- Nuvo to Host Conference Call/Audio
Webcast May 10th at 7:45 a.m. ET -
MISSISSAUGA, ON, May 10, 2018 /PRNewswire/ - Nuvo Pharmaceuticals
Inc. (Nuvo or the Company) (TSX:NRI; OTCQX:NRIFF), a commercial
healthcare company with a portfolio of commercial products and
pharmaceutical manufacturing capabilities, today announced its
financial and operational results for the first quarter ended
March 31, 2018. 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). All figures are in
Canadian dollars, unless otherwise noted.
First Quarter 2018 and Business Update
- In January 2018, the Company's
wholly owned subsidiary, Nuvo Pharmaceuticals (Ireland) Limited (Nuvo Ireland) acquired the
U.S. product and intellectual property rights to Resultz from
Piedmont Pharmaceuticals LLC (Piedmont). Resultz was cleared as a Class 1
medical device by the U.S. Food and Drug Administration (FDA) in
May 2017 and has not yet been
commercially launched in the U.S. Nuvo anticipates commercializing
Resultz in the U.S. through a licensing partner and is in active
discussions with potential licensees.
- In March 2018, the Company held
scientific advice meetings with select European Union (E.U.)
regulatory agencies regarding a potential Pennsaid 2% regulatory
submission for osteoarthritis and is planning on submitting its
Pennsaid 2% regulatory dossier in select E.U. member countries
within the next twelve months.
- In April 2018, pursuant to the
Company's notice of intention to make a normal course issuer bid
for a portion of its outstanding common shares, the Company
purchased 164,049 common shares with available cash on hand for a
total cost of $547,930 or
$3.34 per share. The common shares
acquired by Nuvo were cancelled upon purchase.
First Quarter Financial Summary
- Total revenue was $4.4 million
for the three months ended March 31,
2018 compared to $7.0 million
for the three months ended March 31,
2017.
- Adjusted EBITDA(1) was $0.6
million for the three months ended March 31, 2018 compared to $2.3 million for the three months ended
March 31, 2017.
- Net loss was $0.2 million for the
three months ended March 31, 2018
compared to net income of $2.2
million for the three months ended March 31, 2017. The net loss was inclusive of
non-cash amortization expense of $0.5
million related to the Resultz patents.
- Cash and short-term investments were $6.5 million as at March
31, 2018 compared to $10.4
million as at December 31,
2017. The decrease included the US$1.5 million ($1.9
million) that was paid to Piedmont to acquire the U.S. product and
intellectual property rights to Resultz and a $2.6 million investment in working capital in the
quarter.
(1) Adjusted EBITDA is a non-
International Financial Reporting Standards (IFRS) financial
measure defined by the Company below.
"Q1 marked the completion of our acquisition of the global
rights to Resultz – giving Nuvo an additional, best-in-class,
approved commercial stage product that we intend to out-license to
commercial partners in several countries and ultimately manufacture
at our manufacturing facility," said Jesse Ledger, Nuvo's President & CEO.
"The Nuvo team made considerable progress during Q1 to transition
the Resultz business into Nuvo operations. We are very
pleased with the interactions to-date with our new license partners
including Reckitt-Benckiser in the E.U. Q1 is the first
quarter we earned Resultz royalty income, which came in at a level
in line with our expectations."
Mr. Ledger further added, "Pennsaid 2% commercial bottle
production was also in line with our expectations in Q1. We
look forward to more stable commercial bottle production throughout
2018 and a return to more consistent sample production in the
second half of 2018."
Growth Strategy
The Company's focus, in the short-term, is to continue to
maximize the value of Pennsaid 2% and Resultz through out-licensing
to commercial partners in international markets, identifying new
opportunities to acquire additional, revenue generating or
late-stage products or businesses to further diversify the
Company's existing product portfolio and revenue streams and to
better utilize the Company's manufacturing facility in Varennes, Québec.
Acquisition of Product and Intellectual Property Rights to
Resultz
In January 2018, the Company's wholly
owned subsidiary, Nuvo Ireland acquired the U.S. product and
intellectual property rights to Resultz (50% isopropyl myristate,
50% cyclomethicone D5 topical solution lice and egg removal kit)
from Piedmont. This follows the acquisition of the ex-U.S.
Resultz product and intellectual property rights from Piedmont at the end of December 2017.
These transactions were in line with our strategy to diversify our
product portfolio and revenue streams. The Company believes a
considerable opportunity exists to license Resultz in the U.S.,
Germany and Italy - three markets where Resultz has
regulatory approvals. We are actively seeking commercial
partners in these jurisdictions in a timely manner.
Pennsaid 2% Global Out-licensing
Nuvo management recently held scientific advice meetings with
select E.U. regulatory agencies to discuss a potential pathway
toward Pennsaid 2% regulatory submissions in select E.U.
countries. There was a favourable response from the
regulators and the Company is preparing to file a new, revised
registration dossier to support an application for marketing
approval in these E.U. member states within the next twelve
months. While there is no guarantee that an approval will be
granted, the Company is encouraged by the discussions with the
regulators to-date and feels this is an important step in the right
direction toward expanding the global footprint for Pennsaid
2%.
Table of Selected Financial Results
For further
details on the results, please refer to Nuvo's MD&A and the
Condensed Consolidated Interim Financial Statements which are
available on the Company's website
(www.nuvopharmaceuticals.com).
|
Three months
ended
|
|
March
31,
2018
|
March 31,
2017
|
Change
|
(from continuing
operations, in thousands,
except gross margin)
|
$
|
$
|
$
|
Product
Sales
|
3,755
|
6,653
|
(2,898)
|
Other
Revenue
|
676
|
329
|
347
|
Total Operating
Expenses
|
4,849
|
4,716
|
133
|
Gross Margin % on
Product Sales
|
49%
|
58%
|
(9%)
|
Net Income
(Loss)
|
(169)
|
2,196
|
(2,365)
|
Adjusted
EBITDA
|
558
|
2,298
|
(1,740)
|
Total revenue, consisting of product sales, license revenue and
contract revenue for the three months ended March 31, 2018 was $4.4
million compared to $7.0
million for the three months ended March 31, 2017. The decrease in total
revenue was primarily related to a decrease in Pennsaid 2% product
sales to our U.S. partner, Horizon Pharma plc. The Company's
new sample production equipment is now fully operational and the
Company remains confident that revenue from the physician sample
format will rebound in the second half of 2018.
Total operating expenses for the three months ended March 31, 2018 were $4.8
million compared to $4.7
million for the three months ended March 31, 2017. The slight increase in
operating expenses was primarily attributable to an increase in
general and administrative (G&A) expenses and depreciation and
amortization, partially offset by a decrease in cost of goods sold
(COGS) and research and development expenses (R&D).
COGS for the three months ended March 31,
2018 was $1.9 million compared
to $2.8 million for the three months
ended March 31, 2017. COGS
decreased in the three months ended March
31, 2018 due to decreased product sales. Gross margin
on product sales was $1.8 million or
49% for the three months ended March 31,
2018 compared to a gross margin of $3.9 million or 58% for the three months ended
March 31, 2017. The Company's
gross margin on product sales was impacted by the volume and mix of
products sold during the current and comparative quarter. The
Company's gross margin was also impacted by the Canadian dollar
versus the U.S. dollar, the currency in which it earns certain
product revenues and sources select Pennsaid 2% and Pennsaid raw
materials.
G&A expenses were $2.4 million
for the three months ended March 31,
2018 compared to $1.7 million
for the three months ended March 31,
2017. The increase in the current quarter was primarily
related to $0.3 million in one-time
costs associated with the transition and establishment of the
Resultz business. Furthermore, the Company recognized
$0.1 million in scientific affairs
and regulatory costs primarily attributable to the advancement of
the Company's Pennsaid 2% European regulatory strategy.
For the three months ended March 31,
2018, the Company recognized non-cash costs of $0.5 million in amortization for the Resultz
patents.
Net loss for the three months ended March
31, 2018 was $0.2 million
compared to net income of $2.2
million for the three months ended March 31, 2017. In the current quarter, the
decrease was primarily attributable to a $2.0 million decrease in gross margin, a
$0.5 million increase in amortization
and a $0.7 million increase in
G&A expenses, offset by a $0.4
million increase in license revenue, a $0.3 million decrease in R&D expenses and a
$0.2 million income tax recovery.
Adjusted EBITDA decreased to $0.6
million for the three months ended March 31, 2018 compared to $2.3 million for the three months ended
March 31, 2017. The decrease in
Adjusted EBITDA for the current quarter was primarily related to a
decrease in gross margin and an increase in G&A expenses which
was largely a factor of one-time costs associated with the
Company's acquisition and transition of the Resultz business, as
well as increased costs incurred for the advancement of the
Company's Pennsaid 2% European regulatory strategy.
Cash and short-term investments were $6.5
million as at March 31, 2018
compared to $10.4 million as at
December 31, 2017. The decrease
included the US$1.5 million
($1.9 million) that was paid to
Piedmont to acquire the U.S.
product and intellectual property rights to Resultz and an increase
of $2.6 million in working
capital.
The number of common shares outstanding as at March 31, 2018 was 11,597,849.
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
before net interest income, plus income tax expense (recovery),
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
March 31,
2018
|
Three Months
ended
March 31, 2017
|
in
thousands
|
$
|
$
|
Net income
(loss)
|
(169)
|
2,196
|
Add back:
|
|
|
|
Income tax
recovery
|
(174)
|
-
|
|
Net interest
income
|
(21)
|
(38)
|
|
Depreciation and
amortization
|
614
|
54
|
EBITDA
|
250
|
2,212
|
Add back:
|
|
|
|
Stock-based
compensation
|
308
|
86
|
Adjusted
EBITDA
|
558
|
2,298
|
Management to Host Conference Call/Webcast
Management
will host a conference call to discuss the results today
(Thursday, May 10, 2018) at
7:45 a.m. ET. To participate in
the conference call, please dial 1 (888) 231-8191 or (647)
427-7450, reference number 6490419. 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
May 17, 2018 by calling 1 (855)
859-2056 or (416) 849-0833, reference number 6490419.
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;
OTCQX: NRIFF) is a global commercial healthcare company with a
portfolio of commercial products and pharmaceutical manufacturing
capabilities. Nuvo has four commercial products that are
available in a number of countries: Pennsaid® 2%,
Pennsaid, Resultz® and the heated lidocaine/tetracaine
patch. Nuvo manufactures Pennsaid 2% for the U.S
market, Pennsaid for the global market and the bulk drug product
for the HLT Patch at its FDA, Health Canada and E.U. approved
manufacturing facility in Varennes, Québec. The Company's focus is
to maximize the value of Pennsaid 2% and Resultz through
out-licensing to commercial partners in international markets and
identifying new opportunities to acquire additional, revenue
generating or late-stage products or businesses to further
diversify the Company's existing product portfolio. For
additional information, please visit
www.nuvopharmaceuticals.com.
Forward-Looking Statements
This Press Release contains "forward-looking statements" within
the meaning of applicable securities laws. Forward-looking
statements can be identified by words such as: "anticipate,"
"intend," "plan," "goal," "seek," "believe," "project," "estimate,"
"expect," "strategy," "future," "likely," "may," "should," "will"
and similar references to future periods.
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
the Company's current beliefs, expectations and assumptions
regarding the future of its business, future plans and strategies,
projections, anticipated events and trends, the economy and other
future conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of
which are outside of the Company's control. Nuvo's actual results
and financial condition may differ materially from those indicated
in the forward-looking statements. Therefore, readers should not
rely on any of these forward-looking statements. Important factors
that could cause Nuvo's actual results and financial condition to
differ materially from those indicated in the forward-looking
statements include, among others, the risk factors included in
Nuvo's most recent Annual Information Form dated March 22, 2018 under the heading "Risks Factors",
and as described from time to time in the reports and disclosure
documents filed by Nuvo with Canadian securities regulatory
agencies and commissions. These and other factors should be
considered carefully and readers should not place undue reliance on
Nuvo'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 none of Nuvo or any
other person assumes responsibility for the accuracy and
completeness of these forward-looking statements.
Any forward-looking statement made by the Company in this
Press Release is based only on information currently available to
it and speaks only as of the date on which it is made. Except as
required by applicable securities laws, Nuvo undertakes no
obligation to publicly update any forward-looking statement,
whether written or oral, that may be made from time to time,
whether as a result of new information, future developments or
otherwise.
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SOURCE Nuvo Pharmaceuticals Inc.