Mr. Craig Mull reports

CIPHER PHARMACEUTICALS REPORTS FIRST QUARTER RESULTS, HIGHLIGHTED BY RECORD CASH PER SHARE AND STRONG FINANCIAL FLEXIBILITY

Cipher Pharmaceuticals Inc. today released its financial and operating results for the three-month period ended March 31, 2023. (All figures are presented in United States dollars.)

Q1 2023 financial highlights

(all figures in U.S. dollars, compared with Q1 2022, unless otherwise noted)

• Total revenue was $4.9-million compared with $5.4-million, a decrease of 10 per cent;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased 3 per cent to $3.2-million in Q1 2023;
• Continued emphasis on managing the business with a focus on earnings and strong free cash flow;
• Ended the quarter with $33.4-million in cash ($45.2-million (Canadian)) or $1.33 per share ($1.80 (Canadian))
• Announced the closing of a new $35-million credit facility with Royal Bank of Canada.

Management commentary

Craig Mull, interim chief executive officer, commented: "The market for pharmaceutical assets has dramatically improved this year, as the implications of macro economic factors are working their way through the financial system. With capital becoming incrementally more difficult to secure, we believe pharmaceutical companies are increasingly looking to monetize assets to meet shortfalls and raise liquidity. In the first quarter of 2023, Cipher generated $4.7-million in cash from operating activities, with substantially all of it flowing to our balance sheet, strengthening our total cash reserves in excess of $33-million. Additionally, we took a substantial step to enhance our financial flexibility by securing a $35-million credit facility with the Royal Bank of Canada, providing us with over $68-million in growth capital to deploy in what is becoming an increasingly more attractive M&A market."

Bryan Jacobs, chief financial officer, commented: "Cipher's efficient business model enabled us to deliver strong operating results in the first quarter, with our robust product portfolio generating substantial cash flow from operations. During the quarter, Cipher achieved a 54-per-cent net income margin and delivered 25-per-cent year-over-year growth in EPS, while adding $4.6-million of cash to our balance sheet. With a strong balance sheet, and a substantial credit facility at our disposal, we are in an ideal position to drive our next phase of growth."

Q1 2023 financial review

(all figures are in U.S. dollars)

• Total revenue was $4.9-million for Q1 2023, compared with $5.4-million for Q1 2022.
• Licensing revenue was $1.7-million for Q1 2023, compared with $2.1-million for Q1 2022.
• Product revenue was $3.2-million for Q1 2023, compared with $3.3-million for Q1 2022.
• Cash SG&A (selling, general and administrative) costs were $800,000 for Q1 2023, compared with $1.1-million for Q1 2022.
• Net income was $2.7-million, or 10 cents per diluted share in Q1 2023, compared with $2.1-million, or eight cents per diluted share in Q1 2022.
• Adjusted EBITDA for Q1 2023 was $3.2-million, compared with $3.1-million in Q1 2022.
• The company had $33.4-million in cash and no debt as at Q1 2023. Cipher generated $4.7-million in cash from operating activities during Q1 2023.

Business strategy and outlook

Cipher anticipates executing on its business strategy in 2023 to enhance long-term value, including:

• Focusing on acquiring cash flow positive pharmaceutical assets to further diversity the company's product portfolio;
• Continuing to be responsive to opportunities being presented to us and whereby long-term shareholder value can be enhanced;
• Operating the business in an efficient and prudent manner to deliver continued earnings, being the company's management philosophy;
• Continuing to collaborate with the company's partners on its product pipeline, such as with Moberg Pharma on its phase III clinical trial in the U.S. for MOB-015, which started in May, 2022, a novel product for the treatment of foot fungus, and whereby Cipher has the exclusive Canadian market rights.

Financial statements and MD&A

Cipher's financial statements for the three months ended March 31, 2023, and management's discussion and analysis (the MD&A) for the three months ended March 31, 2023, are available on the company's website in the investors section under financial reports and on SEDAR.

Notice of conference call

Cipher will hold a conference call on May 12, 2023, at 8:30 a.m. ET to discuss its financial results and other corporate developments.

• To access the conference call by telephone, dial 416-764-8650 or 888-664-6383 and use conference 40452017.

A live audio webcast will be available:

• On the investor relations section of the company's website;
• An archived replay of the webcast will be available until May 19, 2023.

About Cipher Pharmaceuticals Inc.

Cipher Pharmaceuticals is a specialty pharmaceutical company with a robust and diversified portfolio of commercial and early to late-stage products. Cipher acquires products that fulfill unmet medical needs, manages the required clinical development and regulatory approval process, and currently markets those products either directly in Canada or indirectly through partners in Canada, the U.S. and South America.

We seek Safe Harbor.