Nuvo Research announces 2013 fourth quarter & year-end results

MISSISSAUGA, ON, Feb. 20, 2014 /CNW/ - Nuvo Research Inc. (TSX: NRI), a 
specialty pharmaceutical company with a diverse portfolio of topical and 
immunology products, today 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.

About Nuvo Research Inc.
Nuvo (TSX:NRI) is a specialty pharmaceutical company focused on improving 
patient's lives by developing and commercializing innovative products that 
address unmet medical needs.  The Company has a diverse portfolio of products 
in the areas of topical pain and immunology.

Nuvo's marketed products include Pennsaid (a topical treatment for the signs 
and symptoms of osteoarthritis of the knee), Pennsaid 2% (a topical treatment 
for the pain of osteoarthritis of the knee), Pliaglis (a topical local 
anesthetic) and the heated lidocaine/tetracaine patch (HLT Patch).  For 
additional Company information visit www.nuvoresearch.com.

Forward-Looking Statements 
Certain statements in this news release constitute forward-looking statements 
within the meaning of applicable securities laws.  Forward-looking statements 
include, but are not limited to, statements concerning the Company's future 
objectives, strategies to achieve those objectives, 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 "outlook", "objective", "may", "will", "expect", "intend", 
"estimate", "anticipate", "believe", "should", "plans" or "continue", 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 the need for additional financing, the current 
economic environment, dependence on sales and marketing partnerships, 
competitive developments, as well as other risk factors included in the 
Company's Annual Information Form dated February 20, 2014 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.  This list is not exhaustive of the factors that may 
impact the Company's forward-looking statements.  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.  The factors underlying current expectations are 
dynamic and subject to change.  Although the forward-looking information 
contained in this news 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.  Certain statements included 
in this news release may be considered "financial outlook" for purposes of 
applicable securities laws, and such financial outlook may not be appropriate 
for purposes other than this news release.  All forward-looking statements in 
this news release are qualified by these cautionary statements.  The 
forward-looking statements contained herein are made as of the date of this 
news 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.
                                    NUVO RESEARCH INC.
                       CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                                          
                                      As at December 31, As at December 31,
                                                    2013               2012
    (Canadian dollars in thousands)                    $                  $
    ASSETS                                                                 
    CURRENT                                                                
    Cash and cash equivalents                     12,621             12,149
    Accounts receivable                            4,189              3,771
    Inventories                                      990              1,156
    Other current assets                             541              1,056
    TOTAL CURRENT ASSETS                          18,341             18,132
                                                                           
    Property, plant and equipment                  1,411              1,614
    Intangible assets                              1,869              8,739
    TOTAL ASSETS                                  21,621             28,485
                                                                           
    LIABILITIES AND EQUITY                                                 
    CURRENT                                                                
    Accounts payable and accrued                   3,925              3,360
    liabilities
    Current portion of finance                     2,114              1,900
    lease and other obligations
    Current portion of deferred                       57                341
    revenue
    TOTAL CURRENT LIABILITIES                      6,096              5,601
    Finance lease and other                        3,327              1,358
    obligations
    Deferred revenue                                   -                 57
    TOTAL LIABILITIES                              9,423              7,016
                                                                           
    EQUITY                                                                 
    Common shares                                229,068            228,705
    Contributed surplus                           13,573             13,495
    Accumulated other comprehensive                1,086                420
    income
    Deficit                                    (231,529)          (221,151)
    TOTAL EQUITY                                  12,198             21,469
    TOTAL LIABILITIES AND EQUITY                  21,621             28,485
                                 NUVO RESEARCH INC.
              CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS  
     
                                    Three Months Ended Twelve Months Ended
                                       December 31,       December 31,
                                       2013       2012     2013       2012
    (Canadian dollars in                  $          $        $          $
    thousands, except per share
    and share figures)
    REVENUE                                                               
    Product sales                     1,327      2,155    4,432      8,936
    Cost of goods sold                1,175      1,770    4,769      7,275
    Gross margin                        152        385    (337)      1,661
                                                                          
    Other revenue                                                         
    Royalties                         1,761      1,278    6,098      8,284
    Licensing fees                      609         85    7,607      7,252
    Research and other contract           4         46      272        178
    revenue
    Net revenue                       2,526      1,794   13,640     17,375
    OPERATING EXPENSES                                                    
    Research and development          1,899      1,539    7,027      6,849
    expenses
    Sales and marketing expenses          -        290      649      4,892
    General and administrative        2,497      2,084    9,467      9,123
    expenses
    Interest expense                    218        131      649        381
    Interest income                    (28)        (1)     (78)       (16)
    Total operating expenses          4,586      4,043   17,714     21,229
    OTHER EXPENSES (INCOME)                                               
    Impairment of intangible              -     11,868    6,358     11,868
    assets and goodwill
    Litigation settlement                 -          -        -      (277)
    Loss (gain) on disposal of           10        (2)       10        (2)
    property, plant and equipment
    Gain on ZARS contingent               -    (2,760)        -    (2,300)
    consideration
    Foreign currency loss (gain)      (161)      (205)    (181)        224
    Net loss before income taxes    (1,909)   (11,150) (10,261)   (13,367)
    Income taxes                         33         22      117        196
    NET LOSS                        (1,942)   (11,172) (10,378)   (13,563)
    Other comprehensive income                                            
    (loss) to be reclassified to
    net income (loss) in
    subsequent periods
    Unrealized gains (losses) on        137        244      666      (544)
    translation of foreign
    operations
    TOTAL COMPREHENSIVE LOSS        (1,805)   (10,928)  (9,712)   (14,107)
    Net loss per common share -                                           
       Basic and diluted            $(0.22)    $(1.27)  $(1.18)    $(1.54)
    Average number of common                                              
    shares outstanding
       (in thousands)
       basic and diluted              8,812      8,794    8,808      8,792
                                      NUVO RESEARCH INC.
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
     
                                     Three months ended Twelve months ended
                                        December 31         December 31
                                        2013       2012     2013       2012
    (Canadian dollars in                   $          $        $          $
    thousands)
    OPERATING ACTIVITIES                                                   
    Net loss                         (1,942)   (11,172) (10,378)   (13,563)
    Items not involving current                                            
    cash flows:
      Impairment of intangible             -     11,868    6,358     11,868
      assets and goodwill
      Gain on ZARS contingent              -    (2,760)        -    (2,300)
      consideration
      Depreciation and                   185        157    1,338        674
      amortization
      Deferred license revenue          (85)       (85)    (341)    (1,092)
      recognized
      Deferred royalty revenue,            -       (69)        -      (385)
      net of royalties earned
      Stock-based compensation           302        158      631        734
      Unrealized foreign exchange      (151)      (182)    (126)        133
      loss (gain)
      Inventory write-downs               24        123       44        123
      Loss (gain) on disposal of          10        (2)       10        (2)
      property, plant and
      equipment
      Interest and accretion of           20         17       68         72
      long-term other obligations
      Other                              (3)        (3)     (16)         11
                                     (1,640)    (1,950)  (2,412)    (3,727)
    Net change in non-cash working      (14)      2,997      677    (1,348)
    capital
    CASH PROVIDED (USED) IN          (1,654)      1,047  (1,735)    (5,075)
    OPERATING ACTIVITIES
    INVESTING ACTIVITIES                                                   
    Acquisition of property, Plant      (40)      (111)    (229)      (149)
    and equipment
    Proceeds on disposal of                -          -        -          8
    property, plant and equipment
    CASH USED IN INVESTING              (40)      (111)    (229)      (141)
    ACTIVITIES
    FINANCING ACTIVITIES                                                   
    Proceeds from other                    -          -    4,000      4,000
    obligations
    Repayment of finance lease and     (536)      (486)  (1,882)    (1,347)
    other obligations
    Issuance of common shares             77         39       77         61
    CASH PROVIDED BY (USED IN)         (459)      (447)    2,195      2,714
    FINANCING ACTIVITIES
    Effect of exchange rate
    changes on cash and cash
    equivalents                          128        170      241       (73)
    Net change in cash and cash      (2,025)        659      472    (2,575)
    equivalents during the period
    Cash and cash equivalents,        14,646     11,490   12,149     14,724
    beginning of period
    CASH AND CASH EQUIVALENTS, END    12,621     12,149   12,621     12,149
    OF PERIOD
                                                                           
    Interest paid                        204        117      551        269
    Interest received                     29          -       69         21
    Income taxes paid                     28         22      105        182



SOURCE  Nuvo Research Inc. 
Christina Cameron 
Director, Investor Relations & Corporate Communications 
Email:ccameron@nuvoresearch.com 
Tel: +1 (905) 673-3617 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/February2014/20/c6116.html 
CO: Nuvo Research Inc.
ST: Ontario
NI: MTC ERN  
-0- Feb/20/2014 22:00 GMT
 
 
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