(All figures are in U.S. dollars)
- Product revenue increased 9% to $12.5
million in 2022
- EBITDA of $12.0 million,
relatively flat YoY
- Cash at December 31, 2022 was
$28.8 million (CDN$39 million) or $1.15 per share (CDN $1.56)
MISSISSAUGA, ON, March 16,
2023 /CNW/ - Cipher Pharmaceuticals Inc.
(TSX:CPH) ("Cipher" or "the Company") today announced
its financial and operating results for the year
ended December 31, 2022.
Full Year 2022 Financial Highlights
(All figures
in U.S. dollars, compared to 2021, unless otherwise noted)
- As at December 31, 2022, the
Company had $28.8 million in cash on
hand (CDN$391 million) or
$1.15 (CDN$1.56) per share
- Total revenue was $20.7 million
in 2022, compared to $21.9 million in
2021, a decrease of 6%
- Total operating expenses decreased 5% to $9.6 million, compared to $10.1 million
- EBITDA2 increased to $12.0
million, compared to $11.8
million
- Adjusted EBITDA2 of $12.4
million, compared to $13.9
million
- 1.1 million shares were repurchased and cancelled under the
Normal Course Issuer Bid at an average price of CDN$2.34
Q4 2022 Financial Highlights
(All figures in U.S. dollars, compared to Q4 2021, unless
otherwise noted)
- Total revenue was $4.9 million
compared to $5.9 million in Q4
2021
- EBITDA2 was $3.0
million compared to $4.1
million in Q4 2021
- Adjusted EBITDA2 was $3.1
million compared to $4.1
million in Q4 2021
- Net income increased to $19.7
million compared to $2.8
million in Q4 2021
- Earnings per common share were $0.78 compared to $0.11 in Q4 2021
Management Commentary
"In 2022, Cipher continued to demonstrate its cash generating
ability with EBITDA2 margins of 58%. Our continued
cash positive and solid financial performance strengthened our
balance sheet and has positioned us for our next phase of growth.
Cipher ended the year in an enviable financial position, with
$28.8 million in cash and no debt.
Subsequent to year-end, we secured a non-dilutive credit facility
with the Royal Bank of Canada,
which provides us with up to USD$35
million of additional funding to opportunistically
capitalize on favorable market conditions we feel are ahead of us,"
said Mr. Craig Mull, Interim
CEO.
"Cipher has built an efficient business platform, laying the
foundational necessary to transition towards a growth-oriented
strategy. This has included the successful re-negotiation and
extension of key distribution and supply agreements, the launch of
co-promotion initiatives and the strengthening of our management
team. Having completed these foundational changes, we are confident
we have positioned the business to capitalize on opportunities
ahead," Mr. Mull added.
"As we enter 2023, Cipher's primary focus remains on effectively
allocating our capital in order to maximize value for our
shareholders. This involves a continued emphasis on investing in
our commercial products to drive organic growth, assessing
opportunities for profitable product and company acquisitions and
working with our partners on advancing our development pipeline.
With these levers at our disposal, and with the recent addition of
our Royal Bank of Canada credit
facility, we are confident in our ability to drive shareholder
value while maintaining a disciplined approach to cost management,"
said Mr. Bryan Jacobs,
CFO.
2022 Corporate Highlights
In September, the Company's partner, Canfite Biopharma,
("Canfite") announced its Phase III COMFORT study of Piclidenoson
used in the treatment of moderate to severe psoriasis met its
primary endpoint of superiority and achieved a better tolerability
profile in a comparative analysis. Based on the safety and efficacy
data revealed in this trial, Canfite plans to approach the U.S.
Food and Drug Administration ("FDA") and the European EMA with a
protocol for a pivotal Phase III study for drug approval and
registration. Previously in June
2022, Canfite had announced positive top-line results from
its phase III COMFORT study of Piclidenoson.
On September 19, 2022, the Company
announced that it received approval from the Toronto Stock Exchange
("TSX") for its intention to commence a normal course issuer bid
(the "NCIB") for its common shares.
In August, Cipher strengthened the leadership team with the
appointment of Bryan Jacobs, as the
Chief Financial Officer.
In May 2022, the Company's
partner, Moberg Pharma AB, ("Moberg") began patient enrollment for
the North American Phase 3 study for MOB-015 to treat nail fungus.
The purpose of the study is to facilitate market approval by the
FDA. Cipher holds the exclusive Canadian rights to MOB-015. In
Canada, according to IQVIA, the
total prescription market for Onychomycosis was greater than
$86 million CDN at September 30, 2022, with a single product having
over 90% market share.
On March 10, 2022, the Company
announced that it had entered into a second amended and restated
distribution and supply agreement with Sun Pharmaceutical
Industries, Inc. ("Sun"). Under the terms of the amendment, Cipher
and Sun have agreed to extend Sun's exclusive right to market, sell
and distribute the isotretinoin product portfolio, Absorica and
Absorica AG in the United States
through December 31, 2026 and
Absorica LD through December 31,
2024.
Q4 2022 Financial Review
(All figures are in U.S.
dollars)
Total revenue was $4.9 million for Q4 2022, compared
to $5.9 million for Q4 2021.
Licensing revenue was $2.0 million
for the three months ended December 31,
2022, compared to $2.8 million
for the three months ended December
31, 2021.
Licensing revenue from Absorica in the US was $1.3 million for the three months ended
December 31, 2022, a decrease of
$0.3 million or 19% compared to
$1.6 million for the three months
ended December 31, 2021.
Licensing revenue from Lipofen and the authorized generic
version of Lipofen, was $0.7 million
for Q4 2022, a decrease of $0.4
million compared to revenue of $1.1
million for Q4 2021.
Product revenue decreased by $0.2
million or 6% to $2.9 million
for Q4 2022, compared to $3.1 million
for the comparable period in 2021.
Total operating expenses were $2.3
million for Q4 2022 compared to $2.0
million for Q4 2021. The entire increase was driven by the
increase in non-cash amortization of intangible assets of
$0.3 million, while all other total
operating costs remained flat quarter over quarter.
Net income was $19.7 million, or $0.78 per common share, compared to $2.8
million, or $0.11 per common share, in Q4 2021. Adjusted
EBITDA for Q4 2022 was $3.1 million, compared
to $4.1 million in Q4 2021.
Business Strategy & Outlook
Cipher anticipates executing on its business strategy in 2023 to
enhance long term value, including:
- Continue to collaborate with our partner Moberg Pharma on its
phase III clinical trial in the U.S. for MOB-015, which started in
May 2022, a novel product for the
treatment of foot fungus, and whereby Cipher has the exclusive
Canadian market rights
- Pursue product and business acquisitions in a prudent manner
with a focus on high growth potential and near-term
profitability
- Actively progressing and supporting studies for our DTR-001
topical product treatment for the removal of tattoos
- Continue to collaborate with the Company's partner, Canfite
Biopharma on its phase III COMFORT study of Piclidenoson used in
the treatment of moderate to severe psoriasis which met its primary
endpoint of superiority and achieved a better tolerability profile
in a comparative analysis, and whereby Cipher has the exclusive
Canadian market rights
Financial Statements and MD&A
Cipher's Financial Statements for the year ended December
31, 2022, and Management's Discussion and Analysis (the
"MD&A") for the three and twelve months
ended December 31, 2022, are available on the Company's
website at www.cipherpharma.com in the "Investors"
section under "Financial Reports" and on SEDAR
at www.sedar.com.
Notice of Conference Call
Cipher will hold a conference call on March 17, 2023,
at 8:30 a.m. (ET) to discuss its financial results and
other corporate developments.
- To access the conference call by telephone, dial (416) 764-8650
or (888) 664-6383 and use conference 02194569.
- A live audio webcast will be available at
https://app.webinar.net/VDZxNRGzWPq
- or the Investor Relations section of the Company's website at
http://www.cipherpharma.com.
- An archived replay of the webcast will be available until
March 24, 2023.
About Cipher Pharmaceuticals Inc.
Cipher Pharmaceuticals (TSX: CPH) is a specialty pharmaceutical
company with a robust and diversified portfolio of commercial and
early to late-stage products. Cipher acquires products that fulfill
unmet medical needs, manages the required clinical development and
regulatory approval process, and currently markets those products
either directly in Canada or indirectly through partners
in Canada, the U.S., and South America. For more
information, visit www.cipherpharma.com.
Forward-Looking Statements and Non-IFRS Measures
This document includes forward-looking statements within the
meaning of applicable securities laws. These forward-looking
statements include, among others, statements with respect to our
objectives and goals and strategies to achieve those objectives and
goals, as well as statements with respect to our beliefs, plans,
expectations, anticipations, estimates and intentions. The
words "may", "will", "could", "should", "would", "suspect",
"outlook", "believe", "plan", "anticipate", "estimate", "expect",
"intend", "forecast", "objective", "hope" and "continue" (or the
negative thereof), and words and expressions of similar import, are
intended to identify forward-looking statements. By their very
nature, forward-looking statements involve inherent risks and
uncertainties, both general and specific, which give rise to the
possibility that predictions, forecasts, projections and other
forward-looking statements will not be achieved. Certain material
factors or assumptions are applied in making forward-looking
statements and actual results may differ materially from those
expressed or implied in such statements. We caution readers not to
place undue reliance on these statements as a number of important
factors, many of which are beyond our control, could cause our
actual results to differ materially from the beliefs, plans,
objectives, expectations, anticipations, estimates and intentions
expressed in such forward-looking statements. These factors
include, but are not limited to, the extent and impact of the
coronavirus (COVID-19) outbreak on our business, our ability to
enter into development, manufacturing and marketing and
distribution agreements with other pharmaceutical companies and
keep such agreements in effect; our dependency on a limited number
of products; our dependency on protection from patents that will
expire; integration difficulties and other risks if we acquire or
in-license technologies or product candidates; reliance on third
parties for the marketing of certain products; the product approval
process is highly unpredictable; the timing of completion of
clinical trials, regulatory submissions and regulatory approvals;
reliance on third parties to manufacture our products and events
outside of our control that could adversely impact the ability of
our manufacturing partners to supply products to meet our demands;
we may be subject to future product liability claims; unexpected
product safety or efficacy concerns may arise; we generate license
revenue from a limited number of distribution and supply
agreements; the pharmaceutical industry is highly competitive;
requirements for additional capital to fund future operations;
products in Canada may be subject
to pricing regulation; dependence on key managerial personnel and
external collaborators; certain of our products are subject to
regulation as controlled substances; limitations on reimbursement
in the healthcare industry; the publication of negative results of
clinical trials; unpredictable development goals and projected time
frames; rising insurance costs; ability to enforce covenants not to
compete; risks associated with the industry in which we operate; we
may be unsuccessful in evaluating material risks involved in
completed and future acquisitions; we may be unable to identify,
acquire or integrate acquisition targets successfully; compliance
with privacy and security regulation; our policies regarding
returns, allowances and chargebacks may reduce revenues; additional
regulatory burden and controls over financial reporting; general
commercial litigation, class actions, other litigation claims and
regulatory actions; the difficulty for shareholders to realize in
the United States upon judgments
of U.S. courts predicated upon civil liability of the Company and
its directors and officers who are not residents of the United States; the potential violation of
intellectual property rights of third parties; our efforts to
obtain, protect or enforce our patents and other intellectual
property rights related to our products; changes in U.S., Canadian
or foreign patent laws; inability to protect our trademarks from
infringement; shareholders may be further diluted if we issue
securities to raise capital; volatility of our share price; the
fact that we have a significant shareholder; we do not currently
intend to pay dividends; our operating results may fluctuate
significantly; and our debt obligations will have priority over the
common shares of the Company in the event of a liquidation,
dissolution or winding up. We caution that the foregoing list
of important factors that may affect future results is not
exhaustive. When reviewing our forward-looking statements,
investors and others should carefully consider the foregoing
factors and other uncertainties and potential events. Additional
information about factors that may cause actual results to differ
materially from expectations, and about material factors or
assumptions applied in making forward-looking statements, may be
found in the "Risk Factors" section of our MD&A for the year
ended December 31, 2022, and
elsewhere in our filings with Canadian securities regulators.
Except as required by Canadian securities law, we do not undertake
to update any forward-looking statements, whether written or oral,
that may be made from time to time by us or on our behalf; such
statements speak only as of the date made. The forward-looking
statements included herein are expressly qualified in their
entirety by this cautionary language.
1) At the December 31, 2022 exchange rate – 1.3544
2) EBITDA and adjusted EBITDA
are non-IFRS financial measures. These non-IFRS
measures are not recognized measures under IFRS and do not have a
standardized meaning prescribed by IFRS and are unlikely to be
comparable to similar measures presented by other companies.
Management uses non-IFRS measures such as Earnings Before Interest,
Taxes, Depreciation and Amortization ("EBITDA") and Adjusted EBITDA
to provide investors with supplemental measures of the Company's
operating performance and thus highlight trends in the Company's
core business that may not otherwise be apparent when relying
solely on IFRS financial measures. The Company defines
Adjusted EBITDA as earnings before interest expense, income taxes,
depreciation of property and equipment, amortization of intangible
assets, non-cash share-based compensation, changes in fair value of
derivative financial instruments, provision for legal settlement,
loss on disposal of assets and loss on extinguishment of lease,
impairment of intangible assets, restructuring costs and unrealized
foreign exchange gains and losses.
The Following is a summary of how EBITDA and Adjusted EBITDA are
calculated:
Annual Period ending
Dec. 31, 2022 & 2021
|
|
|
|
|
(IN THOUSANDS OF
U.S. DOLLARS)
|
|
|
2022
|
2021
|
|
|
|
$
|
$
|
|
|
|
|
|
Net
income
|
|
|
26,636
|
7,758
|
Add back:
|
|
|
|
|
Depreciation and
amortization
|
|
|
989
|
701
|
Interest (income)
expense
|
|
|
(464)
|
92
|
Income
taxes
|
|
|
(15,157)
|
3,301
|
EBITDA
|
|
|
12,004
|
11,852
|
Change in fair value of
derivative financial instrument
|
|
|
—
|
(5)
|
Unrealized foreign
exchange loss (gain)
|
|
|
35
|
(83)
|
Provision for legal
settlement
|
|
|
—
|
1,250
|
Loss on disposal of
assets and extinguishment of lease
|
|
|
—
|
758
|
Share-based
compensation
|
|
|
403
|
139
|
Adjusted
EBITDA
|
|
|
12,442
|
13,911
|
Adjusted EBITDA per
share – basic
|
|
|
0.49
|
0.52
|
Adjusted EBITDA per
share – dilutive
|
|
|
0.48
|
0.52
|
|
|
|
|
|
|
|
|
|
|
Quarterly period
ending Dec. 31, 2022 & 2021
|
|
|
|
|
(IN THOUSANDS
OF U.S. DOLLARS)
|
|
|
Q4
2022
|
Q4
2021
|
|
|
|
$
|
$
|
|
|
|
|
|
Net
Income
|
|
|
19,681
|
2,807
|
Add
back:
|
|
|
|
|
Depreciation and
amortization
|
|
|
341
|
153
|
Interest (income)
expense
|
|
|
(267)
|
5
|
Income
taxes
|
|
|
(16,747)
|
1,105
|
EBITDA
|
|
|
3,008
|
4,070
|
Unrealized foreign
exchange loss (gain)
|
|
|
(95)
|
(16)
|
Share-based
compensation
|
|
|
234
|
18
|
Adjusted
EBITDA
|
|
|
3,147
|
4,072
|
|
|
|
|
|
Adjusted EBITDA EPS –
basic
|
|
|
0.13
|
0.16
|
Adjusted EBITDA EPS –
diluted
|
|
|
0.12
|
0.15
|
Selected Financial Information
Consolidated
statements of financial position
|
(IN THOUSANDS OF
U.S. DOLLARS)
|
|
As at
December 31, 2022
|
|
As at
December 31, 2021
|
|
$
|
|
$
|
|
|
|
|
Assets
|
|
|
|
Cash and cash
equivalents
|
28,836
|
|
20,548
|
Accounts
receivable
|
6,802
|
|
6,658
|
Inventory
|
2,152
|
|
1,650
|
Prepaid expenses and
other assets
|
371
|
|
471
|
Total current
assets
|
38,161
|
|
29,327
|
Property and equipment,
net
|
481
|
|
501
|
Intangible assets,
net
|
2,754
|
|
3,647
|
Goodwill
|
15,706
|
|
15,706
|
Deferred tax
assets
|
16,674
|
|
2,470
|
Total
assets
|
73,776
|
|
51,651
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
4,107
|
|
5,555
|
Income taxes
payable
|
4,904
|
|
6,233
|
Contract
liability
|
257
|
|
450
|
Current portion of
lease obligation
|
101
|
|
56
|
Total current
liabilities
|
9,369
|
|
12,294
|
Lease
obligation
|
327
|
|
460
|
Total
liabilities
|
9,696
|
|
12,754
|
|
|
|
|
|
|
|
|
Share
capital
|
17,719
|
|
18,121
|
Contributed
surplus
|
5,358
|
|
5,092
|
Accumulated other
comprehensive loss
|
(9,514)
|
|
(9,514)
|
Retained
earnings
|
50,517
|
|
25,198
|
Total shareholders'
equity
|
64,080
|
|
38,897
|
Total liabilities
and shareholders' equity
|
73,776
|
|
51,651
|
|
|
|
|
|
|
|
|
Consolidated
statements of income
|
(IN THOUSANDS OF
U.S. DOLLARS)
|
|
For the years ended
December 31,
|
|
2022
|
2021
|
|
$
|
$
|
|
|
|
Revenue
|
|
|
Licensing
revenue
|
8,145
|
10,408
|
Product
revenue
|
12,530
|
11,535
|
Net
revenue
|
20,675
|
21,943
|
|
|
|
Operating
expenses
|
|
|
Cost of products
sold
|
3,992
|
3,684
|
Research and
development
|
98
|
88
|
Selling, general and
administrative
|
5,535
|
5,112
|
Provision for legal
settlement
|
—
|
1,250
|
Total operating
expenses
|
9,625
|
10,134
|
|
|
|
Other expenses
(income)
|
|
|
Change in fair value of
derivatives
|
—
|
(5)
|
Extinguishment of
lease
|
—
|
758
|
Interest (income)
expense
|
(464)
|
80
|
Unrealized foreign
exchange loss (gain)
|
35
|
(83)
|
Total other expenses
(income)
|
(429)
|
750
|
|
|
|
Income before income
taxes
|
11,479
|
11,059
|
|
|
|
Current income tax
(recovery) expense
|
(847)
|
3,413
|
Deferred income tax
(recovery) expense
|
(14,310)
|
(112)
|
Total income tax
(recovery) expense
|
(15,157)
|
3,301
|
|
|
|
Net income and
comprehensive income
|
26,636
|
7,758
|
|
|
|
|
|
|
Earnings per
share
|
|
|
Basic earnings per
share
|
$
1.05
|
$
0.29
|
Basic weighted
average number of shares outstanding
|
25,376,290
|
26,597,842
|
|
|
|
Diluted earnings per
share
|
$
1.03
|
$
0.29
|
Diluted weighted
average number of shares outstanding
|
25,799,159
|
26,830,021
|
SOURCE Cipher Pharmaceuticals Inc.