Nuvo Pharmaceuticals Inc. d/b/a Miravo Healthcare (Miravo or the Company), a Canadian-focused healthcare company with global reach and a diversified portfolio of commercial products, today announced its financial and operational results for the three months ended March 31, 2021. For further details on the results, please refer to Miravo’s Management, Discussion and Analysis (MD&A) and Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2021, which are available on the Company’s website (www.miravohealthcare.com). All figures are in Canadian dollars, unless otherwise noted.
Key Developments
Three months ended March 31, 2021 include the following:
(1) Non-International Financial Reporting Standards (IFRS) financial measure defined by the Company below. |
Business Update
“Our key promoted brands, Blexten and Cambia, continued their solid performance and demonstrated year-over-year gains in prescription growth. New prescriptions of Blexten (a measure of new patients to the product) grew by 17% compared to Q1 2020. Wholesaler and pharmacy buying patterns reverted to more traditional levels, as we did not see a repeat of the forward buying that occurred in Q1 2020 in response to the uncertainty around the COVID-19 pandemic. Our recently launched Suvexx and NeoVisc brands are performing according to plan and are already achieving meaningful market share. Feedback from healthcare providers and patients in relation to both products has been encouraging. In a recent market research study conducted for our marketing team, 95% of physicians surveyed, expect to increase the number of Suvexx prescriptions for their migraine patients,” said Jesse Ledger, Miravo’s President & CEO. “We remain optimistic that with the accelerated roll out of COVID-19 vaccination programs across Canada and around the world, patients will gain improved access to healthcare providers during the remainder of the year and we anticipate this will result in demand for products across all our business segments.”
First Quarter 2021 Financial Results
Adjusted total revenue was $14.5 million for the three months ended March 31, 2021 compared to $18.9 million for the three months ended March 31, 2020. For the three months ended March 31, 2021, the decrease in the Licensing and Royalty Business segment was primarily due to a $2.2 million decrease of the royalty earned on U.S. net sales of Vimovo due to a competitor launching a generic version of Vimovo in March 2020. During the three months ended March 31, 2021, the Company received a royalty of 10% based on U.S. net sales of Vimovo. In subsequent quarters, this royalty is anticipated to decrease to 5% of U.S. net sales of Vimovo due to a royalty step-down provision in Miravo Ireland’s license agreement with Horizon Therapeutics plc that is anticipated to be triggered as a result of continued generic competitor market share gains. Adjusted total revenue attributable to the Commercial Business segment declined during the three months ended March 31, 2021, as an increase in sales related to certain promoted products was more than offset by a decline in revenue from the segment’s mature products. During the comparative quarter, the possibility of future supply disruptions resulted in forward buying linked to the COVID-19 pandemic, which increased revenue in the Company’s Commercial Business segment in the three months ended March 31, 2020. The Production and Service Business segment revenue decreased as a result of a decline in the Company’s Resultz product sales.
Adjusted EBITDA was $4.4 million for the three months ended March 31, 2021 compared to $8.0 million for the three months ended March 31, 2020. The decrease in the current quarter was primarily attributable to a decrease in gross profit and an increase in sales and marketing expenses, slightly offset by a decrease in general and administrative expenses.
Non-IFRS Financial Measures
The Company discloses non-IFRS measures (such as adjusted total revenue, adjusted EBITDA, adjusted EBITDA per share and cash value of loans) that do not have standardized meanings prescribed by IFRS. The Company believes that shareholders, investment analysts and other readers find such measures helpful in understanding the Company’s financial performance and in interpreting the effect of the Aralez Transaction and the Deerfield Financing on the Company. Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and may not have been calculated in the same way as similarly named financial measures presented by other companies.
Adjusted Total Revenue
The Company defines adjusted total revenue as total revenue, plus amounts billed to customers for existing contract assets, less revenue recognized upon recognition of a contract asset. Management believes adjusted total revenue is a useful supplemental measure to determine the Company’s ability to generate cash from its customer contracts used to fund its operations.
The following is a summary of how adjusted total revenue is calculated:
Three Months ended March 31, 2021 |
Three Months ended March 31, 2020 |
|
in thousands |
$ |
$ |
Total revenue |
14,422 |
24,361 |
Add: |
||
Amounts billed to customers for existing contract assets |
127 |
48 |
Deduct: |
||
Revenue recognized upon recognition of a contract asset |
– |
(5,496) |
Adjusted total revenue |
14,549 |
18,913 |
Adjusted EBITDA
EBITDA refers to net income (loss) determined in accordance with IFRS, before depreciation and amortization, net interest expense (income) and income tax expense (recovery). The Company defines adjusted EBITDA as EBITDA, plus amounts billed to customers for existing contract assets, inventory step-up expenses, stock-based compensation expense, Other Expenses (Income), less revenue recognized upon recognition of a contract asset and other income. Management believes adjusted EBITDA is a useful supplemental measure to determine the Company’s ability to generate cash available for working capital, capital expenditures, debt repayments, interest expense and income taxes.
The following is a summary of how EBITDA and adjusted EBITDA are calculated:
Three Months ended March 31, 2021 |
Three Months ended |
|
in thousands |
$ |
$ |
Net income (loss) |
(17,989) |
(1,729) |
Add back: |
||
Income tax expense |
256 |
1,382 |
Net interest expense |
2,586 |
3,100 |
Depreciation and amortization |
2,076 |
2,349 |
EBITDA |
(13,071) |
5,102 |
Add back: |
||
Amounts billed to customers for existing contract assets |
127 |
48 |
Stock-based compensation |
105 |
105 |
Deduct: |
||
Revenue recognized upon recognition of a contract asset |
– |
(5,496) |
Other Expenses (Income): |
||
Change in fair value of derivative liabilities(1) |
18,389 |
2,417 |
Change in fair value of contingent and variable consideration (gain) |
(616) |
2,129 |
Foreign currency loss (gain) |
(714) |
4,697 |
Inventory step-up |
35 |
362 |
Other gains (losses) |
96 |
(1,374) |
Adjusted EBITDA |
4,351 |
7,990 |
(1) The Company’s derivative liabilities are measured at fair value through profit or loss at each reporting date. As a result of the increase in the share price in the current quarter and an increase in the volatility of the Company’s shares, amongst other inputs, the value of the Company’s derivative liabilities increased and the Company recognized a net non-cash $18.4 million loss on the change in fair value of derivative liabilities for the three months ended March 31, 2021. |
Virtual Annual Meeting of Shareholders
Miravo’s 2021 Annual Meeting of Shareholders (Meeting) will be held as an online meeting only. The Meeting will take place on Monday, May 17, 2021 (today) at 9:00 a.m. Registered shareholders can attend the Meeting online, vote shares electronically if they have not voted by proxy in advance of the Meeting in accordance with the proxy instructions, and submit questions during the Meeting. You will need to have your 16-digit Control Number (the Control Number) to participate in the Meeting. If you are a shareholder and do not have a Control Number or if you are not a Miravo shareholder, you can attend the Meeting as a guest, but you will not be able to vote at the Meeting.
The link to participate in the Meeting is: www.virtualshareholdermeeting.com/mrv2021. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Virtual Shareholder Meeting log in page.
About Miravo Healthcare
Miravo is a Canadian focused, healthcare company with global reach and a diversified portfolio of commercial products. The Company’s products target several therapeutic areas, including pain, allergy, neurology and dermatology. The Company’s strategy is to in-license and acquire growth-oriented, complementary products for Canadian and international markets. Miravo’s head office is located in Mississauga, Ontario, Canada, the international operations are located in Dublin, Ireland and the Company’s manufacturing facility is located in Varennes, Québec, Canada. The Varennes facility operates in a Good Manufacturing Practices (GMP) environment respecting the U.S, Canada and E.U. GMP regulations and is regularly inspected by Health Canada and the U.S. Food and Drug Administration. For additional information, please visit www.miravohealthcare.com.