Acerus Pharmaceuticals Corporation (“Acerus” or the “Company”) (TSX: ASP) today reported its financial results for the three and twelve-month period ended December 31, 2017. Unless otherwise noted, all amounts are in U.S. dollars.
The Company continued to execute on its plan to expand the global reach of Natesto® by signing four additional commercial partnership agreements with medac Gesellschaft fϋr Klinische Spezialprӓparate mbH (“medac”) for 15 countries in Europe, Therios Healthcare (“Therios”) for three countries in the MENA region, Eu Hwa Pte LTD (“EU”) for nine countries in South East Asia, and Apsen Farmacêutica (“Apsen”) for Brazil. In addition, the Company in-licensed two products to expand its Canadian presence in Men and Women’s Health.
“With continued Natesto® prescription growth in the U.S. and Canada, and as our other international partners progress towards market approval, we expect to see an acceleration of our Natesto® revenues going forward”, said Luc Mainville, Interim Chief Executive Officer of Acerus. “In addition, in order to leverage our close relationship with key opinion leaders and high prescribers across the country, we expect to continue to add to our Men and Women’s Health product portfolio.”
Financial Results for the Three and Twelve Months Ended December 31, 2017
Product revenues for Q4 2017 increased to $1.8 million from $1.4 million in Q31 and was higher compared to $1.6 million for the same prior year period due to the ramp up in Natesto® sales in Canada and the U.S. Product revenues for the twelve months ended December 31, 2017 and 2016 were $5.3 million and $7.0 million, respectively. While Estrace® accounted for the majority of the sales in the reported periods, Natesto® revenues have shown strong growth in 2017 and are expected to contribute a growing portion of the total revenues going forward.
Research and development ("R&D") expenses for the three and twelve months ended December 31, 2017 were $0.7 million and $2.2 million, respectively, compared to R&D expenses for the three and twelve months ended December 31, 2016 of $0.4 million and $1.6 million, respectively. R&D expenses were higher due to the New Drug Submission (“NDS”) fees for Gynoflor™ in 2017, as well as, clinical trial, product development, and regulatory consulting costs for drug application filings for Natesto® outside of North America.
Selling, general and administrative expenses (“SG&A”) were $3.1 million and $8.0 million for the three and twelve months ended December 31, 2017. This compared to $1.6 million and $5.5 million for the three and twelve-month periods in 2016, respectively. The increase in expenses is due to (i) accrual of severance costs for a member of the executive team, (ii) incremental salary, benefits and stock-based compensation expenses due to recent additions to the management team and (iii) sales and marketing costs mostly associated with programs to drive sales of Natesto® in Canada.
The Company incurred a net loss of $2.1 million and $8.7 million for the three and twelve-month periods ended December 31, 2017 compared to a net loss of $0.3 million and net income of $11.1 million for the same prior year periods. The net income for fiscal 2016 was mainly a result of the recognition of $17.5 million in licensing revenue versus $1.1 million in fiscal 2017. Earnings before interest, tax, depreciation and amortization (“EBITDA”) were a loss of $1.6 million and a loss of $7.2 million for the three and twelve-month periods ended December 31, 2017. This compared to an income of $0.2 million and loss of $2.6 million for the three and twelve-month periods ended December, 2016 respectively. Adjusted EBITDA (see “Non-IFRS Financial Measures” below), were a loss of $2.2 million and a loss of $5.2 million for the three and twelve-months ended December 31, 2017 compared to loss of $0.5 million and loss of $0.6 million for the three and twelve-month periods ending December 31, 2016, respectively.
On December 31, 2017, the Company had current assets of $8.2 million and $5.4 million in current liabilities.
Basic and diluted earnings per share were a loss of $0.01 and loss of $0.04 for the three and twelve-month periods ended December, 2017.
NATESTO®
Natesto® is a nasal
gel formulation of testosterone developed by Acerus and indicated as a
replacement therapy for men diagnosed with conditions associated with a
deficiency or absence of endogenous testosterone (hypogonadism). It is
the first and only nasally-administered testosterone product approved by
the U.S. FDA and Health Canada and available in a ‘no-touch’ dispenser
with a metered dose pump. A copy of the Natesto® Canadian
product monograph can be found at: http://www.aceruspharma.com/English/products-and-pipeline/natesto/default.aspx.
For further information, specific to the U.S. product dosing and administration, please visit: www.NATESTO.com.
On April 5, 2017, the Company announced that Hyundai Pharm Co., Ltd filed an application for the marketing approval of Natesto® with the Ministry of Food and Drug Safety (MFDS) in South Korea. Hyundai Pharm acquired an exclusive license to market NATESTO® in South Korea from Acerus in December 2016.
In addition, the Company continued its global expansion for Natesto® by concluding partnerships with Therios for Saudi Arabia, the United Arab Emirates and Egypt, medac for 15 European countries, including Germany, United Kingdom, France, Italy, and Spain, EU for nine South East Asian countries, and Apsen for Brazil. The Company is currently pursuing additional commercial partnerships for Natesto® in other key markets.
ESTRACE®
On November 16, 2015, Health
Canada granted a Notice of Compliance (NOC) for a third party generic
version of Estrace®. The generic is now commercially
available in Canada with public reimbursement across major provinces as
of July 2016. As of December 31, 2017, Estrace® has
maintained a 42% share of all prescriptions for oral estradiol across
Canada despite over 18 months of generic competition.
GYNOFLOR™
If approved, Gynoflor™ will be the first
combination product on the Canadian market to contain both an estrogen
(estriol) and a probiotic (lactobacillus) which may be used for the
treatment of symptoms of vaginal atrophy, for the restoration of vaginal
flora following the use of anti-infectives and for the treatment of mild
vaginal infections. Gynoflor™ is approved in 41 countries across Europe,
Asia-Pacific, the Middle East, Africa and South America, and it is
estimated that up to 32.7 million women worldwide have been treated with
the product to date. On February 28, 2017, Acerus filed a New Drug
Submission (“NDS”) with Health Canada to obtain marketing approval for
Gynoflor™ in Canada. On December 24, 2017 Acerus received a Notice of
Deficiency (“NOD”). In its notice, Health Canada requested additional
technical information on Gynoflor™ in order to complete its assessment
of the product, which Acerus believes will cause a delay in the review
process. Acerus is currently working on responding to the NOD and
currently intends to focus on the vaginal atrophy indication in its
response to Health Canada. Acerus may revisit with Health Canada at a
later date the indications for restoration of vaginal flora following
the use of anti-infectives and for the treatment of certain vaginal
infections.
Elegant™ Product Pipeline
Acerus licensed the
exclusive right to commercialize the Elegant™ franchise in Canada from
Viramal on December 20, 2017. The Elegant™ franchise comprises Elegant™
Vaginal Moisturizer, which provides comfort to women suffering from
vaginal dryness, and Elegant™ pH, which is a pH balanced vaginal
product. Vaginal dryness is most common in post-menopausal women and
those suffering from vaginal atrophy. Vaginal dryness has been estimated
to occur in 21% of women within one year of menopause and 47% by the
third year of the menopausal transition. Elegant™ Vaginal Moisturizer
and Elegant™ pH are over-the-counter products designed to be a more
user-friendly alternative over Replens™ and RepHresh™ (both of which are
trademarks of Church & Dwight Co. Inc.), which are market leaders in
Canada.
Update on Litigation Initiated by Mr. Eugene Melnyk
On
December 21, 2016, the Honourable Mr. Justice Wilton-Siegel of the
Ontario Superior Court of Justice heard a motion brought by Mr. Eugene
Melnyk for leave to commence a derivative action in the name of the
Company against certain of the Company’s directors and officers. The
motion was dismissed by Mr. Justice Wilton-Siegel with written reasons
to follow. On February 22, 2017, Justice Wilton-Siegel issued his
written reasons dismissing Mr. Melnyk's claim with costs. On April 6,
2017, Mr. Eugene Melnyk served a Notice of Appeal to the Divisional
Court of the Ontario Superior Court of Justice in order to appeal the
decision of Justice Wilton-Siegel. The appeal was heard by the
Divisional Court on February 26, 2018 and was dismissed in a decision
released on March 1, 2018. On March 14, 2018, Mr. Melnyk delivered a
notice of motion for leave to appeal the dismissal of the motion to
convert the action to a derivative action to the Court of Appeal for
Ontario.
Direct Salesforce in Canada
In Q4 2017, Acerus transitioned
from using a contract sales force to directly employing full-time sales
representatives. As of the date hereof, Acerus had eight representatives
detailing Natesto® and Estrace® to urologists,
endocrinologists, gynecologists and high prescribing general
practitioners. Acerus anticipates strategically adding to the direct
salesforce to take advantage of market opportunities, and expand its
territorial coverage in preparation for new product launches. Acerus
will continue to leverage its direct salesforce going forward and
expects to be generating incremental margins from its sales and
marketing operations as well as its product in-licensing/acquisition
activities.
Update on Early R&D Initiatives
Acerus is working on
expanding its product portfolio by leveraging its technology and
formulation expertise. As such, Acerus has a number of ongoing early
stage R&D projects. One of these projects relates to the delivering of
cannabinoids (whether synthetic or naturally derived cannabinoids)
intranasally to patients, which may have multiple possible therapeutic
applications (the “Cannabinoids Initiative”). Acerus has filed patent
applications on the Cannabinoids Initiative, is currently working on
setting up a series of pharmacokinetic clinical trials and is actively
looking at potential partnering transactions for these initiatives.
Links
The above information is in summary form and readers are
encouraged to consult the documents noted below for further details at
the links indicated or on SEDAR at www.sedar.com.
2017
Financial Statements
2017
Management Discussion & Analysis (MD&A)
Conference Call
Shareholders are reminded of the conference
call to discuss the Company’s results for the three and twelve months
period ending December 31, 2017 will be held on Wednesday, March 21,
2018 at 8:30 a.m. Eastern Time. To access the call live, please dial
416-340-2216 or 1-866-225-2055. Listeners are encouraged to dial in 10
minutes before the call begins to avoid delays.
A replay of the conference call will be available until 11:59 p.m. Eastern Time on Wednesday March 28, 2018 by dialing 905-694-9451 or 1-800-408-3053, using access code: 3999287#.
About Acerus
Acerus Pharmaceuticals Corporation is a
Canadian-based specialty pharmaceutical company focused on the
development, manufacture, marketing and distribution of innovative,
branded products that improve patient experience, with a primary focus
in the field of men’s and women’s health. The Company commercializes its
products via its own salesforce in Canada, and through a global network
of licensed distributors in the U.S. and other territories.
Acerus currently has three marketed products: Estrace®, a product for the symptomatic relief of menopausal symptoms, is commercialized in Canada; Natesto®, the first and only testosterone nasal gel for testosterone replacement therapy in adult males diagnosed with hypogonadism, is commercialized in Canada and the U.S; and UriVarx®, a Natural Health Product that helps reduce symptoms of hyperactive bladder such as daytime urinary frequency, urgency and nocturia. UriVarx® was recently approved by Health Canada and will be offered over-the-counter to Canadians dealing with such symptoms. In addition, Natesto® has been licensed for distribution in 29 additional countries worldwide. Marketing approvals in jurisdictions outside of North America are expected to take place over the course of the coming years. Acerus’ pipeline includes four innovative products: Elegant™ Vaginal Moisturizer, which provides comfort to women suffering from vaginal dryness, and Elegant™ pH, which is a pH balanced vaginal product; Gynoflor™, an ultra-low dose vaginal estrogen combined with a probiotic, for which a NDS has been filed in Canada for the treatment of vaginal atrophy, restoration of vaginal flora and treatment of certain vaginal infections; and Tefina™, a clinical stage product aimed at addressing a significant unmet need for women with female sexual dysfunction. Finally, Acerus owns or has a license to numerous patents relating to proprietary delivery systems as well as novel formulations of products currently in the early stage of development.
Acerus’ shares trade on TSX under the symbol ASP. For more information, visit www.aceruspharma.com and follow us on Twitter and LinkedIn.
Non-IFRS Financial Measures
The non-IFRS measures included
in this press release are not recognized measures under IFRS and do not
have a standardized meaning prescribed by IFRS and may not be comparable
to similar measures presented by other issuers. When used, these
measures are defined in such terms as to allow the reconciliation to the
closest IFRS measure. These measures are provided as additional
information to complement those IFRS measures by providing further
understanding of our results of operations from our perspective.
Accordingly, they should not be considered in isolation nor as a
substitute for analysis of our financial information reported under
IFRS. Despite the importance of these measures to management in goal
setting and performance measurement, we stress that these are non-IFRS
measures that may have limits in their usefulness to investors.
We use non-IFRS measures, such as EBITDA and Adjusted EBITDA to provide investors with a supplemental measure of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the valuation of issuers. We also use non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets, and to assess our ability to meet our future debt service, capital expenditure and working capital requirements.
The definition and reconciliation of EBITDA and Adjusted EBITDA used and presented by the Company to the most directly comparable IFRS measures follows below:
EBITDA and Adjusted EBITDA
EBITDA is defined as net (loss)/income adjusted for income tax, depreciation of property and equipment, amortization of intangible assets, interest on long-term debt and other financing costs, interest income, licensing revenue and changes in fair values of derivative financial instruments. Management uses EBITDA to assess the Company’s operating performance.
Adjusted EBITDA is defined as EBITDA adjusted for, as applicable, royalty expenses associated with triggering events, milestones, share based compensation, impairment of intangible asset, foreign exchange (gain)/loss and gain on extinguishment of payables. We use Adjusted EBITDA as a key metric in assessing our business performance when we compare results to budgets, forecasts and prior years. Management believes Adjusted EBITDA is an alternative measure of cash flow generation than, for example, cash flow from operations, particularly because it removes cash flow fluctuations caused by extraordinary changes in working capital. A reconciliation of net (loss)/income to EBITDA (and Adjusted EBITDA) is set out below.
|
For the three months ended |
For the year ended
|
|||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||
| Net (loss)/income | $ | (2,105) | $ | (311) | $ | (8,714) | $ | 11,119 | ||||||
| Adjustments: | ||||||||||||||
| Income tax expense | 47 | - | 47 | 300 | ||||||||||
| Licensing fees | (321) | (251) | (1,096) | (17,473) | ||||||||||
| Amortization of intangible assets | 406 | 450 | 1,781 | 1,811 | ||||||||||
| Depreciation of property and equipment | 66 | 70 | 264 | 397 | ||||||||||
|
Interest on long-term debt and other financing costs |
85 | 327 | 380 | 1,179 | ||||||||||
| Interest income | (3) | (4) | (21) | (17) | ||||||||||
| Change in fair value of derivative | 255 | (76) | 156 | 37 | ||||||||||
| EBITDA | $ | (1,570) | $ | 205 | $ | (7,203) | $ | (2,647) | ||||||
| Royalty expense on upfront payment | 201 | 27 | 201 | 1,451 | ||||||||||
| Share based compensation | 372 | 80 | 589 | 274 | ||||||||||
| Foreign exchange loss/(gain) | (930) | (804) | 1,521 | 341 | ||||||||||
| Gain on extinguishment of payables | (321) | - | (321) | - | ||||||||||
| Adjusted EBITDA | $ | (2,248) | $ | (492) | $ | (5,213) | $ | (581) | ||||||
Notice Regarding Forward-Looking Statements
Information in
this press release that is not current or historical factual information
may constitute forward looking information within the meaning of
securities laws. Implicit in this information are assumptions regarding
our future operational results. These assumptions, although considered
reasonable by the Company at the time of preparation, may prove to be
incorrect. Readers are cautioned that actual performance of the Company
is subject to a number of risks and uncertainties, including with
respect to the ability of Acerus to obtain regulatory approval for
GYNOFLOR™, to continue to successfully commercialize Natesto®
and to be successful in its early stage R&D initiatives, and could
differ materially from what is currently expected as set out above. For
more exhaustive information on these risks and uncertainties you should
refer to our annual information form (“AIF”) dated March 20, 2018 which
is available at www.sedar.com.
Forward-looking information contained in this press release is based on
our current estimates, expectations and projections, which we believe
are reasonable as of the current date. You should not place undue
importance on forward-looking information and should not rely upon this
information as of any other date. While we may elect to, we are under no
obligation and do not undertake to update this information at any
particular time, whether as a result of new information, future events
or otherwise, except as required by applicable securities law.
1 Q3 2017 revenue adjusted to correct top-up revenue amounts.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180321005306/en/
Acerus Pharmaceuticals Corporation
Ken Yoon, (905) 817-8288
Chief
Financial Officer
kyoon@aceruspharma.com
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