Nuvo Research announces 2012 third quarter results
MISSISSAUGA, ON, Oct. 31, 2012 /PRNewswire/ – Nuvo Research Inc. (TSX: NRI), a
specialty pharmaceutical company dedicated to building a portfolio of
products for the topical treatment of pain and the development of its
immune modulating drug candidate WF10, today announced its financial
and operational results for the third quarter ended September 30, 2012.
Third Quarter and Recent Corporate Developments:
-- The Company was informed by Galderma that it has received U.S. Food and Drug Administration (FDA) approval for the Pliaglis supplemental New Drug Application (sNDA); -- The Company was advised by Galderma that it has received marketing licenses in 8 countries bringing the total to 10 countries, the first 3 licenses entitled Nuvo to the full US$6.0 million of milestone payments; -- The New Drug Application (NDA) for Pennsaid 2% was accepted by the FDA with a Prescription Drug User Fee Act (PDUFA) date of March 4, 2013; -- The patent relating to a method of using Pennsaid was issued by the U.S. Patent Office and filed in the FDA Orange Book; -- The Company and Mallinckrodt Inc. (Mallinckrodt), the pharmaceuticals business of Covidien received Paragraph IV certification notices from three companies advising that they have filed an Abbreviated New Drug Application (ANDA) with the FDA for a generic version of Pennsaid; -- The Pennsaid 2% Patent was issued by the U.S. Patent Office and submitted for filing in the FDA Orange Book; -- The U.S. Patent Office reinstated a patent related to the Synera Patch with an expiry date of July 7, 2020 which was filed in the FDA Orange Book; -- The Development Bank of Saxony (SAB) in Germany will provide Nuvo with up to EUR4.4 million of additional funding for the further development of its improved reformulated version of WF10; and -- A new patent relating to a method of treating allergic asthma, allergic rhinitis and atopic dermatitis using a chlorite-based formulation such as WF10, expiring in 2029, was issued by the U.S. Patent Office.
“We continue to make progress with all of our product franchises,” said
Dan Chicoine, Nuvo’s Chairman and CEO. “The FDA approval of Pliaglis,
the FDA filing and acceptance of the NDA for Pennsaid 2% with a PDUFA
date in March 2013, the issued patents for Pennsaid 2% in the U.S. and
the additional patent protection for Synera – move us forward in our
strategy of building a specialty pharmaceutical company focused on
According to IMS Health, a provider of dispensed prescription data,
during the third quarter of 2012, U.S. prescriptions of Pennsaid were
56,000 with an average 1.32 bottles of Pennsaid dispensed per script.
This represents a decrease of approximately 41% from the second quarter
of 2012 during which there was a substantial increase in Pennsaid
prescriptions due to a supply disruption of its main competitor product
Revenue, consisting of product sales, royalties, license fee revenue and
research and other contract revenue for the three months ended
September 30, 2012 decreased to $3.5 million compared to $4.0 million
for the three months ended September 30, 2011. In the current quarter,
a decrease in product sales primarily related to a significant quantity
of Pennsaid samples that were sold in the U.S. in the comparative
quarter was only partially offset by an increase in licensing fees
primarily related to US$1.0 million in milestone revenue earned by the
Company upon the marketing approval of Pliaglis in the third European
country. Total revenue for the nine months ended September 30, 2012
was $21.1 million compared to $11.5 million for the nine months ended
September 30, 2011.
For the three months ended September 30, 2012 and September 30, 2011,
the Company reported a negative gross margin on product sales of $0.3
million. The negative gross margin in the current quarter was
attributable to the significant decrease in Pennsaid product sales and
a planned 4 week shutdown of the Pennsaid manufacturing facility during
the quarter to prepare for the U.S. launch of Pennsaid 2% if approved
by the FDA. For the nine months ended September 30, 2012, gross margin
on product sales were $1.3 million compared to $1.2 million for the
nine months ended September 30, 2011.
Total operating expenses for the three and nine months ended September
30, 2012 were $5.2 million and $17.2 million compared to $4.2 million
and $13.4 million for the three and nine months ended September 30,
2011. The increase in operating expenses relates primarily to sales
and marketing (S&M) costs for the Company’s launch of Synera in the
R&D expenses were $1.7 million for the three months ended September 30,
2012 and compared to $1.5 million for the three months ended September
30, 2011. For the quarter, the increase in costs is associated with
ongoing development costs for Synera. R&D expenses for the nine months
ended September 30, 2012 were $5.3 million compared to $5.6 million for
the nine months ended September 30, 2011.
S&M expenses were $1.2 million and $4.6 million for the three and nine
months ended September 30, 2012 compared to $nil for the three and nine
months ended September 30, 2011. S&M expenses were entirely
attributable to the U.S. launch of Synera. In the quarter, the Company
refocused its resources on large national accounts such as dialysis
centers, infusion centers and blood diagnostic laboratories. To
execute this strategy the Company terminated its agreement with its
contract sales organization. The Pain Group’s internal commercial team
will continue to focus on the national accounts and the key
interventional pain doctors that use Synera.
G&A expenses were $2.2 million for the three months ended September 30,
2012 compared to $2.8 million for the three months ended September 30,
2011. The decrease is related to lower ZARS infrastructure costs. G&A
expenses decreased to $7.0 million for the nine months ended September
30, 2012 compared to $7.9 million for the nine months ended September
Net loss was $3.2 million for the three months ended September 30, 2012
compared to $2.2 million for the three months ended September 30, 2011.
The increase in net loss was attributable to the milestone revenue
earned from Galderma partially offset by higher operating expenses.
Net loss for the nine months ended September 30, 2012 was $1.9 million
compared to $5.1 million for the nine months ended September 30, 2011.
Cash and cash equivalents were $11.5 million as at September 30, 2012
compared to $14.7 million as at December 31, 2011.
Cash used in operating activities was $1.7 million for the three months
ended September 30, 2012 compared to $3.2 million for the three months
ended September 30, 2011. The decrease mainly related to a recovery of
non-cash working capital of $1.2 million in the three months ended
September 30, 2012 compared to an investment in working capital of $1.0
million in the three months ended September 30, 2011. For the nine
months ended September 30, 2012, cash used in operating activities was
$6.1 million for the nine months ended September 30, 2012 versus $8.6
million for the nine months ended September 30, 2011.
Cash used by financing activities was $0.7 million in the three months
ended September 30, 2012, an increase from $1,000 for the three months
ended September 30, 2011, due to repayments of long-term obligations.
During the year, the Company received loan proceeds of $4.0 million
from Paladin which represents the first tranche of an $8.0 million
loan. Net cash provided by financing activities was $3.2 million in
the nine months ended September 30, 2012 compared to cash used by
financing activities of $3.1 million in the nine months ended September
30, 2011. In the comparative period, the Company paid the entire
balance of acquired bank debt from the ZARS acquisition that was
payable on the acquisition date.
The number of common shares outstanding as at September 30, 2012 was
Management to Host Conference Call
Management will host a conference call to discuss the first quarter
results on Thursday, November 1, 2012 at 8:30 a.m. ET. Following
management’s presentation, there will be a question and answer session,
at which time the operator will direct participants to the correct
procedure for submitting questions. To participate in the conference
call, please dial 647-427-7450 or 1-888-231-8191. Please call in 15
minutes prior to the call to secure a line. You will be put on hold
until the conference call begins.
A taped replay of the conference call will be available two hours after
the live conference call and will be accessible until Thursday,
November 8, 2012 by calling 416-849-0833 or 1-855-859-2056, reference
A live audio webcast of the conference call will be available through www.nuvoresearch.com. Please connect at least 15 minutes prior to the conference call to
ensure adequate time for any software download that may be required to
hear the webcast.
About Nuvo Research Inc.
Nuvo Research is a publicly traded, Canadian specialty pharmaceutical
company, headquartered in Mississauga, Ontario. The Company is
building a portfolio of products for the treatment of pain through
internal research and development and by in-licensing and acquisition.
The Company’s product portfolio includes Pennsaid(®), Pliaglis(®) and Synera(®). Pennsaid, a topical nonsteroidal anti-inflammatory drug (NSAID), is
used to treat the signs and symptoms of osteoarthritis of the knee(s).
Pennsaid is sold in the United States by Mallinckrodt Inc., the
Pharmaceuticals business of Covidien, in Canada by Paladin Labs Inc.
and in several European countries. Pliaglis is a topical local
anesthetic cream which provides topical local analgesia for superficial
dermatological procedures. The Company has licensed worldwide
marketing rights to Pliaglis to Galderma Pharma S.A., a global
pharmaceutical company specialized in dermatology. Synera is a topical
patch that combines lidocaine, tetracaine and heat, approved in the
United States to provide local dermal analgesia for superficial venous
access and superficial dermatological procedures and in Europe, for
surface anaesthesia of normal intact skin. Nuvo currently markets
Synera in the United States and its licensing partner, Eurocept
International B.V., has initiated a pan-European launch of Synera
(under the name Rapydan(®)) in several European countries. The Company is also developing the
compound WF10, for the treatment of immune related diseases.
This document contains forward-looking statements. Some forward-looking
statements may be identified by words like “expects”, “anticipates”,
“plans”, “intends”, “indicates” or similar expressions. These
forward-looking statements, by their nature, necessarily involve risks
and uncertainties that could cause actual results to differ materially
from those contemplated by the forward-looking statements. Nuvo
considers the assumptions on which these forward-looking statements are
based to be reasonable at the time they were prepared, but caution that
these assumptions regarding future events, many of which are beyond the
control of the Company, may ultimately prove to be incorrect. Factors
and risks, which could cause actual results to differ materially from
current expectations, are discussed in the Annual Report, as well as in
Nuvo’s Annual Information Form for the year ended December 31, 2011.
Nuvo disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information or
future events, except as required by law. For additional information on
risks and uncertainties relating to these forward looking statements,
investors should consult the Company’s ongoing quarterly filings,
annual report and Annual Information Form and other filings found on
SEDAR at www.sedar.com.
NUVO RESEARCH INC. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION As at September 30, As at December 31, Unaudited 2012 2011 (Canadian dollars in $ $ thousands) ASSETS CURRENT Cash and cash equivalents 11,490 14,724 Accounts receivable 7,702 3,700 Inventories 1,871 1,844 Other current assets 1,534 1,307 TOTAL CURRENT ASSETS 22,597 21,575 Property, plant and equipment 1,615 1,960 Intangible assets 16,121 16,821 Goodwill 4,349 4,498 TOTAL ASSETS 44,682 44,854 LIABILITIES AND EQUITY CURRENT Accounts payable and accrued 5,446 5,208 liabilities Current portion of deferred 410 1,494 revenue Current portion of finance 2,047 55 lease and other obligations TOTAL CURRENT LIABILITIES 7,903 6,757 Deferred revenue 142 398 Finance lease and other 1,677 489 obligations TOTAL LIABILITIES 9,722 7,644 EQUITY Common shares 228,469 228,306 Contributed surplus 16,711 16,405 Accumulated other 176 964 comprehensive income Deficit (210,396) (208,465) TOTAL EQUITY 34,960 37,210 TOTAL LIABILITIES AND EQUITY 44,682 44,854
NUVO RESEARCH INC. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS Three Months Ended Nine Months Ended Unaudited September 30, September 30, 2012 2011 2012 2011 (Canadian dollars in thousands, except per share and share figures) $ $ $ $ REVENUE Product sales 1,012 1,758 6,781 6,337 Cost of goods sold 1,327 2,026 5,505 5,104 Gross margin on product sales (315) (268) 1,276 1,233 Other revenue Royalties 1,356 1,504 7,006 3,887 Licensing fees 1,099 588 7,167 1,096 Research and other contract 33 107 132 223 revenue 2,173 1,931 15,581 6,439 OPERATING EXPENSES Research and development 1,653 1,488 5,310 5,614 expenses Sales and marketing expenses 1,208 - 4,602 - General and administrative 2,233 2,772 7,039 7,926 expenses Interest expense 150 7 250 9 Interest income (5) (32) (15) (131) 5,239 4,235 17,186 13,418 OTHER EXPENSES (INCOME) Litigation settlement (277) - (277) - Gain on ZARS contingent - - - (1,770) consideration Foreign currency loss (gain) 319 (131) 429 (157) Net loss before income taxes (3,108) (2,173) (1,757) (5,052) Income taxes 48 30 174 74 NET LOSS (3,156) (2,203) (1,931) (5,126) Other comprehensive income (loss) Unrealized gains (losses) on (786) 1,710 (788) 1,728 translation of foreign operations TOTAL COMPREHENSIVE LOSS (3,942) (493) (2,719) (3,398) Net loss attributable to: Owners of the parent (3,156) (1,747) (1,931) (4,093) Non-controlling interest - (456) - (1,033) (3,156) (2,203) (1,931) (5,126) Total comprehensive loss attributable to: Owners of the parent (3,942) (41) (2,719) (2,278) Non-controlling interest - (452) - (1,120) (3,942) (493) (2,719) (3,398) Net loss per common share - (0.006) (0.004) (0.003) (0.011) basic and diluted Average number of common shares outstanding (in millions) Basic and 565.7 518.4 565.5 470.1 diluted
NUVO RESEARCH INC. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS Three Months Ended Nine Months Ended Unaudited September 30, September 30, 2012 2011 2012 2011 (Canadian dollars in thousands) $ $ $ $ OPERATING ACTIVITIES Net loss (3,156) (2,203) (1,931) (5,126) Items not involving current cash flows: Gain on ZARS contingent - - - (1,770) consideration Depreciation and amortization 154 279 517 595 Deferred license revenue (85) (588) (1,007) (1,096) recognized Deferred royalty revenue, net (218) (93) (316) (261) of royalties earned Stock-based compensation 87 128 576 324 Unrealized foreign exchange 336 254 315 197 loss Interest and accretion of (42) - 55 - long-term other obligations Other (2) 5 14 13 (2,926) (2,218) (1,777) (7,124) Net change in non-cash working 1,227 (985) (4,345) (1,503) capital CASH USED IN OPERATING (1,699) (3,203) (6,122) (8,627) ACTIVITIES INVESTING ACTIVITIES Acquisition of ZARS Pharma Inc. - - - 1,477 Share issuance fees on - (67) - (67) acquisition of ZARS Pharma, Inc. Proceeds on disposal of 8 - 8 - property, plant and equipment Acquisition of property, plant (23) (34) (38) (114) and equipment CASH PROVIDED BY (USED IN) (15) (101) (30) 1,296 INVESTING ACTIVITIES FINANCING ACTIVITIES Proceeds from other obligations - - 4,000 - Repayment of other obligations (691) - (859) (3,022) Issuance of common shares - - 22 29 Repayments of finance lease (1) (1) (2) (62) obligations CASH PROVIDED BY (USED IN) (692) (1) 3,161 (3,055) FINANCING ACTIVITIES Effect of exchange rate changes (200) 118 (243) 155 on cash and cash equivalents Net change in cash and cash (2,606) (3,187) (3,234) (10,231) equivalents during the period Cash and cash equivalents, 14,096 21,225 14,724 28,269 beginning of period CASH AND CASH EQUIVALENTS, END 11,490 18,038 11,490 18,038 OF PERIOD Interest paid 152 1 152 4 Interest received 6 36 21 135 Income taxes paid 54 21 160 63
SOURCE Nuvo Research Inc.