Theratechnologies Announces Financial Results for Second Quarter of 2014 [Global Data Point]
(Global Data Point Via Acquire Media NewsEdge) Second quarter 2014 financial highlights
•Revenues of $2,393,000
•Cash payment of $4,100,000 by Revenue Canada received on July 3, 2014
•Selling and market development expenses of $2,148,000 mainly associated with marketing initiatives being undertaken in the United States
•Net profit of $1,007,000
•$9,722,000 in liquidities available at quarter-end including bonds, tax credits and grants receivable
"The second quarter marked two important milestones for Theratechnologies", said Luc Tanguay, President and CEO. "Most notably, we have now regained all rights to EGRIFTA™ in the U.S. and are well advanced with our plans to reap the associated benefits. We expect to begin distributing our drug to U.S. patients between mid-August and mid-September. The second achievement was in Canada, where we received regulatory approval for EGRIFTA™ and simultaneously regained the rights to the Canadian market", Mr. Tanguay noted.
Update on production
Technical issues observed during the production of EGRIFTA™ in its 2 mg presentation caused us to suspend manufacturing on February 14, 2014 and there is currently no inventory in the distribution network. In order to replenish inventory and resume shipping as soon as possible, we have temporarily reverted to the initial presentation of EGRIFTA™ (1 mg vial), which was problem free during the first two years of marketing the product. Regulatory clearance for this change has been obtained from the U.S. Food and Drug Administration. We have now produced one batch of EGRIFTA™ in the 1 mg presentation, which is currently undergoing routine testing and should be available for distribution to patients between mid-August and mid-September 2014.
Second Quarter Financial Results
The financial results presented in this press release are taken from the Company's Management's Discussion and Analysis, or MD%7EA, and unaudited consolidated financial statements for the period ended May 31, 2014, which have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. The MD%7EA for the second quarter ended May 31, 2014, and the unaudited consolidated financial statements can be found at www.theratech.com, www.sedar.com and www.sec.gov. Unless specified otherwise, all amounts in this press release are in Canadian dollars and all capitalized terms have the meaning ascribed thereto in our MD%7EA. As used herein, EGRIFTA™ refers to tesamorelin for the reduction of excess abdominal fat in HIV-infected patients with lipodystrophy. EGRIFTA™ is our trademark.
Prior to the closing of the EMD Serono Termination Agreement on May 1, 2014, our revenues were mainly composed of sales of EGRIFTA™ to EMD Serono for re-sale, royalties received from EMD Serono on U.S. sales to customers, and research services, which included milestone payments and the amortization of the initial payment received upon the closing of the EMD Serono Agreement. From May 1, 2014, on, our revenues are primarily sales of EGRIFTA™ to customers. Consolidated revenue for the three- and six-month periods ended May 31, 2014 were $2,393,000 and $4,065,000 compared to $2,331,000 and $4,130,000 in the comparable periods of fiscal 2013.
Revenue generated from the sale of goods in the three- and six-month periods ended May 31, 2014 was nil and $675,000 compared to $996,000 and $1,447,000 in the comparable periods of fiscal 2013. Shipments to EMD Serono in the first quarter of 2014 represented all of the goods that were available in inventory and, with manufacturing suspended, there were no goods available for sale in the second quarter.
The lower sale of goods described above had a direct impact on royalties, which are almost entirely derived from the sales of EGRIFTA™ by EMD Serono. The lower royalties necessitated the adjustment of previous management estimates and resulted in the reported negative royalty revenue of $(57,000) in the three-month period ended May 31, 2014 and downward adjusted royalty revenue of $620,000 in the six-month period ended May 31, 2014, compared to $872,000 and $1,756,000 in the comparable periods of fiscal 2013.
With the closing of the EMD Serono Termination Agreement on May 1, 2014, we are no longer amortizing the initial payment of $27,097,000 received upon the closing of the EMD Serono Agreement. Consequently, all of the $2,450,000 unamortized balance of the initial payment was recognized as revenue in the second quarter of 2014.
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