(All figures are presented in U.S. dollars)
- Revenue increased 27% quarter-over-quarter to $6.1 million
- EPS grew 155% to $0.28 per
share in the quarter
- Cash on hand of US$42.1
million, generated US$5.7
million in Q3 2023
- Repurchased 1.3 million or 5% of common shares through an
efficient SIB process
MISSISSAUGA, ON, Nov. 9, 2023
/CNW/ - Cipher Pharmaceuticals Inc. (TSX: CPH) ("Cipher" or
"the Company") today announced its financial and operating
results for the three and nine months ended September 30,
2023.
Q3 2023 Key Highlights
(All figures in U.S.
dollars, compared to Q3 2022, unless otherwise noted)
- Epuris product revenue grew 11% on a constant currency
basis.
- Cipher's pipeline candidate MOB-015 (nail fungus treatment)
completed its Phase 3 study enrollment ahead of plan in early
October 2023, as announced by Moberg
Pharma AB.
- Total revenue increased 27% to $6.1
million compared to $4.8
million in Q3 2022.
- Licensing revenue increased 54% to $3.1
million due to royalty income from the Absorica
portfolio.
- Adjusted EBITDA1 increased 37% to $3.6 million compared to $2.6 million in Q3 2022.
- Ended the quarter with $42.1
million in cash (CDN$56.9
million2) or $1.66
per share (CDN$2.252).
Management Commentary
Craig Mull, Interim CEO,
commented: "Cipher's third quarter results are a clear
demonstration of positive growth with a focus on continued cash
generation and profitability.
During the quarter, we commenced a Substantial Issuer Bid
("SIB") to repurchase shares, and we were successful in deploying
CAD$6 million of capital. At these
valuation levels, we believe this represented an attractive use of
capital and an excellent lever to drive long-term shareholder
value."
Mr. Mull added: "As we continue to advance our near term product
pipeline, we were pleased to see that Moberg, our partner on
MOB-015, achieved an important milestone well ahead of its
previously expected timeline, with the completion of patient
recruitment and enrolment for its Phase 3 North American study. We
look forward to the topline results from the study, which Moberg
expects to be available in January
2025. This high-potential product, which Cipher holds the
exclusive Canadian rights to, targets an attractive market in
Canada that is in excess of
CDN$80 million annually."
Bryan Jacobs, CFO,
commented: "During the third quarter, our business
performed exceptionally well, with robust year-over-year growth in
revenue and earnings, driven by the strength of our licensing
revenue and our ongoing focus on operational efficiency. We
continued to execute on our plan to deliver strong and continued
profitability, highlighted by a 37% increase in Adjusted
EBITDA1 this quarter, compared to the same quarter last
year. Additionally, we generated year to date $13.3 million in cash and ended the period with
$42.1 million in cash and cash
equivalents, and no debt. Combined with an undrawn $35 million revolving credit facility, we have
substantial resources and financial flexibility to drive future
growth."
Q3 2023 Financial Review
(All figures are in
U.S. dollars)
- Total revenue was $6.1 million in
Q3 2023, an increase of 27%, compared to $4.8 million in Q3 2022.
- Licensing revenue was $3.1
million in Q3 2023, an increase of 54%, compared to
$2.0 million in Q3 2022.
- Product revenue was $3.0 million
in Q3 2023, an increase of 7%, compared to $2.8 million in Q3 2022.
- Net income was $7.0 million, or
$0.27 per diluted share, an increase
of 165%, compared to $2.7 million, or
$0.10 per diluted share in Q3
2022.
- Adjusted EBITDA1 in Q3 2023 was $3.6 million, an increase of 37%, compared to
$2.6 million in Q3 2022.
Corporate Developments
- On September 5, 2023, the Company
announced its intention to commence a Substantial Issuer Bid. Upon
expiry on October 11, 2023, Cipher
repurchased 1.29 million common shares at CDN$4.65 per common share, for an aggregate
purchase price of CDN$6 million,
representing 5.1% of the total common shares outstanding.
- On July 5, 2023, Cipher announced
that Moberg obtained European Union approval for MOB-015, paving
the way for their commercial launch across 13 countries in
Europe. Cipher believes this is an
important precursor to the eventual approval in the U.S. and
Canada.
- On October 6, 2023, Moberg
announced it had completed the recruitment and enrollment of 384
patients with Onychomycosis (nail fungus) ahead of plan for its
ongoing MOB-015 Phase 3 Study in North
America. Moberg expects topline results in January 2025.
Business Strategy & Outlook
Cipher continues to focus on enhancing long-term shareholder
value, through the following strategies:
- Operating the business in an efficient and prudent manner to
deliver continued earnings
- Continuing to collaborate with our partners to advance our
product pipeline, including MOB-015 for the treatment of nail
fungus and CF-101 for the treatment of moderate to severe plaque
psoriasis
- Advancing our studies on DTR-001, our pipeline product for the
removal of tattoos
- Acquiring cash flow positive pharmaceutical assets to further
diversify our product portfolio
- Continuing to pursue opportunities to effectively allocate
capital to enhance long-term shareholder value
Financial Statements and MD&A
Cipher's Financial Statements for the three- and nine-month
periods ended September 30, 2023, and Management's
Discussion and Analysis (the "MD&A") for the three and
nine month periods ended September 30, 2023, are
available on the Company's website
at www.cipherpharma.com in the "Investors" section under
"Financial Reports" and on SEDAR+ at www.sedarplus.ca.
Notice of Conference Call
Cipher will hold a conference call on November 10, 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 ID 74393673.
A live audio webcast will be available at the Investor Relations
section of the Company's website
at http://www.cipherpharma.com or at
https://app.webinar.net/AMLJYMeYrlE. An archived replay of
the webcast will be available until November
17, 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
timing of the receipt of the topline results from MOB-015 Phase 3
North American study, the expectation of approval of MOB-015 in the
U.S. and Canada, 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 health pandemic outbreaks 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; product approval
process by regulators which can be 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 with new competing product entrants; 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; 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 product 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; and our
operating results may fluctuate significantly. 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 this MD&A and the 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 September 29, 2023 exchange rate – 1.3520
The following is a summary of how EBITDA and Adjusted EBITDA are
calculated:
(IN THOUSANDS OF U.S. DOLLARS,
except for per share amounts)
|
Three months
ended
September 30, 2023
|
Three months
ended
September 30, 2022
|
Nine months
ended
September 30, 2023
|
Nine months
ended
September 30, 2022
|
|
$
|
$
|
$
|
$
|
Net income and
comprehensive income
|
7,031
|
2,654
|
12,728
|
6,955
|
Add back:
|
|
|
|
|
Depreciation and
amortization
|
269
|
338
|
954
|
648
|
Interest
income
|
(533)
|
(157)
|
(1,315)
|
(197)
|
Income
taxes
|
(3,909)
|
(359)
|
(3,728)
|
1,590
|
EBITDA
|
2,858
|
2,476
|
8,639
|
8,996
|
Unrealized foreign
exchange loss (gain)
|
434
|
72
|
(21)
|
130
|
Restructuring
costs
|
—
|
—
|
269
|
—
|
Share-based
compensation
|
315
|
84
|
968
|
169
|
Adjusted
EBITDA
|
3,607
|
2,632
|
9,855
|
9,295
|
Adjusted EBITDA per
share – basic
|
0.14
|
0.10
|
0.39
|
0.37
|
Adjusted EBITDA per
share – dilutive
|
0.14
|
0.10
|
0.38
|
0.36
|
Condensed interim consolidated statements of income and
comprehensive income
|
Three months
ended September 30,
|
Nine months
ended September 30,
|
|
2023
|
2022
|
2023
|
2022
|
|
$
|
$
|
$
|
$
|
|
|
|
|
|
Revenue
|
|
|
|
|
Licensing
revenue
|
3,090
|
2,013
|
6,936
|
6,158
|
Product
revenue
|
2,978
|
2,779
|
9,306
|
9,608
|
Net
revenue
|
6,068
|
4,792
|
16,242
|
15,766
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
Cost of products
sold
|
1,076
|
860
|
3,114
|
3,056
|
Research and
development
|
10
|
—
|
110
|
66
|
Depreciation and
amortization
|
269
|
338
|
954
|
648
|
Selling, general and
administrative
|
1,690
|
1,384
|
4,400
|
3,518
|
Total operating
expenses
|
3,045
|
2,582
|
8,578
|
7,288
|
|
|
|
|
|
Other (income)
expenses
|
|
|
|
|
Interest
income
|
(533)
|
(157)
|
(1,315)
|
(197)
|
Unrealized foreign
exchange loss (gain)
|
434
|
72
|
(21)
|
130
|
Total other (income)
expenses
|
(99)
|
(85)
|
(1,336)
|
(67)
|
|
|
|
|
|
Income before income
taxes
|
3,122
|
2,295
|
9,000
|
8,545
|
|
|
|
|
|
Current income tax
expense (recovery)
|
116
|
(586)
|
328
|
1,237
|
Deferred income tax
(recovery) expense
|
(4,025)
|
227
|
(4,056)
|
353
|
Total income tax
(recovery) expense
|
(3,909)
|
(359)
|
(3,728)
|
1,590
|
|
|
|
|
|
Net income and
comprehensive income for the period
|
7,031
|
2,654
|
12,728
|
6,955
|
|
|
|
|
|
|
|
|
|
|
Income per
share
|
|
|
|
|
Basic
|
0.28
|
0.11
|
0.50
|
0.27
|
Diluted
|
0.27
|
0.10
|
0.50
|
0.27
|
|
|
|
|
|
|
Condensed interim consolidated statements of financial
position
|
As at September 30,
|
As at December
31,
|
|
2023
|
2022
|
|
$
|
$
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
42,086
|
28,836
|
Accounts
receivable
|
6,701
|
6,802
|
Inventory
|
2,528
|
2,152
|
Prepaid expenses and
other assets
|
447
|
371
|
Total current
assets
|
51,762
|
38,161
|
Property and equipment,
net
|
412
|
481
|
Intangible assets,
net
|
1,885
|
2,754
|
Goodwill
|
15,706
|
15,706
|
Deferred tax
assets
|
20,764
|
16,674
|
Total
assets
|
90,529
|
73,776
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
Current
liabilities
|
|
|
Accounts payable and
accrued liabilities
|
7,110
|
4,107
|
Income taxes
payable
|
5,237
|
4,904
|
Contract
liability
|
281
|
257
|
Current portion of
lease obligation
|
101
|
101
|
Total current
liabilities
|
12,729
|
9,369
|
Lease
obligation
|
252
|
327
|
Total
liabilities
|
12,981
|
9,696
|
|
|
|
Shareholders'
equity
|
|
|
Share
capital
|
18,486
|
17,719
|
Contributed
surplus
|
5,697
|
5,358
|
Accumulated other
comprehensive loss
|
(9,514)
|
(9,514)
|
Retained
earnings
|
62,879
|
50,517
|
Total shareholders'
equity
|
77,548
|
64,080
|
Total liabilities
and shareholders' equity
|
90,529
|
73,776
|
SOURCE Cipher Pharmaceuticals Inc.