Aequus Provides General Update and Reports Record 2020 Financial Results
VANCOUVER, April 23, 2021 – 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 year ended December 31, 2020 (“Fiscal 2020”) and associated Company developments. Unless otherwise noted, all figures are in Canadian currency.
“We had a very strong end to our fiscal year and set new records for both the fourth quarter and annual revenue,” said Doug Janzen, Chairman and CEO of Aequus. “2020 gross revenues were $2,592,613 for the year, a 59% increase over Fiscal 2019 revenues of $1,632,524 and Q4 revenues were $851,187 a 59% increase over Q4 2019. Our fourth quarter is traditionally our strongest quarter, and we will work to carry this momentum forward into 2020. We significantly improved on our bottom line as well; the net loss for Fiscal 2020 was $1,045,360, a 66% reduction compared to a net loss of $3,106,104 in Fiscal 2019 and the net loss for Q4 2020 dropped to $165,376 compared to $1,037,354 for the same period in 2019.
I am very pleased with our performance in 2020. We have dramatically narrowed our operating losses and continue to close in on our goal of reaching operational break-even. With the recent launch of the EvolveTM and ReviveTM products our focus remains on commercial execution while expanding our existing partnerships to include the acquisition of new products for our growing pipeline. In the next few weeks, we will be submitting the first tranche of information to Health Canada to support the approval of Zimed-PF, a preservative free prescription product for open angle Glaucoma. We are very excited about introducing this product to the Canadian market. We are also encouraged by the pace of negotiations we are having with potential new partners and B2B relationships, despite the challenges associated with the impact of COVID-19 on our partners and customers.”
Key 2020 Financial Highlights
- Highest annual revenue to date, with Fiscal 2020 total revenue of $2.6 million, resulted in an increase of 59% over the $1.6 million in revenue during the year ended December 31, 2019 (“Fiscal 2019”)
- The three months ended December 31, 2020 (“Fourth Quarter 2020”) had revenues of $851,187, is a 59% increase over the three months ended December 31, 2019 (“Fourth Quarter 2019”).
- Fiscal 2020 net loss of $1.0 million, a reduction of 66% from the $3.1 million loss in Fiscal 2019, mainly due to higher sales and a temporary reduction in sales expenses during the mandated shutdowns last year.
- Fourth Quarter 2020 operating loss of $164,750, before other expenses, was 70% less compared to the same quarter in 2019. The Fourth Quarter 2020 net loss of $165,376 was a $871,978 decrease when compared to $1,037,354 net loss in the Fourth Quarter 2019. The change was primarily due to higher sales in 2020 and a $478,940 expense in Q4 2019 related to the impairment of an intangible asset when there was no such expense in Q4 2020.
Key 2020 Operational Highlights
- On January 10, 2020, the Company advanced the filings for provincial reimbursement in both Quebec and British Columbia for its lead product, PRVistitanTM (Bimatoprost 0.03%). If successful, this additional coverage would advance sales in the second and third largest markets in Canada and would trigger an increase in the percentage of total revenue that Aequus receives from its partner Sandoz.
- On October 16, 2020, the Company agreed to a contract extension under modified terms for its promotional service agreement with Sandoz Canada Inc. (“Sandoz”) for Tacrolimus IR to December 31, 2021.
- On October 29, 2020, the Company, together with its partner, Medicom Healthcare Ltd. (“Medicom”), was issued a new Medical Device License for two of three product submissions made for the EvolveTM preservative free dry eye product line, including Daily Intensive Drops and Daily Intensive Gel.
- On August 6, 2020, the Company issued 31,250,000 units at a price of $0.08 per unit for aggregate proceeds of $2,500,000. Each unit is comprised of one common share and one-half of one warrant of the Company (each whole common share purchase warrant, a "Warrant"). Each Warrant entitles the holder to purchase one common share at an exercise price of $0.12 for 36 months. The Warrants include an acceleration provision, exercisable at the Company's option, if the Company's daily volume weighted average share price is greater than $0.20 for ten consecutive trading days.
2021 Highlights - Subsequent to December 31, 2020
- In February 2021, the Company closed a private placement of 6,666,666 units at a price of $0.15 per unit, for proceeds of $1,000,000 to Marc Lustig, a director of the Company. Each unit shall consist of one common share and one-half warrant. Each warrant shall entitle the holder to purchase one common share at an exercise price of $0.25 for 24 months.
- In March 2021, the Company elected to exercise its right to trigger an accelerated expiry under the terms of the warrant indenture which governed the Warrants issued under the August 2020 financing, and subsequently issued 12,343,750 shares at $0.12 per share, pursuant to the exercise of certain other common share purchase warrants for net proceeds of $1,481,250. The Company also issued 317,000 shares at $0.22 per share pursuant to the exercise of warrants for net proceeds of $69,740.
- In March 2021, Aequus launched the newly approved EvolveTM Daily intensive drops and Daily Intensive Gel. Products are sold direct to professionals via a newly created e-commerce platform, www.aequuseyecare.ca .
“Despite Covid-19 and significant reductions in rep selling time, -41% in field vs full time deployment, Aequus combined revenues were $2.6 Million, +59% increase compared to Fiscal 2019. Vistitan revenue at +15% and Tacrolimus at +49% showed strong consistent growth as we increased clinic and transplant center penetration respectively. Fourth Quarter 2020 revenues from operations were $851,187, the first time in our Company’s history that we exceeded $750,000 in sales for a single quarter. We’ve successfully executed sales force deployment strategies into key professional areas of Ophthalmology and Transplant across Canada. We’ve used Covid as an opportunity to improve our remote selling capabilities and scale out our technology with video conferencing and professional CRM implementation,” says Grant Larsen, Chief Commercial Officer with Aequus. “Our accelerated ability to adapt to market conditions, and implement digital technology with a scalable platform of assets, is expected to attract international partners looking for rapid access to the Canadian marketplace.”
With the addition of business development, medical science liaison and commercial analysis resources in late 2020, our focus is on expanding our product offerings in key strategic areas as well as expanding our established partnerships with Sandoz and Medicom. With a new drug establishment license in Canada, and the demonstrated ability to deliver on promotional partnerships, in-license agreements, we have a flexible business model capable of adapting to many portfolio opportunities.
The Company reported an operating loss before other income of $1,064,989 for Fiscal 2020, an improvement of 60% from the loss before other income of $2,636,560 in Fiscal 2019. The lower loss was primarily due to higher sales and a decrease in research and development expenses. The Fiscal 2020 improvement in loss was offset by higher sales and marketing expenses and a higher interest and accretion expenses recognized in general administration expenses which related to the debenture issued during Fiscal 2019.
Sales and marketing costs in Fiscal 2020 were $1,547,773 when compared to $1,857,478 in Fiscal 2019, a reduction of 17% or $309,705. The majority of the reduction related to a decrease in sales activities and reduced work hours due to the COVID-19 pandemic response restrictions which resulted in temporary layoffs, limited travel to customers and reduced in-person meetings. Non-cash expenses for depreciation, amortization and share-based payments in Fiscal 2020 were $91,209 and $150,433 respectively, compared to $189,309 and $82,241 respectively in Fiscal 2019.
Research and development project maintenance expenses in Fiscal 2020 were $54,608 when compared to $210,827 in Fiscal 2019, a decrease of 74% or $156,219. The majority of the decrease was attributable to a reduction in consulting and compensation related expenses as we are now focused on revenue generating third-party commercial products as opposed to internal product development programs.
General and administration expenses in Fiscal 2020 were $2,055,221 when compared to $2,200,779 in Fiscal 2019, a decrease of 7% or $145,558. The Company’s interest and accretion expenses relating to the convertible debenture issued in May 2019 were $246,753 and $232,433 respectively for Fiscal 2020, compared to $147,478 and $223,428 respectively for Fiscal 2019. The Company recognized cost reductions in Management, wages and related, and travel, and legal and professional fees in Fiscal 2020 which were offset by the increased expenses related to the convertible debenture and interest expenses.
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 sales and marketing efforts to include several commercial products in ophthalmology and transplant. 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; , ongoing discussions with current and future partners ’s ability toto 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 28, 2020, 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.
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