On November 14, 2018 Prometic Life Sciences Inc. (TSX: PLI) (OTCQX: PFSCF) (Prometic or the Corporation) reported today its unaudited financial results for the third quarter ended September 30, 2018 (Press release, ProMetic Life Sciences, NOV 14, 2018, View Source [SID1234531350]).
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"Several initiatives that we have been pursuing during the past quarter should bear fruit in the coming weeks and months," said Pierre Laurin, Prometic’s President and Chief Executive Officer. "We have implemented cost-control measures to reduce our cash use while at the same time have made significant progress to advance our two lead drug candidates, Ryplazim (plasminogen) and PBI-4050. As previously stated, our current business plan calls for a significant reduction in R&D expenditures of up to $30 million in 2019 as compared to this year’s budget. Our primary objective remains to close the gap between the fundamental enterprise value we have built and our current market valuation by strengthening our financial position through the closing of commercial partnerships and equity-related initiatives."
Commenting on the third quarter 2018 financial results, Bruce Pritchard, Prometic’s Chief Operating Officer and Chief Financial Officer, said, "We are ahead of target with the financial guidance provided during the AGM in May 2018 and our last few conference calls. We have effectively implemented cost control measures as evidenced by the trending quarterly decrease in R&D, Administration and Sales & Marketing expenses as well as decreases in net loss and cash flows used in operating activities. Cash used in operations year-to-date was $57 M compared to $95 M for the same period in 2017".
Small Molecule Therapeutics Highlights
PBI-4050 – Received a Rare Pediatric Disease designation from the US Food and Drug Administration for the treatment of Alström syndrome
PBI-4050 – Published a paper further elucidating the mechanism of action of its lead drug candidate, PBI-4050, on liver fibrosis in the Journal of Pharmacology and Experimental Therapeutics. The paper entitled "PBI-4050 reduces stellate cell activation and liver fibrosis through modulation of intracellular ATP levels and LKB1-AMPK-mTOR pathway" details the antifibrotic signaling pathway modulated by PBI-4050.
PBI-4050 – Hosted a Key Opinion Leader meeting in New York on PBI-4050 as a novel treatment for Alström syndrome and non-alcoholic steatohepatitis (NASH).
Plasma-Derived Therapeutics Highlights
RyplazimTM (Plasminogen) – Completed a Type C meeting in which the FDA agreed with the Company’s proposed action plan for the implementation of additional analytical assays and in-process controls related to the RyplazimTM (plasminogen) manufacturing process. As a result of the feedback received during the Type C meeting, Prometic is finalizing the process performance qualification (PPQ) protocols in anticipation of commencing the manufacturing of additional RyplazimTM (plasminogen) conformance lots.
Subsequent Events to Third Quarter 2018
Closed a deal with Structured Alpha LP (SALP), an affiliate of Thomvest Asset Management Inc., to extend the maturity dates of the USD $80 million (CAD $100 million) line of credit and the Original Issue Discount Notes to September 2024.
2018 Third Quarter Financial Results
Revenues
Total revenues for the third quarter ended September 30, 2018 were $12.3 million and $36.8 million for the nine months ended September 30, 2018. Revenues from the sale of goods, representing most of the 2018 revenues to date, were $35.3 million during the first nine months ended September 30, 2018 compared to $11 million during the corresponding 2017 period. The $24.3 million increase for 2018 is mainly due to $19.7 million in sales of normal source plasma which occurred in the second and third quarters of 2018 following a change in the production forecast due to the delay of the BLA approval for RyplazimTM (plasminogen). The remainder of the increase of $4.6 million for the nine month period is due to an increase in third party sales in the bioseparation segment. 2018 bioseparation sales are expected to exceed $21 million, which would represent a 30% increase compared to 2017 bioseparation revenues. A comparable level of revenue growth for 2019 is anticipated and is mainly due to the expansion of manufacturing activities by existing clients who utilize Prometic’s products in their production processes, the adoption of products by new clients, the introduction of new products and the continuing expansion of the market for bioseparation products.
Cost of sales and other production expenses
Cost of sales and other production expenses were $9.2 million for the third quarter ended September 30, 2018 compared to $3.8 million for the corresponding period in 2017, representing an increase of $5.5 million. Cost of sales and other production expenses were $30.4 million during the nine months ended September 30, 2018 compared to $7.7 million for the corresponding period in 2017, representing an increase of $22.7 million. The increase was due primarily to the cost of the plasma inventory sold.
Research and Development (R&D)
Total R&D expenses were $24.1 million for the third quarter ended September 30, 2018 compared to $23.3 million for the third quarter ended September 30, 2017. Total R&D expenses were $70.5 million for the nine months ended September 30, 2018 compared to $72.2 million for the corresponding period in 2017, representing a decrease of $1.7 million. The completion of the pivotal phase 3 clinical programs for IVIG and for Ryplazim (plasminogen) and termination of non core preclinical and clinical programs will translate into a significant R&D cost reduction in 2019 compared to 2018.
Administration, Sales & Marketing
Administration, selling and marketing expenses were $6.2 million for the third quarter ended September 30, 2018 compared to $7.7 million for the third quarter ended September 30, 2017. The $1.4 million decrease was due to a reduction in consulting fees and employee compensation expenses. Administration, selling and marketing expenses declined slightly at $20.9 million during the nine months ended September 30, 2018 compared to $22.7 million for the corresponding period in 2017.
Finance Costs
Finance costs were $5.9 million for the third quarter ended September 30, 2018 compared to $2.1 million during the corresponding period of 2017, representing an increase of $3.8 million. Finance costs were $15.5 million for the nine months ended September 30, 2018 compared to $5.3 million during the corresponding period of 2017, representing an increase of $10.2 million. This increase reflects higher debt levels during the nine months ended September 30, 2018 compared to the same period of 2017.
Net Loss
Prometic incurred a net loss of $28.9 million for the third quarter ended September 30, 2018 compared to a net loss of $17.8 million for the third quarter ended September 30, 2017. Prometic incurred a net loss of $96.6 million for the nine months ended September 30, 2018 compared to a net loss of $78.4 million for the corresponding period of 2017. The main reason for the increase in the net loss is that the results for the quarter and the nine months ending September 30, 2017 included $19.7 million in milestone and licensing revenues related to the licensing agreement signed with Jiangsu Renshou Pharmaceutical Co, Ltd.
With the delay of the anticipated launch of its most advanced product, RyplazimTM (plasminogen), the Corporation had to finance its R&D activities via various sources. To date, the Corporation has financed its activities through the sale of products in the bioseparations segment, collaboration arrangements and licensing arrangements, the issuance of debt and equity, operational restructuring as well as investment tax credits. Prometic is currently actively involved in negotiating both equity and equity-linked financing initiatives and continues to be in dialogue with potential licensing partners. Although the Corporation believes that it will be able to obtain the necessary funding as in the past, there can be no assurance of the success of these plans.
Conference Call Information
Prometic will host a conference call at 11:00 am (ET) on Thursday November 15, 2018. The telephone numbers to access the conference call are (647) 427-7450 and 1-888-231-8191 (toll-free). A replay of the call will be available as of Thursday November 15, 2018 at 2:00 pm. The numbers to access the replay are 1-416-849-0833 and 1-855-859-2056 (passcode: 1190238). A live audio webcast of the conference call, with slides, will be available through the following: View Source
Additional Information in Respect to the Third Quarter Ended September 30, 2018
Prometic’s MD&A and condensed interim consolidated financial statements for the quarter ended September 30, 2018 will be filed on SEDAR (View Source) and will be available on the Company’s website at www.prometic.com.