- First quarter 2021 revenue of $136
million
- First quarter 2021 net loss of $15
million
- First quarter 2021 Adjusted EBITDA1 of $56 million
- Generated cash flow from operations of $13 million and concluded the quarter with a cash
and cash equivalents balance of $135
million
LONDON, May 14, 2021 /CNW/ - ADVANZ PHARMA Corp.
Limited ("ADVANZ PHARMA" or "the Company") (TSX: ADVZ), a global
pharmaceutical company with a strategic focus on complex medicines
in Europe, today announced its
financial and operational results for the three months ended
March 31, 2021. All financial
references are in U.S. dollars ("USD") unless otherwise noted.
"Our first quarter results mark the third consecutive quarter of
topline growth for the Company," said Graeme Duncan, Chief Executive Officer of ADVANZ
PHARMA. "With respect to M&A, we continued to diversify our
business during the reporting period with the acquisition of the
global rights to Cyclophosphamide. We also strengthened our
pipeline with the submission of three medicines for approval, and
are pleased to have received the European DCP approval for Mytolac,
our generic formulation of Lanreotide."
Consolidated First Quarter 2021 Financial and Operational
Results
- Reported first quarter 2021 revenue of $136.1 million, compared to $130.0 million for the first quarter of 2020, and
$135.0 million for the fourth quarter
of 2020.
- Reported a net loss for the first quarter of 2021 of
$15.2 million.
- Reported first quarter 2021 Adjusted EBITDA1 of
$55.6 million, compared to
$63.5 million for the first quarter
of 2020, and $50.5 million for the
fourth quarter of 2020.
- Generated cash flows from operating activities of $13.1 million in the first quarter of 2021
compared to $46.2 million in the
first quarter of 2020.
- On January 29, 2021, the Company,
through a wholly owned subsidiary, acquired the global rights to
Cyclophosphamide 50mg tablets from Zenex Pharmaceuticals Pty Ltd
for approximately $6.5 million.
- As of March 31, 2021, the Company
had a cash and cash equivalents balance of $135.1 million, compared to $160.2 million as of December 31, 2020. The decrease in cash is
primarily attributable to debt amortization and interest payments
of $29.7 million, plus an upfront
payment of approximately $5.0 million
for the acquisition of global rights to Cyclophosphomide 50mg
tablets. This decrease is partially offset by cash flows generated
from operating activities of $13.1
million.
First Quarter 2021 Segment Results
International Segment
ADVANZ PHARMA International segment revenue for the quarter
ended March 31, 2021, of $110.4 million increased by $13.4 million, or 14%, compared to the
corresponding period in 2020. A $6.1
million increase in revenue was further compounded with a
$7.4 million increase in revenue as a
result of the GBP strengthening against the USD, when compared to
the corresponding period in 2020. The increase in revenue is
primarily due to $9.7 million of
revenue from the portfolio of Alprostadil products sold within the
ADVANZ PHARMA International segment, and $6.8 million of revenue from the Correvio
Acquisition, due to the timing of these acquisitions in 2020.
The increase in revenue was partially offset, excluding the
impact of foreign currency translation, by a $3.6 million decrease from Fusidic Acid; a
$1.3 million decrease from Codeine
Phosphate+Paracetamol; and a $1.3
million decrease from Levothyroxine Sodium.
These lower product volumes and revenues are primarily due to
ongoing competitive market pressures resulting in market share
erosion in the U.K., combined with phasing of shipments
North America Segment
ADVANZ PHARMA North America segment revenue of $25.7 million for the quarter ended March 31, 2021, decreased by $7.3 million, or 22%, compared to the
corresponding period in 2020. The decrease was primarily due to a
$6.7 million decrease from Plaquenil®
largely as a result of increased demand in the comparative period
of 2020 due to COVID-19; a $1.1
million decrease from Donnatal® due to continued competitive
pressures impacting market share; and a $1.0
million decrease from Salagen® due to phasing of
shipments.
These declines in revenue were partially offset by a
$1.3 million increase from Photofrin
due to impact of COVID-19 in the comparative period; and a
$1.1 million increase from
Zonegran®.
Pipeline Update
The Company continued to make progress with respect to the
evaluation and advancement of its pipeline of medicines.
In the first quarter of 2021, ADVANZ PHARMA submitted three
medicines for approval. In addition, the Company received European
decentralised procedure approval for Mytolac, its generic
formulation of Lanreotide. The Company anticipates it will launch
Mytolac in a number of European markets later this year.
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.
Consolidated Financial Results
|
Three months
ended
|
(in $000's, except
per share data)
|
Mar 31,
2021
|
Mar 31,
2020
|
Revenue
|
136,109
|
|
129,992
|
|
Gross
profit
|
83,450
|
|
86,642
|
|
Gross profit
%
|
61
|
%
|
67
|
%
|
Adjusted gross
profit (1)
|
84,907
|
|
86,642
|
|
Adjusted gross
profit % (1)
|
62
|
%
|
67
|
%
|
Total operating
expenses
|
89,000
|
|
76,038
|
|
Operating (loss)
income for the period
|
(5,550)
|
|
10,604
|
|
|
|
|
Income tax
(recovery) expense
|
(3,221)
|
|
4,103
|
|
Net loss for the
period
|
(15,243)
|
|
(8,686)
|
|
|
|
|
Loss per
share
|
|
|
Basic
|
(0.31)
|
|
(0.18)
|
|
Diluted
|
(0.31)
|
|
(0.18)
|
|
|
|
|
EBITDA
(1)
|
47,940
|
|
70,360
|
|
Adjusted EBITDA
(1)
|
55,575
|
|
63,489
|
|
|
Notes:
|
|
|
(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.
Management believes non-IFRS measures, including Adjusted Gross
Profit and Adjusted EBITDA, provide supplementary information to
IFRS measures used in
assessing the performance of the business.
|
Consolidated Results of Operations
Revenue
Revenue for the first quarter of 2021 increased by $6.1 million, or 5%, compared to the
corresponding period in 2020. This increase was due to higher sales
from the ADVANZ PHARMA International segment combined with higher
foreign exchange rates impacting translated revenues from this
segment, partially offset by lower sales from the ADVANZ PHARMA
North America segment.
Gross profit for the first quarter of 2021 decreased by
$3.2 million, or 4%, compared to the
corresponding period in 2020 primarily due to a shift in product
mix and a non-cash inventory fair value adjustment increasing the
cost of sales due to the fair value of inventory associated with
the Correvio Acquisition amounting to $1.5
million.
Gross profit percentage for the first quarter of 2021 decreased
by 6% to 61% compared to the corresponding period in 2020 primarily
due to a change in the mix of product sales within both segments.
As an example of that change, in the first quarter of 2020, the
Company recorded greater sales of Plaquenil®, a higher-margin
medicine for the Company, primarily as a result of increased demand
due to COVID-19 .
Operating expenses of $89.0
million for the first quarter of 2021 increased by
$13.0 million, or 17%, compared to
the corresponding period in 2020. The increase in operating
expenses is primarily due to $7.1
million higher impairment charges, $5.3 million higher acquisition related,
restructuring and other costs, $3.1
higher general and administrative costs, and $2.7 million higher selling and marketing
costs.
Operating expenses increases are partially offset by
$6.0 million lower amortization
charges on intangible assets.
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 2021
increased by $3.1 million, or 41%,
compared to the corresponding period in 2020. The increase of
$1.3 million is primarily
attributable to the Correvio Acquisition as a result of timing of
acquisition in 2020, combined with higher employee costs and
foreign exchange rate movements negatively impacting translation of
general and administrative costs from ADVANZ PHARMA
International.
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 2021 increased by $2.7
million, or 34%, compared to the corresponding period in
2020, primarily due to an increase of $2.7
million, or 40%, within ADVANZ PHARMA International. The
increase within ADVANZ PHARMA International is primarily as a
result of costs associated with sales promotion and advertising
activities of Correvio due to the timing of acquisition in
2020.
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 2021
increased by $0.4 million, or 5%,
compared to the corresponding period in 2020 primarily due to the
timing of Correvio Acquisition in 2020, combined with foreign
exchange rate movements negatively impacting the translation of
research and development costs from ADVANZ PHARMA International.
This is partially offset by lower clinical trial spend, combined
with lower costs associated with validation and stability testing
activities.
First quarter 2021 Adjusted EBITDA of $55.6 million decreased by $7.9 million, or 12%, compared to the
corresponding period in 2020. Adjusted EBITDA by segment for the
first quarter of 2021 was $40.6
million from ADVANZ PHARMA International and $17.7 million from ADVANZ PHARMA North
America.
In addition, during the first quarter of 2021, the Company
incurred $2.7 million of Corporate
costs.
As of March 31, 2021, the Company
had cash and cash equivalents of $135.1
million and 48,913,490 limited voting shares issued and
outstanding.
About ADVANZ PHARMA
ADVANZ PHARMA is a specialty pharmaceutical company with a
strategic focus on complex medicines in Europe. With an agile and experienced team,
including direct sales, marketing and medical capability across
many of Europe's major markets,
the Company supplies, innovates and enhances the critical medicines
patients depend on, ensuring continued patient access and improving
health outcomes.
ADVANZ PHARMA has expertise in the anti-Infectives and
endocrinology therapy areas, along with strong relationships with
hospital decision makers, making it an attractive partner when
commercialising complex medicines in Europe.
ADVANZ PHARMA has an operational headquarters in London, an operations centre of excellence in
Mumbai, commercial affiliates in
North America, Europe, and Australia, and an established global network
of commercial partners throughout the rest of the world.
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 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 Adjusted Gross Profit, EBITDA,
Adjusted EBITDA and Working Capital, 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 measures in
the evaluation of issuers. Management also uses non-IFRS 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's working capital
requirements. Readers are cautioned that the non-IFRS measures
contained herein may not be appropriate for any other purpose.
Adjusted Gross Profit
Adjusted Gross Profit is defined as gross profit adjusted for
non-cash fair value increases to the cost of acquired inventory
from a business combination. Under IFRS, acquired inventory is
required to be recognized at fair value at the date of acquisition.
As this inventory is sold, the fair value adjustment represents a
non-cash cost of sale amount that has been excluded in adjusted
gross profit in order to normalize gross profit for this non-cash
component.
|
Three months
ended
|
(in
$000's)
|
Mar 31,
2021
|
Mar 31,
2020
|
Gross profit per
financial statements
|
83,450
|
|
86,642
|
Add back: Fair
value adjustment to acquired inventory
|
1,457
|
|
—
|
Adjusted Gross
Profit
|
84,907
|
|
86,642
|
EBITDA
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
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,
change in assumed contingent obligation 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, 2021, and
March 31, 2020.
|
Three months
ended
|
(in
$000's)
|
Mar 31,
2021
|
Mar 31,
2020
|
Net loss for the
period
|
(15,243)
|
|
(8,686)
|
|
|
|
Interest and
accretion expense
|
24,953
|
|
27,552
|
Interest
income
|
(443)
|
|
(504)
|
Income
taxes
|
(3,221)
|
|
4,103
|
Depreciation
|
748
|
|
724
|
Amortization of
intangible assets
|
41,146
|
|
47,171
|
EBITDA
|
47,940
|
|
70,360
|
Impairments
|
7,100
|
|
—
|
Fair value
adjustment to acquired inventory
|
1,457
|
|
—
|
Acquisition
related, restructuring and other
|
9,579
|
|
4,266
|
Share-based
compensation expense
|
1,095
|
|
724
|
Foreign exchange
loss
|
1,191
|
|
245
|
Unrealized foreign
exchange gain
|
(8,349)
|
|
(12,106)
|
Change in assumed
contingent obligation
|
(4,438)
|
|
—
|
Adjusted
EBITDA
|
55,575
|
|
63,489
|
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 statements and
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 and information 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 and information 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, risks associated with
general economic factors and 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.
View original
content:http://www.prnewswire.com/news-releases/advanz-pharma-corp-limited-announces-first-quarter-2021-results-301291491.html
SOURCE ADVANZ PHARMA Corp.