Cipher Pharmaceuticals Reports Fourth Quarter and Full Year 2024 Results

(All figures are presented in U.S. Dollars)

Generated $8.3 million in cash during Q4 2024

Natroba™ revenue was $12.0 million for the 5 months of fiscal 2024 since acquisition

Full year adjusted EBITDA1 of $15.7 million, an increase of 23% over fiscal 2023

Cash at December 31, 2024 was $17.8 million or $0.70 per outstanding common share

Epuris revenue grew by 20% in fiscal 2024 compared to fiscal 2023

Reactivation of a Normal Course Issuer Bid, which may include block purchases of the Company's common shares in accordance with TSX policies

MISSISSAUGA, ON, March 18, 2025 /CNW/ - Cipher Pharmaceuticals Inc. (TSX:CPH) (OTCQX:CPHRF) ("Cipher" or the "Company") today announced its financial and operating results for the year ended December 31, 2024.

Full Year 2024 Financial Highlights

(All figures in U.S. dollars, compared to full year 2023, unless otherwise noted)

Total revenue was $33.4 million in 2024, compared to $21.2 million in 2023, an increase of 58%

Revenue from Epuris increased by $2.4 million or 22%, in constant currency, compared to 2023

Total gross profit of $24.1 million in 2024, compared to $17.1 million in 2023, an increase of 41%

Gross margin on product revenue, excluding non-cash fair value adjustments on acquired inventory, was 76% in 2024, compared to 68% in 2023

Adjusted EBITDA1 of $15.7 million, compared to $12.7 million, an increase of 23%

Positive operating cash flows of $19.5 million in 2024, compared to $16.0 million in 2023, an increase of 22%

Q4 2024 Financial Highlights

(All figures in U.S. dollars, compared to Q4 2023, unless otherwise noted)

Cash balance increased by $8.3 million during Q4 2024

Total revenue was $11.8 million, compared to $4.9 million in Q4 2023, an increase of 141%

Epuris sales volumes grew 16% compared to Q4 2023, continuing growth trajectory for the 6th consecutive quarter

Revenue from Natroba™ was $6.5 million in Q4 2024

Adjusted EBITDA1 was $5.0 million, compared to $2.9 million in Q4 2023, an increase of 73%

Management Commentary

Craig Mull, Interim CEO, commented: "In 2024, Cipher entered a new phase of substantial growth with its acquisition of the Natroba business from ParaPRO LLC, providing us with a U.S.-based commercial footprint, including a commercial sales team and the Natroba™ product for the treatment of head lice and scabies, which form the perfect platform to support further growth in the U.S. and to launch unique dermatology and infectious disease products complementary to Natroba™.

Throughout the year, we also yielded growth in our base business in Canada, with strong sales performance and increased market share from our market leading Canadian product, Epuris®. Revenue from Epuris® grew 20% in 2024, with market share growth of 3% in the year and a total market share of 48%2. As we enter 2025, we continue to execute on our growth strategy by leveraging our existing product portfolio, including distribution in additional territories, and growth through the pursuit of accretive acquisitions."

Ryan Mailling, CFO, commented: "In 2024, Cipher's base business led by Epuris® in Canada, continues to be a reliable source of free cash flow, with our cash balance growing by $8 million, or 20%, to nearly $48 million prior to our acquisition of the Natroba™ business in late-July 2024. Subsequent to our acquisition we continued our predictable track record to generate cash flows, with an increase in cash of $10 million or 123% during the remaining 5 months of the year, to a total of nearly $18 million in cash on-hand at the end of 2024. Post-acquisition Cipher generates meaningful free cash flows from both Cipher's base business and the acquired Natroba™ business. Our significant free cash flows, combined with the undrawn portion of our recently secured credit facility at favourable terms with the National Bank of Canada, provide the Company with substantial capital available to deploy as we continue to execute on our growth strategy."

2024 Corporate Highlights

On July 26, 2024, the Company entered into a new credit facility with National Bank of Canada ("National Bank"), a new financial partner, as Lead Arranger and sole Bookrunner of a syndicated credit facility (the "New Credit Facility"). Under the terms of the New Credit Facility, National Bank provides the Company with access to up to $65 million through a revolving credit facility. In addition, the New Credit Facility contains an optional $25 million accordion feature. Accordingly, the Company's credit facility with Royal Bank of Canada was terminated effective July 25, 2024.

On July 26, 2024, the Company signed a definitive asset purchase agreement with ParaPRO LLC ("ParaPRO") and closed the acquisition of the global product rights for Natroba™ and its authorized generic Spinosad, as well as the commercial sales team in the United States for total consideration of $89.3 million. The Company paid $80 million in cash, satisfied by $40 million from cash on-hand and $40 million from the New Credit Facility. The Company additionally issued $9.3 million of common shares of Cipher ("Common Shares") to ParaPRO, representing 1,474,097 shares at a closing price of CDN$8.68.

On January 29, 2024, the Company announced that its Common Shares were now trading on the OTCQX® Best Market ("OTCQX") under the symbol "CPHRF", in addition to continuing to trade on the Toronto Stock Exchange under the symbol "CPH". The OTCQX is the highest market tier of OTC Markets on which 12,000 U.S. and global securities trade. Trading on OTCQX was completed to enhance the visibility and accessibility of the Company to U.S. investors.

Normal Course Issuer Bid and Block Purchases

As result of the recent decline in the Company's share price, despite the strong underlying performance of the Company's existing base business, combined with the performance to-date and growth potential of the recently acquired U.S. based Natroba™ business, Cipher believes the current price of its Common Shares do not fully reflect their value.

Accordingly, Cipher intends to file with the Toronto Stock Exchange (the "TSX") a notice of its intention to commence a normal course issuer bid ("NCIB"). In accordance with TSX policies, Cipher also intends to utilize block purchases, in addition to daily repurchases under the NCIB, to repurchase its Common Shares.

Repurchases of Cipher's Common Shares are expected to begin immediately following: (i) the successful approval by the TSX of Cipher's notice of intention to commence a NCIB, and (ii) the Company being permitted to do so following the expiry of any blackout periods in effect due to customary regulatory restrictions.  The Company will issue a further press release once it has filed the application for approval of the NCIB with the TSX.

Trade Policies and Tariffs

The Company has been monitoring the announcements of potential changes to trade policies, tariffs, and other trade barriers, largely resulting from the United States federal government targeting certain goods arriving from other countries, including Canada, Mexico, and China. The Company is also monitoring reciprocal tariffs currently in place and being proposed by those countries in which the Company does business, particularly in Canada.

Given the dynamic nature of these proposed changes to trade policies and tariffs, the Company continues to monitor the potential impacts to its business. The Company's current assessment, based on information available at this time, is that changes to trade policies and tariffs, actual or proposed, are not expected to have a significant impact on its business.

Q4 2024 Financial Review

(All figures are in U.S. Dollars)

Total revenue was $11.8 million for Q4 2024, compared to $4.9 million in Q4 2023.

Product revenue increased by $7.1 million or 210% to $10.5 million for Q4 2024, compared to $3.4 million for the comparable period in 2023, due to growth of Epuris® by 21% and the addition of $6.5 million in revenue from Natroba™ in Q4 2024.

Licensing revenue was $1.4 million for Q4 2024, compared to $1.5 million in Q4 2023. 

Licensing revenue from the Absorica portfolio in the U.S. was $0.9 million for Q4 2024, a decrease of $0.1 million or 10% compared to $1.0 million for Q4 2023.

Licensing revenue from Lipofen and the authorized generic version of Lipofen, was $0.5 million for Q4 2024, consistent with Q4 2023.

Total operating expenses were $12.3 million for Q4 2024 compared to $2.6 million for Q4 2023. The increase was largely attributable to incremental costs incurred in connection with the Natroba™ business acquired during the year ended December 31, 2024, certain of which costs are non-recurring. These costs included additional selling, general and administrative expenses associated with ongoing operations of the Natroba™ business; additional amortization for acquired intangible assets; non-cash fair value adjustments to acquired inventory of $2.7 million recognized in cost of products sold during the period; and non-recurring acquisition related costs of $0.9 million. In addition to incremental costs incurred in connection with the Natroba™ business, the Company also incurred $0.9 million of legal costs in Q4 2024 related to Cipher's claim that Sun Pharmaceuticals Industries, Inc. ("Sun") breached the supply and distribution agreement in place between the parties relating to the drug Absorica LD in Canada. The alleged breach of the agreement by Sun relating to a purported misappropriation of Cipher's clinical data resulted in an arbitration hearing subsequent to December 31, 2024. The arbitration is expected to be decided in the second quarter of 2025.

Operating cash flows were $8.9 million for Q4 2024 compared to $2.4 million for Q4 2023, largely benefitting from additional cash generation arising from the operations of the acquired Natroba™ business.

Net income was $3.3 million, or $0.13 per Common Share, in Q4 2024, compared to $7.7 million, or $0.32 per Common Share in Q4 2023. Adjusted EBITDA1 for Q4 2024 was $5.0 million, compared to $2.9 million in Q4 2023. Net income and net income per Common Share in Q4 2024 was lower than Q4 2023, primarily impacted by the non-cash fair value adjustments to acquired inventory and non-recurring acquisition related costs incurred in connection with Natroba™ business acquisition.

Business Strategy & Outlook

Cipher expects to continue to execute on its business strategy in 2025 and remains focused on profitability and driving shareholder value. Key areas of focus include:

Driving market share growth of Natroba™ in the anti-parasitic market in the U.S. where its current market share is approximately 23%2, in a market where market leader "Permethrin" is no longer an effective treatment but still holds 75%2 market share.

Out-licensing Natroba™ globally where there is high unmet need, such as warm climate regions.

Acquiring complementary dermatology products to add to our North American platform to enhance the profitability, size and scale of the business.

Financial Statements and MD&A

Cipher's Financial Statements for the year ended December 31, 2024, and Management's Discussion and Analysis (the "MD&A") for the three and twelve months ended December 31, 2024, are available on the Company's website at www.cipherpharma.com in the "Investors" section under "Financial Reports" and on SEDAR+ at www.sedarplus.ca.

Notice of Conference Call

Cipher will hold a conference call on March 19, 2025, at 8:30 a.m. (ET) to discuss its financial results and other corporate developments.

To access the conference call by telephone, dial (416) 945-7677 or (888) 699-1199

A live audio webcast will be available at https://app.webinar.net/A3drRqWpovk

An archived replay of the webcast will be available until March 26, 2025 and can be accessed by dialing (289) 819-1450 or (888) 660-6345 and entering conference replay code 49540#