Aequus (TSX-V:AQS) (OTCQB:AQSZF) Provides Fourth Quarter and Fiscal 2017 Financial Highlights, Third Consecutive Quarter of Revenue Growth
VANCOUVER, British Columbia - April 27, 2018 (Investorideas.com Newswire) 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 full year ended December 31, 2017. Unless otherwise noted, all figures are in Canadian currency.
"With a now established track record of launching products, a sales and marketing team providing full Canadian coverage, and a history of deals with major players, Aequus now finds itself in a strong position as a preferred partner providing a unique and flexible deal structure in the Canadian marketplace," said Doug Janzen, Chairman and CEO of Aequus. "We then leverage those revenues and relationships with Canadian clinicians to fund and inform our reformulated drug delivery products, which are global products that have significant revenue potential."
Key 2017 Financial Highlights
- Strongest revenue quarter to date, with fourth quarter 2017 total revenue of $368,682, an increase of 121% over the same quarter in 2016
- Achieved profitability in commercial division in fourth quarter of 2017
- Fourth quarter 2017 net loss of $640,770, a decrease of 45% over the same quarter in 2016
- Full year 2017 total revenue of $1.1 million, an increase of 62% over 2016
- Full year 2017 net loss of $3.8 million, a decrease of 19% over 2016
Key 2017 Operational Highlights
- Acquired rights for a transdermal patch containing cannabinoids for the use in certain neurological disorders, and established a series of collaborative partnerships including Scientus, EHAVE and the CDRD to advance various drug delivery programs for medical cannabis to satisfy prescriber needs;
- Closed a $5.2M financing underwritten by Canaccord Genuity Corp.;
- Successfully completed initial Proof of Concept clinical trial for Aequus' long-acting transdermal anti-nausea patch, AQS1303, with positive results;
- Received positive feedback from FDA regarding the suitability of its once-weekly transdermal patch for aripiprazole to follow an abbreviated regulatory pathway for approval in the US;
- Entered into a commercial collaboration with Santen Inc, the Canadian Branch ("Santen"), a subsidiary of Santen Pharmaceutical Co., Ltd. to become its exclusive promotional and marketing partner for an ophthalmology product in Canada;
Subsequent to December 31, 2017
- In January 2018, Aequus announced a collaboration with CannaRoyalty Corp. ("CannaRoyalty") to advance a suite of cannabis-based therapies targeting neurological disorders into clinical trials in Canada, in collaboration with Canadian doctors and key opinion leaders;
- In April 2018, Aequus' partner, Santen, received a Notice of Non-Compliance by Health Canada for the product contemplated under the previously announced commercialization agreement. The Company expects the current agreement to be wound up following the recent decision by Health Canada. Aequus looks forward to continued discussions with Santen around potential future products;
- In April 2018, Aequus entered into an exclusive commercial and distribution agreement with Mynosys for the promotion of Zepto Precision Pulse Capsulotomy System in Canada.
Revenue during the year ended December 31, 2017 was $1,139,424, an increase of 62% in annual revenues compared to 2016. Q4 of 2017 was the Company's strongest quarter to date, with total revenues of $368,682, an increase of 121% over the same quarter in 2016.
VistitanTM revenues are expected to continue to increase in the current fiscal year as it continues to gain market share held by similar medications within the class. Tacrolimus IR sales may be more volatile in 2018 due to competitive dynamics. This volatility is expected to be offset by new revenues from Zepto®, which is expected to be launched in Q2 2018.
"We are very pleased with the growth of our commercial franchise achieved in 2017," says Ian Ball, Chief Commercial Officer of Aequus. "We launched Vistitan less than two years ago and have exceeded a million dollars in total annual revenues for the first time. The recently announced Zepto transaction leverages our existing sales infrastructure and will begin to generate revenues in Q2, we also have additional commercial products in various stages of negotiation. We expect strong revenue growth in 2018 and note that the commercial activities have been cash-flow positive for the past few months based on our expected revenues. It is significant to see the commercial arm contributing cash flow to off-set development and administration expenses."
Aequus looks to leverage its core capabilities, commercial infrastructure and existing product portfolio that it has been growing through promotional partnership agreements, asset acquisitions, in-licenses and in the future with the Company's own internal development programs as they mature and enter the market. The Company's near-term commercial growth strategy includes the progressive build-out of the Company's commercial platform, including leveraging its specialty sales force and relationships with physicians in Canada to enable Aequus to continue to in-license and sell high value branded products in Canada.
Alongside the Company's expected growth in ophthalmology, the Company plans to expand its neurology franchise by advancing clinical studies for its medical cannabis program in the coming months, following the completion of several recently announced collaborative partnerships in this field. Namely, Aequus formed a collaboration with Scientus Pharma, Inc. ("Scientus") to be the development and commercial supplier of specific cannabinoid extracts, with an option for Scientus to co-fund the development of a cannabinoid containing transdermal formulation that would be designed and optimized to address certain neurological disorders. Additionally, the Company entered into a collaboration with Ehave, Inc. ("Ehave") to access Ehave's bioinformatics platform to enhance and streamline data management processes for Aequus-sponsored clinical trials studying specific cannabinoid-rich formulations for treating a number of neurological disorders. On June 1, 2017, Aequus entered into a broad research collaboration with the Centre for Drug Research and Development ("CDRD") to establish pre-clinical safety and efficacy of select cannabinoid-based therapeutics targeting certain neurological movement disorders. And most recently, in January 2018, Aequus announced a collaboration with CannaRoyalty Corp. ("CannaRoyalty") to advance a suite of cannabis-based therapies targeting neurological disorders into clinical trials in Canada, in collaboration with Canadian doctors and key opinion leaders.
The Company also expects to pursue a small clinical study for Topiramate Extended-Release ("Topiramate XR") to support a New Drug Submission ("NDS") in 2018, intended for the treatment of epilepsy.
Progress of Product Pipeline
The Company continued to invest in its development pipeline in 2017. Aequus completed an initial Proof of Concept clinical trial to evaluate the bioavailability and safety of Aequus' long-acting transdermal anti-nausea patch, AQS1303, containing the combination of pyridoxine and doxylamine (the active ingredients in Diclegis®/Diclectin®). AQS1303 could provide patients with a more convenient and reliable delivery system as an alternative to the currently marketed oral form, which is dosed up to four times per day. This Proof of Concept study was designed as a single-dose cross-over comparative bioavailability study versus the currently approved oral version, Diclegis®/Diclectin®, in nine healthy volunteers. The results suggested that sustained delivery of therapeutic levels of the active ingredients through the skin over a multi-day period is possible with the current formulation. The formulation was well tolerated with no serious adverse events reported.
The Company also advanced AQS1301, a once-weekly transdermal formulation of aripiprazole through a multi-dose Proof of Concept clinical study which was completed in February 2017, demonstrating that steady state was achieved in week three of dosing in healthy volunteers, with comparable plasma concentrations to the orally delivered form of aripiprazole, Abilify®. Aequus also expanded the patent portfolio for this program with a patent issued/allowed in seven major countries or regions to date, namely the United States, Russia, Mexico, Japan, Australia, Canada and China with several other major markets pending.
Aequus received positive feedback from the US Food and Drug Administration ("FDA") in a pre-Investigational Drug Application ("pre-IND") meeting for the Company's lead development program, AQS1301, a once-weekly transdermal formulation of aripiprazole. Upon review of the Company's pre-IND submission, the FDA agreed that AQS1301 is a suitable candidate for the 505(b)2 abbreviated regulatory pathway for approval in the United States.
Aequus has been engaging with third parties around partnering discussions for each of its internal programs, with a goal of ensuring that the maximum benefit is realized by shareholders.
Research and development expenses in the fourth quarter of 2017 were $19,590, as compared to $295,115 in the same quarter last year, and for the full year 2017, $1,414,706, as compared to $1,127,780 for 2016. The increase was primarily attributable to subcontractor costs, specifically regulatory consulting for AQS1301 and AQS1303 Pre-IND related work, the development of AQS1303 clinical trial materials and the execution of the Proof of Concept study for AQS1303. In Q4 2017, the Company prepared for the Pre-IND meeting for AQS1303 and was active in establishing collaborative partnerships in anticipation of advancing its medical cannabis programs.
Sales, marketing and general administration expenses in the fourth quarter of 2017 were $992,882, as compared to $1,059,635 in the same quarter last year, and for the full year 2017, $3,727,176 as compared to $4,437,436 in 2016. During Fiscal 2016 the Company incurred relatively high promotional spending associated with launch activities for Tacrolimus IR and Vistitan™ in Canada whereas there were no similar start-up costs in Fiscal 2017. Additionally, in 2017 there was a decrease in management fees, regulatory consultant spending and share-based payments expense.
Aequus reported a loss before other income of $640,770, a decrease of 45% over the same quarter in 2016, and for the full year 2017 a net loss of $3,882,427, a decrease of 19% over 2016. This improvement in loss before other income for both periods is primarily due to growing revenues from its sales and marketing activities in 2017 for its two commercially promoted products, Tacrolimus IR and Vistitan™.
About Tacrolimus IR
Tacrolimus immediate release is an immunosuppressant used for the treatment and prevention of acute rejection following organ transplantation. Tacrolimus is part of a patient's immunosuppressive therapy prescribed chronically in their lifelong management to prevent graft rejection. In 2015, the immunosuppressive market in Canada reached $241M in sales, with tacrolimus products accounting for $100M. With the assistance of Aequus' promotional efforts and commercial team, the tacrolimus IR generic grew 90% year-over-year by unit volume in 2016 when compared to 2015 based on ex-factory data.
Vistitan™ (bimatoprost 0.03%, ophthalmic solution), is a branded generic prostaglandin approved by Health Canada for the reduction of elevated IOP in patients with open angle glaucoma or ocular hypertension. The Canadian glaucoma market in 2015 was estimated to be over $182 million, of which prostaglandins remain one of the primary treatment options for lowering IOP in glaucoma. VistitanTM, which was approved by Health Canada in 2014, is currently the only marketed version of 0.03% bimatoprost ophthalmic solution in Canada.
About Zepto Precision Pulse Capsulotomy System
The Zepto capsulotomy system provides consistent, high quality anterior lens capsulotomies during cataract surgery in a convenient, cost-effective, disposable format. One of the key features is a collapsible super-elastic nitinol capsulotomy ring element with micron scale elements to create the unique and strong Zepto capsulotomy edge. It also has a clear silicone suction cup to enable suction and generate Zepto's proprietary capsulotomy action and to allow Zepto capsulotomies on the patient's individual visual axis. The AMA has recently given a category III code in the US as they see the distinctive application and benefit of aligning on the patient's own visual axis.
Zepto integrates seamlessly into the routine steps of cataract surgery with phacoemulsification. The surgeon does not need to alter his or her normal routine. Instead of capsulorrhexis forceps or a cystitome, the surgeon simply reaches for Zepto.
The Zepto Capsulotomy System consists of a disposable Zepto capsulotomy handpiece that is attached to a small control console. Zepto uses the precision pulse capsulotomy method, a proprietary combination of calibrated suction and a 4-millisecond multipulse energy algorithm to produce highly accurate capsulotomies. Zepto's unique single use hand piece can be inserted through incisions as small as 2.2mm, to create a perfectly circular and precisely placed capsulotomy that can be centred on the visual axis. Zepto is ideal for surgery using premium lenses as well as difficult cases and creates a capsulotomy with an edge strength greater than conventional methods or femtosecond lasers. For more information, please visit https://www.zepto-cataract.com/.
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, and a development stage pipeline in neurology and psychiatry with a goal of addressing the need for improved medication adherence through enhanced delivery systems. As a complement to its focus in neurology, our most recent addition to the development pipeline was a long-acting form of medical cannabis, where there is a high need for a consistent, predictable and pharmaceutical-grade delivery of products for patients. Aequus intends to commercialize its internal programs in Canada alongside its current portfolio of marketed established medicines and will look to form strategic partnerships that would maximize the reach of its product candidates worldwide. 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; the Company's expected revenues; the timing of public listings; the advancement of the Company's transdermal pyridoxine/doxylamine program into a Proof of Concept clinical study; the Company's potential regional partnerships for its internal programs; the timing of public reimbursement decisions for VistitanTM; the timing of the Company's follow-on, multi-dose bioavailability study for the its transdermal aripiprazole program; and the Company's expectations regarding the tech transfer to its development partner with respect to the Company's transdermal patch for clobazam. 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 May 1, 2017, 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.
VistitanTM: Trademark owned or used under license by Sandoz Canada Inc.
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