VANCOUVER, August 27, 2018 – 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 three months ended June 30, 2018 (“Q2 2018”) and associated Company developments. Unless otherwise noted, all figures are in Canadian currency.
Q2 2018 Key Highlights
- Continued quarter over quarter revenue growth with $377,855 in reported revenues for Q2 2018, an increase of 103% compared to the same quarter in 2017;
- Decrease in net losses of 48% compared to same quarter last year primarily due to increased revenues and a decrease in R&D expenditures in Q2 2018;
- Launched third commercial product in Canada, Zepto® Capsulotomy System (“Zepto”), and successfully completed first cataract cases in Canada using Zepto with international renown surgeon, Dr. Ike Ahmed;
- Received positive feedback from FDA on suitability of its long-acting anti-nausea patch, AQS1303, to follow an abbreviated regulatory pathway for approval in the US;
- Expanded relationship with Corium International, Inc. (“Corium”) to advance AQS1303 for the treatment of nausea and vomiting of pregnancy using Corium’s Coreplex™ technology, in preparation for clinical studies;
- Improved commercial terms for continued promotion of Vistitan™ in Canada, and extended agreement to 2021;
- Subsequent to the end of the quarter, the Company successfully closed two financings with total proceeds of $1,575,000.
The Company recorded revenues of $377,855 in Q2 2018, representing 103% growth as compared to the same period in 2017. On a year-to-date basis, the Company recorded $752,855 in revenues in the six-month period ending June 30, 2018, an increase of 57% compared to the same period in 2017. The increase in revenues were primarily attributable to increased promotional activities being focused in markets with positive market access and reimbursement listings.
In Q2 2018, Aequus added to its commercial pipeline as it entered into a commercial agreement with Mynosys Cellular Devices (“Mynosys”) to promote the Zepto® Capsulotomy System in Canada. Aequus has leveraged its existing commercial infrastructure to promote and support the launch Zepto. Following multiple successful trial cases with leading cataract surgeons such as Dr. Ike Ahmed, Aequus expects Zepto to contribute to revenues in the second half of 2018.
During the current quarter, Aequus also successfully improved commercial terms for the continued and extended promotion of Vistitan in Canada. Under the revised terms, Aequus will benefit from improved economics with a tiered split of net profits ranging from 42% and up to 47%, dependent on certain market access and sales milestones being met. The term of the agreement was also extended to 2021.
“We are extremely pleased with the progress and growth we are seeing in our commercial division, particularly in our ophthalmology franchise, as we are becoming recognized by our customers as a committed partner by introducing novel products to Canada such as Zepto,” said Doug Janzen, CEO and Chairman at Aequus. “We expect revenues to continue to grow as we work to add additional commercial products to our pipeline.”
Development Program Activities
Aequus received positive feedback from a pre-Investigational Drug Application (“pre-IND”) meeting with the US Food and Drug Administration (“FDA”) for the Company’s lead development program, AQS1303, a long-acting transdermal anti-nausea program for use in pregnancy. Upon review of the Company’s pre-IND submission, the FDA agreed that AQS1303 is a suitable candidate for the 505(b)2 abbreviated regulatory pathway for approval in the United States.
Following the regulatory guidance provided by the FDA, Aequus and Corium have expanded their pre-existing relationship to further advance AQS1303. Under the terms of the agreement, Corium will use its Corplex™ technology to optimize AQS1303 in preparation for clinical studies. Corium will fund the development work and in exchange will be the exclusive clinical and commercial manufacturer for the product.
Sales and marketing expenses for Q2 2018 were $363,018, which is consistent with prior quarters and includes non-cash expenses of $59,046 related to amortization and share based payments expenses. Depreciation and amortization, and share-based payments for Q2 2018 were $47,279 and $11,767, respectively, compared to $45,916 and $24,041, respectively, in Q2 2017. The amortization costs were primarily related to the acquisition costs of TeOra. As the sales and marketing infrastructure is now established, new products, like Zepto, can be marketed to the same customer base with relatively little change to sales related costs.
The Company incurred research and development expenses of $179,963 in Q2 2018 as compared to $581,670 in Q2 2017. The decrease was primarily attributable to lower subcontractor research costs and reduced regulatory consulting for AQS1301 and AQS1303 pre-IND related work, which completed in Q2 2017. The main development work in Q2 2018 was the advancement and optimization of AQS1303 in preparation for clinical studies. The costs of which are being realized by the Company’s development partner, Corium, in exchange for exclusive manufacturing of the product. This resulted in a $362,058 decrease, or 98% reduction in Q2 2018 cost relative to Q2 2017.
General administration expenses were $503,799 during Q2 2018 as compared to $623,315 in Q2 2017, a decrease of $119,516 or 19%. The decrease was primarily due to a decrease in consulting and legal expenses.
Subsequent to the end of the quarter, on July 31, 2018, the Company issued 4,000,000 units at a price of $0.20 per share for total proceeds of $800,000. Each unit consists of one common share and one-half share purchase warrant exercisable at a price of $0.30 for a period of 48 months under the prospectus supplement to the Company’s base shelf prospectus.
On August 10, 2018, the Company also issued 3,875,000 units at a price of $0.20 per share for total proceeds of $775,000. Each unit consists of one common share and one-half share purchase warrant exercisable at a price of $0.30 for a period of four years following the date of closing. The Company paid a fee to certain arm’s length finders in connection with the Units issued to investors introduced to the Company by the Finders, consisting of (i) a 7% cash payment on certain subscriptions in the aggregate amount of $33,250 and (ii) issued an aggregate of 166,250 Common Share purchase warrants.
FINANCIAL STATEMENTS AND MD&A
Investors are encouraged to review Aequus’ complete Financial Statements and Management’s Discussion and Analysis (“MD&A”) for the three and six months ended June 30, 2018, which are available on the Company’s website at www.aequuspharma.ca and on SEDAR at www.sedar.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; Aequus’ sales and marketing efforts; the Company’s potential regional partnerships for its internal programs; the regulatory requirements for its transdermal pyridoxine/doxylamine program; and the Company’s expectations regarding the market potential and launch timing of the Zepto Capsulotomy System. 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 outlicense 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 April 30, 2018, 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.
Zepto® is a registered trademark of Mynosys Cellular Devices.
Aequus Investor Relations