TORONTO, Nov. 09, 2021 (GLOBE NEWSWIRE) -- Acerus Pharmaceuticals Corporation (“Acerus” or the “Company”) (TSX:ASP; OTCQB:ASPCF) today reported its financial results for the three and nine-month period ended September 30, 2021. Unless otherwise noted, all amounts are in US dollars and are prepared in accordance with International Financial Reporting Standards (“IFRS”).

Third Quarter Highlights

• 31% year-over-year quarterly growth of NATESTO® total prescriptions (“TRx”) in the U.S. market
• Settlement of litigation against Recipharm Limited, the Company’s former contract manufacturer for ESTRACE®, reflected as $2.3 million in other income as well as $0.4 million of reimbursed litigation expenses
• New Orange Book listed patent for NATESTO® extends intellectual property protection in the United States to 2034
  

“The third quarter was one of continued execution in the U.S. market, even in the face of some ongoing pandemic and industry-related challenges,” said Ed Gudaitis, President and Chief Executive Officer of Acerus. “We were pleased with the year-over-year growth in total NATESTO® prescriptions, particularly in the urology sales channel. We also successfully settled our litigation against Recipharm and were able to book $2.3 million in other income, ending a minor distraction for the Company while strengthening the balance sheet in tandem. Consistent with industry trends, Acerus did experience increased COVID-19 pandemic-related access restrictions – tied to the Delta variant – in the third quarter, which dampened the rapid growth path begun earlier this year. Reflecting current macro-economic conditions, we also were negatively impacted by some sales force vacancies, which affected overall prescription volume growth. Neither of these issues, though, is expected to greatly impact our results in the fourth quarter, and so we are optimistic about the business heading into 2022. Given the improved outlook and generally positive prescription trends, we believe Acerus can accelerate top line growth and attract further investment to reach its potential.”

Summary of Results for the Three Months Ended September 30, 2021 compared to the Three Months Ended September 30, 2020, unless otherwise noted

Product revenue was $0.6 million compared to $0.5 million in the prior year period, an increase of 19%. The improvement was primarily due to the assumption of full NATESTO® product sales and revenue recognition as a result of re-purchasing the rights from Aytu Biopharma on April 1, 2021, as previously reported.   Revenue recognition in the prior year period under IFRS15 reflected the value of shipment to Aytu Biopharma plus an estimate of the associated co-promotion revenue under the former licensing agreement. The Company faced some headwinds in the fiscal 2021 third quarter that impacted total prescription volume and subsequent revenue growth, including a temporary increase in COVID-19 restrictions and, to a lesser extent, constraints in hiring qualified staff; both issues are not anticipated to materially impact fourth quarter results.

The Company posted a gross margin of $0.1 million in the third quarter of 2021 compared to a negative gross margin of $0.3 million in the prior-year period. The negative gross margin in the prior period reflects a charge of $0.3 million for obsolete raw materials combined with non-cash costs of $0.2 million related to the amortization of intangible assets and depreciation of property and equipment.   

Third quarter research and development (“R&D”) expenses were $1.4 million compared to $0.8 million in 2020. This increase was principally due to increased clinical trials related to an ambulatory blood pressure study that commenced in 2021 and is expected to be completed in mid-2022.

Selling, general and administrative expenses (“SG&A”) declined by $0.6 million to $5.0 million in the third quarter of 2021, versus $5.6 million in the comparable period last year. The decrease relates to a decline of $1.0 million in expenses related to the Company’s US NATESTO® sales and distribution organization, as the prior year period reflected start-up costs. This decline was partially offset by an increase in legal fees principally related to the filing and listing of a new patent for NATESTO® in the United States.  

Other income includes a credit of $2.3 million related to the settlement of the Recipharm litigation announced on August 12, 2021. and represents the value of forgone ESTRACE® sales that the Company could have recognized had there been sufficient inventory to supply the Canadian market.

Earnings before interest, tax, depreciation and amortization (“EBITDA”)¹ was a loss of $3.9 million compared to an EBITDA loss of $6.5 million in 2020. Adjusted EBITDA¹ was a loss of $5.9 million for the current quarter compared to a loss of $6.2 million in the prior-year period.

The Company posted a net loss of $4.9 million, or $(0.00) per share, for the quarter compared to a loss of $7.0 million, or $(0.01) per share, in the third quarter of 2020.

Cash as of September 30, 2021 was $2.3 million compared with $9.1 million as of December 31, 2020, reflecting the recent $2.3 million settlement payment as well as proceeds of $12.0 million drawn on the $15.0 million subordinated demand loan facility with First Generation Capital, offset by cash used in operations as well as principal and interest repayments totaling $2.5 million on the senior debt with SWK Funding LLC and a lease termination payment of $0.2 million related to the Company’s former Canadian headquarters.

COMPANY UPDATE AND OUTLOOK

NATESTO®

With the full buy back of NATESTO® rights for the US market completed April 1, 2021, the Company continues to execute on its commercial strategy focusing on the US market. Total NATESTO® prescriptions continued to grow, with a 31% increase compared to the third quarter of 2020.

Our U.S. NATESTO® business was bolstered by an additional patent granted and listing in the Orange Book during the third quarter, extending intellectual property protection on NATESTO® in the U.S. to 2034.

Commercial preparations continue regarding the reintroduction of NATESTO® into the Canadian market. Unfortunately, the timing of the Company’s return to Canada has now been delayed due to manufacturing and supply chain disruptions and delays. Canadian stock of NATESTO® is not expected to be ready until the second quarter of 2022.

Recipharm Litigation

On June 18, 2020, Acerus announced it had commenced litigation against Recipharm Limited (“Recipharm”), a wholly-owned subsidiary of Recipharm AB, in the Commercial Court of London. Acerus previously alleged that the suspension of Recipharm’s manufacturing license in August 2018 was a violation of its contractual obligations and led to a shortage of ESTRACE® in Canada. On June 15, 2021, the Company won at a preliminary issue trial in which Recipharm alleged that Acerus’ claim for damages was barred by the terms of the companies’ manufacturing contract. In agreeing with Acerus that its claim for damages was not barred, the Commercial Court of London directed the matter to proceed to a full trial. Recipharm was granted permission to appeal the court’s decision on August 3, 2021 with the main proceedings being stayed pending appeal.

On August 12, 2021, the Company announced that it had accepted an offer to settle pursuant to Part 36 of the English Civil Procedure Rules, and a payment of GBP 1.7 million ($2.3 million) was received in the quarter. In addition, the Company received $0.4 million in October, 2021 to offset the majority of its costs of the litigation.

avanafil

In October, 2021, the Company received a Notice of Deficiency from Health Canada related to its avanafil New Drug Submission (“NDS”). Health Canada had previously requested the provision of additional pre-clinical and toxicology data related to the avanafil active pharmaceutical ingredient (API) from the API manufacturer, Sanofi. Sanofi did not provide the available data in a format requested by Health Canada as per the timeline prescribed. As a result, Acerus has had to withdraw the avanafil dossier from the review process. Acerus is working with Petros Pharmaceuticals, the licensor of avanafil to Acerus, and Sanofi to ensure that the information will be provided in a timely manner and to discuss how to apportion the additional regulatory costs incurred as a result of the failure of Sanofi to supply the information to Health Canada. A resubmission is expected to be made to Health Canada during the first quarter of 2022, with the expected introduction of avanafil to the Canadian market occurring in 2023.

Access to Capital

Absent further equity or debt investment, the Company is expected to fully utilize the $15 million subordinated demand loan facility with First Generation Capital later in November 2021. The Company will need further equity or debt investment to meet its cash loan covenants by the end of November. The Company has engaged HC Wainwright, a New York based investment bank, to assist it in identifying additional investment opportunities. The Company will provide an update on its progress when available.

Conference Call
Shareholders are reminded that the conference call to discuss the Company’s results for the three- and nine-month period ending September 30, 2021 will be held on Tuesday, November 9, 2021 at 10:00 a.m. Eastern Time.

To access the call live, please dial 416-406-0743 or 1-800-952-5114 and use access code 5090811#. Listeners are encouraged to dial in 10 minutes before the call begins to avoid delays. A replay of the conference call will be available until 11:59 p.m. Eastern Time on Tuesday, November 16, 2021 by dialing 905-694-9451 or 1-800-408-3053, using access code: 8120716#.

An updated version of the Company’s Corporate Deck will be made available on the Company’s website after the shareholders conference call.

About Acerus
Acerus Pharmaceuticals Corporation is a Canadian-based specialty pharmaceutical company focused on the commercialization and development of innovative prescription products that improve patient experience, with a primary focus in the field of men’s health. The Company commercializes its products via its own salesforce in the United States and Canada, and through a global network of licensed distributors in other territories.

Acerus’ shares trade on TSX under the symbol ASP and on the OTCQB under the symbol ASPCF. For more information, visit www.aceruspharma.com and follow us on Twitter and LinkedIn.

¹ Non-IFRS Financial Measures - EBITDA and Adjusted EBITDA
The non-IFRS measures included in this press release are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. When used, these measures are defined in such terms as to allow the reconciliation to the closest IFRS measure. These measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from our perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. Despite the importance of these measures to management in goal setting and performance measurement, we stress that these are non-IFRS measures that may have limits in their usefulness to investors.

We use non-IFRS measures, such as EBITDA and Adjusted EBITDA to provide investors with a supplemental measure of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the valuation of issuers. We also use non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets, and to assess our ability to meet our future debt service, capital expenditure and working capital requirements.

The definition and reconciliation of EBITDA and Adjusted EBITDA used and presented by the Company to the most directly comparable IFRS measures follows below:

EBITDA is defined as net (loss)/income adjusted for income tax, depreciation of property and equipment, amortization of intangible assets, interest on long-term debt and other financing costs, interest income, licensing revenue and changes in fair values of derivative financial instruments. Management uses EBITDA to assess the Company’s operating performance.

Adjusted EBITDA is defined as EBITDA adjusted for, as applicable, royalty expenses associated with triggering events, milestones, share based compensation, impairment of intangible asset, foreign exchange (gain)/loss and the impact of charges related to a product recall. We use Adjusted EBITDA as a key metric in assessing our business performance when we compare results to budgets, forecasts and prior years. Management believes Adjusted EBITDA is an alternative measure of cash flow generation than, for example, cash flow from operations, particularly because it removes cash flow fluctuations caused by extraordinary changes in working capital. A reconciliation of net (loss)/income to EBITDA (and Adjusted EBITDA) is set out below.

Notice Regarding Forward-Looking Statements
Information in this press release that is not current or historical factual information may constitute forward looking information within the meaning of securities laws. Implicit in this information are assumptions regarding our future operational results. These assumptions, although considered reasonable by the company at the time of preparation, may prove to be incorrect. Readers are cautioned that actual performance of the company is subject to a number of risks and uncertainties, including with respect to the commercial performance of NATESTO® globally and in the U.S., and could differ materially from what is currently expected as set out above. For more exhaustive information on these risks and uncertainties you should refer to our annual information form dated March 10, 2021 which is available at www.sedar.com. Forward-looking information contained in this press release is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time, whether as a result of new information, future events or otherwise, except as required by applicable securities law.

Contact
Company Contact
[email protected]

Chris Witty
Acerus Investor Relations
(646) 438-9385
[email protected]