Acerus Pharmaceuticals Corporation (TSX:ASP) today reported its financial results for the three and nine-month period ended September 30, 2016. Unless otherwise noted, all amounts are in U.S. dollars.
“During the quarter, Aytu Bioscience began commercializing NATESTO® in the U.S. and the demand for our product has been extremely encouraging and on a path to surpass previous highs. We are equally excited by the early response to the Canadian launch of NATESTO™ and look forward to sharing our successes in the coming months,” said Tom Rossi, President and Chief Executive Officer of Acerus.
Financial Results for the Three and Nine Months Ended September 30, 2016
Revenues for the three months ended September 30, 2016 were $1.6 million compared to $2.8 million in same prior year period. Revenues for the nine months ended September 30, 2016 and 2015 were $22.7 million and $8.8 million respectively. The increase is mainly driven by the accelerated recognition of the upfront fees received under the previous NATESTO® licensing agreement. Product revenues in the third quarter are mainly related to the ESTRACE® sales. On a Canadian dollar basis, third quarter 2016 ESTRACE® decreased by 30 percent over the third quarter 2015 due to the launch of a third party generic late in the second quarter of 2016. However, on a year-to-date basis, ESTRACE® sales have declined by 4 per cent over the same prior year period.
Research and development ("R&D") expenses for the three and nine months ended September 30, 2016 were $0.3 million and $1.2 million, respectively, compared to R&D expenses for the three and nine months ended September 30, 2015 of $0.7 million and $2.2 million, respectively. The lower expenses in the third quarter and YTD 2016 reflect a decrease in product development, professional fees and clinical trial spending. Selling, general and administrative expenses (“SG&A”) were $1.4 million and $3.9 million for the three and nine months ended September 30, 2016. This is compared to $1.4 million and $4.5 million for the three and nine month periods in 2015 respectively. These results demonstrate continued tight control on expenses to help fund incremental commercial spending related to the Canadian launch of NATESTO™.
Earnings before interest, tax, depreciation and amortization (“EBITDA”) for the three and nine months ended September 30, 2016 was a loss of $0.2 million and a loss of $2.9 million respectively, compared to an income of $1.3 million and an income of $1.3 million respectively for the same prior year periods. Adjusted EBITDA (see “Non-IFRS Financial Measures” below) for the three and nine months ended September 30, 2016 was a loss of $0.5 million and a loss of $0.1 million compared to a loss of $0.3 million and a loss of $0.9 million in the same prior year periods. The change is driven by an overall decrease in product revenue and expenses in the third quarter 2016.
On September 30, 2016, the Company had current assets of $16.2 million and $9.3 million in current liabilities. The Company had a cash balance of $5.1 million at September 30, 2016, which is a $0.4 million decrease from second quarter 2016. In October, the Company received $2.0 million of the upfront payments owing under the Aytu license and supply agreement. The remaining $4.0 million is scheduled to be paid in January 2017.
Basic and diluted earnings per share were $0.00 and $0.05 for the three and nine months ended September 30, 2016.
Expansion of Leadership Team
We have appointed Tricia Symmes to the position of Chief Operating Officer, effective November 1, 2016. In this newly created role, Ms. Symmes will lead all efforts related to the development and execution of the commercialization strategy for Acerus as well as have overall responsibility for business development and corporate communications. This appointment brings considerable strength to the company as we look to expand our commercial presence.
On June 30, 2016, Acerus transitioned the U.S. commercialization rights for NATESTO® to Aytu BioScience. Field promotional activities began on July 25, 2016 and early prescription trends in the U.S. are very positive and approaching all-time highs.
In Canada, Acerus has officially launched NATESTO™. The company is prioritizing key specialists and healthcare professionals in the testosterone replacement space and has deployed a sales force across major Canadian provinces. Feedback from healthcare professionals has been overwhelmingly positive which we hope will translate into strong sales in the coming months.
On November 16, 2015, Health Canada granted a Notice of Compliance (NOC) for a third party generic version of ESTRACE®. Lupin-estradiol is now commercially available in Canada and obtained public reimbursement across major provinces as of July 2016.
In April 2016, the company announced that it had acquired the Canadian rights to GYNOFLOR™ from Medinova AG, a Swiss pharmaceutical company. This transaction strengthens our current women’s health portfolio and supports our strategic objective of expanding our presence in this therapeutic space. We continue to progress towards our goal of submitting a regulatory file to Health Canada early next year.
Update on Litigation Initiated by Mr. Eugene Melnyk
As previously disclosed, in response to the motion to strike brought by Acerus and the other co-defendants, Mr. Melnyk advised of his intention to bring a motion to convert the proceedings into a derivative action and to pursue a new action in his personal capacity. As described in our MD&A, the Court scheduled Mr. Melnyk’s motion to convert the action into a derivative action for December 13, 2016. No further steps have occurred or have been scheduled with respect to the personal action. We and the other co-defendants believe that the entirety of the allegations are without merit from a factual or legal basis, and maintain our position regarding the appropriate conduct of the business and management. We and the other co-defendants intend to continue to vigorously defend against these allegations and will be opposing Mr. Melnyk’s motion at the hearing scheduled for December 13, 2016.
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.
Shareholders are reminded of the conference call to discuss the company’s third quarter 2016 results to be held on Wednesday, November 2, 2016 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 Thursday, November, 10, 2016 by dialing 905-694-9451 or 1-800-408-3053, using access code: 1817228#.
Acerus Pharmaceuticals Corporation is a Canadian pharmaceutical company focused on the development, manufacture, marketing and distribution of innovative, branded products that improve the patient experience.
Acerus currently markets two products in Canada: ESTRACE®, a product indicated for the symptomatic relief of menopausal symptoms; and NATESTO™, the first and only testosterone nasal gel for testosterone replacement therapy in adult males diagnosed with hypogonadism. Acerus’ pipeline includes two new innovative products: GYNOFLOR™, an ultra-low dose vaginal estrogen combined with a probiotic, used in the treatment of atrophic vaginitis, restoration of vaginal flora and treatment of certain vaginal infections; and TEFINA™, a ‘use as required’ drug development candidate, aimed at addressing a significant unmet need for women with female sexual dysfunction.
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 refer to the section “Non-IFRS Financial Measures” in our 2015 Annual MD&A available on SEDAR at www.sedar.com.
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, 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 dated March 1, 2016 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.
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Last updated on: 02/11/2016
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