Theratechnologies Inc. (Theratechnologies) (TSX:TH)(NASDAQ:THER)
today announced its financial results for the third quarter ended
August 31, 2012.
Third Quarter 2012 Highlights
-- Consolidated revenues of $3,822,000
-- $1,027,000 in royalties
-- A 42% decrease in operating expenses compared to Q3 11
-- Net loss decreased to $698,000 from $4,170,000 in Q3 11
-- $24,638,000 million in liquidities at quarter-end
Third 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 August 31, 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 and unaudited consolidated financial statements
can be found at www.theratech.com, www.sedar.com or www.sec.gov.
Unless specified otherwise, all amounts in this press release are
in Canadian dollars. As used herein, EGRIFTA(TM) refers to
tesamorelin for the reduction of excess abdominal fat in
HIV-infected patients with lipodystrophy. EGRIFTA(TM) is our
trademark.
Our revenues are mainly sales of EGRIFTA(TM) 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.
Revenues generated from sale of goods amounted to $1,725,000 in
the three-month period ended August 31, 2012 and $3,860,000 in the
nine months ended August 31, 2012, compared to $1,878,000 and
$5,681,000 in the comparable periods of 2011. The higher sales in
the prior-year reflect the build-up of stocks needed by EMD Serono
for the EGRIFTA(TM) launch in the U.S. market. Revenues from sale
of goods are now more closely tied to sales to patients but they
can also vary significantly as a function of EMD Serono's
procurement policies.
Royalties, which are almost entirely derived from the sales of
EGRIFTA(TM), are up significantly over the comparable periods in
2011 when the EGRIFTA(TM) product launch was in its early stages.
EGRIFTA(TM) royalties are paid quarterly in arrears based on the
calendar year. In the three-month period ended August 31, 2012, we
received royalty revenue of $1,027,000, an increase of 40.5% over
the $731,000 received in the second quarter of 2012 and 80.5% more
than the $569,000 received in the comparable three-month period in
2011. In the nine-month period ended August 31, 2012, we received
royalty revenue of $2,599,000, compared to $772,000 in the
comparable period of 2011, an increase of 236.7%.
Our 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- and nine-month periods ended August
31, 2012, amounts of $1,070,000 and $3,209,000 were recognized as
revenue related to this transaction, compared to $1,070,000 and
$4,065,000 in the comparable periods of 2011. The decrease in the
amortization amount for the nine-month period reflects a change
made in 2011 to the service period attributed to the initial
payment. The initial payment will be fully amortized by year end
2013.
Reflecting the variations in product sales, royalties and
amortization of the initial payment described above, consolidated
revenues for the three- and nine-month periods ended August 31,
2012 amounted to $3,822,000 and $9,668,000, compared to $3,517,000
and $10,518,000 in the comparable periods of 2011.
For the three- and nine-month periods ended August 31, 2012, the
cost of sales of EGRIFTA(TM) amounted to $1,704,000 and $3,733,000
compared to $1,971,000 and $7,128,000 in the comparable periods of
2011. In the previous year, the cost of sales exceeded revenue due
to an accounting requirement that we expense certain historical
inventory costs as well as the costs related to validating back-up
suppliers for raw materials and finished goods. The old inventory
is now essentially depleted; however, quarter-over-quarter
variations in gross margins will continue to be experienced due to
the costs associated with validating additional suppliers and other
indirect manufacturing costs. Cost of sales is detailed in note 4
"cost of sales" of our unaudited consolidated financial statements
for the three- and nine-month periods ended August 31, 2012 and
August 31, 2011.
Research and development, or R&D, expenses, net of tax
credits, for the three- and nine-month periods ended August 31,
2012 amounted to $1,724,000 and $4,447,000 compared to $2,907,000
and $8,972,000 in the comparable periods of 2011, decreases of
40.7% and 50.4% respectively. The significant reduction in R&D
expenses is largely attributable to restructuring and the adoption
of a more focused business plan. R&D expenses in the nine
months ended August 31, 2012 were associated with pursuing the
development of TH1173 and the new formulation of EGRIFTA(TM), the
two Phase 4 clinical trials, and helping our commercial partners to
pursue regulatory approvals in their respective jurisdictions.
Selling and market development expenses for the three- and
nine-month periods ended August 31, 2012 amounted to $219,000 and
$736,000 compared to $443,000 and $1,489,000 in the comparable
periods of 2011, decreases of 50.6% in both cases. With licensing
agreements now in place in major markets, the ongoing selling and
market development expenses are reduced to the costs of managing
relationships with our commercial partners and other business
development activities.
General and administrative expenses for the three- and
nine-month periods ended August 31, 2012 amounted to $1,068,000 and
$4,906,000 compared to $2,124,000 and $9,034,000 in the comparable
periods of 2011, decreases of 49.7% and 45.7% respectively. The
expenses in the 2012 periods were considerably lower as a result of
the restructuring and adjustments to remuneration. In addition, the
expenses in 2011 included the cost of the proposed financing and
listing our shares on NASDAQ as well as costs related to the change
in leadership of the Company.
Finance income for the three- and nine-month periods ended
August 31, 2012 was $180,000 and $698,000 compared to $455,000 and
$1,282,000 in the comparable periods of 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.
Taking into account the revenues and expenses described above,
the net loss for the three months ended August 31, 2012 decreased
significantly to $698,000, compared to $4,170,000 in the comparable
period of 2011. For the nine-month period ended August 31, 2012 the
net loss was $9,599,000 (including $6,176,000 of restructuring
costs) compared to $16,043,000 (including $716,000 of restructuring
costs) in the comparable period of 2011. On a per share basis, the
net loss for three months ended August 31, 2012 was $0.01 compared
to $0.07 in the comparable period of 2011. Net loss per share for
the nine months ended August 31, 2012 was $0.16 (including the per
share impact of the restructuring costs) compared to $0.26 in the
comparable period of 2011.
As at August 31, 2012, liquidities, which include cash and
bonds, amounted to $24,352,000 and tax credits and grants
receivable amounted to $286,000, for a total of $24,638,000
compared to $24,517,000 at the end of the second quarter.
Positive cash flows from operating activities of $491,000 in the
three-month period ended August 31, 2012, contributed to the
liquidity increase. The positive cash flows reflect the significant
decrease in net loss and favorable fluctuations in working capital
elements. In the comparable period of 2011, the cash flows used in
operating activities amounted to $9,175,000.
Cash flows used in operating activities for the nine-month
period ended August 31, 2012 amounted to $11,878,000 compared to
$24,896,000 in the comparable period of 2011. The current-year
amount includes the cash impact of the December 2011
restructuring.
For the three months ended August 31, 2012, cash used in
operating activities, before changes in operating assets and
liabilities amounted to $537,000, and change in deferred revenue
amounted to $1,072,000, totaling $1,609,000 for the period.
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.com and
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.
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 tesamorelin for the reduction of
excess abdominal fat in HIV-infected patients with lipodystrophy
will receive approvals in the territories where we have marketing
applications for tesamorelin pending, the safety and efficacy data
gathered through the development of tesamorelin will be accepted by
the regulatory authorities where marketing applications for
tesamorelin are pending and no additional clinical studies will be
required by regulatory authorities to obtain regulatory approval of
tesamorelin. These risks and uncertainties include, but are not
limited to, the risk that tesamorelin is not approved in the
jurisdictions where marketing applications are pending and the risk
that, even if approved, revenue and royalties we expect to generate
from sales of EGRIFTA(TM) are not high enough to sustain our
business.
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.com and at www.sec.gov under 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.
Contacts: Roch Landriault NATIONAL Public Relations 514
843-2345
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