Acerus Reports Q2 2016 Results
“Acerus continues to deliver strong revenue growth driven primarily by sales of ESTRACE®. We have also taken steps to strengthen our balance sheet and improve our overall financial picture. We look forward to the second half of the year as Aytu Bioscience begins their promotion of NATESTO™ in the U.S. and our company prepares to launch the product in Canada,” said Tom Rossi, President and Chief Executive Officer of Acerus.
Financial Results for the Three Months Ended June 30, 2016
Revenues for the three months ended June 30, 2016 were $10.6 million compared to $2.7 million in same prior year period. Revenues for the six months ended June 30, 2016 and 2015 were $21.0 million and $6.0 million respectively. The increase is mainly driven by the accelerated recognition of the upfront fees received under the previous NATESTOTM licensing agreement. On a Canadian dollar basis, second quarter 2016 ESTRACE® revenue increased by five per cent over second quarter 2015, and year-to-date 2016 ESTRACE® sales increased by 10 per cent over the same prior year period.
Research and development ("R&D") expenses for the three and six months ended June 30, 2016 were $0.4 million and $0.9 million, respectively, compared to R&D expenses for the three and six months ended June 30, 2015 of $0.7 million and $1.5 million, respectively. The higher expenses in second quarter 2015 reflect product development, professional fees and clinical trial spending related to the U.S. twice-daily dosing clinical trial for NATESTOTM.
Selling, general and administrative expenses (“SG&A”) were $1.5 million and $2.4 million for the three and six months ended June 30, 2016. This compared to $1.7 million and $3.0 million for the three and six month periods in 2015 respectively. The decrease in expenses are chiefly due to lower salary, benefits and stock based compensation expenses due to reduction in headcount and an overall effort to lower operating costs.
Earnings before interest, tax, depreciation and amortization (“EBITDA”) was a loss of $1.1 million and $1.0 million for second quarter 2016 and 2015 respectively. Adjusted EBITDA (see “Non-IFRS Financial Measures” below), was $0.1 million in second quarter 2016 compared to a loss of $0.4 million in the same prior year period. The change is driven by an overall decrease in expenses in second quarter 2016.
On June 30, 2015, the Company had current assets of $17.1 million, of which $5.5 million represented cash, and $9.2 million in current liabilities. Basic and diluted earnings per share were $0.03 and $0.06 for the three and six months ended June 30, 2016.
On June 30, 2016, Acerus transitioned the U.S. commercialization rights for NATESTO™ to Aytu BioScience. In preparation for the product launch, Aytu expanded their commercial team to cover high potential healthcare professionals. Field promotional activities began on July 25, 2016.
In Canada, Acerus is planning to officially launch NATESTO™ in September 2016. The company will prioritize key specialists in the testosterone replacement space and will deploy a sales force across major Canadian provinces.
ESTRACE® continues to deliver strong year-to-date revenue growth of 10 per cent versus the same prior year period. On November 16, 2015, Health Canada granted a Notice of Compliance (NOC) for a third party generic version of ESTRACE®. To our knowledge, Lupin-estradiol is now commercially available in Canada and obtained public reimbursement across major provinces in July 2016.
Update on Litigation Initiated by Mr. Eugene Melnyk
As disclosed in our MD&A, the Court had set a deadline of August 8, 2016 for the delivery of the plaintiff’s motion record to convert the proceeding into a derivative action. Acerus confirms that it has received the plaintiff’s motion record and is currently reviewing it. We and the other co-defendants intend to continue to vigorously defend against these allegations and will provide an update on the matter at the appropriate time.
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 markets ESTRACE® in Canada, a product indicated for the symptomatic relief of menopausal symptoms. NATESTO™, a product utilizing an Acerus licensed nasal gel technology, is the first and only testosterone nasal gel approved in Canada, and available in the United States for replacement therapy in adult males diagnosed with hypogonadism. GYNOFLOR™, a product licensed to Acerus in Canada by Medinova AG and approved in 40 countries worldwide, is an ultra-low dose vaginal estrogen therapy with the addition of lactobacillus, for the treatment of atrophic vaginitis, certain vaginal infections and/or to restore a healthy vaginal environment. TEFINA™, a ‘use as required’ nasal testosterone gel, is an Acerus 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.
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.