MISSISSAUGA, Ontario--(BUSINESS WIRE)-- Nuvo Pharmaceuticals Inc. (TSX:MRV; OTCQX:MRVFF) d/b/a Miravo Healthcare (Miravo or the Company), a Canadian-focused healthcare company with global reach and a diversified portfolio of commercial products, today announced its financial and operational results for the three and six months ended June 30, 2022. For further details on the results, please refer to Miravo’s Management, Discussion and Analysis (MD&A) and Condensed Consolidated Interim Financial Statements for the three and six months ended June 30, 2022, which are available on the Company’s website (www.miravohealthcare.com). All figures are in Canadian dollars, unless otherwise noted.

Key Developments

Three months ended June 30, 2022 include the following:

• Total revenue was $20.9 million, an increase of 6% compared to $19.8 million for the three months ended June 30, 2021. Adjusted total revenue⁽¹⁾ was $23.3 million, an increase of 17% compared to $19.9 million for the three months ended June 30, 2021.

• Net income was $18.3 million compared to net income of $9.1 million for the three months ended June 30, 2021. Adjusted EBITDA⁽¹⁾ was $10.3 million, an increase of 40% compared to $7.4 million for the three months ended June 30, 2021.

• Revenue related to the Blexten^® franchise, Cambia^® and Suvexx^® was $12.8 million, an increase of 34% compared to revenue of $9.5 million for the three months ended June 30, 2021. Total Canadian prescriptions of Blexten, Cambia and Suvexx increased by 17%, 6% and 85%, respectively compared to the three months ended June 30, 2021.

• The Company repaid $3.2 million (US$2.5 million) of the Amortization Loan to Deerfield Management Company, L.P. (Deerfield).

• As at June 30, 2022, cash and cash equivalents were $28.6 million.

Six months ended June 30, 2022 include the following:

• Total revenue was $36.6 million, an increase of 7% compared to $34.2 million for the six months ended June 30, 2021. Adjusted total revenue⁽¹⁾ was $39.1 million, an increase of 13% compared to $34.4 million for the six months ended June 30, 2021.

• Net income was $20.3 million compared to net loss of $8.8 million for the six months ended June 30, 2021. Adjusted EBITDA⁽¹⁾ was $13.4 million, an increase of 15% compared to $11.7 million for the six months ended June 30, 2021.

• Revenue related to the Blexten franchise, Cambia and Suvexx was $20.9 million, an increase of 36% compared to revenue of $15.4 million for the six months ended June 30, 2021. Total Canadian prescriptions of Blexten, Cambia and Suvexx increased by 18%, 4% and 100%, respectively compared to the six months ended June 30, 2021.

• The Company repaid $6.7 million (US$5.3 million) of the Amortization Loan to Deerfield.

Business Update

• In August 2022, Miravo announced the appointment of Anthony Snow to its Board of Directors. Mr. Snow has over twenty years of experience investing in and advising public and private companies. Mr. Snow is currently the President and Co-Portfolio Manager of Red Oak Partners, LLC. He also serves as President and a director of CBA Florida, Inc. (previously known as Cord Blood America, Inc.). Prior to joining Red Oak Partners, Mr. Snow worked at Soros Fund Management where he was part of a two-person team that managed a global long/short equity portfolio. Prior to Soros, he also focused on global equities at both Ardea Capital Management, as part of the founding team, and Wyper Capital Management. Previously, Mr. Snow was an Associate at private equity firm Lindsay Goldberg. Mr. Snow began his career at Merrill Lynch & Co. as an Analyst in the Mergers & Acquisitions group. Mr. Snow received a B.B.A. with high distinction from the University of Michigan, concentrating in finance and accounting, and an M.B.A. from Harvard Business School.

• In August 2022, Miravo’s U.S. partner for Pennsaid 2% announced it would be winding down the business segment that currently promotes and sells Pennsaid 2% in the U.S. in response to the market erosion resulting from an at-risk launch of a generic version of Pennsaid 2% in May 2022. The Company has conducted a thorough evaluation of its manufacturing operations based in Varennes, Québec, where it manufactures Pennsaid 2%, and has determined that its continued operation of its manufacturing facility is no longer viable as a result of this lost revenue stream. Miravo is exploring strategic alternatives to monetize its manufacturing facility and related intellectual property, while winding down its manufacturing operations. Miravo estimates that prior to any recoveries, its restructuring charges related to the wind-down of its manufacturing operations will be $2.0 million - $2.5 million. The Company anticipates that a wind-down of its manufacturing operations may take 9 - 12 months, depending on various factors, some of which are beyond the Company’s control.

• In June 2022, Miravo’s European partner, Orion Corporation (Orion) received marketing authorization for Suvexx packaged in bottles in Denmark, Estonia, Finland, Hungary, Lithuania, Latvia and Sweden (collectively the EU Markets). Orion intends to launch Suvexx in the EU Markets throughout 2023 once marketing authorization for a blister pack format has been obtained in each jurisdiction.

• In May 2022, Miravo filed U.S., Canadian, European and PCT patent applications for a reformulated and improved version of Resultz. This new formulation maintains the original treatment claims, but is now enhanced with a 100% effectiveness claim for killing nits (the lice eggs) in addition to head lice. The Company believes this enhanced efficacy against nits adds value to existing Resultz partners, as well as other companies active in the head lice category globally who may be interested in licensing the technology. The Company commenced its partnering process for this new intellectual property during Q2 2022. Additional basic development work is anticipated to be conducted to support the new product.

“Our second quarter was marked by a number of notable events. First, this was the first time our Adjusted EBITDA was more than $10 million in a quarter. This financial milestone was driven by the continued growth of our Commercial Business segment and the continued prescription and sales growth of our promoted products Blexten, Cambia and Suvexx. Second, our European partner, Orion, received marketing authorizations for Suvexx in 7 of the 9 territories they have licensed, and we anticipate the final two authorizations to be obtained in the coming months. This marks the first ex-North American approvals for Suvexx and is a testament to the strength of the regulatory submission prepared by our scientific affairs team. We look forward to a commercial launch of Suvexx in Europe during the first half of 2023,” said Jesse Ledger, Miravo’s President & CEO.

Mr. Ledger went on to state, “We remain committed to enhancing profitability and cash flow generation while advancing our strategic growth objectives. After careful review of the cost structure and contribution provided by operating an under-utilized manufacturing facility and considering the recent entry of generic Pennsaid 2% in the U.S., we concluded that the continued operation of our manufacturing facility does not align with our strategic growth objectives. Exiting our involvement with direct manufacturing will improve our gross profit margins and better focus the Company’s efforts and resources on advancing the key growth engines of our business: our Commercial Business and our international Licensing and Royalty Business segments. On behalf of our entire Company, I would like to thank all the employees involved in our manufacturing operations for their significant contributions over the years. The in-house development of both the Pennsaid 1.5% and Pennsaid 2% products and the launch of these products in various territories around the world would not have been possible without the hard work of this very resourceful and resilient team.”

Second Quarter 2022 Financial Results
Adjusted total revenue was $23.3 million and $39.1 million for the three and six months ended June 30, 2022 compared to $19.9 million and $34.5 million for the three and six months ended June 30, 2021. The $3.4 million increase in adjusted total revenue in the current quarter was primarily attributable to a $2.4 million increase in revenue from the Commercial Business segment and an increase of $2.3 million (US$1.8 million) for Yosprala-related milestone revenue billed to the Company’s Japanese licensee, offset by a decrease of $1.3 million of revenue from the Production and Service Business segment.

Revenue attributable to the Commercial Business segment increased during the three months ended June 30, 2022 due to a $3.3 million increase in sales of the Company’s promoted products (Blexten, Cambia, Suvexx and Neovisc_®), offset by a $0.8 million decrease in sales of the Company’s mature products. Revenue attributable to the Commercial Business segment increased during the six months ended June 30, 2022 due to a $5.5 million increase in sales of the Company’s promoted products, slightly offset by a decrease in sales of the segment’s mature products.

The Production and Service Business segment revenue decreased during the three and six months ended June 30, 2022, primarily due to a decrease in the Company’s Pennsaid 2% product sales.

For the three months ended June 30, 2022, the $2.3 million increase in adjusted total revenue in the Licensing and Royalty Business segment was the result of an increase of $2.3 million (US$1.8 million) for Yosprala-related milestone revenue billed to the Company’s Japanese licensee.

Adjusted EBITDA was $10.3 million for the three months ended June 30, 2022 compared to $7.4 million for the comparative quarter. During the three months ended June 30, 2022, a $2.1 million increase in gross profit from the Commercial Business segment and a $2.2 million increase in amounts billed to customers for existing contract assets was offset by a $0.5 million increase in sales and marketing expenses and a $0.8 million decrease in gross profit contribution from the Company’s Production and Service Business segment.

Adjusted EBITDA was $13.4 million for the six months ended June 30, 2022 compared to $11.7 million for the six months ended June 30, 2021. During the six months ended June 30, 2022, a $3.0 million increase in gross profit from the Commercial Business segment and a $2.2 million increase in amounts billed to customers for existing contract assets was offset by a $0.3 million decrease in the contribution from the License and Royalty Business segment, a $1.6 million decrease in gross profit contribution from the Production and Service Business segment, a $0.5 million increase in sales and marketing expenses and a $1.0 million increase in general and administrative expenses.

Non-IFRS Measures
The Company discloses non-IFRS financial measures (adjusted total revenue, adjusted EBITDA, and cash value of loans) and non-IFRS ratios (adjusted EBITDA per share and net debt leverage ratio) that are not recognized under and do not have standardized meanings prescribed by IFRS. Accordingly, such measures are not necessarily comparable and may not have been calculated in the same way as similarly named financial measures presented by other companies. These measures should be considered as supplemental in nature and not as a substitute for related financial information prepared in accordance with IFRS. The Company believes that shareholders, investment analysts and other readers find such measures and ratios helpful in understanding and assessing the Company’s financial performance. We utilize these measures in managing our business, including as means of performance measurement, cash management, debt compliance and assessing leverage and borrowing capacity. Because non-IFRS financial measures and non-IFRS ratios do not have standardized meanings prescribed under IFRS, securities regulations require that such measures be clearly defined, identified, and for non-IFRS financial measures, reconciled to their nearest IFRS measure. The applicable definition, calculation and reconciliation of each such measure used in this press release is provided below.

Adjusted Total Revenue
The Company defines adjusted total revenue as total revenue, plus amounts billed to customers for existing contract assets, less revenue recognized upon recognition of a contract asset. Management believes adjusted total revenue is a useful supplemental measure to determine the Company’s ability to generate cash from its customer contracts used to fund its operations.

The following is a summary of how adjusted total revenue is calculated, reconciled to the nearest IFRS measure:

Adjusted EBITDA
EBITDA refers to net income (loss) determined in accordance with IFRS, before depreciation and amortization, net interest expense (income) and income tax expense (recovery). The Company defines adjusted EBITDA as EBITDA, plus amounts billed to customers for existing contract assets, inventory step-up expenses, stock-based compensation expense, loss on fair value of derivative liabilities, loss on fair value of contingent and variable consideration, impairment loss, foreign currency loss, other losses less revenue recognized upon recognition of a contract asset, stock-based compensation recovery, gain on fair value of derivative liabilities, gain on fair value of contingent and variable consideration, impairment recovery, foreign currency gain and other income. Management believes adjusted EBITDA is a useful supplemental measure to determine the Company’s ability to generate cash available for working capital, capital expenditures, debt repayments, interest expense and income taxes.

The following is a summary of how EBITDA and adjusted EBITDA are calculated, reconciled to the nearest IFRS measure:

Management to Host Conference Call/Webcast
Management will host a conference call to discuss the results today (Monday, August 15, 2022) at 11:00 a.m. ET. To participate in the conference call, please dial (416) 764-8646 or 1 (888) 396-8049 / Conference ID: 64633261. Please call in 15 minutes prior to the call to secure a line. You will be put on hold until the conference call begins.

A live audio webcast and replay webcast of the conference call will be available through:

https://app.webinar.net/5vYkXrPwmEa

About Miravo Healthcare
Miravo is a Canadian-focused, healthcare company with global reach and a diversified portfolio of commercial products. The Company’s products target several therapeutic areas, including pain, allergy, neurology and dermatology. The Company’s strategy is to in-license and acquire growth-oriented, complementary products for Canadian and international markets. Miravo’s head office is located in Mississauga, Ontario, Canada, the international operations are located in Dublin, Ireland and the Company’s manufacturing facility is located in Varennes, Québec, Canada. The Varennes facility operates in a Good Manufacturing Practices (GMP) environment respecting the U.S., Canada and E.U. GMP regulations and is regularly inspected by Health Canada and the U.S. Food and Drug Administration. For additional information, please visit www.miravohealthcare.com.

Forward-Looking Statements
This press release contains “forward-looking information” as defined under Canadian securities laws (collectively, “forward-looking statements”). The words “plans”, “expects”, “does not expect”, “goals”, “seek”, “strategy”, “future”, “estimates”, “intends”, “anticipates”, “does not anticipate”, “projected”, “believes” or variations of such words and phrases or statements to the effect that certain actions, events or results “may”, “will”, “could”, “would”, “should”, “might”, “likely”, “occur”, “be achieved” or “continue” and similar expressions identify forward-looking statements. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking statements. These forward-looking statements include statements regarding anticipated product launches, the expected wind-down of the Company’s manufacturing operations in Varennes, Québec, anticipated impacts of COVID-19, and assumptions and expectations regarding future milestone payments, royalties and patent applications.

Forward-looking statements are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances, including the anticipated receipt of certain milestone and royalty payments, the anticipated launch of certain products and approvals therefor, and the potential impact of COVID-19. Such forward-looking statements are qualified in their entirety by the inherent risks, uncertainties and changes in circumstances surrounding future expectations which are difficult to predict and many of which are beyond the control of the Company. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the Company as of the date of this press release, are inherently subject to significant business, economic and competitive uncertainties and contingencies and may prove to be incorrect. Material factors and assumptions used to develop the forward-looking statements, and material risk factors that could cause actual results to differ materially from the forward-looking statements, include but are not limited to, the delay or failure to meet anticipated product launches, a delay in or disruption caused by the winding down of the Company’s manufacturing operations in Varennes, Québec, ongoing impacts of COVID-19 on the Company’s operations, business, financial results, and the industry in which it operates, the failure to meet certain milestones or collect certain royalties, the denial of patent applications and other factors, many of which are beyond the control of the Company. Additional factors that could cause the Company’s actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the risk factors included in the Company’s most recent Annual Information Form dated March 25, 2022 under the heading “Risks Factors”, and as described from time to time in the reports and disclosure documents filed by the Company with Canadian securities regulatory agencies and commissions. These and other factors should be considered carefully and readers should not place undue reliance on the Company’s forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved

All forward-looking statements are based only on information currently available to the Company and are made as of the date of this press release. Except as expressly required by applicable Canadian securities law, the Company assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All forward-looking statements in this press release are qualified by these cautionary statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220815005172/en/