Nuvo Research Announces 2013 Fourth Quarter & Year-End Results
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Nuvo Research Inc. has announced its financial and operational results for the fourth quarter and year ended December 31, 2013.
"In 2013 and early 2014, we significantly advanced our three FDA approved commercial products that will contribute to Nuvo revenues. Pennsaid 2% was approved and launched in the U.S., Pliaglis was launched in the E.U. and the U.S. and approved in Brazil and we licensed Synera for the U.S. market," said Dan Chicoine, Nuvo's Chairman and Co-CEO. "We believe our immunotherapy drug WF10 will provide relief to the millions of U.S. allergy sufferers with moderate to severe symptoms and we will be commencing a confirmatory Phase 2 study with results expected in Q4 2014. Also, throughout 2014, we will seek additional global and regional out-licensing partners who have the capability to commercialize our broad pipeline of topical products and technologies."
2013 and Recent Corporate Developments:
Pennsaid and Pennsaid 2%
• The U.S. Food and Drug Administration (FDA) approved the marketing of Pennsaid 2% in the U.S. on January 16, 2014 and it was launched by our U.S licensee on February 10, 2014;
• The Company entered into a supply and distribution agreement with NovaMedica LLC providing it with the exclusive rights to market Pennsaid and Pennsaid 2% in Russia and some of the Community of Independent States; and
• The Company commenced legal action against Mallinckrodt, Inc. (Mallinckrodt) seeking not less than US$100M damages and a declaration that it is entitled to terminate Mallinckrodt's license rights which would result in the U.S. rights to market Pennsaid and Pennsaid 2% reverting to the Company.
Pliaglis
• Galderma Pharma S.A. (Galderma), the Company's global Pliaglis marketing partner, initiated its commercial sale of Pliaglis in the E.U. and U.S.; and
• Galderma received marketing approval in Brazil which entitles the Company to a US$2.0 million milestone payment.
Synera
• The Company out-licensed the U.S. Synera rights to Galen for a US$4.5M upfront payment and royalties and potential milestone payments.
WF10
• The U.S. Patent Office granted a U.S. Patent for the treatment of allergic rhinitis and allergic asthma with WF10; and
• The Company announced plans to commence a confirmatory Phase 2 study in Germany for the treatment of allergic rhinitis with WF10, with study results anticipated in Q4 2014.
Capital Markets
• The Company completed a share consolidation reducing the number of its issued and outstanding common shares to approximately 8.8 million; and
• The Company amended its loan agreement with Paladin Labs Inc. and drew an additional $4.0 million of debt financing.
Financial Results
Revenue, consisting of product sales, royalties, license fee revenue and research and other contract revenue for the three months ended December 31, 2013 was $3.7 million compared to $3.6 million for the three months ended December 31, 2012. This slight increase was attributable to a $0.4 million increase in royalty revenue from Pennsaid in the U.S. and an increase in licensing fees, partially offset by lower product sales in the quarter. Total revenue for the year was $18.4 million compared to $24.7 million for the year ended December 31, 2012.
The Company reported a gross margin on product sales of $0.2 million for the three months ended December 31, 2013 compared to $0.4 million for the three months ended December 31, 2012. The decrease in gross margin on product sales was attributable to lower product sales. For the year, the Company reported a negative gross margin on product sales of $0.3 million compared to positive gross margin of $1.6 million in 2012.
Total operating expenses for the three months ended December 31, 2013 were $4.6 million compared to $4.0 million for the three months ended December 31, 2012. The increase in operating expenses was primarily due to termination costs incurred in the quarter partially offset by cost savings realized from the closure of the Company's office in Salt Lake City the first quarter of 2013. Total operating expenses for the year ended December 31, 2013 were $17.7 million compared to $21.2 million for the year ended December 31, 2012.
Research and development (R&D) expenses increased to $1.9 million for the three months ended December 31, 2013 compared to $1.5 million for the three months ended December 31, 2012. The increase in the quarter primarily related to increased spending on WF10 drug development programs and termination costs. R&D expenses were $7.0 million for the year ended December 31, 2013 compared to $6.8 million for the year ended December 31, 2012.
S&M expenses were $nil for the three months ended December 31, 2013 compared to $0.3 million for the comparative period in 2012. S&M expenses relate entirely to the Company's marketing costs for Synera in the U.S. The Company terminated its S&M efforts subsequent to the sale of Synera to Galen in the third quarter of 2013.
General and administrative (G&A) expenses were $2.5 million for the three months ended December 31, 2013 compared to $2.1 million for the three months ended December 31, 2012. The increase in the quarter primarily related to termination costs. G&A expenses increased to $9.5 million for year ended December 31, 2013 compared to $9.1 million for the year ended December 31, 2012.
Net loss for the three months ended December 31, 2013 was $1.9 million compared to $11.2 million for the three months ended December 31, 2012. The decreased loss was a result of significant transactions in the 2012 comparative period including the impairment charge on intangible assets and goodwill, partially offset by the increased gain on the ZARS Contingent Consideration. Net loss for the year ended December 31, 2013 was $10.4 million compared to $13.6 million for the year ended December 31, 2012.
Cash and cash equivalents were $12.6 million as at December 31, 2013 compared to $12.1 million as at December 31, 2012. The US$2.0 million milestone payment for Pliaglis is not due from Galderma until the first quarter of 2014.
Cash used in operating activities for the three months ended December 31, 2013 was $1.7 million compared to cash provided by operating activities of $1.0 million for the three months ended December 31, 2012. The increase in cash used in operating activities related to a significant recovery of non-cash working capital in the comparative period from the receipt of the US$5.0 million ($5.1 million) milestone payment from Galderma. Cash used in operating activities was $1.7 million for the year ended December 31, 2013 compared to $5.1 million for the year ended December 31, 2012.
Net cash used in financing activities totaled $0.5 million for the three months ended December 31, 2013 compared to $0.4 million for the three months ended December 31, 2012. During both periods, the Company made repayments on finance and other obligations. Net cash provided by financing activities totaled $2.2 million for the year ended December 31, 2013 compared to $2.7 million for the year ended December 31, 2012.
The number of common shares outstanding as at December 31, 2013 was 8,849,619.
Pennsaid U.S.
According to IMS Health, a provider of dispensed prescription data, during the fourth quarter of 2013, U.S. prescriptions of Pennsaid were 31,000 with an average 1.29 bottles of Pennsaid dispensed per script. This represents a decrease of approximately 9% over the number of prescriptions in the third quarter of 2013. For the year, approximately 144,000 Pennsaid prescriptions were dispensed, a decrease of 51% over 2012 and for each prescription, approximately 1.31 bottles of Pennsaid were dispensed.
