Amendment on Earlier Release: Aequus Provides General Update and First Quarter 2020 Financial Highlights
VANCOUVER, June 1, 2020 – 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 March 31, 2020 (“First Quarter 2020”) and associated Company developments. Unless otherwise noted, all figures are in Canadian currency.
"Today the Company reported record quarterly revenues of $579,450 for Q1 2020, a 76% increase in revenues compared to Q1 2019,” said Doug Janzen, Chairman and CEO of Aequus. “We ended 2019 with strong sales momentum and are pleased to report a record quarter in Q1 2020, almost doubling revenues over the same period 12 months ago. The revenue growth was primarily due to increases in market access and generally higher sales volume. We also have progressed our launch plans for the Evolve line up of dry eye products and are on track to launch once a final audit certificate is issued and an approval is granted by Health Canada.”
Revenues in First Quarter 2020 were $579,450, an increase of 76% compared to revenue of $328,996 recognized in the three months ended March 31, 2019 (“First Quarter 2019”). The increases can be attributed to increased product acceptance in certain provinces which occurred during the last quarter of 2019.
In Q1 2020, the Company reduced research and marketing expenses as it continues to focus current efforts on growing commercial revenues. Responding to the inaccessibility of customers due to COVID-19, the Company saw a reduction in sales and marketing expenses with field representatives not able to travel to see customers in person as of the beginning of March 2020. As our promoted products treat chronic conditions, this temporary reduction in customer interactions is not expected to have a significant impact on revenues.
The Company reported a loss of $405,815 for First Quarter 2020, a decrease of 44% from the loss of $730,215 in First Quarter 2019. The lower loss was primarily due to higher sales and an overall decrease in expenses. The improvement in loss was offset by $163,386 in combined interest and accretion expenses recognized in general administration expenses which related to the debenture issued May 2, 2019. Whereas, the Company did not recognize any similar debenture related expenses during First Quarter 2019.
Sales and marketing costs in First Quarter 2020 were $451,146 when compared to $509,096 in First Quarter 2019, a decrease of 11% or $57,950. The majority of the decrease related to a reduction in sales activities due to the COVID-19 pandemic impacts and the removal of Zepto from the Company’s product line. Non-cash expenses for depreciation and amortization and share-based payments in First Quarter 2020 were $43,886 and $31,948 respectively, compared to $47,400 and $34,119 respectively in First Quarter 2019.
Research and development project maintenance expenses in First Quarter 2020 were $14,317 when compared to $69,078 in First Quarter 2019, a decrease of 79% or $54,762. The change was attributable to a decrease in resources directed toward development programs and is the result of our focus moving toward revenue generating commercial products.
General administration expenses in the First Quarter 2020 were $522,693 when compared to $482,531 in First Quarter 2019, an increase of 8% or $40,162. The change is primarily due to the May 2019 Convertible Debentures that were issued, resulting in interest and accretion expenses relating to the debenture of $69,735 and $93,651 respectively being recognized in First Quarter 2020, whereas no similar debt existed in First Quarter 2019. Legal expenses were $18,457 or 48% higher in First Quarter 2020 relative to the same period last year to support business development efforts. The Company recognized cost reductions in all other expense categories generally due to our response to COVID-19 and reduced business activity during the quarantine period relative to the comparable period last year.
The news release dated April 29, 2020 incorrectly stated that “On May 2, 2020, the Company issued Convertible Debenture units for gross proceeds of $2,348,000”. The statement should have read “On May 2, 2019, the Company issued Convertible Debenture units for gross proceeds of $2,348,000” to be consistent with other references in the release. We apologize for any confusion that resulted from this disclosure.
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 sales and marketing efforts 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 www.aequuspharma.ca.
FORWARD-LOOKING STATEMENT DISCLAIMER
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; revenue growth trends into the future; expected timing for product launch; the Company’s expected revenues; the continued revenue growth of its products; the Evolve line up of dry eye products on track to launch once a final audit certificate is issued and an approval is granted by Health Canada. 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 28, 2020, 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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