Theratechnologies : Announces Financial Results for First Quarter of 2012
04/13/2012| 08:09am US/Eastern
Recommend:
• Increase in royalties from $4,000 to $836,000
• Decrease in R&D expenses of 56% to $1,313,000
• Decrease in selling and market development expenses of 45% to
$261,000
• Decrease in general and administrative expenses of 36% to
$2,043,000
• Restructuring costs of $6,058,000 (including onerous lease
provision of
$4,055,000)
• $28,889,000 in liquidities available at quarter-end
"Following our restructuring efforts late last
year, we are well positioned as we continue to move forward
with our business plan for 2012. While the U.S. is currently
the only market where EGRIFTATM is being commercialized,
regulatory applications in several key markets are
progressing steadily. These markets include Europe, Latin
America and finally Canada, where we recently signed a
promising commercialization agreement with Actelion,"
said John-Michel T. Huss, President and Chief Executive
Officer of Theratechnologies.
"In terms of U.S. revenues, royalties increased
26% compared to the previous quarter. While we are pleased to
see progress, we are counting on our partner EMD Serono to do
even more to accelerate market penetration in this
territory," added Mr. Huss.
"First quarter results are starting to reflect
cost savings resulting from last year's restructuring
initiatives. Excluding the impact of restructuring costs, our
expenses are significantly lower across the board. From an
expense perspective, we are on track with forecasts made
earlier for 2012. We are well financed and will keep managing
our use of cash carefully," added Luc Tanguay, Senior
Executive Vice President and Chief Financial Officer of
Theratechnologies.
First Quarter Financial Results
The financial results presented in this press release are taken
from the Company's Management's Discussion and
Analysis, or MD&A, and unaudited consolidated financial
statements for the period ended February 29, 2012, which have
been prepared in accordance with International Financial
Reporting Standards, or IFRS, as issued by the International
Accounting Standards Board, or IASB. The MD&A for the first
quarter ended February 29, 2012, and the unaudited consolidated
financial statements can be found at
www.theratech.com,www.sedar.comand
www.sec.gov. Unless
specified otherwise, all amounts in this press release are in
Canadian dollars. As used herein, EGRIFTATM refers to
tesamorelin for the reduction of excess
abdominal fat in HIV-infected patients with lipodystrophy.
EGRIFTATM is our trademark.
Revenues are mainly sales of EGRIFTATM to EMD Serono
for re-sale, royalties received from EMD Serono on U.S. sales
to customers, and the amortization of the initial payment
received upon the closing of the agreement with EMD
Serono.
Under the terms of our agreement, we supply EGRIFTATM
to EMD Serono for resale. The revenues generated from these
sales amounted to $1,279,000 in the three-month period
compared to $1,798,000 in the prior-year period. The
prior-year sales reflect the initial build-up of stocks by
EMD Serono in preparation for the product launch in the U.S.
market.
Royalties are almost entirely derived from the sales of
EGRIFTATM and are paid quarterly in arrears based on the
calendar year. In the three-month period ended February 29,
2012, we received royalty revenue from EMD Serono of $836,000
in relation to the selling period from October 1, 2011 until
December 31, 2011, compared to $4,000 for the same period in
2011.
Revenues also include the amortization of the initial
payment of $27,097,000 received upon the closing of the
agreement with EMD Serono. For the three-month period ended
February 29, 2012, an amount of $1,070,000 ($1,711,000 for
the same period in 2011) was recognized as revenue related to
this transaction. The decrease in the amortization amount for
the current year reflects a change in the service period
attributed to the initial payment. Prior to the second
quarter of 2011, the initial payment was to be fully
amortized by year end 2012. However, the addition of some
further development work has caused us to extend the service
period to year end 2013. At February 29, 2012, the remaining
deferred revenues related to this transaction recorded on the
statement of financial position amounted to
$7,488,000.
Reflecting the variations in product sales, royalties
and amortization of the initial payment, consolidated
revenues for the three-month period ended February 29, 2012
amounted to $3,190,000 compared to $3,518,000 for the same
period in 2011.
For the three-month period ended February 29, 2012, the
cost of sales of EGRIFTATM totaled $1,337,000 compared to
$2,595,000 for the same period in 2011. Cost of sales
exceeded sales revenue in both periods due to an accounting
requirement that we expense certain historical inventory
costs as well as the current costs related to validating
back-up suppliers for raw materials and finished goods. This
is a temporary situation and product sales will become
profitable when our old inventory is depleted, which is
expected in 2012, and the costs associated with validating
additional suppliers are behind us. Cost of sales is detailed
in note 5 "cost of sales" of our unaudited
consolidated financial statements for the three-month periods
ended February 29,
2012 and February 28, 2011.
Research and development, or R&D expenses, net of tax
credits, totaled $1,313,000 for the three months ended
February 29, 2012 compared to $2,993,000 in the comparable
period of 2011, a decrease of 56%. The significant reduction
in R&D expenses is largely attributable to restructuring and
the adoption of a more focused business plan. Current R&D
activities include helping our commercial partners to pursue
regulatory approvals in their respective jurisdictions,
developing a new formulation of EGRIFTATM and pursuing the
development of the new GRF peptide.
Selling and market development expenses amounted to
$261,000 for the three months ended February 29, 2012
compared to $477,000 in 2011, a decrease of 45%. With
licensing agreements now in place in the major markets, the
ongoing selling and market development expenses are costs
associated with the management of the agreements with our
commercial partners.
General and administrative expenses amounted to
$2,043,000 for the three-month period ended February 29, 2012
compared to $3,215,000 in the comparable period of 2011, a
decrease of 36%. The expenses in the 2012 period were lower
as a result of the restructuring. The higher expenses in 2011
included costs related to the change in leadership of the
Company, many of which were entirely expensed in the first
three months of the fiscal year. In addition, all of the
annual compensation paid to the directors in deferred stock
units was expensed in the first three months of 2011. In
2012, deferred stock units granted as compensation to our
directors are being granted quarterly.
On December 7, 2011, we announced that we were
discontinuing our clinical program evaluating tesamorelin in
muscle wasting associated with COPD, resulting in the lay-
off of 34 employees, and giving rise to restructuring costs
of $6,058,000 in the three months ended February 29, 2012.
The largest cost is an onerous lease provision of
$4,055,000, which is based on the Company now occupying
approximately fifty percent of its leased premises. It
includes a provision for the future lease costs of the vacant
portion of the premises, net of estimated of sublease rentals
that could reasonably be obtained. In light of this
provision, the liability related to deferred lease
inducements has been reduced by $481,000. The onerous lease
provision is based on management's best estimates of
sublease rates that have yet to be negotiated, the timing of
a sublease transaction, discount rates and other factors. The
remaining restructuring costs include employee termination
benefits of $1,163,000, costs associated with terminating the
COPD clinical program of $1,036,000 and professional fees of
$285,000.
Finance income for the three-month period ended
February 29, 2012 was $277,000 compared to $372,000 in the
same period in 2011. Interest revenues in 2012 were lower
than 2011 due to the gradual decline in the portfolio size as
investments are liquidated to fund operations as well as to a
slightly lower average rate of return.
Finance costs for the three months ended February 29,
2012 were a gain of $67,000 on positive foreign exchange
fluctuations, compared to finance costs of $577,000 in the
same period of 2011. The prior-year period includes a foreign
exchange loss of $550,000 incurred upon receipt of a
US$25,000,000 milestone payment from EMD Serono. The
milestone payment had originally been converted into the
functional currency of the Company at the more favorable
exchange rate in effect at the November 30, 2010 fiscal year
end for an exchange gain of $635,000 at that time.
Taking into account the revenues and expenses described
above, we recorded a net loss of $7,484,000 (including the
December 2011 restructuring costs of $6,058,000), or $0.12
per share, in the three-month period ended February 29, 2012,
compared to a net loss of $5,932,000 or $0.10 per share for
the same period in 2011.
At February 29, 2012, liquidities, which include cash
and bonds, amounted to
$28,460,000 and tax credits and grants receivable amounted to
$429,000, for a total of $28,889,000.
Use of cash from operating activities was $7,929,000
for the three months ended February 29, 2012, compared to
$7,764,000 in the comparable period of the prior year. The
current-year amount includes the cash impact of the December
restructuring as well as a raw material inventory buildup of
$3,248,000 in preparation for potential regulatory approvals
in territories outside the United States.
Conference Call Details
A conference call will be held today at 8:30 a.m. ET to
discuss the results. The call will be hosted by John-Michel T.
Huss, President and Chief Executive Officer, and Luc Tanguay,
Senior Executive Vice President and Chief Financial Officer.
The conference call is open to questions from financial
analysts. Media and other interested individuals are invited to
participate in the call on a "listen-only"
basis.
The conference call can be accessed by dialling
1-800-762-2596 (North America) or 1-416-981-9000
(International). The conference call will also be accessible
via webcast at www.theratech.com. Audio replay of the
conference call will be available until April 27, 2012, by
dialling 1-800-558-5253 (North America) or 1-416-626-4100
(International) and by entering the playback code
21586611.
About Theratechnologies
Theratechnologies (TSX: TH) (NASDAQ: THER) is a specialty
pharmaceutical company that discovers and develops innovative
therapeutic peptide products, with an emphasis on
growth-hormone releasing factor peptides. For more information
about Theratechnologies, please visit
www.theratech.com.
Additional information, including the public documents filed by
Theratechnologies, is also available on SEDAR at
www.sedar.comand on the
Securities and Exchange Commission's website at
www.sec.gov.
Forward-Looking Information
This press release contains certain statements that are
considered "forward-looking information" within the
meaning of applicable securities legislation, which statements
may contain words such as "will", "may",
"could", "should", "outlook",
"believe", "plan", "envisage",
"anticipate", "expect" and
"estimate", or the negatives of these terms, or
variations of them. This forward-looking information includes,
but is not limited to, information regarding the potential
regulatory approval of tesamorelin for the treatment of excess
abdominal fat in HIV-infected patients with lipodystrophy in
various territories outside of the United States, the
development of a new GRF peptide suitable for the treatment of
a broad range of medical indications, the development of new
methods of administration for this new GRF peptide, the
profitability of our product sales and the timing of the
depletion of our old inventory of product.
Forward-looking information is based upon a number of
assumptions and is subject to a number of risks and
uncertainties, many of which are beyond our control that
could cause actual results to differ materially from those
that are disclosed in or implied by such forward-looking
information. These assumptions made in preparing the forward-
looking information include, but are not limited to, the
assumption that EGRIFTATM will receive approvals in the
territories where we have entered into commercial agreements
with third parties, the safety and efficacy data gathered
through the development of tesamorelin will be accepted by
regulatory authorities in connection with their review of
regulatory submissions made by our commercial partners, no
additional clinical studies will be required by regulatory
authorities to obtain regulatory approval of EGRIFTATM, if
approved, EGRIFTATM will be accepted by the marketplace and
will be on the list of reimbursed drugs by third-party payers
in the territories where approval will be obtained, our
relations with our commercial partners and our third- party
suppliers of EGRIFTATM will be conflict-free and such
third-party suppliers will have enough capacity to
manufacture and supply EGRIFTATM to meet its demand and will
manufacture on a timely-basis, we will have the capacity to
develop our new GRF peptide and our old inventory of products
will be depleted in 2012. These risks and uncertainties
include, but are not limited to, the risk that EGRIFTATM is
not approved in all or some of the territories covered by our
commercial agreements with third parties, the risk that, even
if approved revenue and royalties we expect to generate from
sales of EGRIFTATM are not high enough to sustain our
business, the risk that conflicts occur with our commercial
partners jeopardizing the commercialization of EGRIFTATM, the
risk that the supply of EGRIFTATM to our commercial partners
is delayed or suspended as a result of problems with our
suppliers, the risk that EGRIFTATM is withdrawn from the
market as a result of defects or recalls, the risk that our
intellectual property is not adequately protected, the risk
that delays occur in the filing of regulatory submissions or
obtaining regulatory approval in certain territories, the
risk that we are unable to discover and develop our new GRF
peptide and the risk that our old inventory of product is not
depleted in 2012.
We refer potential investors to the "Risk Factors"
section of our Annual Information Form (AIF) dated February
27, 2012. The AIF is available at www.sedar.comand at
www.sec.govunder our
public filings. The reader is cautioned to consider these and
other risks and uncertainties carefully and not to put undue
reliance on forward-looking information. Forward-looking
information reflects current expectations regarding future
events and speaks only as of the date of this press release
and represents our expectations as of that date.
We undertake no obligation to update or revise the
information contained in this press release, whether as a
result of new information, future events or circumstances or
otherwise, except as may be required by applicable
law.
-30-
Contact:
Roch Landriault
NATIONAL Public Relations
Phone: 514 843-2345
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