Aequus Provides General Update and Second Quarter 2020 Financial Highlights
VANCOUVER, August 27, 2020 – 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, 2020 (“Q2 2020”) and six months ended June 30, 2020 (“YTD 2020”) and associated Company developments. Unless otherwise noted, all figures are in Canadian currency.
“Q2 2020 was an exceptional quarter for Aequus, with the second highest revenues achieved in a quarter to date, despite the challenges presented by the COVID-19 global pandemic,” said Doug Janzen, CEO and Chairman of Aequus Pharmaceuticals. “While revenues continue to show strong growth over the same period last year we are even more pleased to see the results of our cost control efforts in response to temporary COVID-19 field and operational restrictions, reducing net losses for the quarter to $222,248, a 67% decrease compared to a $678,003 net loss in the same period in 2019. We successfully closed a financing with significant insider participation this month and I am very excited about our capital position to launch new products this fall and enter into new strategic partnerships.”
“As we move into the second half of the year, we find ourselves well poised for a successful launch of the Evolve dry eye product line,” said Anne Stevens, COO and Director of Aequus. “We couldn’t be happier to have our recently announced new head of commercial, Grant Larsen, motivating the team and leading the way to find creative and innovative ways to build our business in the ophthalmic space. Grant was previously CEO of Eye Recommend, one of the largest optometry focused buying groups in Canada with approximately $180M in eye care related purchases in 2019 and we are excited about the knowledge, experience and relationships that he brings to the table.”
Second Quarter 2020 Financial Highlights
Aequus reported its second highest revenue quarter to date, with $542,992 in promotional services revenue during Q2 2020 compared to revenue of $397,263 generated during the same period in 2019. During YTD 2020 Aequus achieved $1,122,442 in revenues compared to $726,259 generated during the six months ended June 30, 2019 (“YTD 2019”) – an increase of 55% driven by increased market share of its promoted ophthalmic and transplant products.
Net losses decreased by 67% in Q2 2020 compared to the same period last year, with the Q2 2020 net loss of $222,248 versus a $678,003 loss in the three months ended June 30, 2019 (“Q2 2019”). The loss for YTD 2020 was $628,063 which is 55% lower than the $1,408,218 loss YTD 2019 primarily due to a combination of an increase in revenue, some structural long term cost savings and a temporary decrease in COVID related cost containment efforts. Highlights from the quarter are as follows:
- Sales and marketing costs for Q2 2020 were $270,296 compared to $451,185 in Q2 2019, a decrease of $180,889 or 40%. This decrease was mainly driven by a reduction in working hours, sales activities and related expenses due to the COVID-19 pandemic impacts in Q2 2020. Changes to contracts related to the sales management team also contributed to the decrease in costs in Q2 2020. Non-cash expenses for depreciation and amortization, and share-based payments for Q2 2020 were $43,888 and $33,789, respectively, compared to $47,400 and $15,362, respectively, in Q2 2019.
- The Company incurred research and development (“R&D”) expenses of $13,740 in Q2 2020 compared to $52,493 in Q2 2019. The Company incurred R&D expenses of $28,057 in YTD 2020 compared to $121,571 in YTD 2019. There was no consulting cost in Q2 2020, and YTD 2020 compared to Q2 2019 and YTD 2019 as the Company has continued to focus efforts on growing commercial revenues.
- General and administration (“G&A”) expenses were $481,608 in Q2 2020 compared to $575,841 in Q2 2019, a decrease of $94,233. This decrease was mainly driven by a drop in project costs related to the marketing and branding work at the corporate level compared to Q2 2019. Further costs reductions stems from a drop in workforce and related working hours due to the COVID-19 impact in Q2 2020.
Events subsequent to June 30, 2020
Aequus is in a strong cash position following the subsequent financing on August 6, 2020, where the Company closed a public offering and issued 31,250,000 Units at a price of $0.08 per Unit for aggregate gross proceeds of $2,500,000. Each Unit is comprised of one common share in the capital of the Company and one-half of one common share purchase warrant of the Company (each whole common share purchase warrant, a "Warrant"). Each Warrant entitles the holder thereof to purchase one Common Share at an exercise price of C$0.12 per Common Share until expiry on August 6, 2023. 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 C$0.20 for ten consecutive trading days.
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 launch; the Company’s expected revenues; the continued revenue growth of its products; given our current run rate we expect to offset that step down in the following quarters; the regulatory approval of the Evolve line of products expected in 2020; a regulatory audit of Medicom’s manufacturing facility required by Health Canada to be completed in 2020; ongoing discussions with 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 positive results of clinical trials; 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 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 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.
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