Nuvo Pharmaceuticals™ Announces 2016 Second Quarter Results

- Q2 net income increases to $2.5 million or $0.22 basic earnings per share -
- Positive cash from operating activities of $2.1 million in the quarter -

- Nuvo to Host Conference Call/Audio Webcast August 11th at 8:00 a.m. ET -

MISSISSAUGA, ON, Aug. 10, 2016 /CNW/ - Nuvo Pharmaceuticals Inc. (Nuvo or the Company) (TSX:NRI), formerly Nuvo Research Inc., a commercial healthcare company with a portfolio of commercial products and pharmaceutical manufacturing capabilities, today announced its financial and operational results for the second quarter ended June 30, 2016.  For further details on the results, please refer to Nuvo's Management, Discussion and Analysis (MD&A) and Condensed Consolidated Interim Financial Statements which are available on the Company's website (www.nuvopharmaceuticals.com).

Second Quarter and Business Highlights (1)

  • Total revenue in the second quarter of 2016 increased to $8.1 million from $7.8 million in the first quarter of 2016 and $3.0 million in the second quarter of 2015;

  • Adjusted EBITDA(2) increased to $3.2 million for the second quarter of 2016 compared to $3.0 million for the first quarter of 2016 and $0.3 million for the second quarter of 2015;

  • Net income from continuing operations for the second quarter of 2016 was $2.5 million compared $1.9 million for the first quarter of 2016 and a net loss from continuing operations of $0.5 million for the second quarter of 2015;

  • Basic earnings per share from continuing operations for the second quarter of 2016 was $0.22 compared to $0.17 for the first quarter of 2016 and $(0.05) for the second quarter of 2015;

  • Cash and short-term investments were $16.0 million at June 30, 2016 compared to $14.0 million at March 31, 2016.

    (1) The financial information presented herein reflects results from continuing operations with Nuvo's previously disclosed segment, Crescita, presented as a discontinued operation.
    (2) Adjusted EBITDA is a non-IFRS financial measure defined by the Company below.

Pennsaid® 2%

  • U.S. prescriptions of Pennsaid 2% increased to 126,000 in the second quarter of 2016 compared to 109,000 prescriptions in the first quarter of 2016 according to IMS Health;

  • Pennsaid 2% product sales in the second quarter of 2016 were consistent at $7.0 million with the first quarter of 2016 compared to $2.1 million in the second quarter of 2015;

  • In July, the Company announced it would conduct a new placebo-controlled, multi-centre Phase 3 trial (Trial) in Germany to study Pennsaid 2% for the treatment of acute ankle sprains. Topline results of the Trial are expected to be available in late Q2 or early Q3 2017. The Trial is subject to approval by German regulatory authorities and the ethical review committee. The Trial will be conducted to support regulatory applications for marketing approval of Pennsaid 2% for the treatment of acute pain in the E.U., Canada and Australia.

Q2 Financial Review

Table of Selected Financial Results
For further details on the results, please refer to Nuvo's Management, Discussion and Analysis (MD&A) and Consolidated Financial Statements which are available on the Company's website (www.nuvopharmaceuticals.com).



Three months ended


Six months ended




June 30,
2016

June 30,
2015

Change

June 30,
2016

June 30,
2015


Change

(from continuing operations, Canadian dollars
in millions, except gross margin)


$

$

$

$

$

$

Product Sales


7.3

2.7

4.6

14.6

6.5

8.1

Gross Margin % on Product Sales


57%

35%

22%

57%

35%

22%

Other Revenue


0.8

0.2

0.6

1.3

0.8

0.5

Total Operating Expenses


5.6

3.5

2.1

11.0

6.1

4.9

Net Income (loss)


2.5

(0.5)

3.0

4.4

1.5

2.9

Adjusted EBITDA


3.2

0.3

2.9

6.2

1.4

4.8

 

Total revenue, consisting of product sales, royalties and research and other contract revenue for the three months ended June 30, 2016 was $8.1 million compared to $3.0 million for the three months ended June 30, 2015.  The increase in revenue relates to a $4.6 million increase in product sales and an increase in research and other contract revenue.  Total revenue for the six months ended June 30, 2016 was $15.9 million compared to $7.3 million for the comparative six-month period.

Total operating expenses for the three months ended June 30, 2016 were $5.6 million, an increase from $3.5 million for the three months ended June 30, 2015.  The increase in the current quarter was primarily due to an increase in cost of goods sold (COGS) due to increased product sales and increased professional and consulting fees the majority of which were for post-closing costs associated with the reorganization of Nuvo into two separate publicly traded companies: Nuvo and Crescita Therapeutics Inc. (Crescita) (Reorganization) and transition services provided by Crescita.  Total operating expenses for the six months ended June 30, 2016 increased to $11.0 million from $6.1 million in the comparative six-month period.

COGS for the three months ended June 30, 2016 was $3.2 million compared to $1.8 million for the three months ended June 30, 2015.  The increase in COGS in the current quarter was associated with increased Pennsaid 2% product sales.  The increase in product sales improved the gross margin on product sales to $4.2 million or 57% for the three months ended June 30, 2016 compared to a gross margin of $1.0 million or 35% for the three months ended June 30, 2015. For the six months ended June 30, 2016, COGS was $6.3 million compared to $4.2 million in the comparative period.  Gross margin on product sales for the six months ended June 30, 2016 increased by $6.1 million to $8.3 million or 57% compared to $2.2 million or 35% for the six months ended June 30, 2015. 

R&D expenses were $0.2 million for the three months ended June 30, 2016 compared to $0.3 million for the three months ended June 30, 2015 and related entirely to Pennsaid 2% Phase 3 development. The decrease in spending related to lower costs as the Company completed and closed off its 2015 Pennsaid 2% trial.  R&D expenses were $0.4 million for the six months ended June 30, 2016 compared to $0.7 million for the six months ended June 30, 2015.

G&A expenses were $2.3 million for the three months ended June 30, 2016 compared to $1.5 million for the three months ended June 30, 2015.  The increase related to $0.6 million of higher professional and consulting fees of which the majority of this amount was for post-closing costs associated with the Reorganization and $0.1 million of transition services provided by Crescita.  Non-cash stock-based compensation (SBC) expenses included in G&A were $0.7 million for the three months ended June 30, 2016 compared to $0.9 million for the three months ended June 30, 2015.  In the current quarter, SBC expenses related primarily to the revaluation of the Company's stock appreciation rights (SARS).  For the three months ended June 30, 2015, SBC was mainly related to the revaluation of the Company's SARS and deferred stock units.  G&A expenses were $4.4 million for the six months ended June 30, 2016 compared to $1.5 million for the six months ended June 30, 2015. 

The Company experienced a net foreign currency loss of $32,000 for the three months ended June 30, 2016 compared to a net foreign currency loss of $13,000 for the three months ended June 30, 2015.  For the six months ended June 30, 2016, the Company experienced a net foreign currency loss of $0.6 million compared to net foreign currency gain of $0.3 million in the comparative period. 

Net income from continuing operations was $2.5 million for the three months ended June 30, 2016 compared to a net loss from continuing operations of $0.5 million for the three months ended June 30, 2015.  In the current quarter, the increase in gross margin was partially offset by an increase in G&A expenses and lower interest income.  Net income from continuing operations was $4.4 million for the six months ended June 30, 2016 compared to $1.5 million for the six months ended June 30, 2015. 

Adjusted EBITDA increased to $3.2 million for the three months ended June 30, 2016 compared to $0.3 million for the three months ended June 30, 2015.  The increase in Adjusted EBITDA was primarily related to an increase in gross margin.  Adjusted EBITDA increased to $6.2 million for the six months ended June 30, 2016 compared to $1.4 million for the six months ended June 30, 2015. 

Cash and short-term investments was $16.0 million as at June 30, 2016 compared to $48.7 million at December 31, 2015.  The decrease in cash is related to the $35.0 million that was transferred to Crescita as part of the Reorganization of the Company and expenses related to the Reorganization.

The number of common shares outstanding as at June 30, 2016 was 11,487,184.

Non-IFRS Financial Measures

Adjusted EBITDA

EBITDA is a non-IFRS financial measure.  The term EBITDA does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies.  The Company defines Adjusted EBITDA as net income from continuing operations before net interest income, plus taxes, depreciation, amortization and SBC.  Management believes Adjusted EBITDA is a useful supplemental measure from which to determine the Company's ability to generate cash available for working capital, capital expenditures and income taxes.

The following is a summary of how EBITDA and Adjusted EBITDA are calculated:




Three Months Ended
June 30


Six Months Ended
June 30



2016

2015


2016

2015

in thousands


$

$


$

$

Net income (loss) from continuing operations


2,491

(507)


4,419

1,518

Add back:








Interest expense


1

-


1

-


Interest income


(23)

(138)


(79)

(287)


Income tax expense


-

-


-

7


Depreciation and amortization


55

73


113

154

EBITDA


2,524

(572)


4,454

1,392

Add back:








SBC


652

880


1,711

30

Adjusted EBITDA


3,176

308


6,165

1,422

 

Management to Host Conference Call/Webcast

Management will host a conference call to discuss the results tomorrow (Thursday, August 11, 2016) at 8:00 a.m. ET.  To participate in the conference call, please dial 1 (888) 231-8191 or (647) 427-7450, reference number 52369025.  Please call in 15 minutes prior to the call to secure a line.  You will be put on hold until the conference call begins.

A taped replay of the conference call will be available two hours after the live conference call and will be accessible until August 18, 2016 by calling 1 (855) 859-2056 or (416) 849-0833, reference number 52369025.

A live audio webcast of the conference call will be available through www.nuvopharmaceuticals.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to hear the webcast.

About Nuvo Pharmaceuticals Inc.

Nuvo (TSX:NRI) is a commercial healthcare company with a portfolio of commercial products and pharmaceutical manufacturing capabilities.  Nuvo has three commercial products that are available in a number of countries; Pennsaid 2%, Pennsaid and the heated lidocaine/tetracaine patch.  Pennsaid 2% is sold in the U.S. by Horizon Pharma plc (NASDAQ: HZNP) and is available for partnering in certain other territories around the world.  Nuvo manufactures Pennsaid for the global market and Pennsaid 2% for the U.S. market at its FDA, Health Canada and EU approved manufacturing facility in Varennes, Québec.  For additional information, please visit www.nuvopharmaceuticals.com.

Forward-Looking Statements
Certain statements in this press release constitute forward-looking information and/or forward-looking statements (collectively, "forward-looking statements") within the meaning of applicable securities laws. Forward-looking statements include, but are not limited to, the future approval, marketing and sale of Pennsaid 2% in certain jurisdictions, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "believe", "should" or "plans", or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by such statements. Factors that could cause such differences include, but are not limited to, general business and economic uncertainties and adverse market conditions; as well as other risk factors included in the Company's Management Information Circular dated December 31, 2015 and the Company's Annual Information Form dated February 17, 2016 under the heading "Risks Factors", and as described from time to time in the reports and disclosure documents filed by the Company with Canadian securities regulatory agencies and commissions. These and other factors should be considered carefully and readers should not place undue reliance on the Company's forward-looking statements. As a result of the foregoing and other factors, no assurance can be given as to any such future results, levels of activity or achievements and neither the Company nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. Although the forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. All forward-looking statements in this press release are qualified by these cautionary statements. The forward-looking statements contained herein are made as of the date of this press release and, except as required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

SOURCE Nuvo Pharmaceuticals Inc.

For further information: Investor Relations, Email: ir@nuvopharm.com

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