Cipher Pharmaceuticals Provides Corporate Update and Preliminary Q1 2018 Revenue Results

Monday, April 23, 2018 Drug News
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MISSISSAUGA, ON, April 23, 2018 /CNW/ - Cipher Pharmaceuticals Inc. (TSX:CPH) ("Cipher" or "the Company") today provided

a strategic and operational update and preliminary revenue results for the three months ended March 31, 2018. The Company will issue its complete Q1 2018 financial results on May 10, 2018.

Strategic & Operational Update

For the fiscal year to date, Cipher announced four transactions that demonstrate meaningful progress in the execution of its growth strategy to assemble a diversified portfolio of prescription products that will deliver reliable growth for shareholders.

Canadian Commercial Operation In Canada, Cipher is focused on organic growth of its currently marketed products, as well as the in-licensing and/or acquisition of new products that are highly novel and meet an unmet need in the market.

Highlights include:

  • In January 2018, Cipher launched OZANEX™, a novel bactericidal topical antibiotic cream indicated for impetigo in patients aged 2 months and older. The early response from Health Care Professionals has been encouraging and Cipher has already achieved extensive coverage on private healthcare plans.
  • In February 2018, Cipher acquired the exclusive Canadian rights from Synergy Pharmaceuticals Inc. to TRULANCE®, an FDA-approved once-daily tablet for adults with chronic idiopathic constipation and irritable bowel syndrome with constipation. Cipher expects to file a New Drug Submission (NDS) with Health Canada in the second half of 2018.
  • In April 2018, Cipher acquired the exclusive Canadian rights to A-101 40%, a topical solution indicated for the treatment of raised seborrheic keratoses. A-101 40% was approved by the FDA in December 2017 and will be marketed by Aclaris Therapeutics, Inc. in the U.S. under the tradename Eskata. Cipher plans to file its NDS with Health Canada in the second half of 2018.
  • In March 2018, Cipher announced a definitive arrangement agreement to acquire the Canadian business portfolio of Cardiome Pharma Corp., which includes two commercial products (Brinavess® and Aggrastat®) and two late-stage pipeline products (Xydalba and Trevyent®) used in the hospital vertical. Cardiome's shareholder meeting to approve the transaction is scheduled for May 9, 2018. The Company expects this acquisition to close in Q2 2018.
  • Cipher's lead dermatology product in Canada, Epuris®, showed continued prescription and market share growth in Q1 2018. The product achieved market share of more than 31% during the quarter, compared with 26% for the same period last year.

"We are encouraged by the strong growth of our Canadian commercial business in Q1, and we have several catalysts – Epuris, Actikerall and the recently launched OZANEX – to support this continued organic growth," said Robert Tessarolo, President and CEO of Cipher. "Moreover, with our business development activity to date in 2018, we expect to add six products to our Canadian commercial portfolio in 2018 and 2019, which will provide additional revenue, revenue diversification and growth avenues in new therapeutic categories."

Mr. Tessarolo added: "Fiscal 2017 was a record year for Cipher's Absorica revenues based on our partner's successful promotional campaign; however, as we discussed in our Q4 earnings, we were cautious heading into 2018 because of the decreased prescriptions in December. Absorica prescriptions have stabilized and market share has leveled off over the past several weeks. This remains a differentiated product in the market and a flagship brand for our partner."

Global Licensing BusinessCipher continues to evaluate opportunities to augment its licensing revenue base by out-licensing current products in new regions. In January 2018, Cipher completed an agreement with Italmex Pharma S.A. to market, sell and distribute Cipher's isotretinoin product in Mexico.

Preliminary Q1 2018 Revenue Results

For Q1 2018, Cipher is expecting:

  • Total net revenue of approximately $4.2 million to $4.8 million, compared with $8.1 million in Q1 2017;
  • Licensing revenue of approximately $2.6 million to $2.9 million, compared with $6.9 million in Q1 2017; and
  • Product revenue of approximately $1.6 million to $1.9 million, compared with $1.3 million in Q1 2017.

Total net revenue in Q1 2018 was impacted by a decrease in licencing revenue from Absorica®, which represents the largest portion of the Company's total revenue.

Licensing revenue from Absorica increased by 57% in 2017 based largely on a promotional campaign implemented by Cipher's marketing partner in March 2017. Following changes to this program at the end of November 2017, market share and prescriptions for Absorica decreased as expected in December 2017 and Q1 2018. Absorica's market share, which peaked at 22% during 2017, ended March 2018 at approximately 12%, similar to market share levels experienced prior to the promotional campaign.

Cipher earns royalty revenue based on its partners' shipments to distributors.  In addition to the impact of reduced prescriptions in Q1 2018, royalty revenue from Absorica was affected by a reduction in shipments from Cipher's partner to their distributors as inventory levels were adjusted to reflect the previously mentioned decrease in demand.

About Cipher Pharmaceuticals Inc.Cipher (TSX:CPH) is a specialty pharmaceutical company with a robust and diversified portfolio of commercial and early to late-stage products. Cipher acquires products that fulfill unmet medical needs, manages the required clinical development and regulatory approval process, and markets those products either directly in Canada or indirectly through partners in Canada, the U.S., and South America. Cipher is focused on a three-pronged growth strategy – including acquisitions, in-licensing, and selective investments in drug development – to assemble a broad portfolio of prescription products that serve unmet medical needs. For more information, visit www.cipherpharma.com.

Forward-Looking Statements This document includes forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the Securities Act (Ontario) and other provincial securities law in Canada and U.S. securities laws. These forward-looking statements include, among others, statements with respect to our objectives, goals and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, expectations, anticipations, estimates and intentions. The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective", "hope" and "continue" (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. We caution readers not to place undue reliance on these statements as a number of important factors, many of which are beyond our control, could cause our actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, our ability to enter into in-licensing, development, manufacturing and marketing and distribution agreements with other pharmaceutical companies and keep such agreements in effect; our dependency on a limited number of products; integration difficulties and other risks if we acquire or in-license technologies or product candidates; reliance on third parties for the marketing of certain products; the product approval process is highly unpredictable; the timing of completion of clinical trials; reliance on third parties to manufacture our products and events outside of our control that could adversely impact the ability of our manufacturing partners to supply products to meet our demands; we may be subject to future product liability claims; unexpected product safety or efficacy concerns may arise; we generate license revenue from a limited number of distribution and supply agreements; the pharmaceutical industry is highly competitive; requirements for additional capital to fund future operations; dependence on key managerial personnel and external collaborators; no assurance that we will receive regulatory approvals in the U.S., Canada or any other jurisdictions; current uncertainty surrounding health care regulation in the United States; certain of our products are subject to regulation as controlled substances; limitations on reimbursement in the healthcare industry; limited reimbursement for products by government authorities and third-party payor policies; various laws pertaining to health care fraud and abuse; reliance on the success of strategic investments and partnerships; the publication of negative results of clinical trials; unpredictable development goals and projected time frames; rising insurance costs; ability to enforce covenants not to compete; risks associated with the industry in which it operates; we may be unsuccessful in evaluating material risks involved in completed and future acquisitions; we may be unable to identify, acquire or integrate acquisition targets successfully; inability to meet covenants under our long term debt arrangement; compliance with privacy and security regulation; our policies regarding returns, allowances and chargebacks may reduce revenues; certain current and future regulations could restrict our activities; additional regulatory burden and controls over financial reporting; reliance on third parties to perform certain services; general commercial litigation, class actions, other litigation claims and regulatory actions; the effects of our delisting from the NASDAQ Global Market (the "NASDAQ") and deregistration of our Common Shares under the U.S. Securities Exchange Act of 1934, as amended (the "U.S. Exchange Act"); the difficulty for shareholders to realize in the United States upon judgments of U.S. courts predicated upon civil liability of the Company and its directors and officers who are not residents of the United States; certain adverse tax rules applicable to U.S. holders of our Common Shares if we are a passive foreign investment company for U.S. federal income tax purposes; the potential violation of intellectual property rights of third parties; our efforts to obtain, protect or enforce our patents and other intellectual property rights related to our products; changes in U.S., Canadian or foreign patent laws; litigation in the pharmaceutical industry concerning the manufacture and supply of novel and generic versions of existing drugs; inability to protect our trademarks from infringement; shareholders may be further diluted if we issue securities to raise capital; volatility of our share price; the actions of a significant shareholder; we do not currently intend to pay dividends; our operating results may fluctuate significantly; and our debt obligations will have priority over the Common Shares in the event of a liquidation, dissolution or winding up.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When reviewing our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward-looking statements, may be found in the "Risk Factors" section of this AIF and in our Management's Discussion and Analysis of Operating Results and Financial Position for the year ended December 31, 2017, and elsewhere in our filings with Canadian securities regulators. Except as required by Canadian securities law, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf; such statements speak only as of the date made. The forward-looking statements included herein are expressly qualified in their entirety by this cautionary language.

SOURCE Cipher Pharmaceuticals Inc.



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