Cipher reports Q3 2011 financial results

Toronto Stock Exchange Symbol: DND

MISSISSAUGA, ON, Oct. 26, 2011 /CNW/ - Cipher Pharmaceuticals Inc. (TSX: DND) today announced its financial and operational results for the three months ended September 30, 2011 ("Q3 2011").

Q3 2011 Summary

  • Cipher's U.S. marketing partner, Vertical Pharmaceuticals, launched extended-release tramadol (CIP-TRAMADOL ER) under the name ConZip™.
  • Received Health Canada approval for CIP-TRAMADOL ER.
  • Completed Canadian distribution and supply agreement for CIP-TRAMADOL ER with Medical Futures Inc.; product to be launched in Q1 2012 under the name Durela™.
  • Strengthened balance sheet at quarter end with cash of $9.2 million and no debt.

"With Lipofen® generating steady revenue and our tramadol product now being marketed in the U.S. and set for a Canadian launch in early 2012, we have multiple product revenue streams contributing to our performance for the first time," said Larry Andrews, President and CEO of Cipher. "We are also on track to file Health Canada and FDA submissions this quarter for our high-potential acne product, CIP-ISOTRETINOIN, which is expected to trigger a $1 million milestone payment from our U.S. partner. Our balance sheet remains strong, and we believe the combination of increasing product revenues and future milestone payments from our marketing partners positions us well for future growth."

Financial Review

Revenue in Q3 2011 was $1.1 million, similar to Q3 2010. Prior year Q3 results included $0.5 million non-cash revenue from the original up-front licensing payment on Lipofen®, as well as a milestone payment received in 2009, both of which were being recognized over several quarters, ending in 2010. Results for Q3 2011 include $0.5 million of revenue from extended-release tramadol, representing the Company's first revenue from this product. Royalty revenue from Lipofen® increased by approximately $0.1 million in Q3 2011 compared to Q3 2010.

Research and Development ("R&D") expense for Q3 2011 was $0.5 million, an increase of $0.3 million compared to Q3 2010. The year-over-year increase reflects spending on the CIP-ISOTRETINOIN clinical study, which is now completed.  The reported R&D for Q3 2011 is net of $0.2 million of reimbursed R&D costs related to the CIP-ISOTRETINOIN Phase III clinical study.  The Company does not expect to incur any additional material clinical development costs for CIP-ISOTRETINOIN in the current year.

Operating, General and Administrative ("OG&A") expenses for Q3 2011 were $0.7 million, compared with $0.9 million in Q3 2010.  Net loss in Q3 2011 was $0.2 million ($0.01 per share), the same as in Q3 2010.

The Company's financial position strengthened during the quarter. At September 30, 2011, Cipher had cash of $9.2 million, compared with $8.6 million at June 30, 2011 and continued to have no debt. The Company expects to receive additional milestone payments in the coming quarters from the distribution and supply agreements in place on its current products.

Product Update

Lipofen®
Lipofen® monthly prescriptions remained steady in Q3 2011 relative to the prior quarter. The product continues to be actively promoted by Cipher's U.S. distribution partner, Kowa.

CIP-ISOTRETINOIN
During Q3 2011, Cipher continued to prepare its revised New Drug Application (NDA) for submission to the FDA in Q4 2011. The FDA review under PDUFA is expected to be six months. A regulatory submission to Health Canada is also planned for Q4 2011.

CIP-TRAMADOL ER (ConZip™/Durela™)
In September 2011, Cipher's U.S. marketing partner, Vertical Pharmaceuticals, launched ConZip™ with a sales force of approximately 60 representatives initially. In September 2011, Cipher also received Health Canada approval and, subsequently, completed a distribution and supply agreement under which Cipher has granted Medical Futures the exclusive right to market, sell and distribute CIP-TRAMADOL ER in Canada. Medical Futures plans to launch the product in Q1 2012 under the trade name Durela™. Under the terms of the agreement with Medical Futures, Cipher receives upfront payments totaling CAD$0.3 million with additional payments contingent upon the achievement of certain net sales milestones. In addition, Cipher will receive a double-digit royalty on net sales.

New Products and Out-Licensing Activities
Cipher continues to actively pursue additional product candidates and advance out-licensing discussions for its current products in other territories.

Notice of Conference Call

Cipher will hold a conference call today, October 26, 2011, at 8:30 a.m. (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191 A live audio webcast of the call will be available at www.cipherpharma.com. The webcast will be archived for 90 days.

About Cipher Pharmaceuticals

Cipher Pharmaceuticals is a growing specialty pharmaceutical company that commercializes novel formulations of successful, currently marketed molecules. Cipher's strategy is to in-license clearly differentiated products, advance them through the clinical development and regulatory approval stages, and out-license to international marketing partners. The Company's first product is a fenofibrate formulation marketed in the United States as Lipofen®. Cipher's second product, an extended-release tramadol, is marketed in the United States as ConZip™ and will be marketed in Canada as Durela™. The Company's third product, a novel formulation of the acne treatment isotretinoin, recently completed its final Phase III safety study, with regulatory submissions planned in the United States and Canada in Q4, 2011.

Cipher is listed on the Toronto Stock Exchange under the symbol 'DND' and has approximately 24 million shares outstanding.  For more information, please visit www.cipherpharma.com.

Forward-Looking Statements

Statements made in this news release, other than those concerning historical financial information, may be forward-looking and therefore subject to various risks and uncertainties. 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. 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.  Factors that could cause results to vary include those identified in the Company's Annual Information Form and other filings with Canadian securities regulatory authorities, such as the applicability of patents and proprietary technology; possible patent litigation; regulatory approval of products in the Company's pipeline; changes in government regulation or regulatory approval processes; government and third-party payer reimbursement; dependence on strategic partnerships for product candidates and technologies, marketing and R&D services; meeting projected drug development timelines and goals; intensifying competition; rapid technological change in the pharmaceutical industry; anticipated future losses; the ability to access capital to fund R&D and the ability to attract and retain key personnel. All forward-looking statements presented herein should be considered in conjunction with such filings. Except as required by Canadian securities laws, the Company does not undertake to update any forward-looking statements; such statements speak only as of the date made.

Cipher Pharmaceuticals Inc.

Financial Statements

For the Nine Months Ended September 30, 2011
(Unaudited)

Cipher Pharmaceuticals Inc.            
Balance Sheets            
             
As at September 30, 2011, December 31, 2010 and January 1, 2010    
(in thousands of Canadian dollars - unaudited)        
             
             
    September 30,   December 31,   January 1,
  Note 2011   2010   2010
    $   $   $
ASSETS            
             
Current assets            
  Cash   9,235   10,328   9,006
  Accounts receivable   2,704   1,808   967
  Prepaid expenses and other assets   90   465   457
  Loan receivable   -   -   800
    12,029   12,601   11,230
             
  Property and equipment, net   33   50   86
             
  Intangible assets, net 4 3,169   3,522   3,507
             
    15,231   16,173   14,823
             
LIABILITIES            
             
Current liabilities            
  Accounts payable and accrued liabilities 5 2,613   2,440   1,570
  Current portion of deferred revenue   998   567   1,956
    3,611   3,007   3,526
             
  Deferred revenue   1,720   1,692   329
    5,331   4,699   3,855
             
SHAREHOLDERS' EQUITY            
             
  Share capital 6 50,133   49,977   49,948
  Contributed surplus 3 32,981   32,890   32,585
  Deficit 3 (73,214)   (71,393)   (71,565)
    9,900   11,474   10,968
             
    15,231   16,173   14,823
             
The accompanying notes are an integral part of these unaudited financial statements    

 

Cipher Pharmaceuticals Inc.                
Statements of Operations and Comprehensive Income (Loss)        
                 
For the three and nine month periods ended September 30, 2011 and 2010      
(in thousands of Canadian dollars, except per share data - unaudited)        
                 
                 
    Three months   Nine months
    September 30,   September 30,   September 30,   September 30,
  Note 2011   2010   2011   2010
    $   $   $   $
                 
Revenues                
  Licensing revenue   1,120   1,081   2,522   4,217
                 
Expenses                
  Research and development   468   220   1,593   743
  Operating, general and administrative   659   938   2,433   2,879
  Depreciation of property and equipment     12   29    40
  Amortization of intangible assets   234   176   353   528
  Interest income   (22)   (22)   (65)   (40)
                 
  7 1,347   1,324   4,343   4,150
                 
                 
Income (loss) and comprehensive income (loss) for the period 3 (227)   (243)   (1,821)   67
                 
                 
Basic and diluted earnings (loss) per share 9 (0.01)   (0.01)   (0.08)   0.00
                 
The accompanying notes are an integral part of these unaudited financial statements        
             

Cipher Pharmaceuticals Inc.              
Statements of Changes in Equity              
               
For the nine month periods ended September 30, 2011 and 2010          
(in thousands of Canadian dollars - unaudited)              
               
               
              Total
  Share   Contributed       Shareholders'
  Capital   Surplus   Deficit   Equity
  $   $   $   $
               
               
Balance, January 1, 2011 49,977   32,890   (71,393)   11,474
               
Loss and comprehensive loss for the period -   -   (1,821)   (1,821)
               
Exercise of stock options 90   (43)   -   47
               
Shares issued under the stock purchase plan 66   -   -   66
               
Share-based compensation - stock option plan -   134   -   134
               
               
Balance, September 30, 2011 50,133   32,981   (73,214)   9,900
               
               
Balance, January 1, 2010 49,948   32,585   (71,565)   10,968
               
Income and comprehensive income for the period -   -   67   67
               
Exercise of stock options 29   (14)   -   15
               
Share-based compensation - stock option plan -   246   -   246
               
               
Balance, September 30, 2010 49,977   32,817   (71,498)   11,296
               
The accompanying notes are an integral part of these unaudited financial statements        

 


Cipher Pharmaceuticals Inc.                
Statements of Cash Flows                
                 
For the three and nine month periods ended September 30, 2011 and 2010          
(in thousands of Canadian dollars - unaudited)                
                 
    Three months   Nine months
    September 30,   September 30,   September 30,   September 30,
  Note 2011   2010   2011   2010
    $   $   $   $
                 
Cash provided by (used in)                
                 
Operating activities                
  Income (loss) for the period   (227)   (243)   (1,821)   67
  Items not affecting cash:                
    Depreciation of property and equipment   8   12   29   40
    Amortization of intangible assets 4 234   176   353   528
    Share-based compensation - share purchase plan 6 10   -   10   -
    Share-based compensation - stock option plan   53   76   134   246
    78   21   (1,295)   881
                 
  Changes in non-cash operating items:                
    Accounts receivable   (874)   1,306   (896)   (578)
    Prepaid expenses and other assets   117   60   375   364
    Accounts payable and accrued liabilities   784   (218)   173   996
    Deferred revenue   507   (570)   459   (226)
                 
Net cash generated from (used in) operating activities  612   599   (1,184)   1,437
                 
Investing activities                
  Proceeds from loan receivable   -   -   -   800
  Purchase of property and equipment   (6)   (2)   (12)   (16)
  Acquisition of intangible rights   -   (369)   -   (704)
                 
Net cash generated from (used in) investing activities  (6)   (371)   (12)   80
                 
Financing activities                
  Proceeds from exercise of stock options and from                
  shares issued under the share purchase plan   56   -   103   15
                 
Increase (Decrease) in cash   662   228   (1,093)   1,532
Cash, beginning of period   8,573   10,310   10,328   9,006
                 
Cash, end of period   9,235   10,538   9,235   10,538
                 
The accompanying notes are an integral part of these unaudited financial statements            

Cipher Pharmaceuticals Inc.
Notes to the Interim Financial Statements
September 30, 2011
(in thousands of Canadian dollars, except per share amounts - unaudited)


1 NATURE OF OPERATIONS
Cipher Pharmaceuticals Inc. ("Cipher" or "the Company") is a commercial stage drug development company focused on commercializing novel formulations of successful, currently marketed molecules using advanced drug delivery technologies.  The Company's strategy is to in-license products that incorporate proven drug delivery technologies and advance them through the clinical development and regulatory approval stages, after which the products are out-licensed to international partners. Cipher is incorporated under the Business Corporations Act of Ontario and is located at 5650 Tomken Boulevard, Mississauga, Ontario.


2 BASIS OF PREPARATION AND ADOPTION OF IFRS
The Company prepares its financial statements in accordance with Canadian generally accepted accounting principles as set out in the Handbook of the Canadian Institute of Chartered Accountants ("CICA Handbook").  In 2010, the CICA Handbook was revised to incorporate International Financial Reporting Standards, and requires publicly accountable enterprises to apply such standards effective for years beginning on or after January 1, 2011.  Accordingly, the Company is now reporting on this basis in its interim financial statements.  In these financial statements, the term "Canadian GAAP" refers to Canadian GAAP before the adoption of IFRS.

These interim financial statements have been prepared in accordance with IFRS applicable to the preparaion of interim financial statements, including IAS 34 and IFRS 1.  Subject to certain transition elections disclosed in note 3, the Company has consistently applied the same accounting policies in its opening IFRS balance sheet at January 1, 2010 and throughout all periods presented, as if these policies had been in effect.  Note 3 discloses the impact of the transition to IFRS on the Company's balance sheet, statement of operations and comprehensive loss and statement of cash flows, including the nature and effect of significant changes in accounting policies from those used in the Company's financial statements for the year ended December 31, 2010.

The policies applied in these interim financial statements are based on IFRS issued and outstanding as of October 25, 2011, the date the Board of Directors approved the statements.  Any subsequent changes to IFRS that are given effect in the Company's annual financial statements for the year ending December 31, 2011 could result in restatement of these interim financial statements, including the transition adjustments recognized on the change-over to IFRS.

These interim financial statements should be read in conjunction with the Company's Canadian GAAP annual financial statements for the year ended December 31, 2010 and the Company's interim financial statements for the three month period ended March 31, 2011 prepared in accordance with IFRS applicable to the preparation of interim financial statements.  Note 3 discloses IFRS information for the year ended December 31, 2010 that is material to an understanding of these interim financial statements.


3 TRANSITION TO IFRS
The effect of the Company's transition to IFRS, described in note 2, is summarized in this note as follows:
(i) Transition elections
(ii) Reconciliation of deficit, contributed surplus, comprehensive loss and cash flow as previously reported under Canadian GAAP to IFRS
(iii) Disclosure of additional IFRS information for the year ended December 31, 2010


(i) Transition elections:
IFRS 1 - First-time Adoption of International Financial Reporting Standards - sets forth guidance for the initial adoption of IFRS.  Under IFRS 1, the standards are applied retrospectively at the transitional balance sheet date with all adjustments to assets and liabilities taken to retained earnings unless certain exemptions are applied.  The Company has applied the following exemption to its opening balance sheet dated January 1, 2010:

Share-based payment transactions - the Company has elected not to apply IFRS 2 to awards that vested prior to January 1, 2010.

With regard to the designation of financial assets and liabilities, the Company has elected to re-designate cash from the held-for-trading category to the loans and receivables category.  In addition, as required by IFRS 1, estimates made under IFRS at the date of transition must be consistent with estimates made for the same date under previous GAAP, unless there is evidence that those estimates were in error.

(ii) Reconciliation of deficit, contributed surplus, comprehensive loss and cash flow as previously reported under Canadian GAAP to IFRS:
In preparing its financial statements in accordance with IFRS, the Company has adjusted amounts reported previously in financial statements prepared in accordance with Canadian GAAP.  An explanation of how the transition from previous Canadian GAAP to IFRS has affected the Company's financial position, financial performance and cash flow is set out below.

  Deficit        
      As at As at As at
       Dec 31, 2010  Sept 30, 2010  Jan 1, 2010
           
  As reported under Canadian GAAP    $ (71,192)  $ (71,277)  $ (71,248)
           
  Increase in deficit for:        
    Share-based compensation expense - IFRS 2   (201) (221) (317)
           
  As reported under IFRS    $ (71,393)  $ (71,498)  $ (71,565)
           
  Contributed Surplus        
      As at As at As at
       Dec 31, 2010  Sept 30, 2010  Jan 1, 2010
           
  As reported under Canadian GAAP    $ 32,689  $ 32,596  $ 32,268
           
  Increase in contributed surplus for:        
    Share-based compensation expense - IFRS 2   201 221 317
           
  As reported under IFRS    $ 32,890  $ 32,817  $ 32,585
           
           
  Comprehensive Income (loss)        
      Year Ended Nine Months Ended  Three Months Ended
       Dec 31, 2010  Sept 30, 2010 Sept 30, 2010
           
  As reported under Canadian GAAP    $ 56  $ (29)  $ (260)
           
  Increase in comprehensive income for:        
    Share-based compensation expense - IFRS 2   116 96 17
           
  As reported under IFRS    $ 172  $ 67  $ (243)
           
  Operating, general and administrative expense      
      Year Ended Nine Months Ended Three Months Ended
       Dec 31, 2010  Sept 30, 2010  Sept 30, 2010
           
  As reported under Canadian GAAP    $ 3,895  $ 2,975  $ 955
           
  Decrease in operating, general and administrative expense for:      
    Share-based compensation expense - IFRS 2   (116) (96) (17)
           
  As reported under IFRS    $ 3,779  $ 2,879  $ 938

 

Statements of cash flows - the transition to IFRS had no significant impact on cash flows generated by the Company.

Under IFRS, the Company accrues the cost of employee stock options over the vesting period using the graded method of amortization rather than the straight-line method, which was the Company's policy under Canadian GAAP.  As a result of this change, contributed surplus increased by $317 and deficit increased by $317 as at January 1, 2010.  General and administrative expenses decreased by $96 for the nine months ended September 30, 2010 and by $116 for the year ended December 31, 2010.

(iii) Disclosure of additional IFRS information for the year ended December 31, 2010:
Certain disclosures required in annual IFRS financial statements were not previously disclosed in the Company's Canadian GAAP annual financial statements for the year ended December 31, 2010.  Certain note disclosures in these interim financial statements include December 31, 2010 information as if it had been reported under IFRS.

Compensation of key management - key management includes directors and executives of the Company.  The compensation paid or payable to key management for services is shown below:

      Nine Months Ended Nine Months Ended Year Ended
       Sept 30, 2011  Sept 30, 2010  Dec 31, 2010
           
  Salaries and short-term employee benefits, including bonuses  $ 934  $ 1,095  $ 1,345
  Directors fees   220 217 275
  Share-based compensation expense   120 221 287
           
       $ 1,274  $ 1,533  $ 1,907
           

 4 INTANGIBLE ASSETS

The Company has entered into certain agreements with Galephar Pharmaceutical Research Inc. ("Galephar") for the rights to package, test, obtain regulatory approvals and market certain products in various countries around the world.  In accordance with the terms of the agreements, the Company has acquired these intangible rights through an investment in three separate series of preferred shares of Galephar. The preferred shares are redeemable by the Company from amounts received under the licensing agreements for the products.  The Company may be required to pay additional amounts to Galephar in respect of the CIP-ISOTRETINOIN intangible rights of up to $675 (US$650) if certain future milestones are achieved as defined in the agreement.  These additional payments will be made in the form of Galephar preferred share purchases.  The recoverability of these intangible rights is dependant upon sufficient revenues being generated from the related products currently under development and commercialization.  The Company is currently amortizing the intangible rights related to CIP-ISOTRETINOIN and CIP-TRAMADOL. After product-related expenses are deducted and after the recovery of Cipher's investment in the preferred shares of Galephar, approximately 50% of all milestone and royalty payments received by the Company under the licensing agreements will be paid to Galephar.

The following is a summary of intangible assets as at September 30, 2011:

                     
      CIP-Fenofibrate   CIP-Isotretinoin    CIP-Tramadol   Total
                   
  As at December 31, 2010                
    Cost  $ 2,332  $ 1,579  $ 2,454  $ 6,365
    Accumulated amortization   (2,332)   (511)   -   (2,843)
    Net book value  $ -  $ 1,068  $ 2,454  $ 3,522
                   
  For the nine month period ended September 30, 2011              
    Opening net book value  $ -  $ 1,068  $ 2,454  $ 3,522
    Additions   -   -   -   -
    Amortization   -   (178)   (175)   (353)
    Net book value  $ -  $ 890  $ 2,279  $ 3,169
                   
  As at September 30, 2011                
    Cost  $ 2,332  $ 1,579  $ 2,454  $ 6,365
    Accumulated amortization   (2,332)   (689)   (175)   (3,196)
    Net book value  $ -  $ 890  $ 2,279  $ 3,169

The Company has considered indicators of impairment as of January 1, 2010, December 31, 2010 and September 30, 2011.  No indicators were identified and therefore no impairment test was required.

5 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES      
           
  The following is a summary of accounts payable and accrued liabilities as at September 30, 2011 and December 31, 2010:
           
      As at As at  
      Sept 30, 2011  Dec 31, 2010  
           
  Trade accounts payable   $ 1,297  $ 1,580  
  Accrued liabilities   1,316 860  
           
      $ 2,613  $ 2,440  
           
           
6 SHARE CAPITAL        
           
  Authorized share capital        
  The authorized share capital consists of an unlimited number of preference shares, issuable in series, and an unlimited number of voting common shares.
           
  Issued share capital        
  The following is a summary of the changes in share capital from January 1, 2010 to September 30, 2011:  
           
      Number of    
      common shares Amount  
      (in thousands) $  
           
  Balance outstanding - January 1, 2010   24,055 49,948  
    Options exercised in 2010   25 29  
  Balance outstanding - December 31, 2010   24,080 49,977  
           
    Options exercised in Q2 2011   104 90  
    Shares issued in Q3 2011 under the share purchase plan   79  66  
  Balance outstanding - September 30, 2011   24,263 50,133  

 

Share purchase plan - Effective May 13, 2011, the Company implemented an Employee and Director Share Purchase Plan ("ESPP") to allow employees and directors to share in the growth of the Company through share ownership.  Through the ESPP, employees and directors may contribute amounts from payroll to be used to purchase shares of the Company at a 15% discount from the prevailing trading price.  The shares issued under the ESPP are new shares issued from treasury.  During the three month period ended September 30, 2011, 78,994 shares were issued under the ESPP.  Included in share based compensation expense is $10 associated with the ESPP for the three month period ended September 30, 2011.

Stock option plan
The following is a summary of the changes in the stock options outstanding from January 1, 2010 to September 30, 2011:

      Number of   Weighted average
      options   exercise price
      (in thousands) $
         
  Balance outstanding - January 1, 2010   1,580 2.22
    Granted in 2010   222 1.60
    Exercised in 2010   (25) 0.61
  Balance outstanding - December 31, 2010   1,777 2.17
         
    Granted during the three months ended March 31, 2011 (a)   196 1.16
    Cancelled during the three months ended March 31, 2011   (100) 0.72
    Exercised during the three months ended June 30, 2011 (b)   (104) 0.45
    Expired during the three months ended September 30, 2011   (10) 1.49
  Balance outstanding - September 30, 2011   1,759 2.24

 

At September 30, 2011, 1,231,153 options were fully vested and exercisable (1,054,560 at September 30, 2010).

(a) During the three months ended March 31, 2011, the Company issued 196,000 stock options under the employee and director stock option plan, with an exercise price of $1.16, 25% of which vest on March 11 of each year, commencing in 2012, and expire in 2021.  Total compensation cost for these stock options is estimated to be $198, which will be recognized on a graded basis over the vesting period of the stock options.

The stock options issued during the three months ended March 31, 2011 were valued using the Black-Scholes option pricing model, with the following assumptions.  Expected volatility is based on the Company's historical volatility, while estimated forfeitures are not considered significant.

  Risk-free interest rate 3.27%
  Expected life 10 years
  Expected volatility 90.7%
  Expected dividend Nil

 (b) During the three months ended June 30, 2011, 104,445 stock options were exercised for a total cash consideration of $47
Capital stock increased by $90 representing the cash consideration of $47 and a $43 transfer from contributed surplus.


7 EXPENSES BY NATURE    
       
    Nine Months Ended Nine Months Ended
     Sept 30, 2011  Sept 30, 2010
       
  Employees salaries and directors fees  $ 1,520  $ 1,542
  Share-based compensation 134 245
  Depreciation and amortization 382 568
  Professional fees 644 501
  Contract research 895 -
  Other expenses, net of interest income 768 1,294
     $ 4,343  $ 4,150

 

8 FOREIGN EXCHANGE FORWARD TRANSACTION
The Company utilizes derivative financial instruments in the normal course of its operations as a means to manage risks from fluctuations in foreign exchange.  From time to time, the Company enters into U.S. currency foreign exchange forward contracts in order to hedge future U.S. cash flow surpluses, where the amount and timing of receipt of such funds is reasonably predictable.  In Q3 2011, the Company entered into a foreign exchange forward contract to deliver US$1.5 million at a fixed rate of exchange of $1 US = $1.0285 CDN on November 4, 2011 related to two known U.S. amounts receivable that are expected to be collected in late October 2011 related to product distribution agreements.  The foreign exchange forward contract is considered an effective cash flow hedge and qualifies for hedge accounting.

9 EARNINGS (LOSS) PER SHARE
Earnings (loss) per share is calculated using the weighted average number of shares outstanding.  The weighted average number of shares outstanding for the three and nine month periods ended September 30, 2011 was 24,225,801 and 24,138,236 respectively (for the three and nine month periods ended September 30, 2010 respectively 24,079,878 and 24,068,706).

As the Company had a loss for the three and nine month periods ended September 30, 2011 and for the three month period ended September 30, 2010, basic and diluted loss per share are the same because the exercise of all stock options would have an anti-dilutive effect.  For the prior year, the dilutive impact on earnings per share for the nine month period ended September 30, 2010 is not significant.


 

SOURCE Cipher Pharmaceuticals Inc.

For further information:

Craig Armitage         Larry Andrews
Investor Relations        President and CEO
The Equicom Group        Cipher Pharmaceuticals
(416) 815-0700 ext 278        (905) 602-5840 ext 324
(416) 815-0080 fax        (905) 602-0628 fax
carmitage@equicomgroup.com       landrews@cipherpharma.com

 


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