MISSISSAUGA, ON, April 30 /CNW/ - Nuvo Research Inc. (TSX: NRI), a
Canadian drug development company focused on the research and development of
drug products that are delivered to and through the skin using its topical and
transdermal drug delivery technologies, today announced its financial and
operational results for the quarter ended March 31, 2009.Recent Corporate Developments:
- Successfully completed all Pennsaid(R) studies necessary to resubmit
the application for Pennsaid approval to the United States Food and
Drug Administration (FDA). The FDA confirmed that it has accepted
this filing as a complete response to its Approvable Letter for
Pennsaid dated December 28, 2006 and pursuant to the Prescription
Drug User Fee Act provided the Company with a date of August 5, 2009
(the PDUFA Date) by which the FDA intends to advise Nuvo on
Pennsaid's approvability
- Received net proceeds of $3.7 million from the exercise of warrants
under the warrant incentive program
- Was awarded the bronze medal in the Science and Medical category of
the 2009 Edison Awards for the Company's High Throughput
Experimentation platform
- Was advised that PAIN(R) , the world's leading publication on pain
research and treatments and the official journal of the International
Association for the Study of Pain will be publishing an article
outlining the successful results of the Company's 112 efficacy trial
in its June 2009 issue"With our PDUFA Date rapidly approaching, we remain highly optimistic
about Pennsaid's potential for approval and are continuing discussions with
potential United States licensing partners," said Henrich Guntermann,
President and Chief Executive Officer of Nuvo Research.Financial Results:
(thousands of Canadian dollars)
Three months Three months
ended ended
March 31, March 31,
2009 2008
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Revenue $ 3,047 $ 2,236
Net loss $ (2,868) $ (2,271)
-------------------------------------------------------------------------Revenue, consisting of product sales, license fee revenue, and research
and other contract revenue, for the three months ended March 31, 2009
increased 36% to $3.0 million compared with $2.2 million for the three months
ended March 31, 2008. The increase was attributable to many factors including
a $0.3 million increase in Pennsaid product sales, the recognition of
additional licensing fee revenue and research revenue earned on a
collaboration agreement with a Fortune Global 500 company that develops and
markets skin care products.
Gross margin on product sales was $1.2 million for the three months ended
March 31, 2009 compared to $0.9 million for the comparable quarter in 2008.
The increase in gross margin is primarily attributable to an 18% increase in
Pennsaid product sales, a 38% increase in WF10 based product sales and
significant improvements and efficiencies achieved in the Pennsaid
manufacturing process, partially offset by price increases in the raw
materials used to compound and package Pennsaid and the stronger U.S. dollar.
The overall gross margin percentage was 52% in 2009 versus 45% in 2008.
Total operating expenses, excluding foreign exchange currency gains for
the three-month period ended March 31, 2009 increased to $4.8 million versus
$3.7 million for the three months ended March 31, 2008. The $1.1 million
increase in operating expenses is due to higher research and development
expenses, increases in selling, general and administrative costs and higher
net interest expense, partially offset by lower amortization charges and
stock-based compensation.
Research and development expenses increased by 39% to $2.9 million for
the three months ended March 31, 2009 compared to $2.1 million for the three
months ended March 31, 2008. In the quarter, the Company's expenditures
related to the completion of the studies and preparation of all data and
documents necessary for filing the Company's Complete Response to the Pennsaid
Approvable Letter that occurred on February 4, 2009. The FDA accepted the
resubmission for review and set August 5, 2009 as the PDUFA Date, the date by
which they will advise Nuvo of their decision regarding Pennsaid's
approvability. The Company also incurred expenditures for preclinical
development of the Company's early stage pipeline candidates and costs
relating to the recently expanded research and formulation development
activities in San Diego.
SG&A expenses increased 21% to $1.4 million for the three months ended
March 31, 2009 compared to $1.1 million for the three months ended March 31,
2008. The increase in the quarter was attributable to costs incurred from the
ongoing licensing activities in the U.S. and $0.1 million recognized under the
new Deferred Share Unit Plan, a share-based compensation plan for non-employee
directors under which directors are allotted a portion of and can elect to
receive a portion of their cash compensation in deferred share units.
For the three months ended March 31, 2009, net loss was $2.9 million, an
increase over the $2.3 million net loss for the three months ended March 31,
2008. For the period, higher research and development costs to complete the
Pennsaid resubmission, a reduced foreign exchange gain, higher SG&A costs and
higher net interest expense more than offset the increased gross margin
generated from higher product sales and operating efficiencies.
Cash and cash equivalents on hand at March 31, 2009 of $14.2 million were
only $1.0 million less than the $15.2 million on hand at December 31, 2008.
The decrease is attributable to cash used in operations, partially offset by
$2.2 million in proceeds received from the 2009 Warrant Incentive Program.
Cash used in operating activities of $3.2 million was higher than the
$2.9 million used in the three-month comparative period ended March 31, 2008.
The $0.3 million increase in cash used in operations was primarily due to the
larger loss in the quarter offset somewhat by a lower investment in non-cash
working capital.
Cash provided by financing activities totaled $2.1 million for the three
months ended March 31, 2009, compared with net cash used in financing
activities of $44,000 for the three months ended March 31, 2008. During the
current quarter, the Company received $2.2 million in net proceeds from the
2009 Warrant Incentive Program. These proceeds were slightly offset by
scheduled debt repayments of $62,000 during the quarter versus $44,000 in
2008.
Detailed financial statements and the MD&A are available at
www.nuvoresearch.com or www.sedar.com.
Notice of Annual and Special Meeting
Nuvo will be holding its Annual and Special Meeting of Shareholders on
Thursday, April 30, 2009 at 9:00 a.m. (EST) at the Gallery of the Toronto
Stock Exchange (TSX) Broadcast & Conference Centre, The Exchange Tower, 130
King Street West, Toronto, Ontario, Canada.
About Pennsaid
Pennsaid, the Company's lead product, is used to treat the pain and
symptoms associated with knee osteoarthritis. Pennsaid combines a transdermal
carrier (containing dimethyl sulfoxide, popularly known as "DMSO") with
diclofenac sodium, a leading non-steroidal anti-inflammatory drug ("NSAID"),
and delivers the active drug through the skin directly to the site of pain.
While, conventional oral NSAIDs expose patients to potentially serious
systemic side effects such as gastrointestinal bleeding and cardiovascular
risks, Nuvo's clinical trials suggest that some of these systemic side effects
occur less frequently with topically applied Pennsaid. There are more than 27
million Americans suffering from osteoarthritis and the United States market
for this condition is estimated at US$4 billion annually.
About Nuvo Research Inc.
Nuvo is focused on the research and development of drug products
delivered to and through the skin using its topical and transdermal drug
delivery technologies. Nuvo's lead product is Pennsaid, a topical NSAID used
for the treatment of osteoarthritis of the knee. Nuvo intends to leverage its
skin-penetrating technologies to create a portfolio of topical and transdermal
products targeting a variety of indications.
Nuvo is a publicly traded, Canadian pharmaceutical company headquartered
in Mississauga, Ontario, with manufacturing facilities in Varennes, Québec and
Wanzleben, Germany and a research and development center in San Diego,
California. For more information, please visit www.nuvoresearch.com.
These forward-looking statements, by their nature, necessarily involve
risks and uncertainties that could cause actual results to differ materially
from those contemplated by the forward-looking statements. The Company
considers the assumptions on which these forward-looking statements are based
to be reasonable at the time they were prepared, but caution that these
assumptions regarding future events, many of which are beyond the control of
the Company, may ultimately prove to be incorrect. Factors and risks, which
could cause actual results to differ materially from current expectations, are
discussed in the annual report, as well as in the Company's Annual Information
Form for the year ended December 31, 2008. The Company disclaims any intention
or obligation to update or revise any forward-looking statements whether a
result of new information or future events, except as required by law. For
additional information on risks and uncertainties relating to these
forward-looking statements, investors should consult the Company's ongoing
quarterly filings, annual report and Annual Information Form and other filings
found on SEDAR at www.sedar.com.NUVO RESEARCH INC.
CONSOLIDATED BALANCE SHEETS
As at As at
March 31, December 31,
2009 2008
Unaudited Audited
(thousands of Canadian dollars) $ $
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ASSETS
CURRENT
Cash and cash equivalents 14,176 15,219
Accounts receivable 1,673 2,294
Inventories 1,968 1,393
Prepaid expenses and other 501 446
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TOTAL CURRENT ASSETS 18,318 19,352
Restricted cash 92 93
Property, plant and equipment 1,896 1,990
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TOTAL ASSETS 20,306 21,435
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities 2,517 2,736
Deferred revenue 2,264 2,241
Current portion of long-term debt and
capital lease obligations 178 181
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TOTAL CURRENT LIABILITIES 4,959 5,158
Deferred revenue 2,761 3,321
Long-term debt and capital lease
obligations 263 320
Debentures 4,922 4,774
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TOTAL LIABILITIES 12,905 13,573
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SHAREHOLDERS' EQUITY
Common shares 193,830 189,603
Warrants 8,895 10,847
Contributed surplus 7,022 6,890
Accumulated other comprehensive income 114 114
Deficit (202,460) (199,592)
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TOTAL SHAREHOLDERS' EQUITY 7,401 7,862
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 20,306 21,435
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NUVO RESEARCH INC.
CONSOLIDATED STATEMENTS OF LOSS, COMPREHENSIVE LOSS AND DEFICIT
Three-months ended
Unaudited March 31, March 31,
(thousands of Canadian dollars except 2009 2008
per share and share amounts) $ $
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REVENUE
Product sales 2,383 1,975
Cost of goods sold 1,134 1,084
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Gross margin on product sales 1,249 891
Other revenue
Licensing fees 560 250
Research and other contract revenue 104 11
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1,913 1,152
EXPENSES
Research and development 2,934 2,104
Selling, general and administrative expenses 1,363 1,124
Stock-based compensation 132 150
Amortization of property, plant, and
equipment and intangibles 149 205
Foreign currency gain (9) (279)
Interest expense 246 303
Interest income (34) (184)
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4,781 3,423
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NET LOSS AND TOTAL COMPREHENSIVE LOSS (2,868) (2,271)
Deficit, beginning of period (199,592) (189,040)
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DEFICIT, END OF PERIOD (202,460) (191,311)
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Net loss per common share - basic and diluted $ (0.01) $ (0.01)
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Average number of common shares outstanding
- basic and diluted (millions) 319.6 299.5
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NUVO RESEARCH INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three-months ended
March 31, March 31,
Unaudited 2009 2008
(thousands of Canadian dollars) $ $
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OPERATING ACTIVITIES
Net loss (2,868) (2,271)
Items not involving current cash flows:
Amortization 149 205
Deferred revenue recognized (560) (261)
Stock-based compensation and payments 132 150
Deferred stock unit expense 94 -
Accretion of interest on debentures 148 207
Other 16 (352)
Net change in non-cash working capital (300) (626)
Advances on research contracts 23 -
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CASH USED IN OPERATING ACTIVITIES (3,166) (2,948)
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INVESTING ACTIVITIES
Acquisition of property, plant and equipment (55) (27)
Proceeds from the sale of assets - 28
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CASH USED IN INVESTING ACTIVITIES (55) 1
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FINANCING ACTIVITIES
Issuance of shares, net of related costs 2,196 -
Repayments of long-term debt and capital
lease obligations (62) (44)
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CASH PROVIDED BY FINANCING ACTIVITIES 2,134 (44)
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Effect of exchange rate changes on cash
and cash equivalents 44 261
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Net change in cash and cash equivalents
during the period (1,043) (2,730)
Cash and cash equivalents, beginning of period 15,219 21,791
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CASH AND CASH EQUIVALENTS, END OF PERIOD 14,176 19,061
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Interest paid 95 26
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For further information: Media and Investor Relations, Adam Peeler, The
Equicom Group Inc., Tel: (416) 815-0700 x225, email: apeeler@equicomgroup.com
