• Second Quarter Adjusted Total
Revenue - $19.1 million
•
• Second Quarter Adjusted EBITDA
- $5.7 million
•
• Second Quarter Gross Profit
- $9.6 million •
- Nuvo to Host Conference Call/Audio
Webcast August 14th at 8:30 a.m. ET -
MISSISSAUGA, ON, Aug. 14, 2019 /CNW/ - Nuvo Pharmaceuticals Inc.
(Nuvo or the Company) (TSX:NRI; OTCQX:NRIFF), a Canadian focused,
healthcare company with global reach and a diversified portfolio of
commercial products, today announced its financial and operational
results for the three and six months ended June 30, 2019. 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.
"During the second quarter, our operating segments continued to
perform in line with our expectations and our second quarter
financial results reinforce the increase in scale the Aralez
Transaction has made to our business," said Jesse Ledger, Nuvo's President & CEO.
"While the Vimovo news during the quarter was disappointing, we
have made cost-saving adjustments to our operations and our
underlying business and financial performance is expected to
benefit from these changes moving forward."
Second Quarter Financial Summary
- Adjusted total revenue(1) was $19.1 million for the three months ended
June 30, 2019 compared to
$6.0 million for the three months
ended June 30, 2018.
- Adjusted EBITDA(1) was $5.7
million for the three months ended June 30, 2019 compared to $2.0 million for the three months ended
June 30, 2018.
- Gross profit on total revenue was $9.6
million or 58% for the three months ended June 30, 2019 compared to a gross profit of
$3.5 million or 60% for the three
months ended June 30, 2018.
- Cash and short-term investments were $14.7 million as at June
30, 2019 compared to $28.1
million as at December 31,
2018. The decrease was primarily related to the settlement
of transaction costs and indebtedness acquired by Nuvo upon close
of the Aralez Transaction.
(1)
|
Non-International
Financial Reporting Standards (IFRS) financial measure defined by
the Company below.
|
Second Quarter and 2019 Business Update
- Canadian prescriptions of Blexten® increased
64% to 105,407 for the three months ended June 30, 2019 compared to 64,404 for the three
months ended June 30, 2018.
- Canadian prescriptions of Cambia® increased 30%
to 19,500 for the three months ended June
30, 2019 compared to 15,036 for the three months ended
June 30, 2018.
- On April 2, 2019, the Company
announced the Marketing Authorization Application for
Pennsaid® 2% had been accepted for review by the
Austrian Agency for Health and Food Safety (AGES) acting as the
reference member state for Austria, Italy, Greece
and Portugal. It is anticipated that a review decision will
be made in early 2020.
- On May 3, 2019, the Suvexx™
registration dossier passed screening with Health Canada and is now
under formal review. The Company anticipates a review
decision from Health Canada during the first half of
2020.
- On May 15, 2019, the Company
announced the United States Court
of Appeals for the Federal Circuit (the Court of Appeals) had
reversed the decision by the United
States District Court for the District of New Jersey (the District Court) that had
upheld the validity of U.S. Patent Nos. 6,926,907 (the '907 patent)
and 8,557,285 (the '285 patent). On July 30,
2019, the Court of Appeals rejected the Company's en
banc request to have the Court of Appeals reconsider its
decision. On June 26, 2019, the
Company amended its financing agreement with Deerfield Management
Company, L.P. (Deerfield), to
provide, among other things, for a payment deferral of a portion of
mandatory minimum quarterly prepayments should Vimovo U.S. market
exclusivity be lost due to a generic entry.
- On June 17, 2019, the Company
announced that in the second half of 2019, it will start to realize
on synergies resulting from organizational changes and its
acquisition of Aralez Canada that will reduce its operating
expenses by approximately $7.0
million annually.
Second Quarter 2019 Financial Results
Total revenue is comprised of product sales, license revenue and
contract revenue. Total revenue was $16.6 million for the three months ended
June 30, 2019 compared to
$5.9 million for the three months
ended June 30, 2018. The
significant increase in total revenue for the current quarter was
the result of the timing of the Aralez Transaction. Total
revenue for the six months ended June 30,
2019 was $31.1 million
compared to $10.3 million for the
comparative six-month period.
Adjusted total revenue increased to $19.1
million for the three months ended June 30, 2019 compared to $6.0 million for the three months ended
June 30, 2018. The $13.1 million increase in adjusted total revenue
in the current quarter was primarily related to the timing of the
Aralez Transaction, which provided an incremental $9.7 million of total revenue contributed from
the Commercial Business segment and $4.7
million attributable to the Vimovo royalties related to the
U.S. and ex-U.S. territories, partially offset by a $1.2 million decrease in Production and Service
revenue. Adjusted total revenue increased to $36.2 million for the six months ended
June 30, 2019 compared to
$10.6 for the six months ended
June 30, 2018.
Adjusted EBITDA increased to $5.7
million for the three months ended June 30, 2019 compared to $2.0 million for the three months ended
June 30, 2018. The increase in
adjusted EBITDA for the current quarter was primarily attributable
to the increase in gross profit as a result of the Aralez
Transaction, partially offset by an increase in sales and marketing
and general and administrative (G&A) expenses, including
$1.0 million of one-time
restructuring expenses. Adjusted EBITDA increased to
$10.9 million for the six months
ended June 30, 2019 compared to
$2.7 million for the six months ended
June 30, 2018.
Gross profit on total revenue was $9.6
million or 58% for the three months ended June 30, 2019 compared to a gross profit of
$3.5 million or 60% for the three
months ended June 30, 2018. The
increase in gross profit for the current quarter was primarily
attributable to an increase in gross margin on product sales and an
increase in license revenue due to the timing of the Aralez
Transaction. Gross profit on total revenue was $18.7 million or 60% for the six months ended
June 30, 2019 compared to a gross
profit of $6.1 million or 59% for the
six months ended June 30, 2018.
Non-IFRS Financial Measures
The Company discloses
non-IFRS measures (such as adjusted total revenue, adjusted EBITDA
and adjusted EBITDA per share) that do not have standardized
meanings prescribed by IFRS. The Company believes that
shareholders, investment analysts and other readers find such
measures helpful in understanding the Company's financial
performance and in interpreting the effect of the Aralez
Transaction and the Deerfield Financing on the Company.
Non-IFRS financial measures do not have any standardized meaning
prescribed by IFRS and may not have been calculated in the same way
as similarly named financial measures presented by other
companies.
Adjusted Total Revenue
The Company defines adjusted
total revenue as total revenue, plus amounts billed to customers
for existing contract assets, less revenue recognized upon
recognition of a contract asset. Management believes adjusted
total revenue is a useful supplemental measure from which to
determine the Company's ability to generate cash from its customer
contracts that is used to fund its operations.
The following is a summary of how adjusted total revenue is
calculated:
|
Three months
ended
June 30
|
Six months ended
June 30
|
|
2019
|
2018
|
2019
|
2018
|
in
thousands
|
$
|
$
|
$
|
$
|
Total
revenue
|
16,580
|
5,875
|
31,130
|
10,306
|
Add:
|
|
|
|
|
Amounts billed to
customers for existing contract assets
|
2,498
|
157
|
5,060
|
251
|
Adjusted total
revenue
|
19,078
|
6,032
|
36,190
|
10,557
|
Adjusted EBITDA
EBITDA refers to net income (loss)
determined in accordance with IFRS, before depreciation and
amortization, net interest expense (income) and income tax expense
(recovery). The Company defines adjusted EBITDA as net income
before net interest expense (income), depreciation and amortization
and income tax expense (recovery) (EBITDA), plus amounts billed to
customers for existing contract assets, inventory step-up expense,
stock-based compensation expense, Other Expenses, less revenue
recognized upon recognition of a contract asset and other
income. 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, debt repayments, interest expense and income
taxes.
The following is a summary of how EBITDA and adjusted EBITDA are
calculated:
|
Three Months
Ended
June 30
|
Six Months Ended
June 30
|
|
2019
|
2018
|
2019
|
2018
|
in
thousands
|
$
|
$
|
$
|
$
|
Net income
(loss)
|
6,796
|
1,054
|
(608)
|
885
|
Add back:
|
|
|
|
|
Income tax expense
(recovery)
|
96
|
46
|
150
|
(128)
|
Net interest expense
(income)
|
2,067
|
(9)
|
3,997
|
(30)
|
Depreciation and
amortization
|
2,451
|
611
|
4,885
|
1,225
|
EBITDA
|
11,410
|
1,702
|
8,424
|
1,952
|
Add back:
|
|
|
|
|
Amounts billed to
customers for existing contract assets
|
2,498
|
157
|
5,060
|
251
|
Stock-based
compensation
|
105
|
149
|
231
|
457
|
Inventory step-up
expense
|
1,309
|
-
|
2,524
|
-
|
Other Expenses
(Income):
|
|
|
|
|
Change in fair value
of derivative liabilities & modification of
long-term debt
|
(32,641)
|
-
|
(27,428)
|
-
|
Change in fair value
of contingent and variable consideration
|
(507)
|
-
|
(435)
|
-
|
Contract asset
impairment
|
23,621
|
-
|
23,621
|
-
|
Other losses
(gains)
|
608
|
-
|
608
|
-
|
Foreign currency loss
(gain)
|
(740)
|
-
|
(1,718)
|
-
|
Adjusted
EBITDA
|
5,663
|
2,008
|
10,887
|
2,660
|
Management to Host Conference Call/Webcast
Management
will host a conference call to discuss the results today
(Wednesday, August 14, 2019) at
8:30 a.m. ET. To participate in
the conference call, please dial 1 888 390 0546 or 416 764
8688. 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
midnight on August 21, 2019 by
calling 1 888 390 0541 or 416 764 8677 playback passcode
509912#.
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 Canadian focused, healthcare company with global reach
and a diversified portfolio of commercial products. The
Company targets several therapeutic areas, including pain, allergy
and dermatology. The Company's strategy is to in-license and
acquire growth-oriented, complementary products for Canadian and
international markets and to out-license select products in global
markets. Nuvo's head office is located in Mississauga, Ontario, Canada, the Company's
Commercial Business is located in Mississauga, Ontario, the international
operations are located in Dublin,
Ireland and its manufacturing facility is located in
Varennes, Québec, Canada.
The Varennes facility operates in
a Good Manufacturing Practices (GMP) environment respecting the
U.S, Canada and E.U. GMP
regulations and is regularly inspected by Health Canada and the
U.S. Food and Drug Administration. For additional
information, please visit www.nuvopharmaceuticals.com.
Forward-Looking Statements
This press release
contains "forward-looking information" as defined under Canadian
securities laws (collectively, "forward-looking statements"). The
words "plans", "expects", "does not expect", "goals", "seek",
"strategy", "future", "estimates", "intends", "anticipates", "does
not anticipate", "projected", "believes" or variations of such
words and phrases or statements to the effect that certain actions,
events or results "may", "will", "could", "would", "should",
"might", "likely", "occur", "be achieved" or "continue" and similar
expressions identify forward-looking statements. In addition, any
statements that refer to expectations, intentions, projections or
other characterizations of future events or circumstances contain
forward-looking statements.
Forward-looking statements are not historical facts but
instead represent management's expectations, estimates and
projections regarding future events or circumstances. Such
forward-looking statements are qualified in their entirety by the
inherent risks, uncertainties and changes in circumstances
surrounding future expectations which are difficult to predict and
many of which are beyond the control of the Company.
Forward-looking statements are necessarily based on a number of
estimates and assumptions that, while considered reasonable by
management of the Company as of the date of this press release, are
inherently subject to significant business, economic and
competitive uncertainties and contingencies. Material factors and
assumptions used to develop the forward-looking statements, and
material risk factors that could cause actual results to differ
materially from the forward-looking statements, include but are not
limited to, the validity of the '907 and '285 Patents claims, the
outcome of ongoing patent litigation and other factors, many of
which are beyond the control of Nuvo. Additional 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
28, 2019 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. When relying on forward-looking statements to make
decisions, the Company cautions readers not to place undue reliance
on these statements, as forward-looking statements involve
significant risks and uncertainties. Forward-looking statements
should not be read as guarantees of future performance or results
and will not necessarily be accurate indications of whether or not
the times at or by which such performance or results will be
achieved.
All forward-looking statements are based only on information
currently available to the Company and are made as of the date of
this press release. Except as expressly required by applicable
Canadian securities law, the Company assumes no obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. All
forward-looking statements in this press release are qualified by
these cautionary statements.
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SOURCE Nuvo Pharmaceuticals Inc.