Cipher Pharmaceuticals Inc. (TSX: DND) today announced its financial and operational results for the three and nine months ended September 30, 2009.
Q3 2009 Summary --------------- - Total revenue increased 59% to $1.1 million, compared with $0.7 million in Q3 2008. - Continued steady growth of Lipofen(R) prescriptions. - Commenced CIP-ISOTRETINOIN Phase III safety trial. - A strong balance sheet at quarter end with cash of $9.3 million and no debt. - Subsequent to quarter end, strengthened Board of Directors with the addition of Dr. William Claypool.
"The third quarter saw us deliver a solid year-over-year increase in revenue from Lipofen(R) and enroll our first patient in the phase III safety trial for CIP-ISOTRETINOIN, reaching an important clinical milestone for this product after significant trial planning and preparation," said Larry Andrews, President and CEO of Cipher. "Patient enrollment in the CIP-ISOTRETINOIN trial is progressing well and we are also encouraged by Kowa's increased sales and promotion efforts for Lipofen(R), which should drive continued prescription growth for the product."
Financial Review ----------------
Total revenue in Q3 2009 was $1.1 million, an increase of 59% compared with $0.7 million in Q3 2008, driven mainly by the continued market penetration of Lipofen(R) as Kowa expands its sales force.
Gross Research and Development ("R&D") expenditures for Q3 2009 were $0.5 million, compared with ($0.2) million in Q3 2008. The reported R&D amount of $0.2 million for Q3 2009 is net of reimbursements of $0.3 million from Ranbaxy related to the CIP-ISOTRETINOIN clinical study. Operating, General and Administrative ("OG&A") expenses for Q3 2009 were $1.2 million, compared with $0.9 million in Q3 2008. The year-over-year change reflects the increased level of activity related to pursuing in-licensing and out-licensing opportunities. The loss for the three months ended September 30, 2009 was $0.5 million ($0.02 per basic and diluted share), compared with net income of $0.2 million ($0.01 per basic and diluted share) in Q3 2008. A number of one-time items, including the recovery of $0.4 million in tax credits, contributed to net income in Q3 2008.
For the year-to-date period, revenue was $2.3 million, compared with $1.1 million in the same period last year. The loss for the first nine months of 2009 was $2.1 million ($0.09 per basic and diluted share), compared with $2.7 million ($0.11 per basic and diluted share) in the first nine months of 2008.
The Company's financial position remained solid at quarter end. As at September 30, 2009, Cipher had cash of $9.3 million, compared with $9.9 million as at December 31, 2008 and $9.6 million at the end of Q2 2009.
Product Update --------------
During Q3 2009, Lipofen(R) monthly prescriptions showed steady growth, and Cipher expects this trend to continue as Kowa increases penetration of the primary care physicians in its targeted regions and expands its sales force. Since the Kowa acquisition, the number of sales reps has increased from approximately 65 to 180 currently, with further increases planned in 2010.
During Q3 2009, the Company commenced its Phase III safety trial for CIP-ISOTRETINOIN under a Special Protocol Assessment ("SPA") with the U.S. Food and Drug Administration ("FDA"). The 800-patient study is a double-blind, randomized trial comparing CIP-ISOTRETINOIN to an FDA-approved, commercially available isotretinoin product. The study is being conducted in the U.S. and Canada over an 18-month period. As previously disclosed, the Company's U.S. marketing partner, Ranbaxy Pharmaceuticals, is reimbursing Cipher for all costs associated with the clinical studies required to obtain FDA approval, up to a predetermined cap. Any additional development costs associated with initial FDA approval will be shared equally.
During Q2 2008, Cipher submitted a revised NDA to the FDA for CIP-TRAMADOL ER, the Company's extended-release formulation of tramadol. Cipher's revised NDA received tentative FDA approval in February 2009. In Q3 2009, the Company filed a Paragraph IV Certification with the FDA, which states that the relevant patent listed in the FDA's Orange Book for Ultram(R) ER is invalid, unenforceable, and/or will not be infringed by the manufacture or sale of Cipher's drug product. Subsequent to quarter end, the Company announced that Purdue Pharma Products L.P. and Napp Pharmaceutical Group Ltd. have filed a complaint against Cipher in the United States District Court for the Eastern District of Virginia, for alleged infringement of two U.S. patents. Under the applicable provisions of the Hatch-Waxman Act, this patent challenge can delay final FDA approval of Cipher's NDA by 30 months, or until the patent challenge is resolved, whichever occurs first.
Cipher management believes that this type of litigation is common and considers it to be within the ordinary course of business. Cipher intends to vigorously defend itself against the suit and is confident in the strength of its application.