2016 compared to $2.6 million for the three months ended
September 30, 2015. The
decrease in Adjusted EBITDA for the current three-month period was
primarily related to an increase in G&A expenses, a decrease in
net interest income and a lower foreign exchange gain.
Adjusted EBITDA increased to $7.6
million for the nine months ended September 30, 2016 compared to $4.0 million for the nine months ended
September 30, 2015.
Cash and short-term investments were $17.4 million as at September 30, 2016 compared to $16.0 million at June 30,
2016 and $48.7 million at
December 31, 2015. The decrease
in cash from December 31, 2015
related to the $35.0 million that was
transferred to Crescita as part of the reorganization of the
Company and expenses related to the reorganization.
The number of common shares outstanding as at September 30, 2016 was 11,503,759.
Non-IFRS Financial Measures
Adjusted EBITDA
EBITDA is a non-IFRS financial measure. The term EBITDA does
not have any standardized meaning under IFRS and therefore may not
be comparable to similar measures presented by other
companies. The Company defines Adjusted EBITDA as net income
from continuing operations before net interest income, plus taxes,
depreciation, amortization and SBC. Management believes
Adjusted EBITDA is a useful supplemental measure from which to
determine the Company's ability to generate cash available for
working capital, capital expenditures and income taxes.
The following is a summary of how EBITDA and Adjusted EBITDA are
calculated:
|
Three Months
ended
September
30
|
Nine Months
ended
September
30
|
|
2016
|
2015
|
2016
|
2015
|
in
thousands
|
$
|
$
|
$
|
$
|
Net income from
continuing operations
|
1,251
|
2,109
|
5,670
|
3,627
|
Add back:
|
|
|
|
|
Net interest
income
|
(29)
|
(117)
|
(107)
|
(404)
|
Income tax
expense
|
-
|
-
|
-
|
7
|
Depreciation and
amortization
|
57
|
59
|
170
|
213
|
EBITDA
|
1,279
|
2,051
|
5,733
|
3,443
|
Add back:
|
|
|
|
|
SBC
|
120
|
513
|
1,831
|
543
|
Adjusted
EBITDA
|
1,399
|
2,564
|
7,564
|
3,986
|
Management to Host Conference Call/Webcast
Management
will host a conference call to discuss the results tomorrow
(Friday, November 11, 2016) at
8:00 a.m. ET. To participate in
the conference call, please dial 1 (888) 231-8191 or (647)
427-7450, reference number 89204738. 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, 2016 by calling 1 (855)
859-2056 or (416) 849-0833, reference number 89204738.
A live audio webcast of the conference call will be available
through www.nuvopharmaceuticals.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 Pharmaceuticals
Inc.
Nuvo (TSX:NRI) is a commercial healthcare company with
a portfolio of commercial products and pharmaceutical manufacturing
capabilities. Nuvo has three commercial products that are
available in a number of countries; Pennsaid 2%, Pennsaid and the
heated lidocaine/tetracaine patch. Pennsaid 2% is sold
in the U.S. by Horizon Pharma plc (NASDAQ:HZNP) and is available
for partnering in certain other territories around the world.
Nuvo manufactures Pennsaid for the global market and Pennsaid 2%
for the U.S. market at its FDA, Health Canada and E.U. approved
manufacturing facility in Varennes, Québec. For additional
information, please visit www.nuvopharmaceuticals.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, the
future approval, marketing and sale of Pennsaid 2% in certain
jurisdictions, 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", "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; as well as other risk factors included
in the Company's Management Information Circular dated December 31, 2015 and 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. 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. 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 Pharmaceuticals Inc.