(All figures are presented in U.S.
dollars)
- Cash on hand grew by $4.6
million to $33.4
million
- EPS increased 25% year-over-year to $0.10
- Adjusted EBITDA1 of $3.2
million was higher than Q1 2022 and Q4 2022 by $0.1 million
MISSISSAUGA, ON, May 11, 2023
/CNW/ - Cipher Pharmaceuticals Inc. (TSX: CPH) ("Cipher" or
"the Company") today announced its financial and operating
results for the three month period ended March 31, 2023.
Q1 2023 Financial Highlights
(All figures in U.S.
dollars, compared to Q1 2022, unless otherwise noted)
- Total revenue was $4.9 million
compared to $5.4 million, a decrease
of 10%
- Adjusted EBITDA1 increased 3% to $3.2 million in Q1 2023
- Continued emphasis on managing the business with a focus on
earnings and strong free cash flow
- Ended the quarter with $33.4
million in cash (CDN$45.22) or $1.33 per share (CDN $1.802)
- Announced the closing of a new US$35
million credit facility with Royal Bank of Canada
Management Commentary
Craig Mull, Interim CEO
commented, "The market for pharmaceutical assets has
dramatically improved this year, as the implications of macro
economic factors are working their way through the financial
system. With capital becoming incrementally more difficult to
secure, we believe pharmaceutical companies are increasingly
looking to monetize assets to meet shortfalls and raise liquidity.
In the first quarter of 2023, Cipher generated $4.7 million in cash from operating activities,
with substantially all of it flowing to our balance sheet,
strengthening our total cash reserves in excess of $33 million. Additionally, we took a substantial
step to enhance our financial flexibility by securing a
US$35 million credit facility with
the Royal Bank of Canada,
providing us with over US$68 million
in growth capital to deploy in what is becoming an increasingly
more attractive M&A market."
Bryan Jacobs, CFO
commented, "Cipher's efficient business model enabled us
to deliver strong operating results in the first quarter, with our
robust product portfolio generating substantial cash flow from
operations. During the quarter, Cipher achieved a 54% net income
margin and delivered 25% year-over-year growth in EPS, while adding
$4.6 million of cash to our balance
sheet. With a strong balance sheet, and a substantial credit
facility at our disposal, we are in an ideal position to drive our
next phase of growth."
Q1 2023 Financial Review
(All figures are in U.S.
dollars)
- Total revenue was $4.9 million
for Q1 2023, compared to $5.4 million
for Q1 2022.
- Licensing revenue was $1.7
million for Q1 2023, compared to $2.1
million for Q1 2022.
- Product revenue was $3.2 million
for Q1 2023, compared to $3.3 million
for Q1 2022.
- Cash SG&A costs were $0.8
million for Q1 2023, compared to $1.1
million for Q1 2022.
- Net income was $2.7 million, or
$0.10 per diluted share in Q1 2023,
compared to $2.1 million, or
$0.08 per diluted share in Q1
2022.
- Adjusted EBITDA for Q1 2023 was $3.2
million, compared to $3.1
million in Q1 2022.
- The Company had $33.4 million in
cash and no debt as at Q1 2023. Cipher generated $4.7 million in cash from operating activities
during Q1 2023.
Business Strategy & Outlook
Cipher anticipates executing on its business strategy in 2023 to
enhance long term value, including:
- Focusing on acquiring cash flow positive pharmaceutical assets
to further diversity our product portfolio
- Continuing to be responsive to opportunities being presented to
us and whereby long-term shareholder value can be enhanced
- Operating the business in an efficient and prudent manner to
deliver continued earnings, being our management philosophy
- Continuing to collaborate with our partners on our product
pipeline, such as with 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
Financial Statements and MD&A
Cipher's Financial Statements for the three months
ended March 31, 2023, and Management's Discussion and
Analysis (the "MD&A") for the three months ended
March 31, 2023, 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 May 12, 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 40452017
A live audio webcast will be available
at https://app.webinar.net/wOPDyeLaKb0
- 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
May 19, 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 the
impact of the Company's cost reduction plan, the potential for
improved profitability of our hospital business, increased adoption
of ABSORICA LD, discussions with Galephar regarding new product
opportunities, the impact of the partnership with Verity on the
Company's ability to manage its costs efficiently and drive
profitability within its hospital business, 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 including any impact on our contract manufacturers and
other third party service providers, 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; no assurance that we will receive
regulatory approvals in the U.S., Canada or any other jurisdictions and current
uncertainty surrounding health care regulation in the U.S.; certain
of our products are subject to regulation as controlled substances;
limitations on reimbursement in the healthcare industry; limited
reimbursement for products by government authorities and
third-party payor policies; products may not be included on list of
drugs approved for use in hospitals; hospital customers may make
late payments or not make any payments; various laws pertaining to
health care fraud and abuse; reliance on the success of strategic
investments and partnerships; 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;
legacy risks from operations conducted in the U.S.; inability to
meet covenants under our long term debt arrangement; compliance
with privacy and security regulation; our policies regarding
returns, allowances and chargebacks may reduce revenues; certain
current and future regulations could restrict our activities;
additional regulatory burden and controls over financial reporting;
reliance on third parties to perform certain services; 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; litigation in the pharmaceutical industry
concerning the manufacture and supply of novel and generic versions
of existing drugs; 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 the Company's Annual Information Form 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) EBITDA and adjusted EBITDA
are non-IFRS financial measures. The term EBITDA (earnings before
interest, taxes, depreciation and amortization,) does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other companies. Rather, these
measures are provided as additional information to complement IFRS
measures by providing a further understanding of operations from
management's perspective. 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 foreign exchange
gains and losses from the translation of Canadian cash
balances.
2) At the March 31, 2022 exchange rate – 1.3533
The following is a summary of how EBITDA and Adjusted EBITDA are
calculated:
(IN THOUSANDS OF
U.S. DOLLARS)
|
Three months
ended March 31,
2023
|
Three months
ended
March 31, 2022
|
|
$
|
$
|
Income and
comprehensive income
|
2,626
|
2,149
|
Add
back:
|
|
|
Depreciation and
amortization
|
343
|
155
|
Interest
income
|
(355)
|
(7)
|
Income
taxes
|
82
|
774
|
EBITDA
|
2,696
|
3,071
|
Unrealized foreign
exchange gain
|
(7)
|
(17)
|
Restructuring
costs
|
38
|
—
|
Share-based
compensation
|
444
|
38
|
Adjusted
EBITDA
|
3,171
|
3,092
|
Adjusted EBITDA per
share – basic
|
0.12
|
0.12
|
Adjusted EBITDA per
share – dilutive
|
0.12
|
0.12
|
Condensed interim consolidated statements of income and
comprehensive income
|
Three
months
ended March
31,
|
|
2023
|
2022
|
(IN THOUSANDS OF
U.S. DOLLARS)
|
$
|
$
|
|
|
|
Revenue
|
|
|
Licensing
revenue
|
1,676
|
2,099
|
Product
revenue
|
3,210
|
3,317
|
Net
revenue
|
4,886
|
5,416
|
|
|
|
Operating
expenses
|
|
|
Cost of products
sold
|
977
|
1,124
|
Research and
development
|
3
|
65
|
Depreciation and
amortization
|
343
|
155
|
Selling, general and
administrative
|
1,217
|
1,173
|
Total operating
expenses
|
2,540
|
2,517
|
|
|
|
Other (income)
expenses
|
|
|
Interest
income
|
(355)
|
(7)
|
Unrealized foreign
exchange gain
|
(7)
|
(17)
|
Total other (income)
expenses
|
(362)
|
(24)
|
|
|
|
Income before income
taxes
|
2,708
|
2,923
|
|
|
|
Current income tax
(recovery) expense
|
97
|
724
|
Deferred income tax
(recovery) expense
|
(15)
|
50
|
Total income tax
(recovery) expense
|
82
|
774
|
|
|
|
Net income and
comprehensive income for the period
|
2,626
|
2,149
|
|
|
|
|
|
|
Income per
share
|
|
|
Basic
|
0.10
|
0.08
|
Diluted
|
0.10
|
0.08
|
Condensed interim consolidated statements of financial
position
|
As at
March 31,
|
As at December
31,
|
|
2023
|
2022
|
(IN THOUSANDS OF
U.S. DOLLARS)
|
$
|
$
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
33,427
|
28,836
|
Accounts
receivable
|
5,487
|
6,802
|
Inventory
|
2,383
|
2,152
|
Prepaid expenses and
other assets
|
332
|
371
|
Total current
assets
|
41,629
|
38,161
|
Property and equipment,
net
|
471
|
481
|
Intangible assets,
net
|
2,451
|
2,754
|
Goodwill
|
15,706
|
15,706
|
Deferred tax
assets
|
16,703
|
16,674
|
Total
assets
|
76,960
|
73,776
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
Current
liabilities
|
|
|
Accounts payable and
accrued liabilities
|
4,127
|
4,107
|
Income taxes
payable
|
5,004
|
4,904
|
Contract
liability
|
285
|
257
|
Current portion of
lease obligation
|
101
|
101
|
Total current
liabilities
|
9,517
|
9,369
|
Lease
obligation
|
302
|
327
|
Total
liabilities
|
9,819
|
9,696
|
|
|
|
Shareholders'
equity
|
|
|
Share
capital
|
18,294
|
17,719
|
Contributed
surplus
|
5,273
|
5,358
|
Accumulated other
comprehensive loss
|
(9,514)
|
(9,514)
|
Retained
earnings
|
53,088
|
50,517
|
Total shareholders'
equity
|
67,141
|
64,080
|
Total liabilities
and shareholders' equity
|
76,960
|
73,776
|
SOURCE Cipher Pharmaceuticals Inc.