Novelion Therapeutics Inc. (NASDAQ:NVLN), a biopharmaceutical
company dedicated to developing and commercializing therapies for
individuals living with rare diseases (“Novelion” or the
“Company”), today reported financial results for the fourth quarter
and full year ended December 31, 2017 and provided an overview of
recent business activities.
Chief Operating Officer Jeff Hackman said, “We
are focused on executing near-term plans that we believe will
position our company for sustainable future growth. These
priorities include cost control and expense management, reviewing
our holding and capital structure with a view toward optimizing our
assets for shareholders, advancing the metreleptin development
program, and continuing to provide important therapies to our
patients.”
Business Update
- JUXTAPID: Novelion reported net revenues of
JUXTAPID of $20.1 million in the fourth quarter of 2017, $14.2
million, or 71%, of which were from prescriptions written in the
U.S.
- MYALEPT: Novelion reported net revenues of
MYALEPT of $18.8 million in the fourth quarter of 2017, $13.3
million, or 71%, of which were from prescriptions written in the
U.S.
- Novelion reported total consolidated net revenues of $138.4
million for the year ended December 31, 2017.
- Novelion ended 2017 with $55.4 million in unrestricted cash,
compared with $70.5 million at the end of the third quarter of
2017.
- As announced separately today, subsidiary Aegerion
Pharmaceuticals entered into a new secured financing facility with
affiliates of Sarissa Capital Management and Broadfin Capital LLC
providing for a $20 million term loan to Aegerion, strengthening
Aegerion's balance sheet and liquidity, and positioning the
Company for ongoing capital structure review.
- In January 2018, Novelion undertook significant cost reduction
plans as it continues to manage its limited cash resources.
- With respect to its European application to register
metreleptin for marketing authorization, after taking into account
the results of an oral hearing of the European Medicines Agency’s
Committee for Medicinal Products for Human Use (“CHMP”), which
occurred in February 2018, the Company expects the opinion of the
CHMP in the second quarter of 2018 and the European Commission’s
approval decision in mid-2018.
Fourth Quarter 2017 Financial
Results
On November 29, 2016, the Company completed its
acquisition of Aegerion Pharmaceuticals, Inc. (“Aegerion”). The
acquisition has been accounted for as a business combination in
which Novelion was considered the acquirer of Aegerion. As such,
under U.S. Generally Accepted Accounting Principles (“GAAP”), the
financial statements of Novelion are treated as the historical
financial statements of the consolidated companies, with the
results of Aegerion being included from November 29, 2016. This
release also includes pro forma adjusted non-GAAP financial
information showing pro forma results of operations of Novelion as
if the acquisition had occurred on January 1, 2016. Reconciliation
of the financial results on a GAAP versus non-GAAP basis are
provided below the financial information that follows.
GAAP total net revenues for the fourth quarter
of 2017 were $38.9 million compared to the prior year’s fourth
quarter net revenues of $13.6 million. GAAP net revenues for
JUXTAPID in the fourth quarter of 2017 were $20.1 million compared
to $8.6 million in the prior year. GAAP net revenues for MYALEPT in
the fourth quarter of 2017 were $18.8 million compared to $5.0
million for the same period in 2016.
GAAP total operating expenses for the fourth
quarter of 2017 were $35.9 million compared to total operating
expenses of $22.0 million for the same period in 2016. GAAP
SG&A expenses were $24.1 million in the fourth quarter of 2017
compared to $16.0 million for the same period in 2016. GAAP R&D
expenses were $11.8 million in the fourth quarter of 2017 compared
to $6.0 million for the same period in 2016.
On a pro forma basis, during the fourth quarter
of 2017, SG&A expenses were $22.5 million compared to $55.9
million for the same period in 2016. The decrease in pro forma
SG&A expenses in the fourth quarter of 2017 compared with the
same period in 2016 was primarily related to a reduction in
headcount and legal and consulting fees.
On a pro forma basis, during the fourth quarter
of 2017, R&D expenses were $11.6 million compared to $14.2
million for the same period in 2016. The decrease in pro forma
R&D expenses in the fourth quarter of 2017 compared with the
same period in 2016 was primarily related to a reduction in
headcount and the timing of vendor related activities.
GAAP net loss in the fourth quarter of 2017 was
$24.6 million compared to GAAP net loss of $19.9 million during the
same period in 2016.
On a pro forma basis, net loss in the fourth
quarter of 2017 was $3.3 million, compared to $20.1 million for the
same period in 2016.
Full Year 2017 Financial
Results
GAAP total net revenues for the year ended
December 31, 2017 were $138.4 million compared to $13.6 million in
2016. GAAP net revenues for JUXTAPID for the year ended December
31, 2017 were $72.1 million compared to $8.6 million in 2016. GAAP
net revenues for MYALEPT for the year ended December 31, 2017 were
$66.3 million compared to $5.0 million in 2016.
GAAP total operating expenses for the year ended
December 31, 2017 were $148.0 million compared to total operating
expenses of $44.3 million in 2016. GAAP SG&A expenses were
$96.5 million for the year ended December 31, 2017 compared to
$29.5 million in 2016. GAAP R&D expenses were $49.0 million for
the year ended December 31, 2017 compared to $14.8 million in
2016.
Cost of product sales were $77.2 million in the
year ended December 31, 2017. Cost of product sales in the current
year includes $18.8 million reserves recorded for excess and
obsolete inventory, which are derived from projected sales
activities, respective product shelf-life and their respective fair
value. Additionally, cost of product sales was also comprised of
the cost of inventory sold, amortization of acquired product
rights, which resulted from the acquisition of Aegerion, and
estimated royalties payable related to the sales of lomitapide and
metreleptin. We expect cost of product sales for metreleptin to
increase in 2018 and for the next several years, due primarily to
an increasing time-based royalty rate on net sales of metreleptin
in the U.S.
On a pro forma basis, for the year ended
December 31, 2017, SG&A expenses were $90.7 million compared to
$200.1 million in 2016. For the year ended December 31, 2017,
R&D expenses on a pro forma basis were $48.2 million compared
to $52.1 million in 2016.
GAAP net loss for the year ended December 31,
2017 was $126.7 million compared to GAAP net loss of $52.9 million
in 2016.
On a pro forma basis, net loss for the year
ended December 31, 2017 was $30.0 million, compared to $136.0
million in 2016.
As of December 31, 2017, the Company’s
consolidated unrestricted cash balance was $55.4 million, compared
to $70.5 million at September 30, 2017 and $108.9 million at
December 31, 2016. As of December 31, 2017, there were 18.7 million
shares outstanding. At December 31, 2017, total debt principal was
$325 million, reflecting the principal amount of convertible debt,
before discount, issued by Aegerion and consolidated as a result of
the acquisition.
About Novelion Therapeutics
Novelion Therapeutics is a biopharmaceutical
company dedicated to developing new standards of care for
individuals living with rare diseases. Novelion has a rare disease
product portfolio through its subsidiary, Aegerion Pharmaceuticals,
Inc. The Company seeks to advance its portfolio of rare disease
therapies by investing in science and clinical development.
Non-GAAP Results
The non-GAAP results in this press release,
including, without limitation, non-GAAP net revenues, non-GAAP
operating expenses, non-GAAP R&D expenses, non-GAAP SG&A
expenses and non-GAAP net loss, are provided as a complement to
results provided in accordance with GAAP because management
believes, when considered together with the GAAP information, these
non-GAAP financial measures help indicate underlying trends in the
Company's business, are important in comparing current results with
prior period results and provide additional information regarding
the Company’s financial performance. In particular, management
believes that the pro forma financial information facilitates the
evaluation of the impact of Novelion’s acquisition of Aegerion on
the business and performance of the Company. Management also uses
these non-GAAP financial measures to establish budgets and
operational goals that are communicated internally and externally,
and to manage the Company's business and evaluate its performance.
The non-GAAP financial measures have no standardized meaning under
GAAP and therefore may not be comparable to similar measures
presented by other companies. The non-GAAP financial measures are
not intended to be considered in isolation or as a substitute for,
or superior to, the financial measures prepared and presented in
accordance with GAAP and should be reviewed in conjunction with the
relevant GAAP financial measures. A reconciliation of the GAAP
financial results to non-GAAP financial results is included in the
attached financial information.
Forward-Looking Statements
Certain statements in this press release
constitute “forward-looking statements” of Novelion within the
meaning of applicable laws and regulations and constitute
“forward-looking information” within the meaning of applicable
securities laws. Any statements contained herein which do not
describe historical facts, including statements regarding
expectations and beliefs about the Company’s near-term plans and
the Company’s position for sustainable future growth; expectations
as to the opinion of the CHMP and the European Commission’s
approval decision, including timing; expectations that the cost of
product sales for metreleptin will increase in 2018 and for the
next several years; and our capital structure review are
forward-looking statements which involve risks and uncertainties
that could cause actual results to differ materially from those
discussed in such forward-looking statements. Such risks and
uncertainties include, among others, risks associated with
Aegerion’s previously disclosed criminal plea agreement and other
government settlement arrangements (including the government’s
recitation of their assessment of the background of its case, the
settlement itself and publicity related to the settlement), the
risk that the government investigations and the settlement will
give rise to third party demands, claims or litigation that could
materially and adversely impact our results of operations,
including demands or claims by, or litigation with, third party
payers, healthcare providers, or patients or investors, for matters
related to the subject matter of or disclosure in connection with
the investigation or the settlement, the likelihood that the
investigation could lead to potential investigations, claims or
litigation by consumer protection agencies or groups, or provide a
basis for product liability claims or litigation and the adverse
effects the investigation and settlement could have on Aegerion’s
commercial operations and contracts, along with those risks
identified in our filings with the U.S. Securities and Exchange
Commission (the “SEC”), including under the heading “Risk Factors”
in our Annual Report on Form 10-K filed on March 30, 2017, our
Quarterly Report on Form 10-Q filed on November 9, 2017, our
Current Report on Form 8-K filed on January 31, 2018, and
subsequent filings (including our upcoming Annual Report on Form
10-K), with the SEC, available on the SEC’s website at www.sec.gov.
Any such risks and uncertainties could materially and adversely
affect our results of operations, profitability and cash flows,
which would, in turn, have a significant and adverse impact on our
stock price. We caution you not to place undue reliance on any
forward-looking statements, which speak only as of the date they
are made. Except as required by law, 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.
This press release also contains
“forward-looking information” that constitutes “financial outlooks”
within the meaning of applicable Canadian securities laws. This
information is provided to give investors general guidance on
management’s current expectations of certain factors affecting our
business, including our financial results. Given the uncertainties,
assumptions and risk factors associated with this type of
information, including those described above, investors are
cautioned that the information may not be an appropriate subject of
reliance for other purposes.
Investors and others should note that we
communicate with our investors and the public using our company
website, www.novelion.com, including, but not limited to, company
disclosures, investor presentations and FAQs, SEC filings, press
releases, public conference call transcripts and webcast
transcripts. The information that we post on this website could be
deemed to be material information. As a result, we encourage
investors, the media and others interested to review the
information that we post there on a regular basis. The contents of
our website shall not be deemed incorporated by reference in any
filing under the Securities Act of 1933, as amended.
U.S. INDICATIONS AND IMPORTANT SAFETY
INFORMATION
JUXTAPID® (lomitapide) capsules is a microsomal
triglyceride transfer protein inhibitor indicated as an adjunct to
a low-fat diet and other lipid-lowering treatments, including
low-density lipoprotein (LDL) apheresis where available, to reduce
LDL cholesterol, total cholesterol, apolipoprotein B, and
non-high-density lipoprotein cholesterol in patients with
homozygous familial hypercholesterolemia (HoFH). LIMITATIONS OF
USE: The safety and effectiveness of JUXTAPID have not been
established in patients with hypercholesterolemia who do not have
HoFH, including those with heterozygous familial
hypercholesterolemia (HeFH). The effect of JUXTAPID on
cardiovascular morbidity and mortality has not been determined.
JUXTAPID can cause elevations in transaminases,
as well as increases in hepatic fat, with or without concomitant
increases in transaminases. Because of the risk of hepatotoxicity,
JUXTAPID is available only through a restricted distribution
program called the JUXTAPID REMS PROGRAM. For more detailed
information, please see additional Important Safety
Information and the Prescribing Information for
JUXTAPID.
MYALEPT® (metreleptin) for injection is a
leptin analog indicated as an adjunct to diet as replacement
therapy to treat the complications of leptin deficiency in patients
with congenital or acquired generalized lipodystrophy. LIMITATIONS
OF USE: The safety and effectiveness of MYALEPT for the
treatment of complications of partial lipodystrophy or for the
treatment of liver disease, including nonalcoholic steatohepatitis
(NASH), have not been established.
Anti-metreleptin antibodies with neutralizing
activity have been identified in patients treated with MYALEPT.
T-cell lymphoma has been reported in patients with acquired
generalized lipodystrophy, both treated and not treated with
MYALEPT. For more detailed information, please see
additional Important Safety Information and
the Prescribing Information for MYALEPT.
CONTACT:
Amanda Murphy, Director, Investor Relations
& Corporate CommunicationsNovelion
Therapeutics857-242-5024amanda.murphy@novelion.com
Novelion Therapeutics
Inc.Consolidated Statements of
Operations(in thousands, except per share
amounts)(unaudited) |
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net revenues |
$ |
38,908 |
|
|
$ |
13,574 |
|
|
$ |
138,438 |
|
|
$ |
13,574 |
|
Cost of product
sales |
16,993 |
|
|
5,971 |
|
|
77,220 |
|
|
5,971 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling,
general and administrative |
24,111 |
|
|
15,953 |
|
|
96,472 |
|
|
29,525 |
|
Research
and development |
11,772 |
|
|
6,010 |
|
|
49,008 |
|
|
14,784 |
|
Restructuring charges |
(4 |
) |
|
— |
|
|
2,536 |
|
|
— |
|
Total operating
expenses |
35,879 |
|
|
21,963 |
|
|
148,016 |
|
|
44,309 |
|
Loss from
operations |
(13,964 |
) |
|
(14,360 |
) |
|
(86,798 |
) |
|
(36,706 |
) |
Interest expense,
net |
(10,315 |
) |
|
(3,200 |
) |
|
(39,037 |
) |
|
(2,960 |
) |
Fair value loss on
investment |
— |
|
|
— |
|
|
— |
|
|
(10,740 |
) |
Other expense, net |
(468 |
) |
|
(1,791 |
) |
|
(292 |
) |
|
(1,999 |
) |
Loss before provision
for income taxes |
(24,747 |
) |
|
(19,351 |
) |
|
(126,127 |
) |
|
(52,405 |
) |
Benefit (Provision) for
income taxes |
179 |
|
|
(569 |
) |
|
(583 |
) |
|
(465 |
) |
Net loss |
$ |
(24,568 |
) |
|
$ |
(19,920 |
) |
|
$ |
(126,710 |
) |
|
$ |
(52,870 |
) |
Net loss per common
share—basic and diluted |
$ |
(1.32 |
) |
|
$ |
(1.48 |
) |
|
$ |
(6.81 |
) |
|
$ |
(4.69 |
) |
Weighted-average shares
outstanding—basic and diluted |
18,666 |
|
|
13,423 |
|
|
18,616 |
|
|
11,284 |
|
Novelion Therapeutics
Inc.Consolidated Balance
Sheets(in thousands) |
|
|
December 31, 2017 |
|
December 31, 2016 |
Cash and cash
equivalents |
$ |
55,430 |
|
|
$ |
108,927 |
|
Restricted cash |
253 |
|
|
390 |
|
Accounts receivable,
net |
22,191 |
|
|
9,339 |
|
Inventories |
49,826 |
|
|
74,721 |
|
Insurance proceeds
receivable |
— |
|
|
22,000 |
|
Prepaid expenses and
other current assets |
11,183 |
|
|
9,762 |
|
Property and equipment,
net |
2,920 |
|
|
4,159 |
|
Intangible assets,
net |
225,272 |
|
|
250,324 |
|
Other assets |
2,247 |
|
|
1,160 |
|
Total
assets |
$ |
369,322 |
|
|
$ |
480,782 |
|
|
|
|
|
Accounts payable and
accrued liabilities |
$ |
55,638 |
|
|
$ |
54,789 |
|
Provision for legal
settlement |
39,612 |
|
|
64,010 |
|
Convertible notes,
net |
258,538 |
|
|
225,584 |
|
Other liabilities |
596 |
|
|
612 |
|
Total
liabilities |
354,384 |
|
|
344,995 |
|
Total stockholders’
equity |
14,938 |
|
|
135,787 |
|
Total
liabilities and stockholders’ equity |
$ |
369,322 |
|
|
$ |
480,782 |
|
Novelion Therapeutics
Inc.Reconciliation of GAAP to Non-GAAP Financial
Information(in thousands, except per share
amounts)(unaudited) |
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net loss
reconciliation: |
|
|
|
|
|
|
|
GAAP net loss |
$ |
(24,568 |
) |
|
$ |
(19,920 |
) |
|
$ |
(126,710 |
) |
|
$ |
(52,870 |
) |
Stock-based compensation |
1,118 |
|
|
412 |
|
|
4,537 |
|
|
665 |
|
Amortization of acquired intangible assets |
6,274 |
|
|
2,134 |
|
|
25,052 |
|
|
2,134 |
|
Amortization of debt discount |
8,750 |
|
|
3,253 |
|
|
32,954 |
|
|
3,253 |
|
Inventory
fair value step-up |
5,113 |
|
|
677 |
|
|
31,613 |
|
|
677 |
|
2016
Aegerion non-GAAP net loss (Note 1) |
— |
|
|
(6,830 |
) |
|
— |
|
|
(90,024 |
) |
Restructuring charge related to acquisition |
(4 |
) |
|
180 |
|
|
2,536 |
|
|
180 |
|
Non-GAAP net loss |
$ |
(3,317 |
) |
|
$ |
(20,094 |
) |
|
$ |
(30,018 |
) |
|
$ |
(135,985 |
) |
|
|
|
|
|
|
|
|
GAAP net loss per
common share - basic and diluted |
$ |
(1.32 |
) |
|
$ |
(1.48 |
) |
|
$ |
(6.81 |
) |
|
$ |
(4.69 |
) |
|
|
|
|
|
|
|
|
Non-GAAP net loss per
common share - basic |
$ |
(0.18 |
) |
|
$ |
(1.50 |
) |
|
$ |
(1.61 |
) |
|
$ |
(12.05 |
) |
|
|
|
|
|
|
|
|
GAAP and Non-GAAP
weighted-average common shares outstanding — basic |
18,666 |
|
|
13,423 |
|
|
18,616 |
|
|
11,284 |
|
|
|
|
|
|
|
|
|
Net revenues
reconciliation: |
|
|
|
|
|
|
|
GAAP net revenues |
$ |
38,908 |
|
|
$ |
13,574 |
|
|
$ |
138,438 |
|
|
$ |
13,574 |
|
2016
Aegerion revenues (Note 1) |
— |
|
|
24,038 |
|
|
— |
|
|
139,671 |
|
Non-GAAP net
revenues |
$ |
38,908 |
|
|
$ |
37,612 |
|
|
$ |
138,438 |
|
|
$ |
153,245 |
|
|
|
|
|
|
|
|
|
Cost of product
sales reconciliation: |
|
|
|
|
|
|
|
GAAP cost of product
sales |
$ |
16,993 |
|
|
$ |
5,971 |
|
|
$ |
77,220 |
|
|
$ |
5,971 |
|
Amortization of acquired intangible assets |
(6,274 |
) |
|
(2,134 |
) |
|
(25,052 |
) |
|
(2,134 |
) |
Inventory
fair value step-up |
(4,390 |
) |
|
(677 |
) |
|
(29,585 |
) |
|
(677 |
) |
Aegerion
non-GAAP cost of product sales (Note 1) |
— |
|
|
(116 |
) |
|
— |
|
|
33,417 |
|
Non-GAAP cost of
product sales |
$ |
6,329 |
|
|
$ |
3,044 |
|
|
$ |
22,583 |
|
|
$ |
36,577 |
|
|
|
|
|
|
|
|
|
Selling, general and administrative
reconciliation: |
GAAP selling, general
and administrative |
$ |
24,111 |
|
|
$ |
15,953 |
|
|
$ |
96,472 |
|
|
$ |
29,525 |
|
Stock-based compensation |
(907 |
) |
|
(382 |
) |
|
(3,721 |
) |
|
(541 |
) |
Inventory
fair value step-up |
(723 |
) |
|
— |
|
|
(2,028 |
) |
|
— |
|
Aegerion
non-GAAP SG&A (Note 1) |
— |
|
|
40,316 |
|
|
— |
|
|
171,114 |
|
Non-GAAP selling,
general and administrative |
$ |
22,481 |
|
|
$ |
55,887 |
|
|
$ |
90,723 |
|
|
$ |
200,098 |
|
|
|
|
|
|
|
|
|
Research and
development reconciliation: |
|
|
|
|
|
|
|
GAAP research and
development |
$ |
11,772 |
|
|
$ |
6,010 |
|
|
$ |
49,008 |
|
|
$ |
14,784 |
|
Stock-based compensation |
(211 |
) |
|
(30 |
) |
|
(816 |
) |
|
(124 |
) |
Aegerion
non-GAAP R&D (Note 1) |
— |
|
|
8,244 |
|
|
— |
|
|
37,417 |
|
Non-GAAP research and
development |
$ |
11,561 |
|
|
$ |
14,224 |
|
|
$ |
48,192 |
|
|
$ |
52,077 |
|
Note 1 - Includes
financial information from pre-merger Aegerion for the two and
eleven months ended November 29, 2016, excluding stock based
compensation, amortization of acquired intangible assets,
amortization of debt discount and deferred financing fees,
inventory fair value step-up, restructuring expense and goodwill
impairment.
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