robert tessarolo president & chief executive officer...robert tessarolo president & chief...
TRANSCRIPT
INVESTOR
Robert Tessarolo
President & Chief Executive Officer
May 2019
PRESENTATION
FORWARD-LOOKING STATEMENTS
This document includes forward-looking statements within the meaning of certain securities laws, including the “safe harbour” provisions of the Securities Act (Ontario) and other provincial
securities law in Canada and U.S. securities laws. These forward-looking statements include, among others, statements with respect to our objectives and goals and strategies to achieve
those objectives and goals, as well as statements with respect to our beliefs, plans, expectations, anticipations, estimates and intentions and statements. The words “may”, “will”, “could”,
“should”, “would”, “suspect”, “outlook”, “believe”, “plan”, “anticipate”, “estimate”, “expect”, “intend”, “forecast”, “object ive”, “hope” and “continue” (or the negative thereof), and words and
expressions of similar import, are intended to identify forward-looking statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and
other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from
those expressed or implied in such statements. We caution readers not to place undue reliance on these statements as a number of important factors, many of which are beyond our control,
could cause our actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These
factors include, but are not limited to, our ability to enter into in-licensing, development, manufacturing and marketing and distribution agreements with other pharmaceutical companies and
keep such agreements in effect; our dependency on a limited number of products; integration difficulties and other risks if we acquire or in-license technologies or product candidates; reliance
on third parties for the marketing of certain products; the product approval process is highly unpredictable; the timing of completion of clinical trials, regulatory submissions and regulatory
approvals; reliance on third parties to manufacture our products and events outside of our control that could adversely impact the ability of our manufacturing partners to supply products to
meet our demands; we may be subject to future product liability claims; unexpected product safety or efficacy concerns may arise; we generate license revenue from a limited number of
distribution and supply agreements; the pharmaceutical industry is highly competitive; requirements for additional capital to fund future operations; dependence on key managerial personnel
and external collaborators; no assurance that we will receive regulatory approvals in the U.S., Canada or any other jurisdictions; current uncertainty surrounding health care regulation in the
United States; certain of our products are subject to regulation as controlled substances; limitations on reimbursement in the healthcare industry; limited reimbursement for products by
government authorities and third-party payor policies; various laws pertaining to health care fraud and abuse; reliance on the success of strategic investments and partnerships; the
publication of negative results of clinical trials; unpredictable development goals and projected time frames; rising insurance costs; ability to enforce covenants not to compete; risks
associated with the industry in which it operates; we may be unsuccessful in evaluating material risks involved in completed and future acquisitions; we may be unable to identify, acquire or
integrate acquisition targets successfully; inability to meet covenants under our long term debt arrangement; compliance with privacy and security regulation; our policies regarding returns,
allowances and chargebacks may reduce revenues; certain current and future regulations could restrict our activities; additional regulatory burden and controls over financial reporting;
reliance on third parties to perform certain services; general commercial litigation, class actions, other litigation claims and regulatory actions; the effects of our delisting from the NASDAQ
Global Market (the “NASDAQ”) and deregistration of our Common Shares under the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”); the difficulty for
shareholders to realize in the United States upon judgments of U.S . courts predicated upon civil liability of the Company and its directors and officers who are not residents of the United States;
certain adverse tax rules applicable to U.S. holders of our Common Shares if we are a passive foreign investment company for U.S. federal income tax purposes; the potential violation of
intellectual property rights of third parties; our efforts to obtain, protect or enforce our patents and other intellectual property rights related to our products; changes in U.S., Canadian or foreign
patent laws; litigation in the pharmaceutical industry concerning the manufacture and supply of novel and generic versions of existing drugs; inability to protect our trademarks from
infringement; shareholders may be further diluted if we issue securities to raise capital; volatility of our share price; the actions of a significant shareholder; we do not currently intend to pay
dividends; our operating results may fluctuate significantly; our debt obligations will have priority over the Common Shares in the event of a liquidation, dissolution or winding up.
We caution that the foregoing list of important factors that may affect future results is not exhaustive. When reviewing our forward-looking statements, investors and others should carefully
consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations, and
about material factors or assumptions applied in making forward-looking statements, may be found in the “Risk Factors” section of our Annual Information Form and in our Management’s
Discussion and Analysis of Operating Results and Financial Position for the year ended December 31, 2017, and elsewhere in our filings with Canadian securities regulators. Except as
required by Canadian securities law, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf;
such statements speak only as of the date made. The forward-looking statements included herein are expressly qualified in their entirety by this cautionary language.
2
Successfully
Executing New
Strategy delivering
diversification,
new high growth
products and
expanded near
term pipeline
KEY INVESTMENT HIGHLIGHTS
Profitable
Licensing
Business provides
strong cash flow
and solid financial
position to support
future growth
Company
Repositioned via 2017
Transformation Plan
committed to optimal
resource deployment
and advancing
new value catalysts
Diversified specialty pharmaceutical company with a robust
portfolio of commercial and pipeline products
3
GROWTH STRATEGY
Deliver reliablegrowth by
assembling aselect portfolio
of Rx products
Acquire or in-license Rx medicines
High novelty, high unmet needs
• TRULANCE and ESKATA
Strategic company and/or
portfolio acquisitions
Growth assets, proven capabilities,
substantial synergies
• Cardiome Canadian portfolio acquisition
Selectively invest in drug
development programs
Favourable risk/return profile
• MOB-015 and DTR-001
4
Global Product Portfolio
5
Canadian Commercial Platform Global Licensing Business
Dermatology
Hospital
Severe nodular acne
(Launched Jul. 2013)
Hyperkeratotic actinic keratosis
(Launched Feb. 2016)
Mild to moderate plaque psoriasis
(Launched Apr. 2016)
Topical antibiotic for impetigo in
patients 2 months and older
(Early 2018 launch)
Enzyme inhibitor for
hair growth
(Launched Jun. 2015)
Acute Coronary Syndrome
(Launched Jul. 2018)
Ultragesic
Severe nodular acne
(SUN Pharmaceuticals, U.S.)
High cholesterol
(Kowa Pharmaceuticals, U.S.)
Once-daily treatment of moderately
severe pain
(Vertical Pharmaceuticals, U.S.)
Once-daily treatment of moderately
severe pain
(Aralez Pharmaceuticals, Canada)
Once-daily treatment of moderately
severe pain
(Tecnofarma, Argentina)
Recent onset Atrial Fibrillation (AF)
(Launched Oct. 2018)
6
+30%YoY Organic Product
Revenue Growth in CND Segment
$5.7MDebt repaid with cash
generated from operations
Advancing New Revenue Streams
2 NDS submissions1 NOC
2 Product Launches
6 TransactionsSuccessful execution
across multiple growth pillars
2018 HIGHLIGHTS
ABSORICA
TRx stable since June
2018
Successfully
Executing New
Strategy delivering
diversification,
new high growth
products and
expanded near
term pipeline
KEY INVESTMENT HIGHLIGHTS
Profitable
Licensing
Business provides
strong cash flow
and solid financial
position to support
future growth
Company
Repositioned via 2017
Transformation Plan
committed to optimal
resource deployment
and advancing
new value catalysts
Diversified specialty pharmaceutical company with a robust
portfolio of commercial and pipeline products
7
1Q19 Board of Directors 1Q19 Board of Directors Not for distribution - Strictly Confidential
CANADIANCOMMERCIAL BUSINESS
61%
CAGR
• Investment segment
• 5 marketed products
• 2 recent product launches
($USm)
0.4
1.9
2.9
4.1
5.3
6.9
2013 2014 2015 2016 2017 2018
Expanded Commercial Portfolio
Added five (5) highly innovative assets with clear advantages vs.
current standards of care
Near term assets ~24 months between transaction closing and first
commercial sale
+30% ORGANIC PRODUCT REVENUE GROWTH
8
1Q19 Board of Directors 1Q19 Board of Directors Not for distribution - Strictly Confidential
DRIVING SUCCESS THROUGH COMMERCIAL
EXECUTION
EPURIS flagship
dermatology brand
continues to deliver from
new management initiatives
Prescribed Oral Isotretinoin in Ontario
Prescribed Oral Isotretinoin by Dermatologists#1
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 18 Q3 18 Q4 19 Q1
MK
T S
ha
re C
ha
nge
EPURIS Quarter/Quarter TRx Share Change
9
SUCCESSFUL TRANSACTIONS ACROSS
MULTIPLE GROWTH PILLARS
JANUARY
LAUNCHEDOZANEX
in Canada
JANUARY
OUT-LICENSEDCIP isotretinoin
in Mexico
FEBRUARY
ACQUIREDCanadian rights
to TRULANCE
APRIL
ACQUIREDCanadian rights
to ESKATA
ACQUIREDCanadian business portfolio
of Cardiome Pharma
JULY
AMENDEDdistribution
agreement for
ABSORICA
SEPTEMBER
ACQUIREDCanadian rights
to MOB-015
MAY
2018 Q1 Q2 Q3
10
NEW PRODUCT GROWTH AND DIVERSIFICATION
Near Term Pipeline
Product Potential Indication Status
XYDALBA(dalbavancin)
TRULANCE(plecanatide)
ESKATA(hydrogen peroxide)
TREVYENT(treprostinil)
Acute bacterial skin and
skin structure infections
Approved in Canada,
launch in H2 2019
CIC and IBS-C NDS in 2018
Raised seborrheic keratoses NDS in 2018
Pulmonary arterial hypertension NDS in 2020
Development Pipeline
Product Potential Indication Status
MOB-015(terbinafine)
CF-101(piclidenoson)
DTR-001
Onychomycosis Phase III
Plaque psoriasis
& rheumatoid arthritisPhase III
Tattoo removal Pre-clinical
11
EXPANDED COMMERCIAL PORTFOLIO
BRINGING DIFFERENTIATED PRODUCTS TO MARKET
Acquired from Synergy Pharmaceuticals (NASDAQ:SGYP)
Indication
FDA-approved once-daily tablet for Irritable Bowel Syndrome with Constipation
("IBS-C") and Chronic Idiopathic Constipation ("CIC")
Advantage
• Strong and consistent efficacy and safety profile in 4,700 patients
• Differentiated tolerability profile
Market opportunity
• Serves unmet medical needs and significantly untreated patient population
• CDN $200m market for laxatives and antispasmodics (Rx and OTC)
Regulatory next step
Potential Health Canada Approval Q4 2019
12
DIFFERENTIATED PRODUCT PROFILE IN AN
UNADDRESSED MARKET
Trulance Offers A Differentiated
Profile vs Competition~ 9m Canadians With CIC/IBS-C
Constella ® Trulance
Pharmacology
Efficacy
Tolerability
Ease of Use
GC-C Agonist,
non-systemic
• Analog of E. coli
enterotoxin
Approved to treat CIC
and IBS-C in adults
• Short-term:
16 to 22% diarrhea
• Long-term:
>30% diarrhea
QD
30 minutes before
first meal
Approved to treat CIC and
IBS-C in adults
• First treatment to show
sustained efficacy and
meet more stringent
FDA endpoint
• ~ 5% diarrhea
• Nausea similar
to placebo
QD
With or without food
Any time of day
GC-C Agonist,
minimally absorbed
• Analog of natural GI
peptide uroguanylin
• pH controlled
> 95% currently
not treated
with branded
Rx therapies
Branded
Rx market
serving < 5%
Source IMS TRx June 2017 &
Statistics Canada Favours Trulance
13
EXPANDED COMMERCIAL PORTFOLIO
Acquired from Aclaris Therapeutics (NASDAQ:ACRS)
Indication
FDA-approved product for raised seborrheic keratoses ("SKs") most commonly
known as age spots
Advantage
• First and only prescription product for raised SKs
• Non-invasive vs. current method of surgical procedures
Market opportunity
SKs affect 1 in 9 Canadians
Regulatory next step
Potential Health Canada Approval Q4 2019
BRINGING DIFFERENTIATED PRODUCTS TO MARKET14
SIGNIFICANT UNMET NEED IN SK TREATMENT
Jackson et al, Current Understanding of Seborrheic Keratosis: Prevalence, Etiology, Clinical Presentation, Diagnosis, and
Management, Journal of Drugs in Dermatology; 14:10, 2015; 1119-1125
Cryosurgery Treatment Options
Are Often Invasive Or Painful
A-101 Is An Appealing
Concept For SK Treatment
Treatment with Cryosurgery
3 Months Post Cryosurgery Treatment
1
1
BEFORE
AFTER
15
Acquired via Acquisition of Canadian Business Portfolio of Cardiome
Pharma Corp. (NASDAQ: CORV)
Indication
Rapid conversion of recent onset atrial fibrillation (AF) to sinus rhythm (SR),
for patients in both the surgical and non-surgical setting
Advantage
• Superior efficacy (head-to-head) vs only other IV product
• Faster effect
• Improved efficacy for cardioversion
Market opportunity
~180,000 patients present to hospital annually with AF
Product Status
Approved in Canada, launched October 2018
EXPANDED COMMERCIAL PORTFOLIO
INNOVATIVE ACUTE CARE PRODUCTS BOLSTER ENTRY INTO HOSPITAL SEGMENT
16
Indication
Acute bacterial skin and skin structure infections (”ABSSSI”)
Advantage
First and only 30-minute, one-dose treatment option for the
treatment of ABSSSI
Market opportunity
~CDN$65m market
Regulatory
Health Canada approved in September 2018
Commercial Status
Launch H2 2019
EXPANDED COMMERCIAL PORTFOLIO
INNOVATIVE ACUTE CARE PRODUCTS BOLSTER ENTRY INTO HOSPITAL SEGMENT
Acquired via Acquisition of Canadian Business Portfolio of Cardiome
Pharma Corp. (NASDAQ: CORV)
17
$58MIndication
Onychomycosis
Sources: Canadian Association of Psoriasis Patients; IQVIA
Annual market for
Onychomycosis
in Canada
Acquired Canadian marketing rights from
Moberg Pharma AB (OMX:MOB)
Regulatory next step
Phase III studies underway
Advantage
10% terbinafine with topical application to
avoid systematic side effects
PRODUCT CANDIDATE: MOB-015
NOVEL PRODUCT WITH NO DEVELOPMENT COSTS FOR CIPHER18
PRODUCT CANDIDATE: CF-101 (piclidenoson)
$2.5B
Indication
Plaque psoriasis and rheumatoid arthritis
Sources: Canadian Association of Psoriasis Patients; IQVIA
Canadians suffer from
psoriasis or rheumatoid arthritis
Annual market for biologics
1.5 million
Acquired Canadian marketing rights from
Can-Fite BioPharma (NYSE:CANF)
MOA
Highly selective A3 adenosine receptor (A3AR)
agonist affecting inflammatory production
Regulatory next step
Phase III studies underway for both indications
Advantage
Oral small molecule with safety and efficacy
provides pre-biologic line of therapy
NOVEL PRODUCT WITH NO DEVELOPMENT COSTS FOR CIPHER19
PRODUCT CANDIDATE: DTR-001 (pre-clinical)
Potential Indication
Topical treatment for the removal of tattoos
Acquired Worldwide marketing rights from
Dalhousie University
MOA
Ultra-low density liposomes encapsulating
bisphosphonates to enhance penetration for
targeted deliver to macrophages
Regulatory next step
Large animal proof of concept study complete;
results pending
Advancing pre-clinical activities toward IND in 2020
Advantage
Non-invasive tattoo removal option;
replace/augment laser removal
POTENTIALLY DISRUPTIVE TECHNOLOGY FOR A WORLD WIDE PROBLEM20
7% (4M)
18% (1M)
16% (40M)
13% (2M)
15% (5M)
13% (5M)
15% (1M)
12% (6M)
9% (14M)
8% (4M)
9% (6M)
6% (1M)
8% (3M)
10% (12M)
10% (3M)
7% (6M)
10% (6M)
9% (1M)
11% (118M)
48% (25M)
47% (4M)
46% (119M)
43% (8M)
43% (14M)
42% (17M)
41% (2M)
40% (22M)
37% (59M)
36% (19M)
36% (26M)
35% (3M)
33% (13M)
33% (39M)
33% (10M)
32% (29M)
30% (17M)
25% (1M)
38% (420M)
0% 10% 20% 30% 40% 50% 60%
Italy
Sweden
USA
Australia
Argentina
Spain
Denmark
United Kingdom
Brazil
France
Germany
Greece
South Africa
Russia
Canada
Mexico
Turkey
Israel
All
Est. Population with Tattoo/Regretting Tattoo
At least one tattoo At least one tattoo and regret
1. Dalia Research 2018, Global Tattoo Survey Results. 2. Dalia research findings applied to United Nations 2017, World Population Prospects.
TATTOO REMOVAL IN THE US IS IN DEMAND
21
• Many individuals have tattoos and it’s a growing trend
• Almost 3 in 10 Americans have at least 1 tattoo1
• Despite the growing trend, many individuals with tattoos regret getting one
• Almost 3 in 10 Americans (20M+) with tattoos regret getting one1
• Est. 100K+ tattoo removal procedures take place annually2
1. The Harris Poll #12, 2016. 2. Ho 2015, J Cutan Aesthet. 3. Harris Poll findings applied to US population from US Census Bureau, 2015.
2011 2015
21%Americans with ≥ 1
tattoo
29%Americans with ≥ 1
tattoo
14%Regret getting a
tattoo
23%Regret getting a
tattoo
100K+Tattoo removal
procedures2
20M+Individuals regret getting a tattoo3
AMERICAN TATTOO REGRET CONTINUES TO INCREASE
Successfully
Executing New
Strategy delivering
diversification,
new high growth
products and
expanded near
term pipeline
KEY INVESTMENT HIGHLIGHTS
Profitable
Licensing
Business provides
strong cash flow
and solid financial
position to support
future growth
Company
Repositioned via 2017
Transformation Plan
committed to optimal
resource deployment
and advancing
new value catalysts
Diversified specialty pharmaceutical company with a robust
portfolio of commercial and pipeline products
22
1Q19 Board of Directors 1Q19 Board of Directors Not for distribution - Strictly Confidential
$5.3
MATURE LICENSE BUSINESS
GLOBALLICENSING BUSINESS
Cash
Flow
Generation
• Cash flow segment
• 5 marketed products with
average royalty of 10%
• High-margin royalty revenue
• U.S., Canada and Latin America
($USm)
25.627.4 26.6 26.5
34.9
15.9
2013 2014 2015 2016 2017 2018
Source: IQVIA US NPA TRx data, Mar 2019
0
5,000
10,000
15,000
20,000
25,000
30,000
Feb
-17
Mar
-17
Ap
r-1
7
May
-17
Jun
-17
Jul-
17
Au
g-1
7
Sep
-17
Oct
-17
No
v-1
7
Dec
-17
Jan
-18
Feb
-18
Mar
-18
Ap
r-1
8
May
-18
Jun
-18
Jul-
18
Au
g-1
8
Sep
-18
Oct
-18
No
v-1
8
Dec
-18
Jan
-19
Feb
-19
Mar
-19
TRx
Vo
lum
e
ABSORICA TRx Volume
ABSORICA Monthly TRx Stabilized
Since June 2018
23
STRENGTHENING MATURE LICENSING BUSINESS
ABSORICA Amendment
Provides Sun with the ability to
launch new branded isotretinoin
products into the market prior to
the expiration of the agreement
in November 2022
No change in economics until
earlier of generic entry into the
market or November 2022
Royalty expanded to cover all
products launched under this
amendment until December 2024
Pre-Amendment
PostAmendment
Launch competing
productNO YES
Royalty on ABSORICA Mid teens No Change
Royalty coversABSORICA
only
ABSORICA &all new
Isotretinoinproducts
Royalty expires 2022 2024
24
FINANCIAL SNAPSHOT ($USM)
Strong Financial Position
Debt
$17.7m at December 31, 2018
with interest rate approx. 4.1%
Cash
$10.4m at December 31, 2018,
$11.3m in positive cash flow
2016 2017 2018
Total
Revenue$29.7 $40.3 $22.7
Licensing
Revenue$25.6 $35.0 $15.9
Product
Revenue$4.1 $5.3 $6.9
Adjusted
EBITDA$14.8 $26.6 $6.9
Leverage
Debt-to-EBITDA of ~3.8x
25
VALUE CATALYSTS THROUGH STRONG EXECUTION
CF-101 Psoriasis & RA Phase 3 results
ESKATA launch
XYDALBA launch
TRULANCE approval and launch
ESKATA approval
Potential NDS for TREVYENT
2019
2020
Achieve key milestones for
recent transactions
Deliver organic growth and
profitability in Canadian Business
Enterprise Focus on Execution
26
MOB-015 Phase 3 topline results
Optimize resource deployment
to strengthen EBITDAPotential IND for DTR-001
DTR-001 proof-of-concept results
INVESTMENT HIGHLIGHTS
Management
comprised of
industry veterans
who are delivering
on new growth
strategy
6 deals closed in
2018 bringing
Diversification to
the portfolio
Cash flow and
Adjusted EBITDA
positive
Diverse
product portfolio
& pipeline in varying
stages of
development
Multiple value
catalysts over
next 18 months27
MARKET FACTS
Market Facts
Analyst Coverage
Bloom Burton
Echelon Wealth
GMP Securities
Mackie Research
TD Bank
Market Cap
As of May 7th 2019: ~CDN $37m
Ticker / Listing: CPH (TSX)
Shares o/s: 26.9 million
52-week Range: $1.21 - $3.84
28
HIGHLY EXPERIENCED MANAGEMENT TEAM
Robert TessaroloPRESIDENT & CEO
• Joined in April 2017
• Built Actavis Canadian specialty pharma business from start-up to $190m in 4 years.
• Led integration of 3 major Actavis acquisitions – Warner Chilcott, Forest Lab & Allergan.
• Led US Inflammation & Immunology business at Celgene w/~$1B sales and 350+ employees.
Nadine JutlahINTERIM CFO
Chris WattersVP, CORPORATE
DEVELOPMENT
Dr. Diane Gajewczyk
VP, SCIENTIFIC &
MEDICAL AFFAIRS
29
• Joined in September 2016
• Experience in licensing and asset acquisitions, business acquisitions, debt and equity
financing, etc.
• Over 16 years of public company experience.
• Joined in June 2017
• Over 19 years of pharma experience, including leadership roles in business strategy,
marketing, sales, and business development.
• At GSK, led a 300-person sales and operations team delivering annual revenue of $700m.
• Led marketing and business development at Biovail; delivered a 4-year CAGR of 21%.
• Joined in June 2018
• Over 25 years of pharma experience, primarily focused on medical and scientific affairs.
• Extensive experience with Health Canada and FDA across many therapeutic categories.
• Previously spent 12 years in pharma R&D.
• PhD in Microbiology and Immunology.
• Joined in December 2018
• Over 20 years of pharma experience, primarily focused on commercial disciplines
• Extensive experience with sales and marketing across many therapeutic categories
• At EMD and Biogen led neurology businesses through substantial growth
Michael MilloyVP, COMMERICAL
OPERATIONS
BOARD OF DIRECTORS
Mark Beaudet - Chair
Robert Tessarolo – President & CEO
Dr. John Mull - Director
Arthur Deboeck - Director
Christian Godin - Director
Dr. Laurence Terrisse-Rulleau - Director
Harold Wolkin - Director
30
Craig Mull - Director