Cipher Pharmaceuticals Reports Strong Third Quarter Results, Highlighted by USD$1.09 in Cash Per Share

(All figures are presented in U.S. dollars)

• EPS increased YoY by $0.08 to $0.11 in the third quarter;
• Strengthened balance sheet and demonstrated continued positive cash flow, ending Q3 with $27.5 million in cash and Adjusted EBITDA² increased 19% to $2.6 million;
• EBITDA² increased 67% to $2.5 million.

MISSISSAUGA, ON, Nov. 10, 2022 /CNW/ - Cipher Pharmaceuticals Inc. (TSX: CPH) ("Cipher" or "the Company") today announced its financial and operating results for the three and nine month periods ended September 30, 2022. Unless otherwise noted, all figures are in U.S. dollars.

Q3 2022 Financial Highlights
(All figures in U.S. dollars, compared to Q3 2021, unless otherwise noted)

• Net income in the quarter increased by $1.9 million to $2.7 million
• EBITDA² increased 67% to $2.5 million in Q3 2022
• As at September 30, 2022, the Company had $27.5 million in cash or $1.09 per share
• Repurchased and cancelled $0.3 million under the Normal Course Issuer Bid at an average price of $2.49 Canadian dollars

Management Commentary

Craig Mull, Interim CEO commented, "Cipher's third quarter results demonstrated growth across revenue, EPS and Adjusted EBITDA over the prior year, highlighting the continued strength of our cash flows and the resilient nature of our business. Cipher has benefitted from the impacts of its cost reduction plan, enhanced sales and distribution agreements, key leadership appointments and the strength of our isotretinoin portfolio. These factors have combined to drive a meaningful increase in profitability in the third quarter, underlined by a 252% increase in earnings per share."

In August, Cipher bolstered its management team with the appointment of senior financial executive Bryan Jacobs as Chief Financial Officer.

Bryan Jacobs, CFO commented, "I am delighted to join the Cipher team. My commitment is simple, to support the continued and demonstrated profitability of Cipher, as well as a focus on growing the business. In Q3, we continued to enhance our liquidity, ending the quarter with a cash balance of $27.5 million, placing us in an excellent position to drive organic growth and fund our development pipeline as well as evaluate profitable product and company acquisitions to accelerate growth and drive shareholder value."

Q3 2022 Financial Review
(All figures are in U.S. dollars)

• Total revenue increased 6.2% to $4.8 million for Q3 2022, compared to $4.5 million for Q3 2021.
• Licensing revenue was $2.0 million for the three months ended September 30, 2022, compared to $2.0 million for the three months ended September 30, 2021.
• Product revenue increased by $0.3 million or 12% to $2.8 million for Q3 2022, compared to $2.5 million for the comparable period in 2021. Product revenue from Epuris was $2.4 million for Q3 2022, up from $2.3 million in the comparative period. Epuris experiences seasonality with a lower level of quarterly sales in Q3 annually.
• Net income was $2.7 million, or $0.10 per diluted share, in Q3 2022, compared to $0.8 million, or $0.03 per diluted share, in Q3 2021. Adjusted EBITDA for Q3 2022 was $2.6 million, compared to $2.2 million in Q3 2021.
• The Company had $27.5 million in cash and no debt at September 30, 2022. The Company generated $9.1 million in cash from operating activities for the nine months ended September 30, 2022.

Outlook

Cipher believes it has a strong outlook in the remainder of 2022 and beyond that will continue to enhance long term shareholder value, including:

• In September 2022, the Company's partner, Canfite Biopharma, ("Canfite") announced information related to its phase III COMFORT study of Piclidenoson used in the treatment of moderate to severe psoriasis met its primary endpoint of superiority and achieved a better tolerability profile in a comparative analysis. An estimated 1 million Canadians suffer from psoriasis and Cipher holds the Canadian marketing rights to this novel product, which the Company believes holds substantial commercial potential.
• Continue to collaborate with our partner Moberg Pharma on its phase III clinical trial in the U.S. for MOB-015, which started in May 2022, a novel product for the treatment of foot fungus, and whereby Cipher has the exclusive Canadian market rights
• Actively progressing and supporting proof-of-concept studies for our DTR-001 topical product treatment for the removal of tattoos
• Reinforced commitment to our hospital business with a distribution partnership and supporting physician research activities that is expected to result in improved growth and profitability
• Selectively repurchase shares for cancellation under normal course issuer bid
• Pursue product and business acquisitions in a prudent manner with a focus on high growth potential and near-term profitability

Financial Statements and MD&A

Cipher's Financial Statements for the three and nine months ended September 30, 2022, and Management's Discussion and Analysis (the "MD&A") for the three and nine months ended September 30, 2022, are available on the Company's website at www.cipherpharma.com in the "Investors" section under "Financial Reports" and on SEDAR at www.sedar.com.

Notice of Conference Call

Cipher will hold a conference call on November 11, 2022, at 8:30 a.m. (ET) to discuss its financial results and other corporate developments.

• To access the conference call by telephone, dial [phone] or [phone] and use conference 59484713

A live audio webcast will be available at https://app.webinar.net/ApnV68m4x1k

• or the Investor Relations section of the Company's website at http://www.cipherpharma.com.
• An archived replay of the webcast will be available until November 18, 2022.

About Cipher Pharmaceuticals Inc.

Cipher Pharmaceuticals (TSX: CPH) is a specialty pharmaceutical company with a robust and diversified portfolio of commercial and early to late-stage products. Cipher acquires products that fulfill unmet medical needs, manages the required clinical development and regulatory approval process, and currently markets those products either directly in Canada or indirectly through partners in Canada, the U.S., and South America. For more information, visit www.cipherpharma.com.

Forward-Looking Statements and Non-IFRS Measures

This document includes forward-looking statements within the meaning of applicable securities laws. These forward-looking statements include, among others, statements with respect to the impact of the Company's cost reduction plan, the potential for improved profitability of our hospital business, increased adoption of ABSORICA LD, discussions with Galephar regarding new product opportunities, the impact of the partnership with Verity on the Company's ability to manage its costs efficiently and drive profitability within its hospital business, our objectives and goals and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, expectations, anticipations, estimates and intentions.  The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective", "hope" and "continue" (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. We caution readers not to place undue reliance on these statements as a number of important factors, many of which are beyond our control, could cause our actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, the extent and impact of the coronavirus (COVID-19) outbreak on our business including any impact on our contract manufacturers and other third party service providers, our ability to enter into development, manufacturing and marketing and distribution agreements with other pharmaceutical companies and keep such agreements in effect; our dependency on a limited number of products; our dependency on protection from patents that will expire; integration difficulties and other risks if we acquire or in-license technologies or product candidates; reliance on third parties for the marketing of certain products; the product approval process is highly unpredictable; the timing of completion of clinical trials, regulatory submissions and regulatory approvals; reliance on third parties to manufacture our products and events outside of our control that could adversely impact the ability of our manufacturing partners to supply products to meet our demands; we may be subject to future product liability claims; unexpected product safety or efficacy concerns may arise; we generate license revenue from a limited number of distribution and supply agreements; the pharmaceutical industry is highly competitive; requirements for additional capital to fund future operations; products in Canada may be subject to pricing regulation; dependence on key managerial personnel and external collaborators; no assurance that we will receive regulatory approvals in the U.S., Canada or any other jurisdictions and current uncertainty surrounding health care regulation in the U.S.; certain of our products are subject to regulation as controlled substances; limitations on reimbursement in the healthcare industry; limited reimbursement for products by government authorities and third-party payor policies; products may not be included on list of drugs approved for use in hospitals; hospital customers may make late payments or not make any payments; various laws pertaining to health care fraud and abuse; reliance on the success of strategic investments and partnerships; the publication of negative results of clinical trials; unpredictable development goals and projected time frames; rising insurance costs; ability to enforce covenants not to compete; risks associated with the industry in which we operate; we may be unsuccessful in evaluating material risks involved in completed and future acquisitions; we may be unable to identify, acquire or integrate acquisition targets successfully; legacy risks from operations conducted in the U.S.; inability to meet covenants under our long term debt arrangement; compliance with privacy and security regulation; our policies regarding returns, allowances and chargebacks may reduce revenues; certain current and future regulations could restrict our activities; additional regulatory burden and controls over financial reporting; reliance on third parties to perform certain services; general commercial litigation, class actions, other litigation claims and regulatory actions; the difficulty for shareholders to realize in the United States upon judgments of U.S. courts predicated upon civil liability of the Company and its directors and officers who are not residents of the United States; the potential violation of intellectual property rights of third parties; our efforts to obtain, protect or enforce our patents and other intellectual property rights related to our products; changes in U.S., Canadian or foreign patent laws; litigation in the pharmaceutical industry concerning the manufacture and supply of novel and generic versions of existing drugs; inability to protect our trademarks from infringement; shareholders may be further diluted if we issue securities to raise capital; volatility of our share price; the fact that we have a significant shareholder; we do not currently intend to pay dividends; our operating results may fluctuate significantly; and our debt obligations will have priority over the common shares of the Company in the event of a liquidation, dissolution or winding up.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When reviewing our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward-looking statements, may be found in the "Risk Factors" section of the Company's Annual Information Form for the year ended December 31, 2021, and elsewhere in our filings with Canadian securities regulators. Except as required by Canadian securities law, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf; such statements speak only as of the date made. The forward-looking statements included herein are expressly qualified in their entirety by this cautionary language.

1)	At the September 30, 2022 exchange rate – 1.3707
2)	EBITDA and adjusted EBITDA are non-IFRS financial measures.  The term EBITDA (earnings before interest, taxes, depreciation and amortization,) does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing a further understanding of operations from management's perspective. The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation of property and equipment, amortization of intangible assets, non-cash share-based compensation, changes in fair value of derivative financial instruments, provision for legal settlement, loss on disposal of assets and loss on extinguishment of lease, impairment of intangible assets, restructuring costs and foreign exchange gains and losses from the translation of Canadian cash balances.

The following is a summary of how EBITDA and Adjusted EBITDA are calculated:

(IN THOUSANDS OF U.S. DOLLARS)	Three months ended September 30, 2022	Three months ended September 30, 2021	Nine months  ended September 30, 2022	Nine months ended September 30, 2021
	$	$	$	$
Income from continuing operations	2,654	796	6,956	4,948
Add back:
Depreciation and amortization	338	155	648	550
Interest expense, net	(157)	13	(197)	492
Income taxes	(359)	515	1,590	2,196
EBITDA	2,476	1,479	8,997	7,784
Change in fair value of derivative financial instrument	—	—	—	(5)
Loss (gain) from the translation of Canadian cash balances	72	(58)	129	(67)
Loss on disposal of assets and extinguishment of lease	—	758	—	758
Provision for legal settlement	—	—	—	1,250
Share-based compensation	84	34	169	114
Adjusted EBITDA	2,632	2,213	9,295	9,834
Adjusted EBITDA per share – basic	0.10	0.08	0.37	0.37
Adjusted EBITDA per share – dilutive	0.10	0.08	0.36	0.36

SOURCE Cipher Pharmaceuticals Inc.

James Bowen, CFA, Investor Relations, 416-519-9442