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Financial Report on 2012
Zurich
March 28, 2013
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Safe Harbour Statement
This presentation may include forward-looking statements that are based on our management’s beliefs
and assumptions and on information currently available to our management.
The inclusion of forward-looking statements should not be regarded as a representation by Cosmo that
any of its plans will be achieved. Actual results may differ materially from those set forth in this
presentation due to the risks and uncertainties inherent in Cosmo’s ability to develop and expand its
business, successfully complete development of its current product candidates and current and future
collaborations for the development and commercialisation of its product candidates and reduce costs
(including staff costs), the market for drugs to treat IBD diseases, Cosmo’s anticipated future revenues,
capital expenditures and financial resources and other similar statements, may be "forward-looking" and
as such involve risks and uncertainties and risks related to the collaboration between Partners and Cosmo,
including the potential for delays in the development programs for Budesonide MMX®, Rifamycin SV
MMX®, Methylene Blue MMX® and CB-03-01 . No assurance can be given that the results anticipated in
such forward looking statements will occur. Actual events or results may differ materially from Cosmo’s
expectations due to factors which include, but are not limited to, increased competition, Cosmo’s ability to
finance expansion plans, the results of Cosmo’s research and development activities, the success of
Cosmo’s products, regulatory, legislative and judicial developments or changes in market and/or overall
economic conditions. Cosmo assumes no responsibility to update forward-looking statements or to adapt
them to future events or developments.
You are cautioned not to place reliance on these forward-looking statements, which speak only as of the
date hereof, and Cosmo undertakes no obligation to revise or update this presentation.
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Agenda
• Introduction and 2012 highlights Mauro Ajani, CEO
• 2012 Financial review Chris Tanner, CFO
• Evolving Strategy & Products in Market Mauro Ajani, CEO
• Pipeline update Luigi Moro, CSO
• 2013 Outlook Mauro Ajani, CEO
• Questions & Answers All
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• Very strong growth in Revenues , Operating Profits and Comprehensive
Income delivered a record year for Cosmo on all counts
• Good market performance of Lialda® in USA. Fastest growing UC tablet, 22.5% share in 5- ASA market
• Uceris® approved in January 2013 for marketing in the USA, Cortiment® approved in the Netherlands
• Rifamycin SV MMX® phase III trials in USA attained clinical end points; EU trial ongoing but delays incurred
• CB-03-01 licensed worldwide to Medicis/Valeant; phase II acne in USA ongoing
• CB-17-01 phase II trials for colon cancer diagnosis in surveillance and for patients with longstanding UC completed
• Value of investment in Santarus increased from € 17.8 to € 65.6 million
• Purchase of CCRE for € 13.1 million paid in cash an treasury shares
2012 Highlights
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Key Financial Highlights for 2012
• Revenue increased by 77.7% to € 59.5 million
• Revenue from own products increased to 81.1% from 64.4%
• Costs “only” increased by 34.5% to € 33.1 million
• EBITDA increased by 160.6% to € 29.0 million
• Net profit increased by 154.1% to € 19.3 million
• Total comprehensive income increased by nearly 8 times to € 64.0 million
• Cash and financial assets available for sale increased by 192.4% to € 93.4 million
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Income Statement and Statement of Comprehensive Income
EUR/1,000 31.12.2012 31.12.2011
Revenues 59,537 33,509
Other Income 70 756
Cost of sales (16,259) (14,468)
Research and development costs (10,916) (5,173)
Selling, general and administrative costs (5,977) (5,629)
Net Operating expenses (33,082) (24,577)
Operating Result 26,455 8,932
Financial income 1,012 1,032
Financial expenses (579) (847)
Profit Before Taxes 26,888 9,117
Income tax expenses (7,564) (1,493)
Profit For The Year 19,324 7,624
EUR/1,000 31.12.2012 31.12.2011
Profit (loss) for the year (A) 19,324 7,624
Gains/(Losses) on fair value of available for sale financial assets 44,726 744
Gains/(Losses) on cash flow hedge (-) (78)
Income tax relating to components of other comprehensive income (10) 18
Total other comprehensive income, net of tax (B) 44,716 684
Total comprehensive income (A)+(B) 64,040 8308
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Discussion of Income Statement and Statement of Comprehensive Income
• Overall revenue increased by 77.7% to € 59.5 million
• Recurring revenues increased by 14.9% to € 37.6 million
• Royalties increased by 16.2% to € 11.7 million
• Manufacturing of MMX based products increased by 36.0% to € 14.7 million
• Other contract drug manufacturing decreased by 3.1% to € 10.6 million
• One time license fees and milestones increased very strongly to € 21.9 million
• Operating costs increased by 34.5% to € 33.1 million
• Cost of sales increased by 12.2% to € 16.3 m
• SG&A increased by 5.0% to € 6.0 m
• R&D expenditures increased by 111.0% to € 10.9 million: capitalized R&D costs decreased by 75.3% to € 0.5 m
• Net profit increased by 154% to € 19.3 million
• Increase in value financial assets (primarily SNTS shares) by € 47.3 million caused comprehensive income to jump from € 8.3 million to € 64.0 million
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Consolidated Statement of Financial Position
EUR/1,000 31.12.2012 31.12.2011
Financial assets available for sale 66,070 18,304
Other non current assets 45,795 31,137
Cash and cash equivalents 27,302 13,264
Other current assets 12,678 14,973
Total assets 151,845 78,038
Medium-to long-term interest-bearing loans and borrowings
11,040 1,284
Other non-current liabilities 3,825 2,993
Short-term interest-bearing loans and borrowings
1,797 892
Other current liabilities 10,582 9,417
Equity attributable to owners of the company 124,391 63,208
Non controlling interest 210 244
Total equity and liabilities 151,845 78,038
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Discussion of Statement of Financial Position
• Net working capital increased by 28.2% to € 6.0 m
• Goodwill & intangible assets up 0.8% to € 22.3 m due to capitalization of development cost of Budesonide MMX®
• Increase of medium term borrowings to € 11.0 million due to acquisition of CCRE and assumption of the loans
• Tangible Net Worth increased by 147.5% to € 102.3 million
• 81.9% of Total Assets financed by Equity
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2012 Cash flow
Cash at the end of the period 27,302
Net cash flow due to CCRE acquisition (6,399)
Transaction with treasury shares 3,203
Additional investment in Cosmo R&D interests (28)
Loan repayment (net of increase) (167)
Investment in fixed assets (net) (1,949)
Investment in intangibles assets (943)
Investment in financial assets available for sales (3,040)
Change in working capital (3,538)
Accrual/payment of employee benefits, other provision and taxes (52)
Income taxes paid (2,902)
Other non cash items 63
Depreciation and amortization 2,542
Profit before taxes 26,888
Cash at the beginning of the period 13,624
(9,000) (6,000) (3,000) 0 3,000 6,000 9,000 12,000 15,000 18,000 21,000 24,000 27,000 30,000
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The Santarus relationship
• Decision not to build up own sales force outside of Italy in 2007
• Building an own sales force with no existing products is expensive
• Seek a small, dependable partner with strong distribution capacity in the USA
• Small: product success is key to them
• Dependable: will put and maintain full efforts
• Competent: has shown to be able to distribute gastro products
• 2008 Selection of Santarus and decision to take all payments in shares
• 2008: 6 m SNTS shares at $ 2.00 plus $2.5 million
• 2010: 972’132 shares instead of $ 3 million
• 2012: 906’412 shares instead of $ 4 million
• The relationship has developed superbly
• Uceris was approved
• Instead of $ 19 million, we now have 7’878’544 shares worth $ 86.5 million per 31.12.12 and $ 136.5 million per 25.3.13
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The Patent Strategy
• Cosmo strategy is to use its increasing knowledge of how substances and compositions of substances work in the colon to create effective patent barriers, involving as much as possible:
• Product patents
• Focus on new entities
• Focus on new compositions
• Focus on new combinations
• Methods or use patents
• Process patents
Product
MMX®
MESALAZINE MMX®
BUDESONIDE MMX®
RIFAMYCIN SV MMX®
METHYLENE BLUE MMX®
LMWH MMX®
ZACOL- ZACOFALK
CB-03-01
Italy Eastern Europe
EP 1198226 / US 6,773,720
EP 1183014 / US 7,431,943
EP 1287822
US 7,431,943
US 8,293,273
RE 43,799 E
EP 176339 / US 8,263,120
EP 1455761
EP 1992338
EP 1421099 / US 8143240
granted
pending
2020 2018 2022 2024 2026 2028 2030 2032
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Product Update
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Lialda®
• Indication
• Induction and maintenance of Remission for Patients with Ulcerative Colitis of mild to moderate severity
• Net Sales
• 2012: $ 400 m (+7.5%)
• 2013: $ 450 m (+ 12.5%) analyst projections
• Cosmo Income
• 2012: € 20.8 m (+26.0%) (€ 11.6 m royalties, € 14.6 m manufacturing)
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Uceris™*
• FDA approved on January 14, 2013 for induction of remission in patients with active, mild to moderate ulcerative colitis
• Commercial launch commenced mid-February, 2013
• Ulcerative colitis, an inflammatory bowel disease (IBD), affects
approximately 700,000 patients in U.S.
• Limited therapeutic options mainly involving salycilates, for mild to moderate ulcerative colitis
Locally acting steroid with MMX® colonic delivery Estimated sales potential of ~$300 million
*Please see www.uceris.com for full prescribing and safety information
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Established Therapies for Mild to Moderate Ulcerative Colitis
Step-up according to severity at presentation or failure at prior step
5-ASA
Systemic Corticosteroids
Anti-TNFα
Disease severity at presentation
5-ASA / Thiopurine
5-ASA
Anti-TNFα
Induction Maintenance
Cyclosporine Thiopurine
Severe
Moderate
Mild
Kornbluth and Sacher, Am J Gastroenterol 2010; 105: 501-523
Uceris™
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Physician Reactions to Uceris™
• Very positive reactions to Uceris messages
• Uceris story is logical
• Putting together two familiar ideas—budesonide and MMX
• Clear need for this product – “I’ve been waiting for someone to formulate budesonide for UC”
• Key drivers of usage: efficacy, budesonide, MMX technology and safety profile
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UCERIS™ iPAD Sales Aid
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Uceris™ Advertising
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Internet Based Patient Programs
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Outreach to Patients on UCERIS.com
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Pharmacy
Key Uceris™ Customers
Prescribing GEs
KOL
• 300-400 top National, Regional and Local Key Opinion Leaders
• Primary focus of MSL team
Payers
• Government: Medicaid, Medicare, Department of Defense, Veterans Affairs
• Commercial: Insurance Companies
Patients
• ~700K UC patients
• Wholesalers and ~55,000 retail pharmacies
Patients
Payers
KOL
Prescribing GEs
• ~7,500 high potential Gastroenterologists
• Primary focus of Sales Force Patients
Payers Payers
KOL
Prescribing GEs
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Selected IBD Products – U.S.
TRx and IMS Sales Trends – January 2013
* Generic version of Entocort EC launched in June 2011.
$79M
27%
$152M
19%
$303M
6%
$414M
-11%
$451M
12%
$773M
-1%
$2,173M
2%
Apriso
Canasa
Pentasa
Entocort EC/Gen*
Lialda
Asacol/HD
Total
LTM Sales, Y/Y Growth
0.2M
0%
0.3M
22%
0.4M
9%
0.5M
-4%
0.7M
6%
1.6M
-3%
3.7M
2%
Canasa
Apriso
Entocort EC/Gen*
Pentasa
Lialda
Asacol/HD
Total
LTM TRx, Y/Y Growth
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Uceris™: the Cosmo business case
• Milestone at First sale: $ 7 m
• Royalty: 12% up to annual sales of $ 120 m; 14% above
• Manufacturing: 10% of net sales; all manufacturing at Cosmo
• Sales milestones: $ 5 m when sales reach $ 75 m p.a. $ 17.5 m at sales of $ 150 m p.a.
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Budesonide MMX® outside U.S.A.
Cortiment obtained Marketing Authorization in the Netherlands
in January 2013 In alliance with FERRING:
● MRP planned to obtain the MA in the other EU countries by 1H 14 ● Intention to submit a MA in North and South America, Middle East and Far East within the year end.
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Pipeline Update
Product and Indication Drug type
Phase I Phase II Phase III MA Launch Partner
Rifamycin SV MMX®
Travellers’ Diarrhoea
Antibiotic
Dr. Falk – Europe & Australia
(excluding Italy)
Santarus - USA
CB-17-01
- Chromendoscopy for colorectal cancer
prevention in surveillance patients
- Chromoendoscopy for colorectal
cancer prevention in UC patients
Diagnostic
CB-03-01 (NCE)
Acne
Steroid ester,
androgen antagonist
Licensed out world wide
Medicis/Valeant
CB-03-01 (NCE)
Alopecia
Steroid ester,
androgen antagonist
Licensed out world wide
Medicis/ Valeant
LMW Heparin MMX®
- Induction of remission in UC
- Maintenance of remission in UC
Biologic
CB-01-16
Opioid Induced Constipation
Opioids Antagonist
EU
H1/14
H2 13
H1/14
POC H1/15
EU 1/14
USA
2012
2012
2012
H1/14 2012
Drug development Pipeline
2012
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Rifamycin SV MMX®:
• Pivotal Trials Status:
• USA :
• Phase III clinical end point (superiority to placebo in travellers diarrhoea) in US trial attained
• Designated as New Chemical Entity by FDA in USA
• EU:
• Patient recruiting for Phase III infectious colitis trials in EU ongoing
• Phase III delayed because of change in regulatory process in India. EU trial is for non inferiority to Cipro. Delay could go into H1 2014.
• Costs
• Borne by licensees
• Cosmo may share some regulatory costs for relocating trial to Latin America
Colon Cancer Economics
• 7 MMs have 760 m population; ~ 35% over fifty years old
• > 500’000 new colon cancer diagnoses every year in 7 MMs
• 60% of colon cancers are detected in a late stage
• > 170’000 deaths of colon cancer each year in 7 MMs
• Average cost to treat a colon cancer Medicare patient: $ 140’000
• Average cost to treat a late stage patient: $ 310’000
• Cost of a colonoscopy: ~$ 700 - 1000
• Average time of a colonoscopy: 10-12 minutes
• Gross Average polyp detection rate: 44-49% (US data)
• Gross Average adenoma detection rate: 27-32% (US data)
• Cost of a single use spray catheter: $ 80
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Methylene Blue MMX clinical development • CB-17-01/03
• Dose finding trial optimal dose administration schedule
• 112 subjects completed
• CB-17-01/04 trial on patients with IBD for longer than 8 years: data to allow sample size determination of dysplastic areas in Ph III
• IBD trial
• 52 patients completed
• CB-17-01/05
• Cancer screening trial data providing for sample size determination of adenomas areas in Phase III
• 96 subjects treated
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Number and proportion of subjects with detected polyps, adenomas and serrated lesions in the CB-17-01/05 trial population
Colonic region
Methylene blue MMX® tablets
Subjects with at least
one polyp
n (%)
Subjects with at least one
adenoma
n (%)
Subjects with at least one
serrated lesion
n (%)
All regions 61 (63.5) 45 (46.9) 26 (27.1)
Right colon 32 (33.3) 24 (25.0) 9 (9.4)
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CB-03-01 in 2012 and onwards
• Signed advisory & support agreement with Intrepid Therapeutics
• IND filed and approved
• Signed licensing agreement with Medicis in April
• $ 25 m received
• 360 patients to be enrolled, 4 cohort phase II increasing dose study in acne
• First cohort completed, second cohort going to be completed in April, no major adverse events to date
• Valeant acquired Medicis and reaffirmed major strategic interest
• Next milestone
• At EOP II acne $ 20 m (expected H1 2014)
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Financial Outlook for 2013: looking to another record year
• Revenues projected at > € 60 million
• Flat COGS
• R&D expenditures increase by 55% to ~ € 17 m
• SG&A unchanged
• Operating income increase corresponding to revenue increase
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Key events 2013
• May: First quarter results from Uceris sales in USA
• Launch phase III for Methylene Blue MMX in the USA and EU in Q2/Q3
• Half yearly financials on August 2
• Launch of Cortiment® in the Netherlands
• Approval of Cortiment® in other EU states
• Possible results of phase III Rifamycin SV trials for infectious diarrhoea in EU at end H2
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Cosmo Pharmaceuticals
Information Contacts
• Number of shares: 14,995,743
• Listing: SIX Swiss exchange, Main board
• ISIN: IT0004167463
• Mauro Ajani, CEO [email protected]
• Chris Tanner, CFO [email protected] ph: +39-02-9333’7453
• Giuseppe Cipriano, COO [email protected]
• Luigi Moro, CSO [email protected]