Company also provides update on strategic priorities
MISSISSAUGA, ON, Aug. 9, 2019 /CNW/ - Cipher Pharmaceuticals Inc. (TSX:CPH) ("Cipher" or "the Company") today announced its financial and operating results for the three months ended June 30, 2019. Unless otherwise noted, all figures are in U.S. dollars.
Q2 2019 Financial Highlights
(All figures compared to Q2 2018, unless otherwise noted)
- $9.3 million in cash at June 30, 2019, compared to $7.9 million at March 31, 2019.
- Debt decreased to $13.6 million at June 30, 2019 from $15.5 million at March 31, 2019.
- Total revenue decreased to $5.6 million from $7.0 million.
- Net income from continuing operations of $1.4 million, or $0.05 per basic and diluted share ($0.066 in Canadian dollars 1), compared with net income from continuing operations of $1.9 million, or $0.07 per basic and diluted share.
- Total operating expenses decreased by $0.6 million or 15% to $3.5 million compared to $4.1 million.
As previously announced, the Board of Directors appointed a Special Committee to review and evaluate the strategic direction of the Company and consider various alternatives to maximize shareholder value.
With today's announcement, Cipher established several new strategic priorities. Most significantly, the Company is in the process of targeting strategic distribution partnerships for the Canadian commercial assets.
"Cipher has historically had success bringing late-stage assets through the regulatory approval process and commercializing them with the right partners, and we intend to focus on that model going forward," said Mr. Craig Mull, Interim Chief Executive Officer. "The cost structure to develop and maintain an internal sales force across multiple therapeutic areas is capital intensive and not optimal for a company of Cipher's size. Partnering our Canadian commercial assets will help improve profitability and cash flow and right size the cost structure of the organization ensuring a self-funding business model."
Mr. Mull added: "We will carefully select partners that possess the expertise and scale to ensure the continued success of our products. Commercial investments will be assumed by our partners and Cipher intends to collect upfront payments and royalty streams. The impact of these changes should help build up a cash balance which we intend to use to pay down debt and to target late-stage development programs that we can add to the pipeline. Cipher intends to significantly increase the collaboration with our long-term technology partner Galephar Pharmaceutical Research, Inc. ("Galephar"), to bring new exciting products to the market with a focus on U.S. and international markets."
The Company is committed to moving current pipeline products through the regulatory approval process and is actively looking to partner these assets upon receiving regulatory approvals.
Financial Statements and MD&A
Cipher's Financial Statements for the three and six months ended June 30, 2019 and Management's Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2019 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 today, Friday August 9, 2019, at 8:30 a.m. (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial (416) 764-8609 or (888) 390-0605 and use conference ID 27295490. A live audio webcast will be available at https://bit.ly/2yBeyho or the Investor Relations section of the Company's website at http://www.cipherpharma.com. A replay of the call will be available until midnight (ET) Friday, August 16, 2019.
About Cipher Pharmaceuticals Inc.
Cipher (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 markets those products indirectly through partners in Canada, the U.S., and South America. Cipher is focused on building strategic sales and distribution partnerships, out licensing products in markets where Cipher does not have a commercial presence and selective investments in drug development to assemble a broad portfolio of prescription products that serve unmet medical needs. For more information, visit www.cipherpharma.com.
This document includes forward-looking statements within the meaning of applicable securities laws. These forward-looking statements include, among others, statements with respect to our objectives, goals and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, expectations, anticipations, estimates and intentions and statements relating to the Special Committee's review of the strategic direction of the Company and its strategic priorities including the anticipated benefits thereof. 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, our ability to enter into in 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 it operates; 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 actions of 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 this MD&A and the Annual Information Form for the year ended December 31, 2018, 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) At the Q2 2019 average exchange rate
2) EBITDA is a non-IFRS financial measure. 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, loss on debt extinguishment, non-cash share-based compensation, changes in fair value of derivative financial instruments, impairment of intangible assets and goodwill and foreign exchange gains and losses from the translation of Canadian cash balances.
The following is a summary of how EBITDA and Adjusted EBITDA are calculated:
(IN THOUSANDS OF U.S. DOLLARS)
June 30, 2018
Income from continuing operations
Depreciation and amortization
Interest expense, net
Change in fair value of derivative financial instrument
Loss (gain) from the translation of Canadian cash balances
Impairment of intangible assets
SOURCE Cipher Pharmaceuticals Inc.