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.
Director, Investor Relations & Corporate Communications
Tel: +1 (905) 673-3617
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CO: Nuvo Research Inc. ST: Ontario NI: MTC ERN
-0- Feb/20/2014 22:00 GMT