Aequus Provides Third Quarter 2019 Financial Highlights
VANCOUVER, November 29, 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 three months ended September 30, 2019 (“Q3 2019”) and associated Company developments. Unless otherwise noted, all figures are in Canadian currency.
“Aequus has continued to advance the business in Q3, signing a key collaboration with Medicom Healthcare which adds a collection of market-ready ophthalmology products along with late-stage development assets to our growing ophthalmology franchise in Canada,” said Doug Janzen, Charmain and CEO of Aequus. “This collaboration with Medicom fits perfectly into our goals and vision for the franchise. Aequus looks forward to continuing our business development efforts in the coming quarters and finishing the year strong with our current set of revenue-generating products.
Revenues in the third quarter in 2019 were $370,799, a 12% decrease over the same quarter in 2018 (“Q3 2018”). The decreases seen can be attributed to a strong Q3 2018 and the previously disclosed decrease in royalty share that took place on January 1, 2019.
“Despite the challenges of a decrease in the partner royalties, volume growth in ophthalmology grew by 81% Q3 2019 vs Q3 2018,” said Ian Ball, Chief Commercial Officer of Aequus. “Additionally, our year to date volume growth in 2019 vs 2018 grew by 60% which demonstrates the momentum that our commercial organization is generating.”
- The Company expects to continue to grow product sales for both Tacrolimus and Vistitan and expects promotional marketing services revenue to increase over the duration of the contract. We experienced a one-time reduction in revenue from a reduced profit share percentage that took effect on January 1, 2019 in accordance with our tiered royalty structure set out in the Sandoz agreement which has had an effect on quarter over quarter revenue comparisons throughout 2019. There are no further reductions in the profit-split allocation under this contract. There is the potential for Aequus to receive an increase in royalty at the end of 2019 and into 2020 upon achieving specific market access milestones.
- The Company expects new revenues from sale of the Evolve products next year to be additive to existing activity and would leverage the investments we have already made in our existing sales infrastructure. Under the exclusive distribution agreement with Medicom Healthcare Ltd (“Medicom”), signed in July 2019, Aequus will receive commercial rights to the Evolve® line of preservative free dry eye products which contains 5 commercial stage products and 2 products in development, an undisclosed preservative free ophthalmic medication, and the diagnostic eye drop Fluosine for Canada. Health Canada and other International Regulatory bodies added a new manufacturing audit standard in 2019 as a requirement prior to reviewing product applications for approval. The audit process has begun with our partner, although they have not received the final report at the time of this release. Aequus has completed its regulatory work on the Health Canada applications for the 4 products and is ready to file with Health Canada as soon as the necessary audit report is received from Medicom with an expected one-month review period. We therefore expect the launch of the Evolve products in the New Year.
- Aequus has taken the decision to pause promotion of the Zepto Capsulotomy System while modifications to the handpieces are being made by the manufacturer. This decision is not expected to have a material impact on our current 2020 revenue forecasts.
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.
Operating expenses for the three months ended September 30, 2019
The Company reported a net loss of $660,532 in Q3 2019, an increase of 1% from the net loss of $651,706 in Q3 2018. The loss for the nine months ended September 30, 2019 was $2,068,750, a decrease of 3% from the net loss of $2,134,433 for the nine months ended September 30, 2018, achieved despite the one-time reduction in the royalty percentage we receive from Sandoz.
Sales and marketing costs in Q3 2019 were $417,950 when compared to $449,932 in Q3 2018, a decrease of 7% or $31,982. The majority of the decrease in Q3 2019 was related to the reduction in the advertising and promotion expenses. The Zepto product was launched in Q2 2018 and promoted and advertised throughout Q3 2018 where there was no similar product launched or promoted in Q3 2019. Non-cash expenses for depreciation and amortization and share-based payments in Q3 2019 were $47,327 and $13,474 respectively, compared to $44,555 and $10,165 in Q3 2018.
Research and development project maintenance expenses in Q3 2019 were $57,280 when compared to $76,275 in Q3 2018, a decrease of 25% or $18,995. The majority of the $18,995 decrease was attributable to the decrease in consulting costs and patent and intellectual property protection costs and is a result of our focus on revenue generating ophthalmology products as opposed to development programs. There were $8,044 less consulting costs in Q3 2019 relative to Q3 2018 as the Company completed its AQS1303 pre-IND work in the prior year with no similar activity in the current year.
General administration expenses in Q3 2019 were $560,291 when compared to $546,827 in Q3 2018, an increase of 2% or $13,464. In May 2019, the Company issued new convertible debenture. In Q3 2019, Interest and accretion expenses relating to the debenture were recognized in the amounts of $21,744 and $49,144 respectively, whereas no similar debt was issued in Q3 2018. The Company made some major cost reductions in consulting, legal and professional, and share-based payments in Q3 2019 of $105,763, which were offset by the expenses related to the convertible debenture.
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. 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
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 Company expects new revenues from sale of the Evolve products next year; an increase in royalty at the end of 2019 and into 2020 upon achieving specific market access milestones; expect the launch of the Evolve products in the New Year; The Company looks to continue leveraging its existing core capabilities and commercial infrastructure to expand its presence and product offerings within ophthalmology; 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. 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.
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