TORONTO--(BUSINESS WIRE)--Acerus Pharmaceuticals Corporation (TSX:ASP) today reported its financial results for the three and twelve-month period ended December 31, 2016. Unless otherwise noted, all amounts are in U.S. dollars.
”Despite the introduction of an Estrace® generic, Acerus managed to deliver strong financial results for the year and significantly strengthened its balance sheet," said Tom Rossi, President and Chief Executive Officer. "We are very excited about the new Natesto® partners we have brought on board in both the US and South Korea and look forward to expanding our presence in other countries in the near future. With the addition of Gynoflor™, we have also bolstered our product portfolio in Women’s Health and actively continue to pursue high quality opportunities that will help build our Canadian business.”
Financial Results for the Three and Twelve Months Ended December 31, 2016
Revenue for the fourth quarter 2016 totalled $1.8 million versus $8.1 million for fourth quarter in 2015. Revenues for the year ended December 31, 2016 and 2015 were $24.5 million and $16.9 million respectively, up 45%. The increase in 2016 revenue is mainly driven by the accelerated recognition of the upfront fees received under the previous Natesto® licensing agreement from the fourth quarter 2015 to the end of the second quarter 2016. On a Canadian dollar basis, product sales of Estrace® in the fourth quarter 2016 increased by 11 percent over the third quarter 2016 but decreased by 27 percent over fourth quarter 2015 due to a third party generic obtaining public reimbursement across major provinces in July 2016. On a year over year basis, Estrace® product sales declined by 10 percent.
Research and development ("R&D") expenses for the three and twelve months ended December 31, 2016 were $0.4 million and $1.6 million, respectively, compared to R&D expenses for the three and twelve months ended December 31, 2015 of $0.7 million and $2.9 million, respectively. The lower expenses in the fourth quarter and fiscal 2016 reflect a decrease in product development, professional fees and clinical trial spending. Selling, general and administrative expenses (“SG&A”) were $1.6 million and $5.5 million for the three and twelve months ended December 31, 2016. This compares to $1.3 million and $5.8 million for the three and twelve 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”) (see “Non-IFRS Financial Measures” below) for the three and twelve months ended December 31, 2016 was an income of $0.2 million and a loss of $2.6 million respectively, compared to a loss of $13.7 million and a loss of $12.3 million for the same prior year periods. Adjusted EBITDA (see “Non-IFRS Financial Measures” below) for the three and twelve months ended December 31, 2016 was a loss of $0.5 million and a loss of $0.6 million compared to a loss of less than $0.1 million and a loss of $0.9 million in the same prior year periods.
On December 31, 2016, the Company had current assets of $14.4 million and current liabilities of $8.5 million. The Company had a cash balance of $5.2 million at December 31, 2016, which was a $0.1 million increase from third quarter 2016.
The remaining $4.0 million of the Aytu upfront payment was received in January 2017. The Company used these funds to extinguish its outstanding long-term debt with an affiliate of MidCap Financial LLC.
Basic and diluted earnings per share for the three and twelve months ended December 31, 2016 were $0.00 and $0.05.
In January 2016, Natesto® was approved by Health Canada for commercial sale in Canada with a convenient twice-daily starting dose and it became commercially available in Canada in September 2016. Acerus markets Natesto® through a dedicated sales force to a select group of physicians in the major Canadian provinces. Early prescription results are very encouraging and feedback from healthcare professionals has been overwhelmingly positive.
On June 30, 2016, Acerus transitioned the U.S. commercialization rights for NATESTO® to Aytu BioScience. Field promotional activities began in July 2016 and prescription trends in the U.S. remain positive with strong month over month growth.
In September 2016, the Corporation initiated an open-label study in 100 hypogonadal males in 10 Canadian centers. The study will assess a modified titration methodology, which is simplified and more in line with Canadian Men’s Health Foundation Multidisciplinary Guidelines as endorsed by both the Canadian Urological Association and the Canadian Society of Endocrinology and Metabolism. The study will also capture information on the change in symptoms from baseline and patient preference, for patients having prior experience on testosterone replacement therapy medication. The study is currently expected to report out results in the third quarter of 2017.
On December 15, 2016, we granted exclusives rights to market Natesto® in South Korea to Hyundai Pharm Co., LTD. (“Hyundai”), a South Korean pharmaceutical company. Under the terms of the license, development and supply agreement, Acerus received a non-refundable upfront fee in January 2017. Additionally, the Company is eligible to receive another milestone payment upon regulatory approval of the product in South Korea, as well as a transfer price for supplying the product.
Additionally, the Corporation is pursuing commercial partnerships for Natesto® globally in other jurisdictions.
On November 16, 2015, Health Canada granted a Notice of Compliance (NOC) for a third party generic version of Estrace®, which obtained public reimbursement across major provinces as of July 2016 and is commercially available in Canada. Estrace® has been available on the Canadian market for approximately 40 years and generated net sales of CDN$9.0 million in 2016, representing a 10% decline from 2015 despite the entrance of a generic competitor. The Company is closely monitoring the situation and is implementing initiatives which can potentially minimize further erosion of sales going forward.
On February 28, 2017, the Corporation submitted a New Drug Submission (“NDS”) to Health Canada to obtain marketing approval for Gynoflor™ in Canada. Currently, there are no estriol + lactobacilli products approved on the Canadian market.
Gynoflor™ is an ultra-low dose estrogen (estriol) and probiotic (Lactobacillus acidophilus) combination vaginal tablet used for the treatment of symptoms of vaginal atrophy, for the restoration of vaginal flora following the use of anti-infectives and for the treatment of certain vaginal infections.
Gynoflor™ is approved in 41 countries across Europe, Asia-Pacific, the Middle East, Africa and South America, and it is estimated that up to 32.7 million women worldwide have been treated with the product to date.
Update on Litigation Initiated by Mr. Eugene Melnyk
In April 2016, we were served with a statement of claim filed in the Ontario Superior Court of Justice by Mr. Eugene Melnyk against the Company, as well as its Chairman and President & Chief Executive Officer. On December 21, 2016, the Honourable Mr. Justice Wilton-Siegel of the Ontario Superior Court of Justice heard a motion brought by Mr. Eugene Melnyk for leave to commence a derivative action in the name of the Company against certain of the Company’s directors and officers. The motion was dismissed by Mr. Justice Wilton-Siegel with written reasons to follow. On February 22, 2017, Justice Wilton-Siegel issued his written reasons dismissing Mr. Melnyk's claim with costs.
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 fourth quarter and year end 2016 results to be held on Wednesday, March 8, 2017 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, March 16, 2017 by dialing 905-694-9451 or 1-800-408-3053, using access code: 1212516#.
Acerus Pharmaceuticals Corporation is a fully-integrated, Canadian specialty pharmaceutical company engaged in the development, manufacture, marketing and distribution of innovative, branded products in Men’s and Women’s Health. Acerus’ shares trade on TSX under the symbol ASP. For more information, visit www.aceruspharma.com and follow us on Twitter and LinkedIn.
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 2016 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, including with respect to the ability of Acerus to obtain regulatory approval for GYNOFLOR™, 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 7, 2017 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.