Cipher reports record financial results for 2012

- Revenue increases 137%, Company records earnings of $0.10 per share -

Toronto Stock Exchange Symbol: DND

MISSISSAUGA, ON, March 1, 2013 /CNW/ - Cipher Pharmaceuticals Inc. (TSX: DND; OTC: CPHMF) today announced its financial and operational results for the three and twelve months ended December 31, 2012.

Fiscal 2012 Highlights

  • Net revenue of $8.5 million, an increase of 137% over 2011; Q4 2012 revenue was a quarterly record $2.9 million.
  • Net revenue from Lipofen® increased 110% to $4.6 million.
  • EBITDA of $3.4 million versus ($1.8) million in 2011.
  • Net income in 2012 was $2.5 million, or $0.10 per share, compared with a loss of $2.3 million, or ($0.10) per share, in 2011; Q4 2012 net income was $1.5 million, or $0.06 per share.
  • Cash balance increased to $15.8 million, compared with $15.1 million as at September 30, 2012 and $9.6 million at December 31, 2011.
  • Cipher's U.S. marketing partner, Ranbaxy Laboratories Inc., launched Absorica in Q4 2012.
  • Cipher received Health Canada approval for Epuris.
  • Acquired the Canadian license and distribution rights for the Betesil® Patch, a novel treatment for inflammatory skin conditions such as plaque psoriasis.

"Our financial performance in 2012 was excellent, reflecting the strong growth of Lipofen and early returns from Absorica, which was introduced in the fourth quarter," said Larry Andrews, President and CEO of Cipher. "With a full-year contribution from Absorica, the Canadian launch of the product later this year, and ongoing growth in our other products, we are well positioned to deliver continued revenue gains in 2013. We are also investing to build commercial sales and marketing capabilities in Canada both to support the Epuris launch as well as future products we plan to in-license for the Canadian market."

Financial Review and Outlook

Net revenue for 2012 was $8.5 million, an increase of 137% compared with $3.6 million in 2011. The year-over-year change reflects the strong performance of Lipofen®, including an increase in product shipments and the achievement of a $1.0 million sales milestone. In addition, 2012 revenue reflects the additions of Absorica (launched in Q4 2012) and Durela® (launched in late Q1 2012). Net revenue from Lipofen® increased to $4.6 million during 2012, compared with $2.4 million in 2011. Net revenue from the Company's extended release tramadol product (ConZip®/Durela®) was $1.4 million in 2012, compared with $0.8 million in 2011. Absoricaä contributed $2.6 million of net revenue, compared with $0.6 million in 2011, reflecting strong product sales in Q4 2012 associated with the U.S. launch.

Research and Development (R&D) expense decreased during 2012 to $1.5 million, compared with $2.2 million in 2011. Operating, General and Administrative ("OG&A") expenses for 2012 were $3.5 million, compared to $3.2 million in 2011.

Net income in 2012 grew to $2.5 million, or $0.10 per share, compared with a net loss of $2.3 million, or ($0.10) per share, in 2011.

In Q4 2012, Cipher recorded net revenue of $2.9 million, compared with $1.0 million in Q4 2011. Net income for the three months ended December 31, 2012 was $1.5 million, or $0.06 per share, compared with a net loss of $0.5 million, or ($0.02) per share, in the same period last year.

The Company's cash position increased at year end. As at December 31, 2012, Cipher had cash and cash equivalents of $15.8 million, compared with $15.1 million as at September 30, 2012 and $9.6 million at December 31, 2011.

For fiscal 2013, Cipher expects continued revenue growth from its currently marketed products and the introduction of Epuris in Canada during the second half of 2013. In particular, the Company expects the full-year contribution of Absorica to be a primary revenue driver.  In 2013, Cipher will be investing in commercial sales and marketing capabilities in Canada. The Company expects an increase in operating expenses of approximately $2.5 million to $3.0 million related to the launch of Epuris in Canada and to support other growth initiatives. In addition to one-time launch costs associated with marketing promotion and market access for Epuris, the Company plans to deploy a 6 to 8 person field sales force in the second half of 2013. The Company expects the revenue growth in 2013 to fund the build of its commercial infrastructure.

Product Update

CIP-ISOTRETINOIN (Absorica/Epuris)
In November 2012, Ranbaxy Laboratories Inc., Cipher's U.S. partner, launched Absorica.  The combination of initial royalty revenue and the load-in of finished product inventory to support this launch resulted in very strong net revenue from the product during Q4 2012.  Revenue from Absorica was $2.6 million in 2012, compared to $0.6 million in 2011.

The product was also approved by Health Canada in Q4 2012 under the trade name Epuris. The Company is preparing to launch Epuris by Q3-2013 and has commenced pre-commercial activities.

Lipofen®
During 2012, Kowa's promotional effort resulted in Lipofen® monthly prescriptions and sales increasing significantly.  Cipher's net revenue increased 110% over 2011 to $4.6 million. During 2012, Cipher achieved another contractual sales goal for the product and as a result, the royalty percentage for Lipofen® increased by three percentage points. This change was retroactive to October 2011 and resulted in a one-time catch-up payment which was recorded in Q3 2012.

CIP-TRAMADOL ER (ConZip®/Durela®)
Cipher's extended-release tramadol was launched in the U.S. by Vertical Pharmaceuticals in September 2011 under the trade name ConZip®. Vertical's dedicated sales force comprises approximately 60 representatives. In Canada, Medical Futures launched the product in March 2012 under the trade name Durela®, with a dedicated sales force comprising 22 representatives. Net revenue from these products was $1.3 million in 2012, compared with $0.8 million in 2011. Subsequent to year end, Vertical expanded its sales force to 75 representatives.

Cipher is actively pursuing marketing partners for CIP-TRAMADOL ER in other territories, including Latin America.

Other Products
In Q3 2012, Cipher obtained exclusive license and distribution rights in Canada to market the Betesil® Patch, a novel, patent-protected, self-adhesive medicated plaster for the treatment of inflammatory skin conditions such as plaque psoriasis. The efficacy and safety of the Betesil® Patch has been established in three successful phase III trials, and the product is currently marketed in several European countries. Cipher is currently in discussions with Health Canada regarding the requirements of a New Drug Submission for the product.

Cipher plans to license in and/or acquire other products, with an emphasis on late-stage to commercial-stage product candidates in specialty markets for Canada, where the Company can leverage its sales and marketing capabilities.

Notice of Conference Call

Cipher will hold a conference call today, March 1, 2013, 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 Inc.

Cipher Pharmaceuticals (TSX: DND; OTC: CPHMF) is a growing specialty pharmaceutical company that commercializes novel formulations of successful, currently marketed molecules. Cipher'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 in Canada as Durela®. Cipher's third product, a novel formulation of the acne treatment isotretinoin, was approved by the FDA in May 2012 and launched in the United States in Q4 2012 as Absorica. The product was also recently approved by Health Canada and Cipher expects to launch it as Epuris in Canada by Q3 2013.

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. These factors include, but are not limited to; the applicability of patents and proprietary technology; possible patent litigation; approval of products in the Company's pipeline; marketing of products; meeting projected drug development timelines and goals; product liability and insurance; dependence on strategic partnerships and licensees; concentration of the Company's revenue; substantial competition and rapid technological change in the pharmaceutical industry; the publication of negative results of clinical trials of the Company's products; the ability to access capital; the ability to attract and retain key personnel; changes in government regulation or regulatory approval processes; dependence on contract research organizations; third party reimbursement; the success of the Company's strategic investments; the achievement of development goals and time frames; the possibility of shareholder dilution; market price volatility of securities; and the existence of significant shareholders. 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 Year Ended December 31, 2012

       
Cipher Pharmaceuticals Inc.      
Balance Sheets      
       
As at December 31, 2012 and December 31, 2011    
(in thousands of Canadian dollars)      
       
  December 31,   December 31,
  2012   2011
  $   $
ASSETS      
       
Current assets      
  Cash and cash equivalents 15,843   9,636
  Accounts receivable 3,185   1,782
  Prepaid expenses and other assets 212   272
  19,240   11,690
       
  Property and equipment, net 25   25
       
  Intangible assets, net 2,690   2,944
       
  21,955   14,659
LIABILITIES      
       
Current liabilities      
  Accounts payable and accrued liabilities 2,808   1,912
  Current portion of deferred revenue 2,392   917
  5,200   2,829
       
  Deferred revenue 4,349   2,330
  9,549   5,159
       
SHAREHOLDERS' EQUITY      
       
  Share capital 50,339   50,172
  Contributed surplus 33,227   33,032
  Deficit (71,160)   (73,704)
  12,406   9,500
       
  21,955   14,659

 


       
       
Cipher Pharmaceuticals Inc.      
Statements of Operations and Comprehensive Income (Loss)    
       
For the years ended December 31, 2012 and 2011    
(in thousands of Canadian dollars, except per share data)    
       
  December 31,   December 31,
  2012   2011
  $   $
       
Revenues      
  Licensing revenue 8,458   3,569
       
Expenses      
  Research and development 1,517   2,205
  Operating, general and administrative 3,527   3,186
  Amortization of intangible assets 1,025   578
  Interest income (155)   (89)
       
  5,914   5,880
       
Income (loss) before income taxes 2,544   (2,311)
       
Provision for (recovery of) income taxes      
  Current 770   -
  Deferred (770)   -
       
Income (loss) and comprehensive income (loss) for the year 2,544   (2,311)
       
Basic and diluted earnings (loss) per share 0.10   (0.10)

 

               
               
Cipher Pharmaceuticals Inc.              
Statements of Changes in Equity              
               
For the years ended December 31, 2012 and 2011            
(in thousands of Canadian dollars)              
               


 
Share
Capital


 
Contributed
Surplus


 
Deficit

 
Total
Shareholders'
Equity
  $   $   $   $
               
Balance, January 1, 2012 50,172   33,032   (73,704)   9,500
               
Income and comprehensive income for the year -   -   2,544   2,544
               
Exercise of stock options 8   (8)   -   -
               
Shares issued under the share purchase plan 159   -   -   159
               
Share-based compensation - stock option plan -   203   -   203
               
Balance, December 31, 2012 50,339   33,227   (71,160)   12,406
               
Balance, January 1, 2011 49,977   32,890   (71,393)   11,474
               
Loss and comprehensive loss for the year -   -   (2,311)   (2,311)
               
Exercise of stock options 90   (43)   -   47
               
Shares issued under the share purchase plan 105   -   -   105
               
Share-based compensation - stock option plan -   185   -   185
               
Balance, December 31, 2011 50,172   33,032   (73,704)   9,500

 

       
       
Cipher Pharmaceuticals Inc.      
Statements of Cash Flows      
       
For the years ended December 31, 2012 and 2011      
(in thousands of Canadian dollars)      
       
  December 31,   December 31,
  2012   2011
  $   $
Cash provided by (used in)      
       
Operating activities      
  Income (loss) for the year 2,544   (2,311)
  Items not affecting cash:      
    Depreciation of property and equipment 20   37
    Amortization of intangible assets 1,025   578
    Share-based compensation - share purchase plan 24   16
    Share-based compensation - stock option plan 203   185
  3,816   (1,495)
       
  Changes in non-cash operating items:      
    Accounts receivable (1,403)   26
    Prepaid expenses and other assets 60   193
    Accounts payable and accrued liabilities 896   (528)
    Deferred revenue 3,494   988
       
Net cash generated from (used in) operating activities  6,863   (816)
       
Investing activities      
  Purchase of property and equipment (20)   (12)
  Acquisition of intangible rights (771)   -
       
Net cash generated from (used in) investing activities  (791)   (12)
       
Financing activities      
  Proceeds from shares issued under the share purchase plan 135   89
  Proceeds from exercise of stock options -   47
       
Net cash generated from (used in) financing activities  135   136
       
Increase (Decrease) in cash 6,207   (692)
Cash, beginning of year 9,636   10,328
       
Cash, end of year 15,843   9,636

 

SOURCE: Cipher Pharmaceuticals Inc.

For further information:

Craig Armitage
Investor Relations
The Equicom Group
(416) 815-0700 ext 278
(416) 815-0080 fax
carmitage@tmxequicom.com

Larry Andrews
President and CEO
Cipher Pharmaceuticals
(905) 602-5840 ext 324
(905) 602-0628 fax
landrews@cipherpharma.com


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