Cipher Pharmaceuticals Inc. (CPH)

[10 bagger]

CPHMF.. $7.777 Cipher reports record financial results for Q3 2013..
I have decided to repurchase a smaller position in CPHMF.. I know there is a lawsuit out there for thier patent infringment but the last reported numbers are too compelling to ignore.. Hank

Cipher reports record financial results for Q3 2013

Cipher Pharmaceuticals (TSX:DND)

Revenue increases to $5.6 million and earnings per share rise to $0.14

MISSISSAUGA,, ON, Oct. 30, 2013 /CNW/ - Cipher Pharmaceuticals Inc. (TSX: DND) ("Cipher") today announced its financial and operational results for the three and nine months ended September 30, 2013.

Q3 2013 Highlights

•Net revenue increased to $5.6 million, from $2.1 million in Q3 2012.

•EBITDA1 of $3.6 million versus $1.0 million in Q3 2012.

•Net income was $3.4 million, or $0.14 per share, compared with net income of $0.08 million, or $0.03 per share, in Q3 2012.

•Cash balance increased to $20.0 million at quarter end, compared with $15.8 million at December 31, 2012 and $17.8 million at June 30, 2013.

•Launched Epuris™ (isotretinoin) capsules in the Canadian market.

"Absorica™ performed well again in the third quarter, with market share increasing to 17.3%2 by September from 13.1% in June, resulting in strong increases in our revenue, earnings and cash," said Larry Andrews, President and CEO of Cipher. "While Epuris™ was only launched recently, feedback from the Canadian dermatology community has been very encouraging. With a healthy financial position, we continue to pursue growth through product portfolio expansion and new out-licensing agreements for our current products in other regions."

Financial Review

Net revenue for Q3 2013 was $5.6 million, compared with $2.1 million in Q3 2012. The year-over-year increase was mainly driven by the success of Absorica™, which contributed $4.5 million of net revenue in Q3 2013 versus $0.5 million in Q3 2012.

Net revenue from Lipofen® was $0.6 million in Q3 2013, compared with $1.3 million in Q3 2012. The comparable period in 2012 benefited from $0.4 million in revenue from a retroactive increase in Cipher's royalty percentage.

Net revenue from the Company's extended release tramadol product (ConZip®/Durela®) increased to $0.5 million in Q3 2013, compared with $0.3 million in Q3 2012.

Research and Development expense in Q3 2013 was $0.4 million, a slight increase over $0.3 million in Q3 2012. Selling, General and Administrative ("SG&A") expenses for Q3 2013 increased to $1.7 million, compared to $0.8 million in Q3 2012. The year-over-year increase in SG&A reflects the build out of the Company's commercial infrastructure in Canada to support the launch of Epuris™ and future products.

Net income in Q3 2013 grew to $3.4 million, or $0.14 per share ($0.13 per share on a fully diluted basis), compared with net income of $0.8 million, or $0.03 per share, in Q3 2012.
The Company's cash position increased at quarter end. As at September 30, 2013, Cipher had cash and cash equivalents of $20.0 million, compared with $15.8 million at December 31, 2012.

1 EBITDA - Non-IFRS Financial Measure: the term EBITDA (earnings before interest, taxes, depreciation and amortization) does not have any standardized meaning under International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similar measures presented by other companies. The Company defines EBITDA as earnings before interest expense, income taxes, depreciation of property and equipment, amortization of intangible assets and non-cash share-based compensation.

2 Source: IMS Health. Market share calculated based on total isotretinoin prescriptions.

Product Update

Absorica™/Epuris™ (CIP-ISOTRETINOIN)
Absorica™ was released in the U.S. market in late November 2012. The product has performed well to date, achieving 17.3% market share by September 2013, compared to 13.1% in June 2013, based on total isotretinoin prescriptions. In addition, the overall U.S. isotretinoin market continues to show growth. Prescriptions increased by 15%3 in the nine months of 2013 and by 19%4 in Q3 2013, over the comparable periods in the prior year. While total U.S. prescriptions increased year-over-year, they declined from Q2 2013 to Q3 2013. This is consistent with the historical seasonal pattern that has seen total U.S. isotretinoin prescriptions decrease by approximately 11% from Q2 (the summer months) to Q3. Based on Absorica's strong sales performance to-date, Cipher expects to achieve a US$10.0 million milestone payment by the end of Q1 2014 at the latest (50% of which would be shared with its technology partner, Galephar Pharmaceutical Research).

In September 2013, Cipher's partner Ranbaxy received a Paragraph IV Certification Notice of filing from Watson Laboratories Inc. ("Watson") of an Abbreviated New Drug Application ("ANDA") to the FDA for a generic version of Absorica™.

Ranbaxy and Cipher intend to vigorously defend Absorica's intellectual property rights and pursue all available legal and regulatory pathways in defense of the product. Cipher has been advised by Ranbaxy that this development has no impact on current sales and marketing plans for the product, and that Ranbaxy plans to continue to invest in Absorica™ to increase sales and market penetration.

CIP-ISOTRETINOIN was approved by Health Canada in Q4 2012 under the trade name Epuris™. Cipher launched Epuris™ in early July 2013, supported by a field sales force of six full-time representatives and one part-time representative.
Lipofen® (CIP-FENOFIBRATE)

In Q3 2013, new prescriptions for Lipofen® were 6% below Q3 2012 levels. Kowa Pharmaceuticals America, Cipher's U.S. marketing partner for Lipofen®, plans to continue to promote the product in a second detail position for the remainder of 2013.

ConZip®/Durela® (CIP-TRAMADOL ER)
Cipher's extended-release tramadol is marketed in the U.S. by Vertical Pharmaceuticals under the trade name ConZip®. In Q1 2013, Vertical expanded its sales force from 60 to 75 representatives, which has contributed to modestly improved performance. In Q3 2013, prescriptions grew 3% compared to Q3 2012. In Canada, Medical Futures launched the product in March 2012 under the trade name Durela®, with a dedicated sales force comprising 22 representatives. Following its strong performance in Q2 2013, the product continued to demonstrate steady improvement, with a 25% growth in sales during Q3 2013.

In Q2 2013, Cipher out-licensed the Latin American distribution rights for CIP-TRAMADOL ER to Tecnofarma International Ltd. Cipher is working closely with Tecnofarma in preparing regulatory submissions for certain countries in Latin America.
Cipher is also actively pursuing marketing partners for CIP-TRAMADOL ER and CIP-ISOTRETINOIN in other territories.
Other Products

In Q3 2012, Cipher obtained exclusive license and distribution rights in Canada to market the Betesil® Patch, a novel, patent-protected, self-adhesive medicated plaster for the treatment of inflammatory skin conditions such as plaque psoriasis. The efficacy and safety of the Betesil® Patch has been established in three successful phase III trials, and the product is currently marketed in several European countries. Cipher is working with its partner, Institut Biochimique SA, on a New Drug Submission for the product, and will provide additional detail on expected timelines and plans in the coming months.

In addition, the Company is seeking other late-stage to commercial-stage product candidates targeting specialty markets to support its commercial marketing and sales presence in Canada.

3 Source: IMS Health

4 Source: IMS Health

Notice of Conference Call
Cipher will hold a conference call today, October 30, 2013, 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) is a growing specialty pharmaceutical company with three commercial products and a fourth in development. Our product candidates are typically improved formulations of successful, currently marketed drugs. We in-license a product, manage the required clinical development and regulatory approval process, and either out-license it to a marketing partner, or, in Canada, we may market the product ourselves. Our core capabilities are in clinical and regulatory affairs, product licensing, supply chain management, and marketing and sales. Since the Company was founded in 2000, we have achieved final regulatory approval in the U.S. and Canada for all three of our original products and completed six marketing partnerships, generating growing licensing revenue.

Cipher Pharmaceuticals Inc.
Balance Sheets

As at September 30, 2013 and December 31, 2012
(in thousands of Canadian dollars - unaudited)



September 30, December 31,
2013 2012
$ $
ASSETS

Current assets
Cash and cash equivalents 20,035 15,843
Accounts receivable 9,220 3,185
Inventory 318 -
Prepaid expenses and other assets 200 212
29,773 19,240

Property and equipment, net 21 25

Intangible assets, net 1,859 2,690

31,653 21,955

LIABILITIES

Current liabilities
Accounts payable and accrued liabilities 5,747 2,808
Current portion of deferred revenue 2,392 2,392
8,139 5,200

Deferred revenue 2,611 4,349
10,750 9,549

SHAREHOLDERS' EQUITY

Share capital 9,514 50,339
Contributed surplus 3,464 33,227
Retained earnings (Deficit) 7,925 (71,160)
20,903 12,406

31,653 21,955


Cipher Pharmaceuticals Inc.
Statements of Operations and Comprehensive Income

Three and nine month periods ended September 30, 2013 and 2012
(in thousands of Canadian dollars, except per share data - unaudited)


Three months Nine months
September 30, September 30, September 30, September 30,
2013 2012 2013 2012
$ $ $ $

Revenues
Licensing revenue 5,592 2,118 14,344 5,558
Product revenue 44 - 132 -

5,636 2,118 14,476 5,558

Expenses
Cost of product sold 12 - 39 -
Research and development 388 335 1,037 1,154
Selling, general and administrative 1,660 799 4,823 2,676
Amortization of intangible assets 277 277 831 747
Interest income (64) (47) (179) (108)

2,273 1,364 6,551 4,469

Income before income taxes 3,363 754 7,925 1,089

Provision for (recovery of) income taxes
Current 891 225 2,100 352
Deferred (891) (225) (2,100) (352)

Income and comprehensive income for the period 3,363 754 7,925 1,089


Basic earnings per share 0.14 0.03 0.32 0.04

Diluted earnings per share 0.13 0.03 0.31 0.04

Cipher Pharmaceuticals Inc.
Statements of Changes in Equity

Nine month periods ended September 30, 2013 and 2012
(in thousands of Canadian dollars - unaudited)



Retained Total
Share Contributed Earnings Shareholders'
Capital Surplus (Deficit) Equity
$ $ $ $

Balance, January 1, 2013 50,339 33,227 (71,160) 12,406

Income and comprehensive income for the period - - 7,925 7,925

Exercise of stock options 194 (93) - 101

Shares issued under the share purchase plan 141 - - 141

Share-based compensation - stock option plan - 330 - 330

Reduction of stated capital (41,160) (30,000) 71,160 -


Balance, September 30, 2013 9,514 3,464 7,925 20,903



Balance, January 1, 2012 50,172 33,032 (73,704) 9,500

Income and comprehensive income for the period - - 1,089 1,089

Exercise of stock options 8 (8) -

Shares issued under the share purchase plan 114 - - 114

Share-based compensation - stock option plan - 151 - 151

Balance, September 30, 2012 50,294 33,175 (72,615) 10,854

Cipher Pharmaceuticals Inc.
Statements of Cash Flows

Three and nine month periods ended September 30, 2013 and 2012
(in thousands of Canadian dollars - unaudited)



Three months Nine months
September 30, September 30, September 30, September 30,
2013 2012 2013 2012
$ $ $ $

Cash provided by (used in)

Operating activities
Income for the period 3,363 754 7,925 1,089
Items not affecting cash:
Depreciation of property and equipment 3 3 12 16
Amortization of intangible assets 277 277 831 747
Share-based compensation - share purchase plan 7 6 21 17
Share-based compensation - stock option plan 141 51 330 151
3,791 1,091 9,119 2,020

Changes in non-cash operating items:
Accounts receivable (1,158) (417) (6,035) (975)
Inventory 10 - (318) -
Prepaid expenses and other assets (130) (27) 12 170
Accounts payable and accrued liabilities 227 795 2,939 898
Deferred revenue (607) (698) (1,738) 4,018

Net cash generated from operating activities 2,133 744 3,979 6,131

Investing activities
Purchase of property and equipment (3) - (8) (12)
Acquisition of intangible rights - (100) - (771)

Net cash used in investing activities (3) (100) (8) (783)

Financing activities
Proceeds from shares issued under the share purchase plan 41 34 120 97
Proceeds from exercise of stock options 89 - 101 -

Net cash generated from financing activities 130 34 221 97


Increase in cash and cash equivalents 2,260 678 4,192 5,445
Cash and cash equivalents, beginning of period 17,775 14,403 15,843 9,636

Cash and cash equivalents, end of period 20,035 15,081 20,035 15,081

SOURCE Cipher Pharmaceuticals Inc.

Copyright 2013 Canada NewsWire