Aequus Provides Financial Year End Highlights
VANCOUVER, April 24, 2019 – Aequus Pharmaceuticals Inc. (TSX-V: AQS, OTCQB: AQSZF) (“Aequus” or the “Company”), a specialty pharmaceutical company with a focus on developing, advancing and promoting differentiated products, today reported financial results for the full year ended December 31, 2018. Unless otherwise noted, all figures are in Canadian currency.
“2018 was our strongest year to date,” said Doug Janzen, Chairman and CEO of Aequus. “We achieved quarter over quarter revenue growth in all four quarters of the year for our commercial business, with Q4 revenue surpassing $500,000 for the first time before a one-time adjustment was applied. Aequus continued to grow its product portfolio with a new product launch in June, licensed a new preservative free prescription ophthalmic therapeutic to the portfolio, extended an agreement with a key existing partner (Sandoz), formed key collaborations in the medical cannabis space, and assembled a Strategic Advisory Board in ophthalmology. The momentum has continued into 2019 with a term sheet signed with Medicom Healthcare for their Evolve® line of preservative free dry eye products which Aequus plans on launching in Q3 2019.”
Key 2018 Financial Highlights
- Highest annual revenue to date, with full year 2018 total revenue of $1.4 million, an increase of 24% over $1.1 million in 2017. Q4 2018 revenue included a one-time negative adjustment of $270,113 due to expired stock from launch which was recorded during the period. Without that adjustment Q4 2018 revenue would have been $506,482.
- Full year 2018 net loss of $2.8 million, a decrease of 28% from the $3.88 million loss in 2017.
- Fourth quarter 2018 net loss of $669,307, an increase 5% over the $640,770 net loss in fourth quarter of 2017 due to the one-time revenue adjustment which was fully recognized in the quarter.
- Zepto product launch was a key variable in the 19% increase in sales and marketing costs during 2018.
Key 2018 Operational Highlights
- Launched the Zepto Precision Pulse Capsulotomy System (“Zepto”) on June 1, 2018 as a new product in Canada.
- In July 2018, Aequus extended the term and improved the economics for its promotional service agreement with Sandoz for PRVistitan™ (“Vistitan”). The term has been extended to June 2021, with an option for renewal if mutually agreed to.
- Aequus signed a term sheet with a European partner in December for an undisclosed preservative-free therapeutic in ophthalmology. The preservative free therapeutic is a prescription product, currently approved in certain countries in Europe.
- Aequus formed a Strategic Advisory Board in ophthalmology to assist in assessing and rationalizing the many ophthalmology pipeline opportunities, both in therapeutics and medical devices.
- Formed a collaboration with CannaRoyalty Corp. (“CannaRoyalty”) to advance a suite of cannabis-based therapies targeting neurological disorders into clinical trials in Canada, in collaboration with Canadian physicians and opinion leaders.
- Expanded its relationship with Corium International, Inc. (“Corium”) to include the Company’s long-acting transdermal patch, AQS1303, for the treatment of nausea and vomiting in pregnancy.
- Received positive feedback from the United States Food and Drug Administration (the “FDA”) on the Company’s pre-Investigational New Drug submission (“Pre-IND”) for the Company’s long-acting anti-nausea transdermal patch, AQS1303.
- Closed a $1.875M of equity financing during the year ended December 31, 2018.
Subsequent to December 31, 2018
- In March 2019, Aequus signed a term sheet for an exclusive license with Medicom Healthcare Ltd (“Medicom”)., a United Kingdom based pharmaceutical company with a focus on preservative free therapies in ophthalmology. The proposed license agreement is for the Canadian commercial rights to Medicom’s Evolve® line of preservative free dry eye products.
- In April 2019, Aequus announced a public offering of convertible debenture units for targeted gross proceeds of approximately $2 million - $3 million CAD. The net proceeds received by the Company from the public offering are intended to be used for regulatory applications, the launch of the recently announced Medicom products, investments in the medical cannabis space, initiation of the Trokendi clinical study, working capital, and general corporate purposes. The pricing of the offering is expected to be during the week of April 22, 2019.
Revenue during the year ended December 31, 2018 was $1,410,240, an increase of 24% in annual revenues compared to the year ended December 31, 2017. Q4 of 2018 had total revenues of $237,227. Q4 2018 revenue included a one-time negative adjustment of $270,113 due to a Sandoz factory inventory management adjustment which was recorded during the period. Without that adjustment Q4 2018 revenue would have been $507,340.
“Our commercial build continued in 2018, we grew the sales team further as well as revenues.” said Ian Ball, Chief Commercial Officer of Aequus. “Both Vistitan and Tacrolimus drove revenue growth to a record year for Aequus. Our commitment to the underserved ophthalmology space continues to pay dividends as Aequus has been able to form deep relationships with opinion leaders in Canada, evidenced by our strong advisory board in ophthalmology and our continued revenue growth. We’re excited about the addition of Medicom’s Evolve® line of dry eye products, which further expands our therapeutic range and will bring our ophthalmology product portfolio to 7 products, still leveraging our existing salesforce. 2019 will see further launches in Ophthalmology, building on our commitment to our customers to bring profitable innovation into Canada.”
The Company entered into a commercial agreement with Mynosys Cellular Devices in April of 2018 for the Canadian distribution, sales and marketing of the Zepto® Precision Pulse Capsulotomy System for cataract surgery. The Company subsequently launched the product in June of 2018 at the Canadian Ophthalmological Society’s Annual Meeting and Exhibition to great reviews. The addition of this product not only expands Aequus’ product portfolio within ophthalmology but also provides a more intimate interaction with ophthalmologists through product demos within the surgical theatre.
The Company strengthened its position within ophthalmology with the formation of a Strategic Advisory Board consisting of clinicians, commercial leaders, and regulatory expertise. The Advisory Board was formed to assist in assessing and rationalizing the many ophthalmology pipeline opportunities, both in therapeutics and medical devices, available to the Company. The advisory board will help Aequus in determining whether a product can improve patient outcomes, integrate into a clinician’s workflow, and navigate the Canadian reimbursement and commercial landscape.
In December of 2018, Aequus signed a term sheet for an exclusive license in Canada of an undisclosed preservative free ophthalmic therapeutic with a European partner. he preservative free therapeutic is a prescription product, currently approved in certain countries in Europe. Aequus has previously met with Health Canada to receive regulatory guidance regarding this therapeutic and expects to submit an application for regulatory approval in the second half of 2019 for this product, with minimal additional analytical data required to complete the data package.
More recently, in March of 2019 the Company signed a term sheet with Medicom Healthcare Ltd., a United Kingdom based pharmaceutical company with a focus on preservative free therapies in ophthalmology, for the exclusive Canadian license to their Evolve® line of preservative free dry eye products. Launched in 2015 in Europe, the Evolve® brand has grown to 5 products across 35 countries. With an array of products, the brand can address the various symptoms involved with dry eye disease and blepharitis including discomfort, stinging, burning, and dryness. Currently in Canada, the dry eye market is estimated at over $90M, which includes both prescription and over-the-counter products. The Company looks to file for regulatory approval and subsequently launch these products in Q3 2019.
The Company looks to continue leveraging its existing core capabilities and commercial infrastructure to expand its presence and product offerings within ophthalmology. Aequus has positioned itself as a key partner for international companies looking to access the Canadian marketplace. The Company will continue its strategy of adding to its existing product portfolio through promotional partnership agreements, asset acquisitions, in-licenses, and internal development programs.
The Company continued to advance its development programs in 2018. For Aequus’ AQS1303 transdermal patch for nausea and vomiting of pregnancy, Aequus completed a pre-IND meeting with the FDA in early 2018, with positive feedback confirming approval via the 505(b)(2) accelerated approval pathway in the United States. This approval pathway will allow Aequus to utilize clinical data from the approved oral form of the product, thereby reducing both timelines and costs associated with clinical trials. As well, Aequus expanded its relationship with Corium to include the optimization of AQS1303 using Corium’s Corplex™ proprietary transdermal technology. The optimization will look to improve the clinical performance of AQS1303 before entering into pivotal clinical trials towards product approval. In conjunction with this collaboration, Corium will become the exclusive manufacturing partner for AQS1303.
The Company continues to work towards approval of Topiramate XR in Canada. Aequus has had on-going dialogue with Health Canada regarding the acceptability of the FDA submission data. It is expected that Topiramate XR will be filed as a non-new active substance new drug submission (non-NAS NDS) in Canada, which will require a small pharmacokinetics bridging study. The pharmacokinetics bridging study is required to bridge the United States reference product used in the original Trokendi XR study to a Canadian equivalent reference product to validate the data under Health Canada’s regulations.
Aequus has continued its commitment to the medical cannabis space with the formation of key strategic collaborations in 2018. Aequus entered into a joint venture with CannaRoyalty, a company focused on building and supporting a diversified portfolio of growth-ready assets in high-value segments of the cannabis sector. The collaboration looks to clinically advance a number of cannabis-based therapies in partnership with Canadian clinicians. In conjunction, Aequus formed a collaboration with Ehave, a healthcare bioinformatics company focused on capturing clinical data, to enhance and streamline data management processes for Aequus-sponsored clinical trials involving cannabinoids.
Research and development expenses in the fourth quarter of 2018 were $77,730, as compared to $19,590 in the same quarter last year, and for the full year 2018, $526,935, as compared to $1,414,706 for 2017. The decrease was primarily a reduction of activity in 2018 compared to the 2017 activity related to regulatory consulting for AQS1301 and AQS1303 Pre-IND related work, the development of AQS1303 clinical trial materials and the execution of the Proof of Concept study for AQS1303.
Sales and marketing combined with general administration expenses in the fourth quarter of 2018 were $829,941, as compared to $992,882 in the same quarter last year, and for the full year 2018, $3,691,334 as compared to $3,727,176 in 2017. Increased activity related to the salesforce and travel resulted in increased costs in sales and marketing. This increase was offset with lower costs in general and administration which related to lower share-based compensation costs and general cost saving efforts.
Aequus reported a loss before other income of $669,307, an increase of 5% over the same quarter in 2017, and for the full year 2018 a net loss of $2,803,740, a decrease of 28% from 2017. This improvement in loss before other income for the year is primarily due to lower research related costs and growing revenues from its sales and marketing activities in 2018 for its two commercially promoted products, Tacrolimus IR and Vistitan™. The one-time revenue adjustment discussed above impacted the change in the comparison of the quarters.
VistitanTM: Trademark owned or used under license by Sandoz Canada Inc.
ABOUT AEQUUS PHARMACEUTICALS INC.
Aequus Pharmaceuticals Inc. (TSX-V: AQS, OTCQB: AQSZF) is a growing specialty pharmaceutical company focused on developing and commercializing high quality, differentiated products. Aequus has grown its pipeline to include several commercial products in ophthalmology and transplant, and a development stage pipeline in neurology and psychiatry with a goal of addressing the need for improved medication adherence through enhanced delivery systems. As a complement to its focus in neurology, our most recent addition to the development pipeline was a long-acting form of medical cannabis, where there is a high need for a consistent, predictable and pharmaceutical-grade delivery of products for patients. Aequus intends to commercialize its internal programs in Canada alongside its current portfolio of marketed established medicines and will look to form strategic partnerships that would maximize the reach of its product candidates worldwide. Aequus plans to build on its Canadian commercial platform through the launch of additional products that are either created internally or brought in through an acquisition or license; remaining focused on highly specialized therapeutic areas. For further information, please visit www.aequuspharma.ca.
This release may contain forward-looking statements or forward-looking information under applicable Canadian securities legislation that may not be based on historical fact, including, without limitation, statements containing the words “believe”, “may”, “plan”, “will”, “estimate”, “continue”, “anticipate”, “intend”, “expect”, “potential” and similar expressions. Forward- looking statements are necessarily based on estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as the factors we believe are appropriate. Forward-looking statements include but are not limited to statements relating to: the implementation of our business model and strategic plans; the Company’s expected revenues; the timing of public listings; the advancement of the Company’s transdermal pyridoxine/doxylamine program; the Company’s potential regional partnerships for its internal programs; the signing of an exclusive license with Medicom; the launch of the Evolve® product line in Canada; the optimization of AQS1303; the approval of Topiramate XR. Such statements reflect our current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Aequus, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements. In making the forward looking statements included in this release, the Company has made various material assumptions, including, but not limited to: obtaining positive results of clinical trials; obtaining regulatory approvals; general business and economic conditions; the Company’s ability to successfully out license or sell its current products and in-license and develop new products; the assumption that the Company’s current good relationships with its manufacturer and other third parties will be maintained; the availability of financing on reasonable terms; the Company’s ability to attract and retain skilled staff; market competition; the products and technology offered by the Company’s competitors; and the Company’s ability to protect patents and proprietary rights. In evaluating forward looking statements, current and prospective shareholders should specifically consider various factors set out herein and under the heading “Risk Factors” in the Company’s Annual Information Form dated April 24, 2019, a copy of which is available on Aequus’ profile on the SEDAR website at www.sedar.com, and as otherwise disclosed from time to time on Aequus’ SEDAR profile. Should one or more of these risks or uncertainties, or a risk that is not currently known to us materialize, or should assumptions underlying those forward-looking statements prove incorrect, actual results may vary materially from those described herein. These forward-looking statements are made as of the date of this release and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by applicable securities laws. Investors are cautioned that forward-looking statements are not guarantees of future performance and are inherently uncertain. Accordingly, investors are cautioned not to put undue reliance on forward looking statements.
Aequus Investor Relations