PHOTOCURE ASA BUILDING A SPECIALTY PHARMA COMPANY
RESULTS FOR FOURTH QUARTER AND FULL YEAR 2016
15 FEBRUARY 2017
Kjetil Hestdal, MD, President & CEO Erik Dahl, CFO
DISCLAIMER
The information included in this Presentation contains certain forward-looking statements that address activities, events or developments that Photocure ASA ("the Company") expects, projects, believes or anticipates will or may occur in the future. These statements are based on various assumptions made by the Company, which are beyond its control and are subject to certain additional risks and uncertainties. The Company is subject to a large number of risk factors including but not limited to economic and market conditions in the geographic areas and markets where Photocure is or will be operating, IP risks, clinical development risks, regulatory risks, fluctuations in currency exchange rates, and changes in governmental regulations. For a further description of other relevant risk factors we refer to Photocure's Annual Report for 2015. As a result of these and other risk factors, actual events and our actual results may differ materially from those indicated in or implied by such forward-looking statements. The reservation is also made that inaccuracies or mistakes may occur in this information given above about current status of the Company or its business. Any reliance on the information above is at the risk of the reader, and Photocure disclaims any and all liability in this respect.
KEY OBJECTIVES AND ACHIEVEMENTS
KEY OBJECTIVES 4Q/FY 2016 KEY ACHIEVEMENTS
- Increase Hexvix/Cysview global in-market unit sales growth rate
- Hexvix/Cysview global in-market volume increased YoY 5% full year
- Cysview in-market volume increased YoY 5% in fourth quarter and 21% full year
- Hexvix/Cysview in-market value increased YoY 13% to NOK 241 million full year
- Hexvix/Cysview recommended in National treatment guidelines in the US, Germany and France during the year
- Finalize recruitment and reporting of clinical results of Hexvix/Cysview phase 3 market expansion study in 2017
- Patient enrollment completed
- Lower total project costs than originally planned
- Secure Partnership for further development and commercialization of Visonac and Cevira reflecting the product potential
- Discussions ongoing with potential partners
Strengthen cash position with NOK 75 million in 4Q2016 to NOK 169 million
Hexvix/Cysview Update
HEXVIX/CYSVIEW A SIGNIFICANT GLOBAL SPECIALTY BRAND
- Value of in-market sales of Hexvix/Cysview in the quarter increased YoY 4% to NOK 60 million. Full year at NOK 241 million (+13%)
- Hexvix/Cysview global in-market volume increased YoY 3% in the quarter and 5% for the full year
- Overall franchise EBITDA full year at NOK 30.0 million, EBITDA margin of 21%
Global in-market unit sales (by Q)
Global in-market value NOK mill (LTM)
HEXVIX/CYSVIEW INCREASED EXPOSURE IN MEDICAL COMMUNITY
Continued positive data flow fuels forward momentum
- New publications in Bladder Cancer show Blue Light Cystoscopy (BLC) with Hexvix/Cysview significantly improves long time outcomes
- ─ Significantly prolongs time to progression of bladder cancer (Kamat et al, April)
- ─ Significantly reduces progression of bladder cancer (Gakis et al, August)
- Publication in The Journal of Urology shows BLC with Hexvix/Cysview has no increase in adverse events when a one-off procedure to compared to repeats 1
- New study in World Journal of Urology shows that BLC with Hexvix/Cysview significantly improves detection of NMIBC 2
1) Lane et al., Tolerability of Repeat Use of Blue Light Cystoscopy with Hexaminolevulinate for Patients with Urothelial Cell Carcinoma
HEXVIX/CYSVIEW INCLUSION IN KEY NATIONAL GUIDELINES
Transforming clinical practice
- US Guidelines: Use of Blue Light Cystoscopy with Cysview/Hexvix receives highest level of recommendation in the new AUA/SUO bladder cancer guideline
- ─ Recommended based on the large body of evidence supporting both increased detection and reduced recurrence of non-muscle invasive bladder cancer
- Included in European and National Guidelines in several EU countries
- ─ Strong recommendation recently received within French and German National Guidelines for Blue Light Cystoscopy with Hexvix
- ─ EAU altered guidelines to include the use of Hexvix as a preferential diagnosis procedure
- ─ NICE recommended the use of cystoscopies and that photodynamic diagnosis should be offered to patients
- Recommended use in 50-70% of TURB procedures 1
|
Table 1: TNM Classification 2009 |
|
T - Primary tumour |
| TX |
Primary tumour cannot be assessed |
| т٥ |
No evidence of primary tumour |
HEXVIX/CYSVIEW PERFORMANCE IN NORDICS AND USA
- Photocure own sales revenue in the US and Nordics increased full year 13% to NOK 69.5 million. Full year growth in unit sales was 5%.
- US revenue increased YoY 9% in the quarter and 32% full year
- Driven by YoY in-market volume growth of 5% in fourth quarter and 21% full year
- Permanent Blue Light Cystoscope placements of 83 at the end of the year (2015 year end 65)
- The bill introduced in the last Congressional session to secure Cysview Medicare reimbursement was not voted on. A similar bill is under preparation for introduction in the current Congress
- Nordic revenue decreased YoY 22% in the quarter and increased 1% full year
- Main driver behind fourth quarter sales decline was inventory reductions at our distributors compared to last year inventory increases. In-market unit sales for the
- 8 quarter was YoY down 3%, full year at level with 2015
Own Hexvix/Cysview in-market unit sales Nordic and US
CYSVIEW US ESTABLISHED FOUNDATION FOR CONTINUED GROWTH
Key highlights and basis for future growth
- Inclusion of BLC with Cysview in the AUA guidelines validated the high unmet medical needs
- BLC with Cysview available at many key US major urology and cancer hospitals
- Established best practice account management and gained market share of
-
20% across current accounts
- Successfully implementation of our MSA Strategy in key markets such as NY Metro, Baltimore-Washington DC Metro and Los Angeles Metro allowed for more effective and efficient penetration of accounts.
- Long standing partnership and commitment from US scope manufacturer
CYSVIEW US INCREASED AWARENESS KEY FOR CONTINUED GROWTH
- Established a major bladder cancer patient registry with over 600 patients as of 2016
- Secure continued flow of new data on clinical benefits from real world clinical use of BLC with Cysview
- Patient awareness increased through close collaboration with Bladder Cancer Advocacy Network (BCAN), key Urology Hospitals, Physicians and patient awareness programs
- Recent survey performed by BCAN among more than 500 bladder cancer patients confirmed increased awareness over last 12 months:
- 70% vs 17% (LY) of patients had received BLC with Cysview
- 71% vs 34% (LY) of patients were recommended by their physicians to have BLC with Cysview
- 74% vs 41% (LY) of patients once diagnosed referred to hospitals providing BLC with Cysview
- 81% vs 31% (LY) of patients stated that availability of BLC with Cysview was a determining factor in selecting for treatment facility
CYSVIEW US SIGNIFICANT GROWTH OPPORTUNITY
Number of bladder cancer resections (TURBs) > 300 000 annually
– Majority of TURBT's done at 400 centers in the US with more than 100 MUSD potential
Number of cystoscopies > 1.4 million annually
- Surveillance following initial diagnosis a significant growth opportunity with a total market size 2-3 times current TURB segment
- Patient enrollment in Hexvix/Cysview Phase 3 market expansion trial completed as planned
- Study results expected mid-2017
Maximizing the long term potential of Cysview in the US by increasing the Cysview growth rate
- Increase of salesforce and marketing activities over next 24 months while build on current experience and successes
- Target to achieve 4 times current sales by end of 2020
Maximizing the US Cysview opportunity is essential to Photocure's strategy to create a Specialty Pharmaceutical Company in Urology
Increase investment
market
in US M&S
Increase US penetration Receive reimbursement code in US
Approval in surveillance market
HEXVIX/CYSVIEW PARTNER PROGRESS
- Partner revenue increased YoY 3% in the quarter and 14% full year to NOK 61.5 million
- End user YoY volume growth 3% in the quarter and 5% year to date
- New territories & partners
- Sales in Canada and Australia have commenced
- Commercial sales behind expectations due to timing of outplacement of scopes
Hexvix Partner Unit Sales Per Quarter
Cevira/Visonac Update
CEVIRA & VISONAC PHASE 3 READY PRODUCTS WITH SIGNIFICANT SALES POTENTIAL
- Cevira Breakthrough single use and fully integrated drug-device technology to satisfy high need for novel non-surgical therapies to treat global epidemic of HPV/HSIL populations
- Visonac Novel topical non-antibiotic/non-isotretinoin treatment to satisfy high unmet medical need among patients with inflammatory, severe acne (IGA 4)
- Cevira and Visonac both phase 3 ready with Special Protocol Agreement on phase 3 program with FDA
- Cevira and Visonac both addressing large patient populations with significant unmet medical needs
- Cevira with blockbuster sales potential based on premium pricing opportunity in large patients populations
- Cevira and Visonac have granted patents with extensive patent life and additional patent applications can provide additional extension
- Ongoing discussions and due diligence with potential partners for development and commercialization
Financials
SEGMENTS FOURTH QUARTER 2016
Commercial franchise:
- Hexvix/Cysview total revenue declining YoY 5% in the quarter, impacted by inventory reductions for distributors and partners. Full year increase of 13% (in constant FX: 9%)
- Full year total revenues negatively impacted by API and milestone revenues
- Increased operating expenses; sales & marketing in US and investigator initiated trials to support surveillance market
- EBITDA margin at 21% for the year
Development portfolio:
• Activities related to regulatory work and intellectual property. Cysview post marketing commitment phase 3 capitalized 16
| MNOK |
Q4 '16 |
FY '16 |
FY '15 |
| Commercial Franchise |
|
|
|
| Nordic revenues |
9.6 |
39.0 |
38.7 |
| US revenues |
8.0 |
30.5 |
23.0 |
| Partner revenues |
14.0 |
61.5 |
54.1 |
| Hexvix / Cysview |
31.6 |
131.0 |
115.8 |
| API revenues |
5.2 |
5.2 |
6.5 |
| Signing fee & milestones |
1.2 |
7.4 |
12.4 |
| Total revenues |
38.1 |
143.6 |
134.7 |
| Cost of goods sold |
-2.7 |
-9.3 |
-8.2 |
| Gross profit |
35.4 |
134.3 |
126.5 |
| Operating expenses |
-24.6 |
-104.2 |
-97.8 |
| EBITDA |
10.7 |
30.0 |
28.7 |
| Development Portfolio |
|
|
|
| Operating expenses |
-11.1 |
-38.1 |
-46.8 |
| EBITDA |
-11.1 |
-38.1 |
-46.8 |
| Total |
|
|
|
| EBITDA |
-0.3 |
-8.0 |
-18.1 |
|
|
|
|
PROFIT & LOSS FOURTH QUARTER 2016
- Total revenue increase YoY 7% full year
- Negatively impacted by reduced sales of API and reduced milestone revenues
- Operating expenses decline YoY 2% full year
- R&D reduction 40%
- Sales & marketing increase 8%
- Other Opex increase 9%
- EBITDA at NOK -0.3 million for the quarter, NOK -8.0 million full year
- Gain from sale of shares and subscription rights with net profit of NOK 27.3 million
- Tax net income (non-cash) driven by change in transfer pricing method 17
| MNOK |
Q4 '16 |
FY '16 |
FY '15 |
| Hexvix / Cysview revenues |
31.6 |
131.0 |
115.8 |
| Other sales revenues (API) |
5.2 |
5.2 |
6.5 |
| Signing fees and milestones |
1.2 |
7.4 |
12.4 |
| Total revenues |
38.1 |
143.6 |
134.7 |
| Cost of goods sold |
-2.7 |
-9.3 |
-8.2 |
| Gross profit |
35.4 |
134.3 |
126.5 |
| Research & Development |
-5.4 |
-17.7 |
-29.6 |
| Sales & Marketing |
-20.1 |
-79.3 |
-73.3 |
| Other Opex |
-10.1 |
-45.3 |
-41.8 |
| Operating expenses |
-35.7 |
-142.3 |
-144.6 |
| EBITDA |
-0.3 |
-8.0 |
-18.1 |
| Depreciation & Amortization |
-3.1 |
-7.9 |
-3.9 |
| EBIT |
-3.4 |
-15.9 |
-22.0 |
| Net financial items |
27.4 |
28.6 |
-6.1 |
| Profit/loss(-) before tax |
24.0 |
12.8 |
-28.1 |
| Tax expenses |
-6.2 |
22.5 |
-8.1 |
| Net profit/loss(-) |
17.9 |
35.3 |
-36.2 |
CASH FLOW FOURTH QUARTER 2016
| MNOK |
Q4 '16 |
FY '16 |
FY '15 |
| Cash flow from: |
|
|
|
| - Operations |
49.9 |
19.2 |
-21.0 |
| - Investments |
25.0 |
13.9 |
-12.6 |
| - Financing |
0.4 |
2.1 |
2.4 |
| Net change in cash |
75.3 |
35.2 |
-31.2 |
| Ending cash balance |
169.2 |
169.2 |
134.0 |
• Fourth quarter net cash flow NOK 75.3 million, NOK 4.9 million excluding one-off items:
- Cash flow from operations: Payment form Galderma, NOK 37.2 million (EUR 4.0 million)
- Cash flow from investments: Sale of shares and subscription rights in PCI Biotech, NOK 33.2 million
- Full year cash flow from operations, excluding Galderma, NOK -18.0 million (prior year NOK -21.0 million)
- Full year cash flow from investments, excluding sale of shares, NOK -19.3 million. Includes investments of NOK 18.6 million in development expenses
- Year end cash balance at NOK 169.2 million
BALANCE SHEET PER 31 DECEMBER 2016
•
Non current assets include NOK
28.1 million in investments in |
MNOK |
31.12
2016 |
31.12
2015 |
| tangible and intangible assets and |
Non-current assets |
74.1 |
43.6 |
| deferred tax asset of NOK 46.0 |
Inventory & receivables |
43.0 |
70.4 |
| million |
Cash & equivalents |
169.2 |
134.0 |
•
No interest bearing debt |
Total assets |
286.3 |
248.1 |
•
Shareholder's equity of NOK 251.9 |
Shareholders equity |
251.9 |
210.1 |
| million. Equity ratio of 88% |
Long term liabilities |
3.8 |
4.0 |
|
Current liabilities |
30.6 |
34.0 |
•
Photocure held 809 own shares at
end of the year |
Total equity & liabilities |
286.3 |
248.1 |
|
Equity ratio |
88 % |
85 % |
Outlook
OUTLOOK
Investment in the US Cysview Market
- Established foundation for growth
- Inclusion in AUA/SUO guidelines in 2016
- Increased awareness of BLC with Cysview among urologists and patients
- Bladder cancer registry demonstrating benefits in "real life" setting
- Opportunity to significantly improve US market penetration and sales
- Increase of salesforce and marketing activities over next 24 months
- Exploring new market segments (potential approval in surveillance setting 2018)
- Financial impact
- Goal to increase US sales significantly, 4-times to the range of USD 15 million by 2020
- Commercial franchise EBITDA reduction in 2017 / 2018
- US growth strategy is fully funded
Secure Partnership for further development and commercialization of Visonac and Cevira reflecting the product potential