- First quarter 2020 revenue of $130 million
- First quarter net loss of $9 million
- First quarter 2020 Adjusted EBITDA1 of $63 million
- Generated cash flow from operations of $45 million in 2020 and concluded the quarter with a cash and cash equivalents balance of $266 million
- Announces the appointment of a Chief Medical Officer
LONDON, May 13, 2020 /CNW/ - ADVANZ PHARMA Corp. Limited ("ADVANZ PHARMA" or "the Company"), an international specialty pharmaceutical company focused on serving the needs of patients and healthcare providers around the world with enhanced access to high quality, niche-established medicines, today announced its financial and operational results for the three months ended March 31, 2020. All financial references are in U.S. dollars ("USD") unless otherwise noted.
"Building on the momentum we generated in the latter half of 2019, the Company delivered strong financial results in the first quarter of 2020," said Graeme Duncan, Chief Executive Officer of ADVANZ PHARMA. "We believe that our first quarter financial results demonstrate the essential nature of many of our niche-established medicines, and our ability to respond to changes in demand caused by the current Coronavirus pandemic."
Consolidated First Quarter 2020 Financial and Operational Results
- Reported first quarter 2020 revenue of $130.0 million, compared to $135.6 million for the first quarter of 2019, and $122.0 million for the fourth quarter of 2019.
- Reported a net loss for the first quarter of 2020 of $8.7 million.
- Reported first quarter Adjusted EBITDA1 of $63.5 million, compared to $65.1 million for the first quarter of 2019, and $52.8 million for the fourth quarter of 2019.
- Generated cash flows from operating activities of $45.1 million in the first quarter of 2020 compared to $46.0 million in the first quarter of 2019.
- As of March 31, 2020, the Company had a cash and cash equivalents balance of $266.5 million compared to $261.1 million as of December 31, 2019.
First Quarter 2020 Segment Results
ADVANZ PHARMA International segment revenue for the quarter ended March 31, 2020 of $96.9 million decreased by $2.2 million or 2%, compared to the first quarter of 2019. A $0.4 million decrease in revenue was further compounded by a $1.8 million decrease in revenue as a result of the GBP weakening against the USD, when compared against the corresponding period in 2019.
Declines in revenue attributable to key products during the quarter, excluding the impact of foreign currency translation, included a $1.3 million decrease from Argipressin; a $1.3 million decrease from Carbimazole; and a $1.1 decrease from Nitrofurantoin.
These lower product volumes and revenues are primarily due to ongoing competitive market pressures resulting in market share erosion in the United Kingdom.
These declines to revenue were partially offset by a $1.9 million increase from Codeine Phosphate + Paracetamol; a $1.3 million increase from Fusidic Acid; and a $1.0 million increase from Ibuprofen.
North America Segment
ADVANZ PHARMA North America segment revenue of $33.1 million for the quarter ended March 31, 2020, decreased by $3.5 million or 9%, compared to the corresponding period in 2019.
The decrease was primarily due to a $4.0 million decrease from Dyrenium® primarily as a result of generic competition that arose during the latter half of 2019; a $1.6 million decrease from Photofrin as a result of COVID-19; and a $1.4 million decrease from Donnatal® due to continued competitive pressures impacting market share.
These declines in revenue were partially offset by a $1.6 million increase from Orapred®; a $1.4 million increase from Salagen® due to the acquisition of the rights to Salagen® on March 31, 2019; and a $1.4 million increase from Dibenzyline® primarily due to lower returns during the first quarter of 2020.
Appointment of Nick Warwick as Chief Medical Officer
ADVANZ PHARMA announced today that it has appointed Dr. Nick Warwick as the Company's Chief Medical Officer, effective June 1, 2020.
Dr. Warwick brings to ADVANZ PHARMA more than 25 years of experience with innovative, value-added and branded-generics companies, including nearly five years as Chief Medical Officer with Sandoz Inc., and 16 years of experience in various senior roles with Abbott Laboratories.
In his role at ADVANZ PHARMA, Dr. Warwick will lead the Medical Office for ADVANZ PHARMA, which will comprise the Medical Affairs, Medical Information and Pharmacovigilance functions. Dr. Warwick will establish the medical vision and strategic direction for the Medical Office, while ensuring the Company has the right resources, skills and capabilities to meet ADVANZ PHARMA's growing business requirements.
Mr. Duncan commented, "With our continued M&A execution, and the ongoing focus on our own product pipeline, we determined that it was appropriate timing to further strengthen our medical capabilities. We are looking forward to working closely with Nick and leveraging his medical and business expertise as we strive to build ADVANZ PHARMA into the leading platform for niche-established medicines, with advanced commercial capabilities throughout Western Europe."
The Company continued to make progress with respect to the evaluation and advancement of its pipeline of medicines.
In the first quarter of 2020, ADVANZ PHARMA submitted for approval, or received approval, for five medicines.
Going forward, the Company intends to expand its product portfolio in order to deliver mid-term value and long-term growth, through pipeline filling, optimization, licencing and development partnerships. These initiatives will be focussed on niche and differentiated generics, complex specialty and value-added medicines.
For 2020, the Company believes that product launches from its pipeline will not generate a material amount of revenue.
ADVANZ PHARMA is focused on mitigating the effects of COVID-19 on its business while concurrently helping to ensure the well-being of patients by continuing to provide them with the medication required to lead healthier lives in the face of this pandemic.
To support these objectives, ADVANZ PHARMA has set up a COVID-19 taskforce to achieve the following priorities:
Ensure the Health and Wellbeing of the Company's Employees
The Company has implemented a number of initiatives such as instructing all employees, in all offices around the world, to work from home. ADVANZ PHARMA's global workforce has access to technology that will enable the Company to continue to operate its business effectively while employees work remotely.
Ensure That Patients Can Continue to Access ADVANZ PHARMA's Medicines
ADVANZ PHARMA is working with its suppliers, distributors and its key employees to ensure the supply and movement of medicines around the world.
Continue To Execute on the Company's Strategic Plan
Despite the challenges posed by COVID-19, the Company is continuing to implement its P.L.A.N strategy as evidenced by its recent M&A activity.
ADVANZ PHARMA will continue to monitor COVID-19 and intends to provide additional business updates as appropriate relative to the disease.
Consolidated Financial Results
Three months ended
(in $000's, except per share data)
Mar 31, 2020
Mar 31, 2019
Gross profit %
Total operating expenses
Operating income for the period
Income tax expense
Net loss for the period
Loss per share
Adjusted EBITDA (1)
Represents a non-IFRS measure. For the relevant definitions and reconciliation to reported results, see "Non-IFRS Financial Measures" section of this press release for further information. Management believes non-IFRS measures, including Adjusted EBITDA, provide supplementary information to IFRS measures used in assessing the performance of the business.
Consolidated Results of Operations
Revenue for the first quarter of 2020 decreased by $5.6 million, or 4%, compared to the corresponding period in 2019, primarily due to lower sales from the ADVANZ PHARMA International and North America segments, combined with lower foreign exchange rates impacting translated revenues from the International segment.
Gross profit for the first quarter of 2020 decreased $4.5, or 5%, compared to the corresponding period in 2019, primarily due to lower sales from the International and North America segments.
Gross profit percentage for the first quarter of 2020 was consistent with the corresponding period in 2019. The consistent gross profit as a percentage of revenue is a net result of a 2% decrease within the International segment and a 6% increase within the North America segment.
Operating expenses for the first quarter of 2020 decreased by $9.6 million, or 11%, compared to the corresponding period in 2019. The decrease in operating expenses is primarily due to $5.9 million of lower amortization charges on intangible assets due to prior year's impairment, $1.6 million of lower general and administrative costs, and $0.9 million of lower selling and marketing costs.
General and administrative expenses reflect costs related to salaries and benefits, professional and consulting fees, public company costs, travel and other administrative expenditures. General and administrative expenses for the first quarter of 2020 decreased by $1.6 million, or 18%, compared to the corresponding period in 2019.
These decreases are primarily due to closure of Barbados operations resulting in lower employee costs and costs related to infrastructure within the North America segment, combined with favourable foreign exchange rate movements impacting translation of general and administrative expenses from the International segment, partially offset by higher costs associated with legal compliance within the International segment.
Selling and marketing expenses reflect costs incurred by the Company for the marketing, promotion and sale of its portfolio of products across its segments. Selling and marketing costs for the first quarter of 2020 decreased by $0.9 million, or 11%, compared to the corresponding period in 2019, comprised of a decrease of $1.4 million, or 54%, within the North America segment and an increase of $0.5 million, or 8%, within the International segment.
The decrease within the North America segment is primarily attributable to lower promotional expenses related to Donnatal®. Within the International segment, the increase for the first quarter of 2020 is primarily as a result of higher costs associated with promotion and advertising activities, as well as increased salaries and benefits costs due to higher headcount in the sales and marketing functions.
Research and development expenses reflect costs for clinical trial activities, product development, professional and consulting fees and services associated with the activities of the medical, clinical and scientific affairs, quality assurance costs, regulatory compliance and drug safety costs (pharmacovigilance) of the Company.
Research and development costs for the first quarter of 2020 decreased by $0.3 million, or 4%, primarily due to lower clinical trial spend, combined with lower costs associated with validation and stability testing activities and favourable foreign exchange rate movements impacting translation of research and development costs within the International segment.
Adjusted EBITDA for the first quarter of 2020 decreased by $1.6 million, or 2%, compared to the corresponding period in 2019. This decline is primarily due to lower sales and gross profit from both the segments, combined with lower foreign exchange rates impacting translated results of the International segment.
Adjusted EBITDA by segment for the first quarter of 2020 was $41.6 million from the International segment and $24.6 million from the North America segment.
In addition, during the first quarter of 2020, the Company incurred $2.7 million of Corporate costs.
As of March 31, 2020, the Company had cash and cash equivalents of $266.5 million and 48,913,490 limited voting shares issued and outstanding.
Conference Call Notification
The Company will hold a conference call on Wednesday, May 13, 2020, at 8:30 a.m. ET hosted by senior management. A question-and-answer session will follow the corporate update.
CONFERENCE CALL DETAILS
Wednesday, May 13, 2020
8:30 a.m. ET
(647) 427-7450 or (888) 231-8191
(416) 849-0833 or (855) 859-2056
This call is being webcast and can be accessed by going to:
An archived replay of the webcast will be available by clicking the link above.
1 Management uses non-IFRS measures such as EBITDA and Adjusted EBITDA to provide a supplemental measure of operating performance. Please refer to the "Non-IFRS Financial Measures" section of this press release for further information.
About ADVANZ PHARMA
ADVANZ PHARMA operates an international specialty pharmaceutical business with a diversified portfolio of more than 200 branded and unbranded products, and sales in more than 90 countries, and going forward, is focused on becoming the leading platform for niche-established medicines, with advanced commercial capabilities throughout Western Europe.
ADVANZ PHARMA's registered office is in Jersey, Channel Islands. The Company operates globally from its headquarters in London, England and through its subsidiaries in Dublin, Ireland; Sydney, Australia; Helsingborg, Sweden; Chicago, United States; and Mumbai, India.
Non-IFRS Financial Measures
This press release makes reference to certain measures that are not recognized measures under International Financial Reporting Standards ("IFRS"). These non-IFRS financial measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies. When used, these measures are defined in such terms 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 the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute to the Company's financial information reported under IFRS. Management uses non-IFRS measures such as EBITDA, and Adjusted EBITDA, to provide investors with supplemental information of the Company's operating performance and thus highlight trends in the Company's core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management believes that securities analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of issuers. Management also uses non-IFRS financial measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets, to assess its ability to meet future debt service requirements, in making capital expenditures, and to consider the business' working capital requirements. Readers are cautioned that the non-IFRS financial measures contained herein may not be appropriate for any other purpose.
EBITDA is defined as net income (loss) adjusted for interest and accretion expense, interest income, income taxes, depreciation and amortization of intangible assets. Management uses EBITDA to assess the Company's operating performance.
Adjusted EBITDA is defined as EBITDA adjusted for certain charges including costs associated with acquisitions, restructuring initiatives, and other costs (which includes onerous contract costs and direct costs associated with contractual terminations), management retention costs, non-operating gains / losses, integration costs, legal settlements (net of insurance recoveries) and related legal costs, non-cash items such as unrealized gains / losses on derivative instruments, share based compensation expense / recovery, fair value changes including purchase consideration and derivative financial instruments, asset impairments, fair value increases to inventory arising from purchased inventory from a business combination, gains / losses from the sale of assets and unrealized gains / losses related to foreign exchange. Management uses Adjusted EBITDA, among other Non-IFRS financial measures, as the key metric in assessing business performance when comparing actual results to budgets and forecasts. Management believes Adjusted EBITDA is an important measure of operating performance and cash flow and provides useful information to investors because it highlights trends in the underlying business that may not otherwise be apparent when relying solely on IFRS measures.
The table below sets forth the reconciliation of net income (loss) to EBITDA and to Adjusted EBITDA for the three month periods ended March 31, 2020, and March 31, 2019.
Three months ended
Mar 31, 2020
Mar 31, 2019
Net income (loss) for the period
Interest and accretion expense
Amortization of intangible assets
Acquisition related, restructuring and other
Share-based compensation expense
Foreign exchange (gain) loss
Unrealized foreign exchange (gain) loss
Notice Regarding Trademarks
This press release includes trademarks that are protected under applicable intellectual property laws and are the property of ADVANZ PHARMA or its affiliates or its licensors. Solely for convenience, the trademarks of ADVANZ PHARMA, its affiliates and/or its licensors referred to in this press release may appear with or without the ® or TM symbol, but such references or the absence thereof are not intended to indicate, in any way, that the Company or its affiliates or licensors will not assert, to the fullest extent under applicable law, their respective rights to these trademarks. Any other trademarks used in this press release are the property of their respective owners.
Notice Regarding Forward-looking Statements and Information:
This news release includes forward‐looking information within the meaning of Canadian securities laws. Often, but not always, and forward‐looking information can be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes" or variations (including negative and grammatical variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of ADVANZ PHARMA's management, and are based on assumptions and subject to risks and uncertainties. Although ADVANZ PHARMA's management believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect. The forward‐looking events and circumstances discussed in this news release may not occur by certain dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting ADVANZ PHARMA, including risks associated with ADVANZ PHARMA's securities, increased indebtedness and leverage, ADVANZ PHARMA's growth, risks associated with the use of ADVANZ PHARMA's products, the inability to generate cash flows, revenues and/or stable margins, the inability to repay debt and/or satisfy future obligations, risks associated with a delay in releasing ADVANZ PHARMA's financial statements (which could result in a default under ADVANZ PHARMA's debt agreements and a violation of applicable laws), ADVANZ PHARMA's outstanding debt, risks associated with the geographic markets in which ADVANZ PHARMA operates and/or distributes its products, the pharmaceutical industry and the regulation thereof, regulatory investigations and proceedings, the failure to comply with applicable laws, risks associated with distribution agreements, economic factors, market conditions, risks associated with growth and competition, the failure to obtain regulatory approvals, the equity and debt markets generally, general economic and stock market conditions, risks associated with fluctuations in exchange rates (including, without limitation, fluctuations in currencies), political risks (including changes to political conditions), risks associated with the United Kingdom's exit from the European Union (including, without limitation, risks associated with regulatory changes in the pharmaceutical industry, changes in cross‐border tariff and cost structures and the loss of access to the European Union global trade markets), risks related to patent infringement actions, the loss of intellectual property rights, risks and uncertainties detailed from time to time in ADVANZ PHARMA's filings with the Canadian Securities Administrators, risks related to the spread of COVID-19 (including, without limitation, risks associated with reliance on third party manufacturers and suppliers, uncertainties relating to its ultimate spread, severity and duration, and related adverse effects on the economies and financial markets of many countries), and many other factors beyond the control of ADVANZ PHARMA. Although ADVANZ PHARMA has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward‐looking statements and information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward‐looking statement or information can be guaranteed. Except as required by applicable securities laws, forward‐looking statements and information speak only as of the date on which they are made and ADVANZ PHARMA undertakes no obligation to publicly update or revise any forward‐looking statement or information, whether as a result of new information, future events, or otherwise.
SOURCE ADVANZ PHARMA Corp.