Press Releases
Cipher reports third quarter fiscal 2008 results
Toronto Stock Exchange Symbol: DND
MISSISSAUGA, ON, Nov. 7 /CNW/ - Cipher Pharmaceuticals Inc. (TSX: DND)
today announced its financial and operational results for the three and nine
months ended September 30, 2008.Q3 2008 Summary
---------------
- Entered into a definitive development, distribution and supply
agreement with Ranbaxy Pharmaceuticals Inc. ("Ranbaxy") for
CIP-ISOTRETINOIN in the United States.
- Recorded licensing revenue of $672,000.
- Achieved net income of $0.2 million for the quarter.
- Solid balance sheet with cash of $10.3 million and no debt at
quarter end; during Q3 2008, cash increased by $0.4 million.
- Subsequent to quarter end, strengthened management team with the
appointment of John MacInnis as Vice President, Portfolio Development
and Licensing."The third quarter was highlighted by the out-licensing agreement for
CIP-ISOTRETINOIN with Ranbaxy, which we believe is an excellent partner for
the product," said Larry Andrews, President and CEO of Cipher. "With their
financial support, we are moving forward with the pivotal Phase III safety
study, with enrolment expected to begin in early Q1 2009. The third quarter
also saw continued growth in Lipofen(R) prescriptions under Kowa, resulting in
steadily increasing royalty revenue, which contributed to positive net income
during the quarter. With more than $10 million in cash, no debt and limited
spending required for our current products, we are in a solid financial
position from which to build our pipeline and expand distribution of our
current products in selected markets."Financial Review
----------------In Q3 2008, Cipher recorded total revenue of $0.7 million compared with
$149,000 in the same period last year. Revenue for Q3 2008 includes $0.6
million from Lipofen(R) and an additional $0.1 million which represents an
amortized portion of the US$1.0 million up-front payment from Ranbaxy for
CIP-ISOTRETINOIN. Revenue from Lipofen(R) included a one-time amount of $0.3
million related to the first-year minimum performance guarantee from Kowa.
Operating, general and administrative (OG&A) expenses for Q3 2008 were $0.9
million, compared with $1.0 million in Q3 2007. During the quarter, the
Company received $0.4 million under the Ontario Innovation Tax Credit program
related to qualifying R&D expenditures made in 2006 and 2007. This is
reflected in the Q3 financial results as a reduction of R&D expenses. As a
result of this payment, R&D expense for Q3 2008 was a recovery of $0.2
million, compared with an expense of $0.4 million in Q3 2007. Net income for
the three months ended September 30, 2008 was $0.2 million ($0.01 per basic
and diluted share), compared with a net loss of $1.1 million ($0.04 per basic
and diluted share) in the same period last year.
As at September 30, 2008, Cipher had cash of $10.3 million, compared with
$11.0 million at December 31, 2007.Product Update
--------------In July 2007, Cipher entered into a licensing and distribution agreement
with ProEthic Pharmaceuticals under which ProEthic was granted the exclusive
right to market, sell and distribute Lipofen(R) (Fenofibrate) in the United
States. In Q3 2008, ProEthic was acquired by Kowa Company, Ltd. and changed
its name to Kowa Pharmaceuticals America, Inc. ("Kowa"). During Q3 2008,
weekly prescriptions continued to show steady growth, and Cipher expects this
trend to continue as Kowa increases penetration of the primary care physicians
in its targeted regions and expands its sales force.
In Q2 2007, Cipher received a second approvable letter from the FDA
pertaining to its CIP-ISOTRETINOIN NDA. In the letter, the FDA indicated that
Cipher's application is approvable subject to the resolution of two remaining
issues. In addition to one question related to chemistry, manufacturing and
controls, which the Company responded to, the FDA requested that Cipher
provide additional clinical safety data. The Company appealed the position
taken by the FDA in its approvable letter using the formal dispute resolution
process. After subsequent discussions, the representative from the FDA agreed
with the Division of Dermatology and Dental Product's original view that a
Phase III safety study was needed to further demonstrate the safety of
CIP-ISOTRETINOIN. During Q3 2008, Cipher and its advisors met with the
Division regarding the appropriate design of a safety trial. The Company
expects to finalize the study protocol shortly under a Special Protocol
Assessment ("SPA") and plans to begin trial enrolment in early Q1 2009.
Subsequent to quarter end, another important milestone was reached with notice
that the United States Patent and Trademark Office issued a patent for
CIP-ISOTRETINOIN.
During the third quarter, the Company entered into a definitive
development, distribution and supply agreement with Ranbaxy Pharmaceuticals
Inc. ("Ranbaxy"), a wholly owned subsidiary of Ranbaxy Laboratories Limited,
under which Cipher has granted Ranbaxy the exclusive right to market, sell and
distribute CIP-ISOTRETINOIN in the United States. Under the terms of the
agreement with Ranbaxy, Cipher received an initial upfront milestone payment
of US$1 million. The agreement includes additional pre- and
post-commercialization milestone payments of up to US$23 million, contingent
upon the achievement of certain milestone targets. Once the product is
successfully commercialized, Cipher will also receive a royalty in the
mid-teens on net sales. In addition, Ranbaxy will reimburse Cipher for all
costs associated with any remaining clinical studies required to obtain FDA
approval, up to a predetermined cap. Any additional development costs
associated with initial FDA approval will be shared equally. After
product-related expenses are deducted, approximately 50% of all milestone and
royalty payments received by Cipher under the agreement will be paid to
Galephar.
In May 2007, Cipher received an approvable letter from the FDA pertaining
to its NDA for CIP-TRAMADOL ER, the Company's extended-release formulation of
tramadol. In December 2007, Cipher announced that it had appealed the position
taken by the FDA using the FDA's formal dispute resolution process. In the
written response, the Acting Director of the Office of Drug Evaluation II,
Center for Drug Evaluation and Research supported the original approvable
action. During Q2 2008, Cipher submitted a revised NDA to the FDA, which the
Company concluded was the most expeditious path to final regulatory approval.
Cipher's revised NDA includes data from additional pharmacokinetic studies
conducted by the Company comparing CIP-TRAMADOL ER to Ultram(R) ER. The
revised NDA was accepted for review in Q2 2008, and the Company originally
expected the review to be completed by mid-October 2008. Subsequent to quarter
end, Cipher was informed that additional time will be required for the FDA to
complete its review of the NDA as the FDA has indicated that it plans to
inspect the facilities of the Company's manufacturer and packager in Puerto
Rico. No other outstanding issues have been identified. It is possible that
the submission could trigger patent infringement litigation and a stay of up
to 30 months under the Hatch-Waxman Act. Out-licensing discussions with
potential commercial partners are ongoing.Notice of Conference Call
-------------------------Cipher will hold a conference call today, November 7, 2008, at 10:00 a.m.
(ET) to discuss its financial results and other corporate developments. To
access the conference call by telephone, dial 647-427-3411 or 1-888-241-0326.
A live audio webcast of the call will be available at www.cipherpharma.com.
The webcast will be archived for 90 days.
About Cipher Pharmaceuticals Inc.
Cipher Pharmaceuticals is a drug development company focused on
commercializing novel formulations of successful, currently marketed molecules
using advanced drug delivery technologies. Cipher's strategy is to in-license
products that incorporate proven drug delivery technologies and advance them
through the clinical development and regulatory approval stages, after which
the products are out-licensed to international partners. Because Cipher's
products are based on proven technology platforms applied to currently
marketed drugs, they are expected to have lower approval risk, shorter
development timelines and significantly lower development costs. The Company's
lead compound, CIP-FENOFIBRATE, received final approval from the U.S. Food and
Drug Administration and Health Canada in the first quarter of 2006. The
product is being marketed in the United States by Kowa Pharmaceuticals America
under the label Lipofen(R). In addition, Cipher is developing formulations of
the pain reliever tramadol (FDA approvable letter in May 2007) and the acne
treatment isotretinoin (FDA approvable letter in April 2007).
Cipher is listed on the Toronto Stock Exchange under the symbol 'DND' and
has approximately 24 million shares outstanding. For more information, please
visit www.cipherpharma.com.
Forward-Looking Statements
Statements made in this news release, other than those concerning
historical financial information, may be forward-looking and therefore subject
to various risks and uncertainties. Some forward-looking statements may be
identified by words like "may", "will", "anticipate", "estimate", "expect",
"intend", or "continue" or the negative thereof or similar variations. 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. Factors that could cause results to vary include
those identified in the Company's Annual Information Form and other filings
with Canadian securities regulatory authorities, such as the applicability of
patents and proprietary technology; possible patent litigation; regulatory
approval of products in the Company's pipeline; changes in government
regulation or regulatory approval processes; government and third-party payer
reimbursement; dependence on strategic partnerships for product candidates and
technologies, marketing and R&D services; meeting projected drug development
timelines and goals; intensifying competition; rapid technological change in
the pharmaceutical industry; anticipated future losses; the ability to access
capital to fund R&D; and the ability to attract and retain key personnel. All
forward-looking statements presented herein should be considered in
conjunction with such filings. Except as required by Canadian securities laws,
the Company does not undertake to update any forward-looking statements; such
statements speak only as of the date made.Cipher Pharmaceuticals Inc.
Unaudited Consolidated Balance Sheets
(in thousands of dollars)
As at
September 30, December 31,
2008 2007
ASSETS
Current assets
Cash $ 10,277 $ 10,961
Accounts receivable 1,191 1,396
Income taxes receivable - 128
Prepaid expenses and other current assets 66 56
Current portion of loan receivable 594 -
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12,128 12,541
Property and equipment, net 162 208
Loan receivable 699 1,377
Intangible assets, net 4,242 4,592
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$ 17,231 $ 18,718
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LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 1,284 $ 1,059
Deferred revenue 1,329 790
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2,613 1,849
Deferred revenue 1,224 1,192
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3,837 3,041
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SHAREHOLDERS' EQUITY
Share capital 49,948 49,948
Contributed surplus 31,459 31,032
Deficit (68,013) (65,303)
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13,394 15,677
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$ 17,231 $ 18,718
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The accompanying notes are an integral part of these unaudited
consolidated financial statements
Cipher Pharmaceuticals Inc.
Unaudited Consolidated Statements of Operations and Comprehensive Income
(in thousands of dollars, except per share amounts)
For the three For the nine
months ended months ended
September 30 September 30
2008 2007 2008 2007
Revenues
Licensing revenue $ 672 $ 149 $ 1,126 $ 149
Product sales - - - 227
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672 149 1,126 376
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Expenses
Cost of goods sold - - - 177
Research and
development (220) 383 1,322 2,053
Operating, general
and administrative 879 950 2,657 3,221
Amortization of
property and
equipment 18 16 53 32
Amortization of
intangible assets 117 117 350 350
Recovery of legal
fees and court
costs (176) - (176) -
Interest income (119) (267) (370) (634)
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499 1,199 3,836 5,199
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Income (loss) and
comprehensive
income (loss)
for the period $ 173 $ (1,050) $ (2,710) $ (4,823)
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Basic and diluted
earnings (loss)
per share $ 0.01 $ (0.04) $ (0.11) $ (0.20)
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The accompanying notes are an integral part of these unaudited
consolidated financial statements
Cipher Pharmaceuticals Inc.
Unaudited Consolidated Statements of Deficit
(in thousands of dollars)
For the three For the nine
months ended months ended
September 30 September 30
2008 2007 2008 2007
Deficit, beginning
of period $ (68,186) $ (62,631) $ (65,303) $ (58,858)
Income (loss) for
the period 173 (1,050) (2,710) (4,823)
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Deficit, end of
period $ (68,013) $ (63,681) $ (68,013) $ (63,681)
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The accompanying notes are an integral part of these unaudited
consolidated financial statements
Cipher Pharmaceuticals Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands of dollars)
For the three For the nine
months ended months ended
September 30 September 30
2008 2007 2008 2007
Cash provided by
(used in)
Operating activities
Income (loss) $ 173 $ (1,050) $ (2,710) $ (4,823)
Items not
affecting cash
Amortization of
property and
equipment 18 16 53 32
Amortization of
intangible
assets 117 117 350 350
Stock-based
compensation
expense 149 170 427 473
Imputed
interest (31) (45) (104) (145)
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426 (792) (1,984) (4,113)
Net change in
non-cash
operating
items (73) 709 1,119 435
Drawdown of loan
receivable 77 - 188 800
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430 (83) (677) (2,878)
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Investing activities
Purchase of
property and
equipment (4) (10) (7) (143)
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Increase
(Decrease) in cash 426 (93) (684) (3,021)
Cash, beginning of
period 9,851 12,149 10,961 15,077
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Cash, end of period $ 10,277 $ 12,056 $ 10,277 $ 12,056
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The accompanying notes are an integral part of these unaudited
consolidated financial statements%SEDAR: 00020415E
For further information:
For further information: Craig Armitage, Investor Relations, The Equicom Group, (416) 815-0700 ext 278, (416) 815-0080 fax, carmitage@equicomgroup.com; Larry Andrews, President and CEO, Cipher Pharmaceuticals, (905) 602-5840 ext 324, (905) 602-0628 fax, landrews@cipherpharma.com