- Results highlighted by strong revenue and earnings growth -

MISSISSAUGA, ON, Oct. 24, 2012 /CNW/ - Cipher Pharmaceuticals Inc. (TSX: DND) (OTC: CPHMF) today announced its financial and operational results for the three months ended September 30, 2012 ("Q3 2012").

Q3 2012 Summary

• Achieved quarterly net revenue of $2.1 million, an 89% increase over Q3 2011.
  
• EBITDA of $1.0 million versus nil in Q3 2011.
  
• Net income in Q3 2012 was $0.8 million, compared with a loss of $0.2 million in Q3 2011.
  
• Cash balance increased to $15.1 million, compared with $14.4 million as at June 30, 2012 and $9.6 million at December 31, 2011.
  
• Acquired the Canadian license and distribution rights for the Betesil^® Patch, a novel treatment for inflammatory skin conditions such as plaque psoriasis.

"Strong third-quarter revenues combined with consistent expense levels year over year allowed us to achieve substantially higher earnings and strengthened our cash balance," said Larry Andrews, President and CEO of Cipher. "The near-term launch of Absorica in the U.S., our highest-potential product to date, positions us well for the balance of 2012 and for continued strong revenue growth in 2013."

Financial Review

Net revenue in Q3 2012 was $2.1 million, an increase of 89% compared with $1.1 million in Q3 2011. Net revenue from Lipofen® increased to $1.3 million during Q3 2012, compared with $0.5 million in Q3 2011. Net revenue from ConZip® was $0.3 million in Q3 2012, compared with $0.5 million in Q3 2011. ConZip® revenue was higher in the prior year as a result of the impact of initial shipments to support the product's launch in Q3 2011. Revenue from Durela® was not significant during Q3 2012 as the product was only launched in mid-March 2012. Absoricaä contributed $0.5 million of net revenue, compared with $0.1 million in Q3 2011, reflecting recognition of a portion of milestone payments received to date.

Research and Development expense decreased during Q3 2012 to $0.3 million, compared with $0.5 million in Q3 2011. Operating, General and Administrative expenses for Q3 2012 were $0.8 million, compared to $0.7 million in Q3 2011. Net income in Q3 2012 was $0.8 million, or $0.03 per share, compared with a net loss of $0.2 million, or $0.01 per share, in Q3 2011.

The Company's cash position increased at quarter end. As at September 30, 2012, Cipher had cash and cash equivalents of $15.1 million, compared with $14.4 million as at June 30, 2012 and $9.6 million at December 31, 2011.

Product Update

Lipofen®
During Q3 2012, Kowa's promotional effort resulted in Lipofen® monthly prescriptions and sales increasing significantly as reflected in an 89% increase in Cipher's net revenue over Q3 2011. During Q3 2012, Cipher achieved another contractual sales goal for the product and as a result, the royalty percentage for Lipofen increased by three percentage points. This change was retroactive to October 2011 and resulted in a one-time catch-up payment which was recorded in Q3 2012.

CIP-TRAMADOL ER (ConZip®/Durela®)
Cipher's extended-release tramadol for the treatment of moderate to moderately severe chronic pain, was launched in the U.S. by Vertical Pharmaceuticals in September 2011 under the trade name ConZip®. Vertical's dedicated sales force comprises approximately 60 representatives.

In Canada, Medical Futures launched the product in March 2012 under the trade name Durela®, with a dedicated sales force comprising 22 representatives.

With CIP-TRAMADOL ER's best-in-class product attributes, Cipher is optimistic revenues will grow in the coming quarters in both the U.S. and Canada.

In addition, Cipher is actively pursuing out-licensing discussions for CIP-TRAMADOL ER in other territories, including Latin America.

CIP-ISOTRETINOIN (Absorica™)
During Q3 2012, Cipher and its U.S. partner, Ranbaxy Pharmaceuticals, continued with pre-commercial activities, including commercial batch manufacturing and marketing planning, in anticipation of a product launch in Q4 2012.  Cipher is responsible for supplying Ranbaxy with commercial product.

Cipher completed a New Drug Submission to Health Canada in Q4 2011.  This has been accepted for review, with a response from Health Canada expected by Q1 2013.  Once approved, the Company plans to market the product in Canada on its own.

In addition, Cipher is actively pursuing out-licensing discussions for CIP-ISOTRETINOIN in other territories, including Latin America.

New Products 
In Q3 2012, Cipher obtained exclusive license and distribution rights in Canada to market the Betesil^® Patch, a novel, patent-protected, self-adhesive medicated plaster for the treatment of inflammatory skin conditions such as plaque psoriasis. Based on initial feedback from Canadian dermatologists, the Betesil^® Patch is expected to provide distinct advantages over existing treatment options, particularly for patients who suffer from plaque psoriasis in hard to treat areas such as knees and elbows.  The efficacy and safety of the Betesil^® Patch has been established in three successful phase III trials, and the product is currently marketed in several European countries. Cipher intends to initiate the regulatory review process in Canada in Q4 of this year.

The Company is seeking other late-stage to commercial-stage product candidates to complement its Canadian commercialization plans for CIP-ISOTRETINOIN and the Betesil^® Patch.

Notice of Conference Call

Cipher will hold a conference call today, October 24, 2012, at 8:30 a.m (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191.  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 (TSX: DND; OTC: CPHMF) is a growing specialty pharmaceutical company that commercializes novel formulations of successful, currently marketed molecules.  Cipher's strategy is to in-license clearly differentiated products, advance them through the clinical development and regulatory approval stages, and out-license to international marketing partners.  The Company's first product is a fenofibrate formulation marketed in the United States as Lipofen®. Cipher's second product, an extended-release tramadol, is marketed in the United States as ConZip® and in Canada as Durela®.  Cipher's third product, a novel formulation of the acne treatment isotretinoin, was recently approved by the FDA and is expected to be launched in Q4 2012 as Absorica™.  The product is also currently being reviewed by Health Canada. 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. 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. 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. These factors include, but are not limited to losses; the applicability of patents and proprietary technology; possible patent litigation; approval of products in the Company's pipeline; marketing of products; meeting projected drug development timelines and goals; product liability and insurance; dependence on strategic partnerships and licensees; concentration of the Company's revenue; substantial competition and rapid technological change in the pharmaceutical industry; the publication of negative results of clinical trials of the Company's products; the ability to access capital; the ability to attract and retain key personnel; changes in government regulation or regulatory approval processes; dependence on contract research organizations; third party reimbursement; the success of the Company's strategic investments; the achievement of development goals and time frames; the possibility of shareholder dilution; market price volatility of securities; and the existence of significant shareholders. 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.

Financial Statements

For the Nine Months Ended September 30, 2012
(Unaudited)

SOURCE: Cipher Pharmaceuticals Inc.