Nuvo Research® Announces 2014 Fourth Quarter & Year-End Results
MISSISSAUGA, ON, Feb. 19, 2015 /PRNewswire/ - 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, 2014.
Fourth Quarter and Recent Corporate Developments:
WF10™
- In January, the Company announced topline results of its Phase 2 clinical trial to investigate the safety and efficacy of WF10 in patients with refractory allergic rhinitis. As expected, the WF10 arm reduced allergy symptoms as evidenced by recorded patient Total Nasal Symptom Scores (TNSS). The placebo arm demonstrated an unexpected reduction in patient TNSS scores that was not only greater than the placebo arm in the Company's 2010 Phase 2 proof-of-concept clinical study, but also lasted much longer. While the WF10 arm and the 2 separate arms that included constituent elements of WF10 all performed better than placebo, the differences were not statistically significant.
The Company is continuing to conduct a detailed review of the data with its external experts and expects to release further information and analysis of the trial, including information on secondary endpoints, when the analysis is completed.
Pennsaid® 2%
- In October, the Company sold its Pennsaid 2% U.S. rights to Horizon Pharma plc (Horizon) for US$45.0 million. The Company will manufacture Pennsaid 2% for Horizon pursuant to a long-term supply agreement. Horizon launched the sale and marketing of Pennsaid 2% in January 2015;
- In November, the Company announced its plans to conduct a Phase 3 clinical trial in Germany of Pennsaid 2% for the treatment of acute pain to support regulatory approval applications for Pennsaid 2% in international jurisdictions. The Company anticipates the trial may commence in Q2 2015, subject to German regulatory approval. The Company anticipates results could be available in Q4 2015; and
- In November, the Company reacquired from Paladin Labs Inc. (Paladin) the rights to market Pennsaid 2% in South America, Central America, South Africa and Israel. As consideration for these rights, the Company provided its authorization to Paladin to market, sell and distribute an authorized generic version of Pennsaid in Canada.
Paladin Loan Repayment
- In October, the Company paid $3.7 million to Paladin in full repayment of its outstanding loan. All obligations of the Company were satisfied and all security was released and discharged.
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.nuvoresearch.com).
| Three months ended |
Year ended |
|||||
| December 31, 2014 |
December 31, 2013 |
Change |
December 31, 2014 |
December 31, 2013 |
|
|
| (Canadian dollars in millions) |
$ |
$ |
$ |
$ |
$ |
$ |
| Revenue |
3.4 |
3.7 |
(0.3) |
13.1 |
18.4 |
(5.3) |
| Operating Expenses |
8.7 |
5.8 |
2.9 |
27.1 |
22.5 |
4.6 |
| Net income (loss) |
(6.1) |
(1.9) |
(4.2) |
38.6 |
(10.4) |
49.0 |
| Per share - basic |
(0.58) |
(0.22) |
3.85 |
(1.17) |
||
| Per share - diluted |
(0.56) |
(0.22) |
3.76 |
(1.17) |
||
Q4 Financial Highlights
Revenue, consisting of product sales, royalties, license fee revenue and research and other contract revenue for the three months ended December 31, 2014 was $3.4 million compared to $3.7 million for the three months ended December 31, 2013. The decrease in revenue was attributable to lower royalty revenue primarily from Pennsaid and Pennsaid 2% net sales in the U.S. market. The decrease in royalty revenue was partially offset by an increase in product sales to Horizon to prepare for their launch of Pennsaid 2% in January 2015. Total revenue for the year was $13.1 million compared to $18.4 million in the comparative period.
Total operating expenses for the three months ended December 31, 2014 increased to $8.7 million versus $5.8 million for the three months ended December 31, 2013. The increase in operating expenses was primarily due to an increase in share-based compensation (SBC) expenses of $2.8 million in the quarter. Total operating expenses for the year ended December 31, 2014 were $27.1 million compared to $22.5 million for the year ended December 31, 2013.
Cost of goods sold (COGS) for the three months ended December 31, 2014 was $1.6 million compared to $1.2 million for the three months ended December 31, 2013. The increase in COGS was primarily related to the increase in product sales to our partners and distributors. For the year ended December 31, 2014, COGS increased to $5.5 million compared to $4.8 million for the year ended December 31, 2013.
Research and development (R&D) expenses increased to $2.8 million for the three months ended December 31, 2014 compared to $1.9 million for the three months ended December 31, 2013. The increase in the quarter was primarily attributable to increased drug development spending related to the Company's Phase 2 clinical trial using WF10 as a treatment for allergic rhinitis. R&D expenses were $8.1 million for the year ended December 31, 2014 compared to $7.0 million for the year ended December 31, 2013.
General and administrative (G&A) expenses increased to $4.3 million for the three months ended December 31, 2014 compared to $2.5 million for the three months ended December 31, 2013. The increase in the quarter was primarily related to increased SBC expense. G&A expenses increased to $13.0 million for the year ended December 31, 2014 compared to $9.5 million for the year ended December 31, 2013.
Other expenses were $0.8 million for the three months ended December 31, 2014 which included an impairment charge of $1.7 million on intangible assets that was partially offset by a $0.5 million foreign exchange gain and a gain of $0.3 million related to the sale of unused land at the Company's manufacturing site in Varennes, Québec. In the comparative period, the Company recognized other income of $0.2 million primarily related to a foreign exchange gain. For the year ended December 31, 2014, other income was $52.6 million, which included the $52.3 million gain on the litigation settlement, compared to other expenses of $6.2 million for the year ended December 31, 2013.
Cash was $48.3 million at December 31, 2014, an increase of $35.7 million compared to $12.6 million at December 31, 2013. In the three months ended December 31 2014, the Company received US$10.0 million (CDN$11.2 million) from its litigation settlement with Mallinckrodt and US$45.0 million (CDN$50.4 million) from the Pennsaid 2% U.S. Asset Sale. In addition, the Company invested $10.0 million in short-term investments. The Company had $58.3 million in cash and short-term investments at December 31, 2014.
Cash provided by operating activities was $7.3 million for the three months ended December 31, 2014 compared to cash used in operating activities of $1.7 million for the three months ended December 31, 2013. The increase in cash used in operations was offset by a significant recovery of non-cash working capital in the quarter from the receipt of the US$10 million litigation settlement proceeds. For the year ended December 31, 2014, cash provided by operating activities was $2.6 million compared to cash used in operating activities of $1.7 million for the year ended December 31, 2013.
Net cash provided by investing activities totaled $33.9 million for the three months ended December 31, 2014 compared to net cash used in investing activities of $40,000 for the three months ended December 31, 2013. Cash provided by investing activities related to the net proceeds of $43.6 million received from the sale of Pennsaid 2% for the U.S. market to Horizon. These proceeds were partially offset by an investment of $10.0 million in short-term investments. For the year ended December 31, 2014, net cash provided by investing activities totaled $33.7 million compared to net cash used in investing activities of $0.2 million for the year ended December 31, 2013.
Net cash used in financing activities totaled $2.6 million for the three months ended December 31, 2014 compared to $0.5 million for the three months ended December 31, 2013. In the fourth quarter of 2014, the Company paid $3.7 million to settle the outstanding loan with Paladin. In addition, the Company received $0.9 million in proceeds from the exercise of warrants. In the comparative period, net cash used in financing activities related to repayments of other obligations. For the year ended December 31, 2014, net cash used in financing activities totaled $0.8 million compared to net cash provided by financing activities of $2.2 million for the year ended December 31, 2013.
The number of common shares outstanding as at December 31, 2014 was 10,774,757.
About Nuvo Research Inc.
Nuvo (TSX:NRI) is a specialty pharmaceutical company with a diverse portfolio of products and technologies. The Company operates two distinct business units: the Topical Products and Technology (TPT) Group and the Immunology Group. The TPT Group currently has four commercial products, a pipeline of topical and transdermal products focusing on pain and dermatology and multiple drug delivery platforms that support the development of patented formulations that can deliver actives into or through the skin. The Immunology Group has two commercial products, a development program for the treatment of allergic rhinitis and an immune system modulation platform that has the potential to support treatments for a broad range of immune system related disorders. For additional company information visit www.nuvoresearch.com.
Forward-Looking Statements
Certain statements in this press 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 general business and economic uncertainties and adverse market conditions as well as other risk factors included in the Company's Annual Information Form dated February 19, 2015 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 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 Research Inc.
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