Mr. Luc Tanguay reports
THERATECHNOLOGIES ANNOUNCES FINANCIAL RESULTS FOR SECOND QUARTER OF 2013
Theratechnologies Inc. has released its financial results for the second quarter ended May 31, 2013.
Second quarter financial highlights
- Revenues of $2,331,000;
- Royalties of $872,000;
- Decrease in expenses for selling and market development, general and
administrative, and R&D (research and development) by 20.9 per cent to $2,766,000 in total;
- Net loss of $1,382,000;
- $13,726,000 in liquidities available at quarter-end.
"Financial parameters are now going in the right direction. After going through significant cost-control measures, we are keeping expenses under tight control while working on generating more revenues from EGRIFTA in the United States and elsewhere around the world," said Luc Tanguay, president and chief executive officer of Theratechnologies.
"In the short term, our focus will be to support our partner in Latin America toward the approval in Mexico and Brazil, to meet with local regulatory authorities to better assess our refiling strategy in Europe and to prepare for the meeting with the scientific advisory committee of Health Canada," concluded Mr. Tanguay.
Second quarter financial results
The financial results presented in this press release are taken from the company's management's discussion and analysis and unaudited consolidated financial statements for the period ended May 31, 2013, which have been prepared in accordance with international financial reporting standards. The MD&A for the second quarter ended May 31, 2013, and the unaudited consolidated financial statements can be found at the company's website or SEDAR.
The company's revenues are mainly royalties received from EMD Serono on EGRIFTA sales to United States customers, sales of EGRIFTA to EMD Serono for resale and the amortization of the initial payment received upon the closing of the agreement with EMD Serono. Consolidated revenue for the three- and six-month periods ended May 31, 2013, amounted to $2,331,000 and $4.13-million compared with $2,656,000 and $5,846,000 in the comparable periods of fiscal 2012.
Revenue generated from the sale of goods in the three- and six-month periods ended May 31, 2013, was $996,000 and $1,447,000 compared with $856,000 and $2,135,000 in the comparable periods in fiscal 2012, reflecting variations in the transfer price and the quantities shipped. The 2013 transfer price for EGRIFTA is lower than it was in the comparable periods of 2012 as a result of the single-vial presentation introduced in October, 2012. The percentage markup that the company is entitled to under the terms of its agreement with EMD Serono is unchanged. In the second quarter of fiscal 2013 the quantity shipped was higher than in the comparable quarter of 2012 while in the first quarter the quantity shipped was lower than in the comparable quarter of 2012. While the company's shipments can be expected to track sales to customers over time, they vary significantly in the short term as a function of EMD Serono's procurement policies.
Royalties were $872,000 and $1,756,000 in the three- and six-month periods ended May 31, 2013, compared with $731,000 and $1,572,000 in 2012. The reported royalties in the fiscal 2013 periods include the actual royalties earned from Dec. 1, 2012, until March 31, 2013, and an estimate of the royalties earned in April and May of 2013. In the fiscal 2012 periods, the reported royalties include the actual royalties earned from Oct. 1, 2011, until March 31, 2012.
Revenue related to the amortization of the initial payment received upon the closing of the EMD Serono agreement was $463,000 and $927,000 for the three- and six-month periods ended May 31, 2013, compared with $1,069,000 and $2,139,000 in the comparable periods of fiscal 2012. The lower amortization amounts in fiscal 2013 reflect an extension made to the service period attributed to the initial payment in order to allow sufficient time for work that has yet to be completed.
For the three- and six-month periods ended May 31, 2013, the cost of sales of EGRIFTA amounted to $1,065,000 and $1,733,000 compared with $692,000 and $2,029,000 in the comparable periods of 2012. Cost of sales includes the cost attributed to goods sold in the period as well as other costs related to the manufacture and supply of EGRIFTA. In 2013, these other costs include: the costs related to implementing manufacturing corrective measures required by the Brazilian regulatory authorities, a loss of $192,000 which occurred during the conversion of raw materials into finished goods in January, 2013, as well as costs associated with the company's actions to remedy the production issues and resume production. Variations in gross margins are expected to continue due to the absorption of indirect manufacturing costs.
Research and development expenses, net of tax credits, for the three- and six-month periods ended May 31, 2013, were $1,791,000 and $3,246,000 compared with $1.41-million and $2,723,000 in the comparable periods of 2012. R&D expenses in 2013 are principally the company's share of the costs of the two phase 4 clinical trials, and expenses associated with pursuing regulatory approvals. In 2012, R&D activities included developing a new formulation of EGRIFTA, the preclinical development of TH1173 as well as the pursuit of regulatory approvals.
Selling and market development expenses for the three- and six-month periods ended May 31, 2013, amounted to $69,000 and $131,000 compared with $256,000 and $517,000 in the comparable periods of 2012. The company's selling and market development expenses activities are now principally the costs associated with managing relationships with commercial partners.
General and administrative expenses for the three- and six-month periods ended May 31, 2013, amounted to $906,000 and $1,873,000 compared with $1,795,000 and $3,838,000 in the comparable periods of 2012. The expenses are considerably lower in 2013, reflecting the benefits of restructuring and adjustments to remuneration.
There were no restructuring costs incurred in the three months ended May 31, 2013. However, in the first three months of fiscal 2013, the company reversed restructuring costs in the amount of $3,093,000, which compared with an expense of $6,173,000, including an onerous lease provision of $4,055,000, in the comparable period of 2012. The lease amendment agreement in April, 2013, triggered the reversal of the remaining portion of this provision in the amount of $3,119,000 after deducting expenses related to the agreement.
Finance income for the three- and six-month periods ended May 31, 2013, was $166,000 and $326,000 compared with $241,000 and $518,000 in the comparable periods of 2012. Interest revenues in 2013 were lower than 2012 due to the gradual decline in the portfolio size as investments are liquidated to finance operations.
Finance costs for the three- and six-month periods ended May 31, 2013, were $31,000 and $71,000 compared with $51,000 and a gain of $16,000 in the comparable periods of 2012.
Taking into account the revenues and expenses described above, the net loss for the three-month period ended May 31, 2013, was $1,382,000. For the six-month period ended May 31, 2013, the company recorded a net profit of $478,000. These results compare with net losses of $1,417,000 and $8,901,000 in the comparable periods of 2012. On a per-share basis, the net loss for the three-month period ended May 31, 2013, two cents and the net profit for the six-month period was one cent. These results compare with net losses of two cents and 15 cents in the comparable periods of 2012.
As at May 31, 2013, liquidities, which include cash and bonds, amounted to $13,249,000 and tax credits and grants receivable amounted to $477,000, for a total of $13,726,000 compared with $20,924,000 at Nov. 30, 2012.
Cash flows used in operating activities for the three-month period ended May 31, 2013, amounted to $4,071,000, which includes the one-time fee of $1.8-million paid in respect to the lease amendment agreement, compared with $4.44-million in the comparable period of 2012. In the six months ended May 31, 2013, cash flows used in operating activities were $6,955,000 (including the one-time fee of $1.8-million) compared with $12,369,000 in the comparable period of 2012.
Conference call details
A conference call will be held today at 8:30 a.m. Eastern Time to discuss the results. The call will be hosted by Luc Tanguay, president and chief executive officer. The conference call will be open to questions from financial analysts. Media and other interested individuals are invited to participate in the call on a listen-only basis.
The conference call can be accessed by dialling 1-800-732-6870 (North America) or 1-416-981-9000 (international). The conference call will also be accessible via webcast. Audio replay of the conference call will be available until July 24, 2013, by dialling 1-800-558-5253 (North America) or 1-416-626-4100 (international) and by entering the playback code 21661229.
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