Cipher reports third quarter fiscal 2007 results
"We reached important company milestones in the third quarter with thesigning of our first commercial distribution agreement in the U.S. market and,toward the end of the quarter, the launch of Lipofen in the large and growingU.S. fenofibrate market," said Larry Andrews, President and CEO of Cipher."These successes validate our core business strategy and our transition to acommercial, specialty pharmaceutical company. During the quarter, we alsocontinued our dialogue and correspondence with the FDA on CIP-ISOTRETINOIN andCIP-TRAMADOL ER as we work diligently to advance these two products throughthe remaining milestones on the path to final approval."
In the third quarter of 2007, the Company recorded total revenue of$149,000, compared with nil in the same period last year. Revenue for thethird quarter of 2007 includes an amortized portion of the US$2 millionup-front licensing fee from ProEthic. Cipher received the initial payment ofUS$1 million in the third quarter of 2007 and expects to receive the secondpayment of US$1 million in March 2008. Revenue is presented on a net basis andreflects the elements of the ProEthic licensing and distribution agreement, aswell as direct product-related expenses and amounts due to Galephar, theCompany's technology partner.
Research and development (R&D) expenses for the third quarter of 2007 were$0.2 million, compared with $1.4 million in the third quarter of 2006. Thedecrease in R&D spending reflects the advanced stage of development of theCompany's current products. Operating, general and administrative (OG&A)expenses for the third quarter of 2007 were $1.1 million, compared with $0.9million in the same period last year. The increase in OG&A is due to highercompensation expense resulting from an increase in personnel to supportcurrent growth plans, as well as stock-based compensation expense. Net lossfor the three months ended September 30, 2007 was $1.1 million ($0.04 perbasic and diluted share), compared with a net loss of $2.0 million ($0.08 perbasic and diluted share) in the same period last year.
As at September 30, 2007, Cipher had cash and cash equivalents of $12.1million, compared with $12.1 million as at June 30, 2007 and $15.1 million asat December 31, 2006.
In July 2007, Cipher entered into a licensing and distribution agreementwith ProEthic Pharmaceuticals under which ProEthic was granted the exclusiveright to market, sell and distribute Lipofen in the United States. Theagreement with ProEthic is for a period of ten years and they have the rightto extend the term for additional two-year periods. In late September 2007,ProEthic launched Lipofen 150 mg and 50 mg capsules in the U.S. market withthe full effort of its sales and marketing teams. Lipofen is the lead productfor ProEthic as it seeks to build its presence in the important primary carespace.
During the second quarter of 2007, Cipher received a second approvableletter from the FDA pertaining to its CIP-ISOTRETINOIN NDA. In the letter, theFDA indicated that Cipher's application is approvable subject to theresolution of two remaining issues. In addition to one question related tochemistry, manufacturing and controls, which the Company has responded to, theFDA has requested that Cipher provide additional clinical safety data. TheCompany appealed the position taken by the FDA in its approvable letter usingthe formal dispute resolution process. Cipher submitted its appeal and metwith the FDA on July 11, 2007. In August 2007, the Company received a responsefrom the FDA to its request for formal dispute resolution. In the letter t
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