Quantcast

Nuvo Research announces 2009 fourth quarter and year-end financial results

February 19, 2010

MISSISSAUGA, ON, Feb. 19 /PRNewswire-FirstCall/ – Nuvo Research Inc. (TSX: NRI), a Canadian drug development company focused on the research and development of drug products that are delivered into and through the skin using its topical and transdermal drug delivery technologies, and on the development of its immune modulating drug candidate WF10, today announced its financial and operational results for the year and the fourth quarter ended December 31, 2009.

    2009 Key Corporate Developments:

    -   Attained U.S. Food and Drug Administration (FDA) approval to market
        the Company's lead drug Pennsaid(R), a topical non-steroidal anti-
        inflammatory drug (NSAID), in the U.S.;

    -   Entered into a license and development agreement with Mallinckrodt
        Inc., a subsidiary of Covidien plc (NYSE:COV), a leading global
        provider of healthcare products, granting it exclusive rights to
        market and sell Pennsaid, and its follow-on product, Pennsaid
        Plus(R), in the United States;

    -   Awarded the bronze medal in the Science and Medical category of the
        2009 Edison Awards for the Company's High Throughput Experimentation
        Platform for the research and development of topical and transdermal
        drug delivery formulations; and,

    -   Finished the year with $42.1 million in cash and cash equivalents,
        which will be utilized to move Nuvo's internal pipeline of product
        candidates forward, and potentially to acquire complementary late
        stage products to fit within the Company's pipeline.

“In 2009, we laid the groundwork for Nuvo to mature into a profitable, diverse, drug development company with a focus on pain-related therapeutics,” said Dan Chicoine, Chairman and Co-Chief Executive Officer of Nuvo Research. “We are eagerly anticipating Covidien’s launch of Pennsaid in the first half of 2010. We believe that our best-in-class topical NSAID marketed by a partner like Covidien has the potential to generate significant revenue that will allow us to more aggressively invest in our pipeline and build our Company.”

    Financial Results:
    (thousands of Canadian dollars)

    -------------------------------------------------------------------------
                                 THREE MONTHS ENDED          YEAR ENDED
                                     DECEMBER 31,            DECEMBER 31,
                              ----------------------- -----------------------
                                  2009        2008        2009        2008
                              ----------- ----------- ----------- -----------

    Revenue                    $  29,660   $   3,117   $  38,647   $  10,727

    Net income (loss)          $  22,275   $  (2,413)  $  15,018   $ (10,552)
    -------------------------------------------------------------------------

Pennsaid FDA Approval

On November 4, 2009, the FDA approved the New Drug Application for Pennsaid permitting it to be sold and marketed in the United States. This approval significantly impacted the Company’s fourth quarter results. The quarterly revenue includes $27.3 million in licensing fee revenue comprised of milestone and licensing payments received pursuant to the U.S. Licensing Agreement with Covidien. In addition, the Company incurred several costs directly related to the approval including: $0.1 million, representing a 0.5% royalty payable to Paladin under the terms of its current licensing arrangements (“Royalty Payment”) and a $0.5 million milestone payment (“Milestone Payment”) related to proprietary research. The net impact of these approval related items is an increase to net income of $26.7 million.

Operating Results

Revenue consisting of product sales, license fee revenue and research and other contract revenue for the three months ended December 31, 2009 was $29.7 million compared to $3.1 million for the three months ended December 31, 2008, an increase of $26.6 million. The increase was primarily attributable to licensing fee revenue of $27.3 million related to the U.S. Licensing Agreement (see Pennsaid FDA Approval), offset by a $0.6 million reduction in product sales. This decrease in product sales was primarily attributable to lower sales of Pennsaid to Greece as the fourth quarter of 2008 was, and still represents, the highest quarterly sales to Nuvo’s Greek distributor, Vianex. For the year, revenue increased significantly to $38.6 million from $10.7 million. The increase was primarily attributable to the licensing fee revenue earned pursuant to the U.S. Licensing Agreement with Covidien and an increase in Pennsaid product sales.

For the three months ended December 31, 2009, gross margin on product sales decreased to $0.4 million compared to $1.0 million for the three months ended December 31, 2008. The decrease in gross margin was primarily attributable to a decrease in Pennsaid sales and sales of WF10 based products and the impact of higher raw material prices versus a year ago. For the year, gross margin on product sales was $3.3 million compared to $3.2 million for the year ending December 31, 2008. The increase in gross margin was primarily attributable to higher Pennsaid sales, offset partially by higher material costs, the strengthening U.S. dollar and costs related to the capacity expansion at the Company’s manufacturing facility in Varennes, Quebec.

Total operating expenses, excluding foreign currency losses, for the three months ended December 31, 2009 were $5.6 million versus $5.0 million for the three months ended December 31, 2008. The increase in the quarter relates primarily to higher research and development expenses and selling, general and administrative expenses. Total operating expenses, excluding foreign currency losses, for the year ended December 31, 2009 increased slightly to $17.4 million compared to $17.1 million for the year ended December 31, 2008. The increase from 2008 relates to higher selling, general and administrative expenses, offset by lower research and development expenses, stock-based compensation and amortization expense.

Research and development expenses were $3.0 million for the three months ended December 31, 2009, compared with $2.5 million for the three months ended December 31, 2008. The increase in the quarter relates to the Milestone Payment and severance, while other R&D spending was lower as the fourth quarter of 2008 included expenses related to completing studies for the Company’s Complete Response to the Pennsaid Approvable Letter. For the year, research and development was $8.6 million compared to $9.3 million for the year ending December 31, 2008. The decrease for the year relates to reduced spending on Pennsaid and Pennsaid Plus, offset by increases in costs related to research and formulation development activities at the Company’s research labs in San Diego and severance costs.

SG&A expenses increased to $2.2 million for the three months ended December 31, 2009, compared to $1.6 million for the three months ended December 31, 2008. The increase in the quarter relates primarily to the Royalty Payment, compensation expense and severance. For the year ended December 31, 2009, SG&A expenses increased to $7.0 million compared to $5.2 million for the year ended December 31, 2008. The increase was primarily attributable to increased compensation expense, legal fees and the Royalty Payment.

For the three months and year ended December 31, 2009, net income was $22.3 million and $15.0 million compared to net losses of $2.4 million and $10.6 million for the three months and year ended December 31, 2008, respectively. The significant increase in both periods relates to the Pennsaid FDA Approval related items.

Cash and cash equivalents on hand at December 31, 2009 of $42.1 million were $12.6 million more than the $29.5 million at September 30, 2009. The increase was almost entirely attributable to cash received for the FDA Approval Payment, offset partially by other net spending during the quarter.

Cash provided by operating activities of $12.9 million was significantly higher than the cash used in operating activities of $4.2 million for the three-month period ended December 31, 2008 due to receipt of the FDA Approval Payment and a recovery of the Company’s investment in non-cash working capital due primarily to lower accounts receivable and an increase in accounts payable and bonus and severance accruals at December 31, 2009. For the year ended December 31, 2009, cash provided by operating activities was $16.3 million compared to cash used in operating activities of $9.1 million for the year ended December 31, 2008.

Notice of Annual and Special Meeting

Nuvo will be holding its Annual and Special Meeting on Thursday, April 29, 2010 at 9:00 a.m. (EST) at One King West (The Austin Gallery), 1 King Street West, Toronto, Ontario, Canada.

About Nuvo Research Inc.

Nuvo is primarily focused on the research and development of drug products delivered into and through the skin using its topical and transdermal drug delivery technologies, and on the development of its immunomodulating drug candidate WF10. Nuvo’s lead product is Pennsaid, a topical non-steroidal anti-inflammatory drug (NSAID), which is currently sold in Canada and several European countries. Pennsaid was approved for marketing in the U.S. by the FDA on November 4, 2009. The commercial launch of Pennsaid in the U.S. by Covidien is scheduled for the first half of 2010. Nuvo intends to leverage its skin-penetrating technologies to create a portfolio of topical and transdermal products targeting a variety of indications. Nuvo is a publicly traded, Canadian pharmaceutical company headquartered in Mississauga, Ontario, with manufacturing facilities in Varennes, Quebec and Wanzleben, Germany, and research and development centers in San Diego, California and Leipzig, Germany. For more information, please visit www.nuvoresearch.com.

Summary financial statements attached

Forward-Looking Statements

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, 2008. Nuvo disclaims any intention or obligation to update or revise any forward-looking statements whether 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.
                         CONSOLIDATED BALANCE SHEETS

                                                         As at         As at
                                                   December 31,  December 31,
                                                          2009          2008
    (Canadian dollars in thousands)                          $             $
    -------------------------------------------------------------------------
    ASSETS
    CURRENT
    Cash and cash equivalents                           42,102        15,219
    Accounts receivable                                  2,091         2,294
    Inventories                                          2,078         1,393
    Prepaid expenses and other                             445           446
    -------------------------------------------------------------------------
    TOTAL CURRENT ASSETS                                46,716        19,352

    Restricted cash                                          -            93
    Property, plant and equipment                        1,834         1,990
    -------------------------------------------------------------------------
    TOTAL ASSETS                                        48,550        21,435
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT
    Accounts payable and accrued liabilities             4,589         2,736
    Deferred revenue                                     2,241         2,241
    Current portion of long-term debt and
     capital lease obligations                              79           181
    Current portion of debentures                        3,038             -
    -------------------------------------------------------------------------
    TOTAL CURRENT LIABILITIES                            9,947         5,158
    Deferred revenue                                     1,080         3,321
    Long-term debt and capital lease obligations            65           320
    Debentures                                               -         4,774
    -------------------------------------------------------------------------
    TOTAL LIABILITIES                                   11,092        13,573
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Common shares                                      210,086       189,603
    Warrants                                                 -        10,847
    Contributed surplus                                 12,536         6,890
    Accumulated other comprehensive income                 114           114
    Deficit                                           (185,278)     (199,592)
    -------------------------------------------------------------------------
    TOTAL SHAREHOLDERS' EQUITY                          37,458         7,862
    -------------------------------------------------------------------------
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          48,550        21,435
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                             NUVO RESEARCH INC.
    CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

                                                    Year ended    Year ended
                                                   December 31,  December 31,
    (Canadian dollars in thousands,                       2009          2008
     except per share and share figures)                     $             $
    -------------------------------------------------------------------------
    REVENUE
    Product sales                                        8,795         8,008
    Cost of goods sold                                   5,534         4,809
    -------------------------------------------------------------------------
    Gross margin on product sales                        3,261         3,199

    Other revenue
    Licensing fees                                      29,553         2,514
    Research and other contract revenue                    299           205
    -------------------------------------------------------------------------
                                                        33,113         5,918
    -------------------------------------------------------------------------

    EXPENSES
    Research and development                             8,575         9,263
    Selling, general and administrative expenses         6,950         5,204
    Stock-based compensation                               598           803
    Amortization of property, plant, and equipment
     and intangibles and impairment of intangibles         547         1,068
    Foreign currency (gain) loss                           689           (93)
    Interest expense                                       815         1,283
    Interest income                                        (79)         (497)
    -------------------------------------------------------------------------
                                                        18,095        17,031
    -------------------------------------------------------------------------
    Income (loss) from operations                       15,018       (11,113)
    Change in estimate of contingency                        -           860
    Loss on extinguishment of convertible debenture          -          (299)
    -------------------------------------------------------------------------
    NET INCOME (LOSS) AND TOTAL COMPREHENSIVE
     INCOME (LOSS)                                      15,018       (10,552)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net income (loss) per common share
      basic                                              $0.04        $(0.03)
      diluted                                            $0.04        $(0.03)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average number of common shares outstanding
     (millions)
      basic                                              363.4         306.3
      diluted                                            400.2         306.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                       NUVO RESEARCH INC CONSOLIDATED
                           STATEMENTS OF CASH FLOWS

                                                    Year ended    Year ended
                                                   December 31,  December 31,
                                                          2009          2008
    -------------------------------------------------------------------------
    (Canadian dollars in thousands)                          $             $
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net income (loss)                                   15,018       (10,552)
    Items not involving current cash flows:
      Amortization                                         547         1,068
      Deferred revenue recognized                       (2,241)       (1,832)
      Stock-based compensation and payments                598           815
      Deferred stock unit expense                          225             -
      Accretion of interest on debentures                  538           828
      Loss on extinguishment of convertible debenture        -           299
      Change in estimate in contingency                      -          (860)
      Unrealized foreign exchange loss (gain)              488          (214)
      Other                                                (75)           49
    Net change in non-cash working capital               1,161           270
    Deferred proceeds from licensing arrangements            -         1,014
    -------------------------------------------------------------------------
    CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES     16,259        (9,115)
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Acquisition of property, plant and equipment          (391)         (151)
    Proceeds from sale of assets                             -            28
    -------------------------------------------------------------------------
    CASH USED IN INVESTING ACTIVITIES                     (391)         (123)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Issuance of common shares and warrants,
     net of related costs                               11,704         1,115
    Issuance of debentures, net of related costs             -         1,956
    Costs related to the November 2004 Unsecured
     Convertible Debenture amendments                        -           (32)
    Repayments of long-term debt and capital lease
     obligations                                          (243)         (630)
    -------------------------------------------------------------------------
    CASH PROVIDED BY FINANCING ACTIVITIES               11,461         2,409
    -------------------------------------------------------------------------
    Effect of exchange rate changes on cash
     and cash equivalents                                 (446)          257
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net change in cash and cash equivalents
     during the year                                    26,883        (6,572)
    Cash and cash equivalents, beginning of year        15,219        21,791
    -------------------------------------------------------------------------
    CASH AND CASH EQUIVALENTS, END OF YEAR              42,102        15,219
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Interest paid                                          363           256
    -------------------------------------------------------------------------

SOURCE Nuvo Research Inc.


Source: newswire



comments powered by Disqus