MISSISSAUGA, ON, Nov. 7 /PRNewswire-FirstCall/ - Cipher Pharmaceuticals Inc. (TSX: DND) today announced its financial and operational results for the three and nine months ended September 30, 2007.
"We reached important company milestones in the third quarter with the signing of our first commercial distribution agreement in the U.S. market and, toward the end of the quarter, the launch of Lipofen in the large and growing U.S. fenofibrate market," said Larry Andrews, President and CEO of Cipher. "These successes validate our core business strategy and our transition to a commercial, specialty pharmaceutical company. During the quarter, we also continued our dialogue and correspondence with the FDA on CIP-ISOTRETINOIN and CIP-TRAMADOL ER as we work diligently to advance these two products through the remaining milestones on the path to final approval."
Financial Review
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In the third quarter of 2007, the Company recorded total revenue of $149,000, compared with nil in the same period last year. Revenue for the third quarter of 2007 includes an amortized portion of the US$2 million up-front licensing fee from ProEthic. Cipher received the initial payment of US$1 million in the third quarter of 2007 and expects to receive the second payment of US$1 million in March 2008. Revenue is presented on a net basis and reflects the elements of the ProEthic licensing and distribution agreement, as well as direct product-related expenses and amounts due to Galephar, the Company's technology partner.
Research and development (R&D) expenses for the third quarter of 2007 were $0.2 million, compared with $1.4 million in the third quarter of 2006. The decrease in R&D spending reflects the advanced stage of development of the Company's current products. Operating, general and administrative (OG&A) expenses for the third quarter of 2007 were $1.1 million, compared with $0.9 million in the same period last year. The increase in OG&A is due to higher compensation expense resulting from an increase in personnel to support current growth plans, as well as stock-based compensation expense. Net loss for the three months ended September 30, 2007 was $1.1 million ($0.04 per basic and diluted share), compared with a net loss of $2.0 million ($0.08 per basic and diluted share) in the same period last year.
As at September 30, 2007, Cipher had cash and cash equivalents of $12.1 million, compared with $12.1 million as at June 30, 2007 and $15.1 million as at December 31, 2006.
Product Update
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In July 2007, Cipher entered into a licensing and distribution agreement with ProEthic Pharmaceuticals under which ProEthic was granted the exclusive right to market, sell and distribute Lipofen in the United States. The agreement with ProEthic is for a period of ten years and they have the right to extend the term for additional two-year periods. In late September 2007, ProEthic launched Lipofen 150 mg and 50 mg capsules in the U.S. market with the full effort of its sales and marketing teams. Lipofen is the lead product for ProEthic as it seeks to build its presence in the important primary care space.
During the second quarter of 2007, Cipher received a second approvable letter from the FDA pertaining to its CIP-ISOTRETINOIN NDA. In the letter, the FDA indicated that Cipher's application is approvable subject to the resolution of two remaining issues. In addition to one question related to chemistry, manufacturing and controls, which the Company has responded to, the FDA has requested that Cipher provide additional clinical safety data. The Company appealed the position taken by the FDA in its approvable letter using the formal dispute resolution process. Cipher submitted its appeal and met with the FDA on July 11, 2007. In August 2007, the Company received a response from the FDA to its request for formal dispute resolution. In the letter to Cipher, the representative from the FDA agreed with the Division of Dermatology and Dental Product's view that a clinical study is needed to further demonstrate the safety of CIP-ISOTRETINOIN. Subsequently, Cipher has had further discussions with the FDA on the issues raised in its response letter. Cipher continues to believe that the clinical questions raised by the FDA have been addressed in the NDA submission. The appeal process is ongoing.
During the second quarter of 2007, Cipher received an approvable letter from the FDA pertaining to its NDA for CIP-TRAMADOL ER, the Company's once-daily formulation of tramadol. In its letter, the FDA indicated that Cipher's application is approvable subject to the resolution of certain issues, including a request for an additional adequate clinical trial to provide further efficacy data. In subsequent discussions with the FDA, Cipher has obtained clarification on the question of efficacy. The FDA has indicated that the statistical methods used to analyze data from Cipher's clinical trials did not adequately address missing data relating to subjects who dropped out of the trials. The Company has a meeting scheduled with the FDA in November 2007 to further discuss the issues raised in the action letter. The Company will determine the most appropriate path forward to achieve final regulatory approval based in part on the outcome of these discussions with the FDA. Cipher continues to believe its submission includes sufficient efficacy data to support regulatory approval.
Notice of Conference Call
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Cipher will hold a conference call today, November 7, 2007, at 8:30 a.m. (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial 416-644-3424 or 1-800-732-1073. 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 is a drug development company focused on commercializing novel formulations of successful, currently marketed molecules using advanced drug delivery technologies. Cipher's strategy is to in-license products that incorporate proven drug delivery technologies and advance them through the clinical development and regulatory approval stages, after which the products are out-licensed to international partners. Because Cipher's products are based on proven technology platforms applied to currently marketed drugs, they are expected to have lower approval risk, shorter development timelines and significantly lower development costs. The Company's lead compound, CIP-FENOFIBRATE, received final approval from the U.S. Food and Drug Administration and Health Canada in the first quarter of 2006. The product is being marketed in the United States by ProEthic Pharmaceuticals under the label Lipofen(TM). In addition, Cipher is developing formulations of the pain reliever tramadol and the acne treatment isotretinoin.
Cipher is listed on the Toronto Stock Exchange under the symbol 'DND' and has approximately 24 million shares outstanding. For more information, please visit www.cipherpharma.com.
Forward-Looking Statements
Statements made in this news release, other than those concerning historical financial information, may be forward-looking and therefore subject to various risks and uncertainties. Some forward-looking statements may be identified by words like "may", "will", "anticipate", "estimate", "expect", "intend", or "continue" or the negative thereof or similar variations. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. Factors that could cause results to vary include those identified in the Company's Annual Information Form and other filings with Canadian securities regulatory authorities, such as the applicability of patents and proprietary technology; possible patent litigation; regulatory approval of products in the Company's pipeline; changes in government regulation or regulatory approval processes; government and third-party payer reimbursement; dependence on strategic partnerships for product candidates and technologies, marketing and R&D services; meeting projected drug development timelines and goals; intensifying competition; rapid technological change in the pharmaceutical industry; anticipated future losses; the ability to access capital to fund R&D; and the ability to attract and retain key personnel. All forward-looking statements presented herein should be considered in conjunction with such filings. The Company does not undertake to update any forward-looking statements; such statements speak only as of the date made.
SOURCE Cipher Pharmaceuticals Inc.
