Cipher Reports Q1 2012 Financial Results

Toronto Stock Exchange Symbol: DND

MISSISSAUGA, ON, May 4, 2012 /CNW/ - Cipher Pharmaceuticals Inc. (TSX: DND; OTC: CPHMF.PK) today announced its financial and operational results for the three months ended March 31, 2012 ("Q1 2012").

Q1 2012 Summary

• Achieved quarterly revenue of $1.8 million, a 168% increase over Q1 2011.
• Net income in Q1 2012 was $0.1 million, compared with a loss of $1.1 million in Q1 2011.
• Received a US$1.0 million sales milestone for Lipofen®.
• Durela™ (extended-release tramadol) was launched in March 2012 by Cipher's Canadian partner, Medical Futures Inc.
• Cash increased for the third consecutive quarter to $10.1 million, compared with $9.6 million as at December 31, 2011.

"Revenue grew strongly in the first quarter based on Lipofen's performance and early contributions from ConZipä, which was recently launched in the U.S.," said Larry Andrews, President and CEO of Cipher. "In addition, with the launch of Durelaä in Canada, we now have multiple royalty revenue streams contributing to our results as we await U.S. regulatory approval for CIP-ISOTRETINOIN, our promising product for the treatment of acne."

Financial Review

Net revenue in Q1 2012 was $1.8 million, an increase of 168% compared with $0.7 million in Q1 2011. Revenue from Lipofen® increased to $1.4 million during Q1 2012 compared with $0.6 million in Q1 2011, reflecting a strong performance by our U.S. partner, Kowa Pharmaceuticals, and the achievement of a contractual net sales milestone, which contributed $0.5 million in revenue for the quarter.  Revenue from ConZipä was $0.3 million in Q1 2012.  No revenue was recognized in Q1 of the prior year as the product was launched in Q3 2011. Revenue from Durelaä was not significant during Q1 2012 as the product was only launched in mid-March 2012.

Research and Development expense during Q1 2012 was $0.5 million, the same as incurred in Q1 2011. Operating, General and Administrative expenses for Q1 2012 declined to $1.0 million, compared to $1.2 million in Q1 2011. Net income in Q1 2012 was $0.1 million, or $0.01 per share, compared to a net loss of $1.1 million, or $0.05 per share, in Q1 2011.

The Company's financial position remained solid at quarter end. As at March 31, 2012, Cipher had cash of $10.1 million, compared with $9.6 million as at December 31, 2011.

Product Update

Lipofen®
During Q1 2012, Lipofen® monthly prescriptions increased solidly relative to the prior quarter based on Kowa's increased promotional effort and a new managed care client contract. Lipofen® achieved record sales performance for the quarter, with royalty revenue 65% higher than the prior year and 26% higher than Q4 2011. During the first quarter, Cipher received a US$1.0 million milestone payment from Kowa. Cipher's 50% share of the milestone is reflected in its financial results for Q1 2012. This one-time milestone, which was based on sales performance over the trailing 12-month period, reflected steadily increasing new prescriptions during the fourth quarter and Q1 2012.

CIP-TRAMADOL ER (ConZip™/Durela™)
Cipher's extended-release tramadol was launched in the U.S. by Vertical Pharmaceuticals in September 2011 under the trade name ConZip™. Vertical's dedicated sales force comprises 60 representatives, with plans for further expansion in 2012.  Product sales to date have been encouraging and the Company expects solid growth in 2012 as U.S. physicians gain more experience with the product and Vertical expands its coverage.

During Q3 2011, Cipher received Health Canada approval for CIP-TRAMADOL ER and also completed a Canadian distribution and supply agreement with Medical Futures. Medical Futures launched the product in March 2012 under the trade name Durela™, with a dedicated sales force comprising approximately 22 representatives.

CIP-ISOTRETINOIN
Cipher's New Drug Application for CIP-ISOTRETINOIN is currently under review by the FDA with a target action date under PDUFA of May 29, 2012.  Pre-commercial activities are underway with Ranbaxy Pharmaceuticals, the Company's U.S. partner, for a possible launch in Q4 2012. When CIP-ISOTRETINOIN is commercialized, Cipher expects that it will have the potential to generate significant revenue for the Company.

Cipher completed a New Drug Submission to Health Canada in Q4 2011.  This was accepted for review in Q1 2012, and a response from Health Canada is expected in Q1 2013.  Once approved, Cipher plans to market the product in Canada on its own.

New Products and Out-Licensing Activities
Cipher is actively pursuing out-licensing discussions for its current products in other territories and is seeking late to commercial stage product candidates to complement its Canadian commercialization plans for CIP-ISOTRETINOIN.

Notice of Conference Call

Cipher will hold a conference call today, May 4, 2012, at 8:30 a.m (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191.  A live audio webcast of the call will be available at www.cipherpharma.com. The webcast will be archived for 90 days.

About Cipher Pharmaceuticals Inc.

Cipher Pharmaceuticals (TSX: DND; OTC: CPHMF.PK) is a growing specialty pharmaceutical company that commercializes novel formulations of successful, currently marketed molecules.  Cipher's strategy is to in-license clearly differentiated products, advance them through the clinical development and regulatory approval stages, and out-license to international marketing partners.  The Company's first product is a fenofibrate formulation marketed in the United States as Lipofen®. Cipher's second product, an extended-release tramadol, is marketed in the United States as ConZip™ and is marketed in Canada as Durela™.  Cipher's New Drug Application for its third product, a novel formulation of the acne treatment isotretinoin, is currently being reviewed by the FDA and Health Canada. For more information, please visit www.cipherpharma.com.

Forward-Looking Statements

Statements made in this news release, other than those concerning historical financial information, may be forward-looking and therefore subject to various risks and uncertainties. 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. 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.  Factors that could cause results to vary include those identified in the Company's Annual Information Form and other filings with Canadian securities regulatory authorities. These factors include, but are not limited to losses; the applicability of patents and proprietary technology; possible patent litigation; approval of products in the Company's pipeline; marketing of products; meeting projected drug development timelines and goals; product liability and insurance; dependence on strategic partnerships and licensees; concentration of the Company's revenue; substantial competition and rapid technological change in the pharmaceutical industry; the publication of negative results of clinical trials of the Company's products; the ability to access capital; the ability to attract and retain key personnel; changes in government regulation or regulatory approval processes; dependence on contract research organizations; third party reimbursement; the success of the Company's strategic investments; the achievement of development goals and time frames; the possibility of shareholder dilution; market price volatility of securities; and the existence of significant shareholders. All forward-looking statements presented herein should be considered in conjunction with such filings. Except as required by Canadian securities laws, the Company does not undertake to update any forward-looking statements; such statements speak only as of the date made.

Cipher Pharmaceuticals Inc.
Balance Sheets
As at March 31, 2012 and December 31, 2011
(in thousands of Canadian dollars - unaudited)
		March 31,		December 31,
		2012		2011
		$		$
ASSETS
Current assets
	Cash	10,113		9,636
	Accounts receivable	1,937		1,782
	Prepaid expenses and other assets	180		272
		12,230		11,690
	Property and equipment, net	28		25
	Intangible assets, net	2,719		2,944
		14,977		14,659
LIABILITIES
Current liabilities
	Accounts payable and accrued liabilities	2,212		1,912
	Current portion of deferred revenue	875		917
		3,087		2,829
	Deferred revenue	2,177		2,330
		5,264		5,159
SHAREHOLDERS' EQUITY
	Share capital	50,211		50,172
	Contributed surplus	33,081		33,032
	Deficit	(73,579)		(73,704)
		9,713		9,500
		14,977		14,659

 

Cipher Pharmaceuticals Inc.
Statements of Operations and Comprehensive Income (Loss)
Three month periods ended March 31, 2012 and 2011
(in thousands of Canadian dollars, except per share data - unaudited)
		March 31,		March 31,
		2012		2011
		$		$
Revenues
	Licensing revenue	1,811		675
Expenses
	Research and development	471		547
	Operating, general and administrative	1,016		1,177
	Amortization of intangible assets	225		59
	Interest income	(26)		(23)
		1,686		1,760
Income (loss) and comprehensive income (loss) for the period		125		(1,085)
Basic and diluted earnings (loss) per share		0.01		(0.05)

Cipher Pharmaceuticals Inc.
Statements of Changes in Equity
Three month periods ended March 31, 2012 and 2011
(in thousands of Canadian dollars - unaudited)
							Total
	Share		Contributed				Shareholders'
	Capital		Surplus		Deficit		Equity
	$		$		$		$
Balance, January 1, 2012	50,172		33,032		(73,704)		9,500
Income and comprehensive income for the period	-		-		125		125
Shares issued under the share purchase plan	39		-		-		39
Share-based compensation - stock option plan	-		49		-		49
Balance, March 31, 2012	50,211		33,081		(73,579)		9,713
Balance, January 1, 2011	49,977		32,890		(71,393)		11,474
Loss and comprehensive loss for the period	-		-		(1,085)		(1,085)
Share-based compensation - stock option plan	-		28		-		28
Balance, March 31, 2011	49,977		32,918		(72,478)		10,417

 

Cipher Pharmaceuticals Inc.
Statements of Cash Flows
Three month periods ended March 31, 2012 and 2011
(in thousands of Canadian dollars - unaudited)
			March 31,		March 31,
			2012		2011
			$		$
Cash provided by (used in)
Operating activities
	Income (loss) for the period		125		(1,085)
	Items not affecting cash:
		Depreciation of property and equipment	7		13
		Amortization of intangible assets	225		59
		Share-based compensation - share purchase plan	6		-
		Share-based compensation - stock option plan	49		28
			412		(985)
	Changes in non-cash operating items:
		Accounts receivable	(155)		216
		Prepaid expenses and other assets	92		100
		Accounts payable and accrued liabilities	300		(364)
		Deferred revenue	(195)		(144)
Net cash generated from (used in) operating activities			454		(1,177)
Investing activities
	Purchase of property and equipment		(10)		(4)
Net cash generated from (used in) investing activities			(10)		(4)
Financing activities
	Proceeds from shares issued under the share purchase plan		33		-
Increase (Decrease) in cash			477		(1,181)
Cash, beginning of period			9,636		10,328
Cash, end of period			10,113		9,147

 

Craig Armitage
Investor Relations
The Equicom Group
[phone] ext 278
[phone] fax
[email protected]

Larry Andrews
President and CEO
Cipher Pharmaceuticals
[phone] ext 324
[phone] fax
[email protected]