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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