A Return to Revenue Growth - Aequus Provides Second Quarter 2019 Financial Highlights

Aug 27, 2019

VANCOUVER, August 27, 2019 – 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 six months ended June 30, 2019 (“Q2 2019”) and associated Company developments. Unless otherwise noted, all figures are in Canadian currency.

“We’re pleased to announce a return to revenue growth in the second quarter,” said Doug Janzen, Chairman and CEO of Aequus. “The commercial team has been successfully driving sales, with Vistitan growing in unit volume by 76% in Q2 2019 over the same quarter last year. Meanwhile, our strategic team has been executing on new collaborations to bring revenue-generating products into the territory. With the regulatory approval of the Evolve line of products expected in 2019 and continued strength in our currently marketed products, Aequus is poised to continue the trend in revenue growth over the coming quarters.”  


Q2 2019 Highlights

Planned Shelf Prospectus Filing to Replace Soon to Expire Existing Shelf Prospectus

“As a public company, it has been Aequus’ strategy to always have a Shelf Prospectus in place,” said Doug Janzen. “Our current Shelf Prospectus is approaching its expiry date and we plan to replace it in the coming days – this is a normal part of our business and should not be interpreted as us initiating a financing.”

Subsequent to June 30, 2019

Commercial Update

“We are pleased to see such strong growth in our products over the first half of the year,” said Ian Ball, Chief Commercial Officer of Aequus. “As a newcomer to the intimate Canadian ophthalmology space in 2016, our team has been steadfast in building a brand through close relationships, conference sponsorships, physician webinars, and patient outreach. We are now seeing the benefit of this hard work, with Vistitan actively gaining market share from the brand leader. We are excited to continue the momentum within ophthalmology with our recently announced distribution agreement with Medicom. Medicom is currently preparing for a regulatory audit of their manufacturing facility required by Health Canada which is scheduled for October. This same facility has successfully passed audits by European regulators. Aequus and its regulatory consultants have completed the regulatory submissions for Health Canada and will be allowed to file for approval for the Evolve line as soon as the manufacturing audit is completed. This timeline of regulatory events allows for expected product approvals this year.”

Revenue for Q2 2019 was $397,263 compared to $377,855 earned in Q2 2018 and $328,996 earned in Q1 2019. The 5% and 20% revenue increases, respectively, can be primarily attributable to strategically directed promotional activities focused in markets with positive market access and reimbursement listings.  

The signing of the distribution agreement with Medicom had terms consistent with the term sheet that was previously announced in March 2019. The agreement grants Aequus commercial rights to novel portions of Medicom’s portfolio of ophthalmology products including the Evolve® line of preservative free dry eye products, which contains 5 commercial products and 2 products in development, an undisclosed preservative free ophthalmic medication, and the diagnostic eye drop Fluosine within Canada. This agreement adds 9 products to Aequus’ portfolio.

Launched in 2015 in Europe, the Evolve® brand has grown to 5 products across 35 countries with 2 products in development. With an array of products, the brand can address the various symptoms involved with dry eye disease and blepharitis including discomfort, stinging, burning, and dryness. Currently in Canada, the dry eye market is estimated at over $90M, which includes both prescription and over-the-counter products. Aequus and Medicom are currently working with Health Canada to review Medicom’s manufacturing facility prior to submitting the regulatory package for the Evolve® line of products. Aequus expects to detail these products with our existing commercial infrastructure, allowing for effective and efficient use of resources, and a seamless launch into the Canadian marketplace.

“We are very excited about the developing relationship with Medicom” said Ian Ball, CCO of Aequus. “Not only is the fit between the two businesses ideal, but Aequus’ access to Medicom’s development pipeline will give the Company the ability to address unmet clinical and patient needs in Canada. Evolve will be launched in Canada by our existing sales infrastructure, bringing the broadest range of preservative free dry eye products to the market. Finally, the companies have discussed the possibility of expanding the agreement to cover other territories in the future which would greatly enhance the value of the partnership to both companies.”

The Company looks to continue leveraging its existing core capabilities and commercial infrastructure to expand its presence and product offerings within ophthalmology. Aequus has positioned itself as a key partner for international companies looking to access the Canadian marketplace. The Company will continue its strategy of adding to its existing product portfolio through promotional partnership agreements, asset acquisitions, in-licenses, and internal development programs.

VistitanTM: Trademark owned or used under license by Sandoz Canada Inc.


Operating expenses for the three months ended June 30, 2019

The Company reported a Q2 2019 net loss of $678,006, an increase of 2% from the $666,243 loss in Q2 2018. The loss for the six months ended June 30, 2019 was $1,408,218 (June 2018 - $1,482,727).

Sales and marketing costs for Q2 2019 was $451,185, as compared to $363,846 in Q2 2018, an increase of $87,339 or 24%. The majority of the second quarter increase related to the addition of new sales reps and higher related salesforce expenses relative to the Q2 2018.  Q2 2019 also included the addition of a National Sales Manager in Ophthalmology, a new position created after June 30, 2018.  Non-cash expenses for depreciation and amortization, and share-based payments for Q2 2019 were $47,400 and $15,362, respectively, compared to $47,279 and $11,767, respectively, in Q2 2018.

The Company incurred research and development project maintenance expense of $52,493 in Q2 2019 compared to $179,963 in Q2 2018 when the company was actively working with FDA regulatory consultants for the AQS1303 Pre-IND related work.

General administration expenses were $575,841 during Q2 2019 as compared to $502,971 in Q2 2018, an increase of $72,870 or 14%. The increase was primarily due to $84,827 in costs related to interest and accretion expense related to the convertible debt issued during the quarter in May 2019.   Costs also include consulting expenses relating to corporate marketing during Q2 2019 that was not required in Q2 2018.  


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; revenue growth trends into the future; expected timing for product launches; the Company’s expected revenues; the regulatory approval of its products; the Company’s ability to attract international partners; and ongoing discussions with and the Company’s ability to secure potential partners to further grow our product portfolio. 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 regulatory approvals; general business and economic conditions; the Company’s ability to successfully out license or sell its current products and in-license and develop new products; the assumption that the Company’s current good relationships with 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; the impact of the coronavirus (COVID-19) on the Company’s operations; 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, 2021, 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.
Aequus Contact Information
investors@aequuspharma.ca
604-336-7906