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MISSISSAUGA, Ontario--(BUSINESS WIRE)--Nov 14, 2022--
Nuvo Pharmaceuticals Inc. (TSX:MRV; OTCQX:MRVFF) d/b/a Miravo Healthcare (Miravo or the Company), a Canadian-focused healthcare company with global reach and a diversified portfolio of commercial products, today announced its financial and operational results for the three and nine months ended September 30, 2022. For further details on the results, please refer to Miravo’s Management, Discussion and Analysis (MD&A) and Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2022, which are available on the Company’s website ( www.miravohealthcare.com ). All figures are in Canadian dollars, unless otherwise noted.
Key Developments
Three months ended September 30, 2022 include the following:
Nine months ended September 30, 2022 include the following:
| (1) | Non-IFRS financial measure. These measures are not recognized under IFRS and do not have standardized meanings prescribed by IFRS. See the Non-IFRS Measures section for definitions, reconciliations and the basis of presentation of the Company’s non-IFRS measures. |
Business Update
“Our Canadian commercial business segment continues to deliver consistent year-over-year sales growth driven primarily by prescription growth of our key promoted brands of Blexten, Cambia and Suvexx. In our international Licensing and Royalty segment, we remain on track for a 2023 launch of Suvexx in select EU markets through our partner Orion,” said Jesse Ledger, Miravo’s President & CEO.
Mr. Ledger went on to state, “The work on winding down our manufacturing operations continues and based on the final order book for Pennsaid and Pennsaid 2% production, we now anticipate completing all manufacturing and quality release testing activities during the second half of 2023.”
Third Quarter 2022 Financial Results
Adjusted total revenue was $18.2 million and $57.3 million for the three and nine months ended September 30, 2022 compared to $17.1 million and $51.6 million for the three and nine months ended September 30, 2021. The $1.1 million increase in adjusted total revenue in the current quarter was primarily attributable to a $2.6 million increase in revenue from the Commercial Business segment, offset by a $1.5 million decrease in revenue from the Licensing and Royalty Business segment and $0.1 million in amounts billed to customers for existing contract assets.
Revenue attributable to the Commercial Business segment increased during the three months ended September 30, 2022 due to a $2.5 million increase in sales of the Company’s promoted products (Blexten, Cambia, Suvexx and NeoVisc ® ) and a $0.1 million increase in sales of the Company’s mature products. Revenue attributable to the Licensing and Royalty Business segment decreased during the three months ended September 30, 2022 due to a $1.0 million reduction in ex-U.S. Vimovo royalties due to the expiry of the royalty term for certain territories and a $0.3 million reduction in Yosprala royalties, as the Company’s entitlement to royalties on Takeda’s net sales of Cabpirin ended with the patent expiry on May 31, 2022 and a $0.2 million reduction in the U.S. Vimovo royalty.
The $5.7 million increase in adjusted total revenue in the nine months ended September 30, 2022 was primarily attributable to a $7.7 million increase in revenue from the Commercial Business segment and a $2.2 million increase in amounts billed to customers for existing contract assets, offset by a $1.8 million decrease in revenue from the Licensing and Royalty Business segment and a $2.4 million decrease in revenue from the Production and Service Business segment. Revenue attributable to the Commercial Business segment increased during the nine months ended September 30, 2022 due to a $8.0 million increase in sales of the Company’s promoted products (Blexten, Cambia, Suvexx and NeoVisc), offset by a $0.3 million decrease in revenue for the Company’s mature products.
The $1.8 million decline in license revenue during the current nine-month period was primarily attributable to a $1.0 million reduction in ex-U.S. Vimovo royalties due to the expiry of the royalty term for certain territories, a $0.8 million reduction in the U.S. Vimovo royalty due to a step-down in royalty to 5% of net sales compared to 10% of net sales for a portion of the comparative nine-month period and a $0.3 million reduction in Yosprala royalties, as the Company’s entitlement to royalties on Takeda’s net sales of Cabpirin ended with the patent expiry on May 31, 2022. In the nine months ended September 30, 2022, the Company received $2.3 million (US $1.8 million) for Yosprala-related milestone revenue billed to its Japanese licensee for its then existing contract asset. The $2.4 million decrease in product sales from the Production and Service Business segment during the current nine-month period was primarily attributable to a decrease in Pennsaid 2% and Pennsaid sales.
Adjusted EBITDA was $5.7 million for the three months ended September 30, 2022 compared to $7.0 million for the comparative quarter. During the three months ended September 30, 2022, a $1.6 million increase in gross profit from the Commercial Business segment was more than offset by a $1.5 million decrease in the gross profit contribution from the Company’s Licensing and Royalty Business segment, a $0.5 million decrease in the gross profit contribution from the Company’s Production and Service Business segment, a $0.4 million increase in sales and marketing expenses, a $0.4 million increase in G&A expenses and a $0.1 million decrease in amounts billed to customers for existing contract assets.
Adjusted EBITDA was $19.1 million for the nine months ended September 30, 2022 compared to $18.8 million for the nine months ended September 30, 2021. During the nine months ended September 30, 2022, a $4.7 million increase in gross profit from the Commercial Business segment and a $2.2 million increase in amounts billed to customers for existing contract assets was more than offset by a $2.3 million decrease in gross profit contribution from the Production and Service Business segment, a $1.8 million decrease in the contribution from the License and Royalty Business segment, a $1.0 million increase in sales and marketing expenses and a $1.4 million increase in G&A expenses net of a $0.2 reduction in stock-based compensation expenses.
Non-IFRS Measures
The Company discloses non-IFRS financial measures (adjusted total revenue, adjusted EBITDA, and cash value of loans) and non-IFRS ratios (adjusted EBITDA per share and net debt leverage ratio) that are not recognized under and do not have standardized meanings prescribed by IFRS. Accordingly, such measures are not necessarily comparable and may not have been calculated in the same way as similarly named financial measures presented by other companies. These measures should be considered as supplemental in nature and not as a substitute for related financial information prepared in accordance with IFRS. The Company believes that shareholders, investment analysts and other readers find such measures and ratios helpful in understanding and assessing the Company’s financial performance. We utilize these measures in managing our business, including as means of performance measurement, cash management, debt compliance and assessing leverage and borrowing capacity. Because non-IFRS financial measures and non-IFRS ratios do not have standardized meanings prescribed under IFRS, securities regulations require that such measures be clearly defined, identified, and for non-IFRS financial measures, reconciled to their nearest IFRS measure. The applicable definition, calculation and reconciliation of each such measure used in this press release is provided below.
Adjusted Total Revenue
The Company defines adjusted total revenue as total revenue, plus amounts billed to customers for existing contract assets, less revenue recognized upon recognition of a contract asset. Management believes adjusted total revenue is a useful supplemental measure to determine the Company’s ability to generate cash from its customer contracts used to fund its operations.
The following is a summary of how adjusted total revenue is calculated, reconciled to the nearest IFRS measure:
| Three months ended | Nine months ended | ||
| 2022 | 2021 | 2022 | 2021 |
| $ | $ | $ | $ |
Total revenue | 18,119 | 16,989 | 54,706 | 51,198 |
Add: |
|
|
|
|
Amounts billed to customers for existing contract assets | 80 | 141 | 2,558 | 381 |
Adjusted total revenue | 18,199 | 17,130 | 57,264 | 51,579 |
Adjusted EBITDA
EBITDA refers to net income (loss) determined in accordance with IFRS, before depreciation and amortization, net interest expense (income) and income tax expense (recovery). The Company defines adjusted EBITDA as EBITDA, plus amounts billed to customers for existing contract assets, inventory step-up expenses, stock-based compensation expense, loss on fair value of derivative liabilities, loss on fair value of contingent and variable consideration, impairment loss, foreign currency loss, other losses less revenue recognized upon recognition of a contract asset, stock-based compensation recovery, gain on fair value of derivative liabilities, gain on fair value of contingent and variable consideration, impairment recovery, foreign currency gain and other income. Management believes adjusted EBITDA is a useful supplemental measure to determine the Company’s ability to generate cash available for working capital, capital expenditures, debt repayments, interest expense and income taxes.
The following is a summary of how EBITDA and adjusted EBITDA are calculated, reconciled to the nearest IFRS measure:
| Three Months ended | Nine Months ended | ||
| 2022 | 2021 | 2022 | 2021 |
| $ | $ | $ | $ |
Net income (loss) | 447 | (17,770) | 20,762 | (26,612) |
Add back: |
|
|
|
|
Income tax expense (1) | 1,236 | 811 | 3,471 | 2,384 |
Net interest expense | 2,390 | 2,512 | 7,185 | 7,577 |
Depreciation and amortization | 1,598 | 2,021 | 5,261 | 6,125 |
EBITDA | 5,671 | (12,426) | 36,679 | (10,526) |
Add back: |
|
|
|
|
Amounts billed to customers for existing contract assets | 80 | 141 | 2,558 | 381 |
Stock-based compensation | 13 | 71 | 80 | 311 |
Impairment (2) | - | 14,682 | 917 | 14,682 |
Foreign currency loss | 3,339 | 1,439 | 4,544 | 162 |
Other losses | 145 | 110 | 199 | 284 |
Deduct: |
|
|
|
|
Change in fair value of derivative liabilities (3) | (3,461) | 2,929 | (26,057) | 14,447 |
Change in fair value of contingent and variable consideration | (103) | 94 | 210 | (1,005) |
Inventory step-up | - | - | - | 35 |
Adjusted EBITDA | 5,684 | 7,040 | 19,130 | 18,771 |
| (1) | Income tax expense for the three and nine months ended September 30, 2022, includes $0.5 million and $2.5 million for deferred income tax due to the utilization of loss carry forwards that were previously recognized [$0.7 million and $2.1 million for the three and nine months ended September 30, 2021]. | |
| ||
| (2) | In the three and nine months ended September 30, 2022, the impairment loss of $0.9 million included a $46 write-down of certain mature intangible assets and $0.3 million for Resultz goodwill in the Commercial Business segment and a $0.6 million write-down of certain intangible assets in the Licensing and Royalty Business segment [$14.7 million of impairment losses on goodwill and certain intangible assets in the Commercial Business and Licensing and Royalty segments for the three and nine months ended September 30, 2021]. | |
| (3) | The Company’s derivative liabilities are measured at fair value through profit or loss at each reporting date. As a result of the decrease in the share price in the current quarter and a decrease in the volatility of the Company’s shares, amongst other inputs, the value of the Company’s derivative liabilities decreased and the Company recognized net non-cash gains of $3.5 million on the change in fair value of derivative liabilities for the three months ended September 30, 2022 [$2.9 million net non-cash losses for the three months ended September 30, 2021]. During the nine months ended September 30, 2022, as a result of the decrease in the share price and a decrease in the volatility of the Company’s shares, amongst other inputs, the value of the Company’s derivative liabilities decreased and the Company recognized net non-cash gains of $26.1 million on the change in fair value of derivative liabilities [$14.4 million net non-cash losses for the nine months ended September 30, 2021]. |
Management to Host Conference Call/Webcast
Management will host a conference call to discuss the results today (Monday, November 14, 2022) at 11:00 a.m. ET. To participate in the conference call, please dial (416) 764-8646 or 1 (888) 396-8049 / Conference ID: 80555289. Please call in 15 minutes prior to the call to secure a line. You will be put on hold until the conference call begins.
A live audio webcast and replay webcast of the conference call will be available through:
https://app.webinar.net/5vYkXrPwmEa
About Miravo Healthcare
Miravo is a Canadian-focused, healthcare company with global reach and a diversified portfolio of commercial products. The Company’s products target several therapeutic areas, including pain, allergy, neurology and dermatology. The Company’s strategy is to in-license and acquire growth-oriented, complementary products for Canadian and international markets. Miravo’s head office is located in Mississauga, Ontario, Canada, the international operations are located in Dublin, Ireland and the Company’s manufacturing facility is located in Varennes, Québec, Canada. For additional information, please visit www.miravohealthcare.com.
Forward-Looking Statements
This press release contains “forward-looking information” as defined under Canadian securities laws (collectively, “forward-looking statements”). The words “plans”, “expects”, “does not expect”, “goals”, “seek”, “strategy”, “future”, “estimates”, “intends”, “anticipates”, “does not anticipate”, “projected”, “believes” or variations of such words and phrases or statements to the effect that certain actions, events or results “may”, “will”, “could”, “would”, “should”, “might”, “likely”, “occur”, “be achieved” or “continue” and similar expressions identify forward-looking statements. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking statements. These forward-looking statements include statements regarding anticipated product launches, the expected wind-down of the Company’s manufacturing operations in Varennes, Québec, anticipated impacts of COVID-19, and assumptions and expectations regarding future milestone payments and royalties.
Forward-looking statements are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances, including the anticipated receipt of certain milestone and royalty payments, the anticipated launch of certain products and approvals therefor, and the potential impact of COVID-19. Such forward-looking statements are qualified in their entirety by the inherent risks, uncertainties and changes in circumstances surrounding future expectations which are difficult to predict and many of which are beyond the control of the Company. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the Company as of the date of this press release, are inherently subject to significant business, economic and competitive uncertainties and contingencies and may prove to be incorrect. Material factors and assumptions used to develop the forward-looking statements, and material risk factors that could cause actual results to differ materially from the forward-looking statements,include but are not limited to,the delay or failure to meet anticipated product launches, a delay in or disruption caused by the winding down of the Company’s manufacturing operations in Varennes, Québec, ongoing impacts of COVID-19 on the Company’s operations, business, financial results, and the industry in which it operates, the failure to meet certain milestones or collect certain royalties and other factors, many of which are beyond the control of the Company. Additional factors that could cause the Company’s actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the risk factors included in the Company’s most recent Annual Information Form dated March 25, 2022 under the heading “Risks Factors”, and as described from time to time in the reports and disclosure documents filed by the Company with Canadian securities regulatory agencies and commissions. These and other factors should be considered carefully and readers should not place undue reliance on the Company’s forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved
All forward-looking statements are based only on information currently available to the Company and are made as of the date of this press release. Except as expressly required by applicable Canadian securities law, the Company assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All forward-looking statements in this press release are qualified by these cautionary statements.
View source version on businesswire.com:https://www.businesswire.com/news/home/20221114005411/en/
CONTACT: Investor Relations
905 673-6980 / option 2
ir@miravohealth.com
KEYWORD: NORTH AMERICA CANADA
INDUSTRY KEYWORD: BIOTECHNOLOGY GENERAL HEALTH PHARMACEUTICAL HEALTH
SOURCE: Nuvo Pharmaceuticals Inc.
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PUB: 11/14/2022 07:30 AM/DISC: 11/14/2022 07:32 AM
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