Cosmo reports excellent first half

Highlights

• Uceris® net revenues in the USA have exceeded all expectations
• CB-03-01 phase II for acne was successfully concluded.
• The FDA agreed to the clinical development plan as a medical device of the new product SIC 8000, a submucosal injectable composition for removal of polyps during colonoscopy.
• The phase III clinical trial for Methylene Blue MMX in North America and EU continues on plan.
• The operating result increased by 118.3% to EUR 14.6 million.
• A financial gain of EUR 65.1 million was attained on the sale of the last part of the investment in Santarus.
• Shareholders benefited from a first time dividend of EUR 1 per share and from 4% share repurchase plan.

Alessandro Della Chà, CEO of Cosmo Pharmaceuticals, commented: "I am very pleased with the first half 2014 because we have made great progress in our operations, in our clinical development and last but not least, financially. The recently announced Salix transaction, if closed, will dramatically change the shape of the Company. The success of our MMX® products demonstrates the versatility of our technology. The development of SIC 8000 and the continued clinical progress in CB-03-01 and Methylene Blue MMX® give us confidence in the success of the next generation of products. Furthermore, the termination of the license with Valeant strongly enhances the opportunity of building a stand-alone franchise in dermatology".

Net operating revenues increased by 54.6% to EUR 41.1 million, driven by a 104% increase in royalties to EUR 14.8 million (EUR 5.9 million from Lialda®/Mezavant®/Mesavancol® and EUR 8.9 million from Uceris®/Cortiment®), a 96.9% increase in the manufacturing of MMX® products and a 9.4% increase in manufacturing of generic products and speciality drugs for third parties. Financial income increased by 14.1% to EUR 66.8 million primarily driven by the sale of the remaining 2'991'044 Santarus shares to Salix. These had been purchased for EUR 1.77 and were sold for USD 32 per share creating a net profit of EUR 65.1 million.

Net operating expenses increased by 33.2% to EUR 26.5 million. These increases were primarily driven by a 58.9% increase in research & development costs to EUR 9.2 million and by a 58% increase in selling general and administrative costs to EUR 7.2 million. Costs of goods sold only increased by 5.7% to EUR 10.1 million. Total personnel employed increased by 11.2% to 179 persons.

The operating result consequently increased by 118.3% to EUR 14.6 million and profit before taxes increased by 22.4% to EUR 79.4 million. The basic profit per share, dividing the net profit attributable to shareholders by the weighted average number of ordinary shares during the period increased by 17.8% and reached EUR 5.318.

In the first half the Company paid a first dividend of EUR 14.3 million and bought back 4% of all shares for EUR 46.1 million in a public offering. The Company holds extensive liquidity of EUR 28.7 million cash and cash equivalents and investment securities of EUR 104.1 million included in financial assets. Interest bearing debt declined by 7.9% to EUR 10.8 million and the equity ratio stood at 87.6%.

Key consolidated financial figures

The Half-Year Report 2014 with further information was published on 30 July 2014, 7am CET, and is available for download at:

http://www.cosmopharma.com/ir/first-half.aspx

Outlook

The overall outlook for the entire year is very positive. From an operational perspective Management expects strong growth in Uceris® sales. From a clinical development perspective Management is looking forward to the end of the phase III clinical trial of Methylene Blue MMX® and the successful completion of the regulatory process for SIC 8000.

Half year 2014 results conference call at 10:30 am CEST on 30 July 2014

Alessandro Della Chà, CEO, Luigi Moro, CSO, and Chris Tanner, CFO, will present the half year results and discuss the outlook for 2014 at a conference call to be held today at 10:30 am CEST.

The dial-in numbers:

The presentation is available for download at:

http://www.cosmopharma.com/ir/presentations.aspx