Earnings Release • Aug 26, 2014
Earnings Release
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25 August 2014
(Numbers in brackets are for the corresponding period in 2013)
| Figures in NOK million | 2Q 2014 | 2Q 2013 | Change | 1H 2014 | 1H 2013 | FY 2013 |
|---|---|---|---|---|---|---|
| Sales revenues Hexvix / Cysview | 23.8 | 20.9 | 14 % | 43.2 | 35.4 | 77.9 |
| Sales revenues API | 0.5 | 0.5 | 9 % | 0.7 | 0.7 | 1.4 |
| Signing fee & milestone revenues | 1.1 | 1.1 | 8 % | 2.3 | 2.1 | 4.3 |
| Total revenues | 25.5 | 22.5 | 14 % | 46.2 | 38.1 | 83.6 |
| Gross profit | 23.5 | 20.4 | 15 % | 42.6 | 34.7 | 76.8 |
| Research and development expenses | 7.3 | 6.5 | 13 % | 16.0 | 15.7 | 34.0 |
| Sales and marketing expenses | 13.5 | 19.2 | -30 % | 27.6 | 38.2 | 68.4 |
| Operating result excl. restructuring & one-off |
-5.7 | -13.9 | -59 % | -19.4 | -37.6 | -63.0 |
| Operating result incl. non-recurring | -5.7 | -18.0 | -19.4 | -41.7 | -75.5 | |
| Net profit/loss | -4.2 | -15.2 | -17.2 | -36.6 | -58.9 | |
| Earnings per share, diluted (NOK) | -0.20 | -0.72 | -0.81 | -1.73 | -2.78 |
"Sales of Hexvix/Cysview remained strong in the second quarter, achieving year to date growth of 22%. Alongside this positive growth in revenue, our focus on cost control has resulted in reduced losses.
The continued unit sales growth of Hexvix/Cysview across all markets demonstrates the untapped potential for Hexvix/Cysview. In the US market, our efforts coupled with the efforts of other key stakeholders within the
Urology and Bladder Cancer community, passed a milestone with the introduction of a new Congressional bill to secure a long term sustainable reimbursement solution for this valuable product. For Cevira we have made progress toward meeting the FDA requests by completing the reanalysis of the phase 2b data. This will now allow for continued discussions with the FDA."
Photocure's strategy is to:
Photocure develops innovative products and markets and sells these products through its own commercial teams and in partnerships with other companies.
Hexvix/Cysview is the first approved drug-device procedure for improved detection and management of bladder cancer. Photocure is commercializing Hexvix/Cysview directly in the US and the Nordic region. Photocure has a strategic partnership with Ipsen for the commercialization of Hexvix in Europe, excluding the Nordic region.
The in-market value of Hexvix/Cysview continues double digit growth. Second quarter, global inmarket sales value increased by 14% to NOK 43 million. First half year growth was 24% to NOK 89 million. Global in-market unit sales for the first half year increased 13% compared to last year.
Total sales revenues for Hexvix/Cysview increased 14% to NOK 23.8 million (NOK 20.9 million) in second quarter. Hexvix/Cysview continues to experience underlying customer demand as shown by strong volume growth in the major markets. Furthermore, first half year growth has also been driven by price increases and a stronger Euro.
Photocure's own sales in the US and Nordic region increased 6% to NOK 11.1 million in second quarter and 19% for the first half year.
Nordic revenues in second quarter were level with last year, following a very strong growth in first quarter of 40%. Growth is driven by strong customer demand and price increases. A price increase of 8% has been implemented in second quarter in Norway. First half year revenue growth was 15%.
Photocure's in-market unit sales in the Nordic region increased 6% in the first half of the year, however with a slight decline of 2% in second quarter. Sweden, the key growth area in Nordic, is developing positively with high double-digit growth both for the quarter and year to date.
In the US, second quarter revenue increased 30% compared to last year, driven by unit growth as well as price increases and a stronger US dollar. Year to date revenue increased 33%. Unit sales increased 17% in the quarter and 15% year to date.
As anticipated, the number of Blue Light Cystoscope (BLC) installations has been impacted by the decision by Centers for Medicare & Medicaid Services (CMS) to create a new package category for Cysview. However, as more centers see the clinical and health economic benefits of Cysview, the total number of permanent BLCs has continued to increase. At the end of second quarter there were 47 BLCs compared to 36 at the end of 2013.
In the US, Photocure continues to work closely with the leading urology associations AUA and BCAN, as well as other key stakeholders, patient groups, and interested members of the Congress to secure a long-term sustainable solution for Cysview reimbursement. A major milestone for the supporters of bladder cancer patients was recently achieved as a new bill to secure US senior cancer patient access to state of the art treatment using up to date technology, including Cysview, was introduced. The bill has gained broad bi-partisan support. The bill, if enacted by Congress, will provide separate payment to hospitals for Cysview.
End user unit sales by Ipsen increased 8% in second quarter, driven by double digit growth in France, UK and Austria. Year to date end user unit sales growth was at 14%.
Partner revenue increased 22% in the quarter and 25% year to date, driven by the strong customer demand and replenishment of supply to partner as well as foreign currency exchange rate impact.
Updated expert recommendations on the clinical and cost effectiveness of Hexvix have been published in European Urology. The European expert panel, comprised of leading urologists across Europe, has reviewed the most recent evidence on both the clinical benefits and cost effectiveness on the use of Hexvix blue-light cystoscopy in the diagnosis and follow up of nonmuscle-invasive bladder cancer (NMIBC). The panel concluded that Hexvix blue-light cystoscopy is a clinically effective and cost-effective tool for improving NMIBC detection and management, thereby reducing the burden of disease for patients and costs to the healthcare system. The group recommends Hexvix blue-light cystoscopy for all patients with non–muscle-invasive bladder cancer to improve initial resection and to identify previously missed or recurrent tumors at follow-up resections, especially in high-risk patients. Hexvix blue-light cystoscopy used at initial resection reduces costs and improves quality-adjusted lifeyears compared with a resection under white-light cystoscopy.
| Figures in NOK million | 2Q 2014 | 2Q 2013 | Change | 1H 2014 | 1H 2013 | FY 2013 |
|---|---|---|---|---|---|---|
| Total own sales | 11.1 | 10.4 | 6 % | 20.0 | 16.8 | 38.1 |
| Revenues from partners | 12.8 | 10.5 | 22 % | 23.2 | 18.6 | 39.8 |
| Total revenue | 23.8 | 20.9 | 14 % | 43.2 | 35.4 | 77.9 |
Hexvix/Cysview (hexaminolevulinate hydrochloride) is the first approved drug-device combination procedure for improved detection and management of bladder cancer. It is designed to induce fluorescence selectively in the malignant cells in the bladder during a cystoscopic procedure, enabling the urologist to detect non muscle invasive bladder cancer, as an adjunct to white light cystoscopy. It is the first product in a new diagnostic class known as Photodynamic Diagnostic (PDD) agents.
Bladder cancer is a high incidence tumor type, and the fourth most common type of cancer in males in the US. An estimated 75,000 new cases will be diagnosed with cancer of the bladder in 2014, with an estimated 15,580 people dying from the disease, according to the American Cancer Society. In Europe, bladder cancer is the seventh most common type of cancer in men and the fourteenth in women. Each year in Europe, approximately 36,500 men and 13,000 women die due to bladder cancer (Ferlay et al., 2001). It is notoriously difficult to detect. The most common initial sign is blood in the urine, which calls for urine cytology and cystoscopy.
| Indication | Status | |
|---|---|---|
| Visonac® | Treatment of moderate to severe acne |
Phase 3 ready |
| Cevira® | Treatment of HPV associated diseases of the cervix including precancerous lesions |
Phase 3 preparation |
| Lumacan® | Detection of colorectal cancer |
Phase 1/2 |
Visonac is a novel patented photodynamic therapy under development in combination with Photocure's innovative full face red light lamp, Nedax®, for treating the large unmet medical need in moderate to severe, inflammatory acne.
Photocure's strategy is to establish a partnership for the product for further development. During the first half of the year Photocure has been in discussions with companies that are leaders in
dermatology to secure a strategic partnership to assist with the late stage development and commercialization of Visonac.
Research from GlobalData' cites Visonac as one of the most highly anticipated introductions in the acne therapeutics market1.
Visonac successfully completed a phase 2b study in 2012 that showed a statistically significant reduction in inflammatory lesions and overall improvement in acne severity. In addition, through the FDA Special Protocol Assessment (SPA) process and approval of the European Pediatric Investigational Plan, the design and analysis for the global pivotal phase 3 registration program has been secured.
Visonac (methyl aminolevulinate 80mg/g) is in development for the treatment of moderate to severe acne. Acne is the single most common skin disease worldwide and affects up to 85% of all 12- 24 year olds. There is a high unmet medical need for patients with moderate to severe acne, where the current mainstay of treatment is oral antibiotics and/or retinoids. The value of this segment globally is estimated at USD 900 million annually. Visonac is being developed as the first photodynamic therapeutic option for this large patient population, which can easily and conveniently be administered in dermatology offices. By avoiding the risks of increased antibiotic resistance from long term exposure and providing a better tolerated alternative than systemic retinoids, Visonac has the potential to satisfy a high unmet medical need.
Cevira is a unique, non-invasive photodynamic therapy under development for the treatment of oncogenic human papilloma virus (HPV) infection and pre-cancerous cervical abnormalities.
Photocure has consulted key regulatory agencies in both the US and EU to agree the design and target patient population for the pivotal phase 3 registration program. Discussions with Health Authorities in key European markets have been completed and support has been achieved to continue with the proposed phase 3 program, targeting women with HSIL (CIN2) as the first indication.
Following the discussions with the US FDA last year, Photocure has completed a re-analysis of the clinical data in accordance with the recently published diagnostic consensus classification system and guidance provided by FDA. The reanalysis includes new pathology assessment, panel read among three pathologists and applying new clinical success end points. The re-analysis demonstrated that Cevira provides improved treatment efficacy compared to placebo among patients with high grade precancerous lesions of the cervix (HSIL). The new data obtained from the re-evaluation do not allow for a direct comparison to the prospective data in CIN2 patients. However, the retrospective analyses in patients with HSIL applying new metrics showed that Cevira provided the same improvement rate (50-55%) compared to placebo as was obtained in previous prospective phase 2b results in CIN2 patients. The re-analysis has showed encouraging results, however the Company is dependent on the outcome of the discussions with the FDA on the further development of Cevira.
Photocure is in discussions with companies that are leaders in women's healthcare to secure a strategic partnership to assist with the late stage development and commercialization of Cevira. The partner discussions will continue as we progress our discussions with the regulators.
Cervical HPV and precancerous lesions of the cervix are highly prevalent diseases affecting an estimated 260 million women worldwide. There is currently no medical therapeutic treatment option available. Cevira is being developed as the first novel therapeutic option for this large and growing patient population. Cevira can be easily administered by gynecologists, avoiding the potential morbidities associated with surgery.
Following the proposed merger agreement between Salix and Cosmo Pharmaceuticals S.p.A. ("Cosmo"), under which Salix will combine with Cosmo Technologies Limited, a subsidiary of Cosmo, Photocure and Salix have agreed to terminate the global licensing agreement for Lumacan®. Photocure will receive a payment of USD 5 million from Salix and will regain the global rights, all technical data and all intellectual property to Lumacan
1 http://healthcare.globaldata.com/media-center/press-
releases/pharmaceuticals/novel-product-launches-to-reinvigorateacne-treatment-market-by-2018-says-globaldata
Photocure entered into a development and commercialization agreement with Salix in 2010, granting Salix an exclusive global license for Lumacan.
Photocure will over the next months evaluate options to secure the further development and optimize value for Lumacan.
Lumacan is being developed to increase the detection rate of polyps and colorectal cancer through fluorescence diagnosis. Colorectal cancer is traditionally diagnosed through colonoscopies (visual examination) with white light. The market for colonoscopies is growing as a result of extensive patient screening programs in Europe and USA. In the US, it is estimated that approximately 14 million colonoscopies are being carried out annually for screening of colorectal cancer. At the same time, it is increasingly being recognized that standard white-light colonoscopy has considerable limitations when it comes to optimal detection of colorectal cancer.
(Numbers in brackets are for the corresponding period in 2013).
The development in the second quarter as well as year to date has been positive with growth in revenues combined with reduced operating costs.
Total revenues in second quarter were NOK 25.5 million, an increase of 14% from second quarter 2013.
In second quarter the in-market unit sales of Hexvix/Cysview increased 6% compared to the corresponding period in 2013. Total Hexvix/Cysview sales revenues for the quarter were NOK 23.8 million, an increase of 14% from NOK 20.9 million in second quarter 2013. Year to date in-market unit growth was 13% and growth in sales revenues were 22%. Year to date sales revenues are positively impacted by change in exchange rates of approximately 8%.
Second quarter operating costs are below previous three quarters and are 15% below operating costs in second quarter 2013. Total operating costs net of other income amounted to NOK 29.1 million (NOK 34.3 million) in second quarter. Year to date operating costs were at NOK 62.0 million, a reduction of 14% from first half of 2013.
| MNOK | YTD '14 YTD '13 Change | ||
|---|---|---|---|
| Research & Development | 16,0 | 15,7 | 2 % |
| Sales & Marketing | 27,6 | 38,2 | -28 % |
| Other Opex | 18,5 | 18,4 | 0 % |
| Operating expenses | 62,0 | 72,3 | -14 % |
Research and development (R&D) costs were NOK 7.3 million (NOK 6.5 million), an increase of 11% compared to the second quarter 2013. The R&D costs relate to patent protection and regulatory work as well as the development of the current pipeline. The primary development activity in the quarter and year to date has been work related to the re-analysis of the phase 2b Cevira data. Year to date R&D costs were NOK 16.0 million, compared to NOK 15.7 million last year.
Marketing and sales costs decreased by 30% to NOK 13.5 million (NOK 19.2 million) in second quarter compared to last year. Year to date spending was NOK 27.6 million, a reduction of 28% from 2013 (NOK 38.2 million). The decrease is mainly due to the completion of the contractual co-funding arrangement of the marketing activities with Ipsen as well as reduced costs related to commercial activities in the US.
Operating loss reduced 59% to NOK 5.7 million in second quarter. This is an improvement of NOK 8.3 million in Q2 2013 excluding last year's restructuring costs. This was driven by a combination of increased Hexvix/Cysview revenues and a decrease in operating costs. Year to date operating loss was NOK 19.4 million compared to loss of NOK 37.6 million in 2013 before restructuring spending.
Net financial items were NOK 1.5 million (NOK 3.0 million) in second quarter and NOK 2.2 million (NOK 5.2 million) year to date.
Photocure recorded a net loss from continued operations of NOK 4.2 million for the quarter, an improvement of NOK 10.9 million from last year (loss of NOK 15.1 million). Year to date improvement from last year is NOK 19.3 million to a loss of NOK 17.2 million.
Photocure is the largest shareholder in PCI Biotech Holding ASA with 19.35% of the shares. The market value of the shareholding was NOK 41.5 million at 30 June 2014, resulting in a positive market value adjustment of NOK 8.9 million year to date.
Cash and cash equivalents were NOK 141 million at 30 June 2014 compared to 167 million at 31 December 2013. The net outflow is driven by
negative operating result as well as increase in net working capital.
Shareholders' equity was NOK 262 million at 30 June 2014, an equity ratio of 92%. At the end of 2013, shareholders' equity was NOK 269 million (89%).
As of 30 June 2014, Photocure held 72,976 own shares.
Following the proposed merger agreement between Salix and Cosmo Pharmaceuticals S.p.A. ("Cosmo"), under which Salix will combine with Cosmo Technologies Limited, a subsidiary of Cosmo, Photocure and Salix have agreed to terminate the global licensing agreement for Lumacan®. Photocure will receive a payment of USD 5 million from Salix and will regain the global rights and all intellectual property to Lumacan
Photocure is exposed to uncertainties and risk factors, which may affect some or all of the company's activities. Photocure has financial risk, market risk and operational risk factors and risk related to research and development of new products.
The most important risks the company is exposed to for 2014 are associated with market development for Hexvix/Cysview, progress and performance of R&D programs including outlicensing, as well as financial risks related to interest rates, liquidity and currency fluctuations.
There are no significant changes in the risks and uncertainty factors compared to the descriptions in the Annual Report for 2013.
The focus for Photocure in 2014 is to increase sales of Hexvix/Cysview and to establish strategic partnerships for products in the pipeline.
Key to driving the 2014 sales is continued strong growth in the Nordic region, building upon the commercial partnership with Ipsen, as well as increasing sales for Cysview in the US. Photocure's expectation for global Hexvix/Cysview in-market unit sales for 2014 is a minimum increase of 10%.
With respect to the development of the product pipeline, Photocure's priorities are
Given the focus on profitable growth, cost containment is important. Photocure expects to end 2014 with a cash reserve in the range of NOK 140-150 million, including the termination fee from Salix and excluding any milestone payments.
We confirm that, to the best of our knowledge, the unaudited condensed set of financial statements for the first half year of 2014 which has been prepared in accordance with IAS 34 Interim Financial Statements gives a true and fair view of the Company's consolidated assets, liabilities, financial position and results of operations, and that the first half 2014 report includes a fair review of the information required under the Norwegian Securities trading Act section 5-6 fourth paragraph.
The Board of Directors and CEO Photocure ASA
Oslo, 25 August 2014
Bente-Lill B Romøren Chairman
Synne H. Røine Mats Pettersson
Xavier Yon Kjetil Hestdal President and CEO
| 2014 | 2013 | 2014 | 2013 | 2013 | ||
|---|---|---|---|---|---|---|
| (all amounts in NOK 1 000 except per share data) | Note | 2Q | 2Q | 1.1-30.06 | 1.1-30.06 | 1.1-31.12 |
| Sales revenues | 24 376 | 21 401 | 43 887 | 36 049 | 79 307 | |
| Signing fee and milestone revenues | 1 132 | 1 050 | 2 284 | 2 075 | 4 309 | |
| Total revenues | 25 508 | 22 451 | 46 171 | 38 124 | 83 616 | |
| Cost of goods sold | -2 027 | -2 096 | -3 565 | -3 441 | -6 829 | |
| Gross profit | 23 481 | 20 355 | 42 606 | 34 683 | 76 787 | |
| Other income | 17 | 353 | 17 | 629 | 1 591 | |
| Indirect manufacturing expenses | 2 | -1 633 | -1 747 | -3 531 | -3 879 | -7 751 |
| Research and development expenses | 2 | -7 288 | -6 545 | -16 018 | -15 684 | -33 976 |
| Marketing and sales expenses | 2 | -13 458 | -19 209 | -27 555 | -38 196 | -68 418 |
| Business development and administrative exp. | 2 | -6 788 | -7 156 | -14 937 | -15 150 | -40 079 |
| Operating profit/loss(-) recurring | -5 669 | -13 949 | -19 418 | -37 597 | -71 846 | |
| Restructuring costs | 3 | - | -4 078 | - | -4 078 | -3 694 |
| Operating profit/loss(-) incl. non-recurring | -5 669 | -18 027 | -19 418 | -41 675 | -75 540 | |
| Financial income | 1 679 | 2 893 | 3 072 | 5 445 | 10 119 | |
| Financial expenses | -216 | 66 | -903 | -269 | -1 431 | |
| Net financial profit/loss(-) | 1 463 | 2 959 | 2 169 | 5 176 | 8 688 | |
| Profit/loss(-) before tax | -4 206 | -15 068 | -17 249 | -36 499 | -66 852 | |
| Tax expenses | - | - | - | - | 8 204 | |
| Net profit/loss(-) continued operations | -4 206 | -15 068 | -17 249 | -36 499 | -58 648 | |
| Discontinued operations | 3 | - | -121 | - | -104 | -302 |
| Net profit/loss(-) | -4 206 | -15 189 | -17 249 | -36 603 | -58 950 | |
| Other comprehensive income | 4 | -7 012 | -1 050 | 8 818 | -14 996 | -14 015 |
| Total comprehensive income | -11 218 | -16 239 | -8 431 | -51 599 | -72 966 | |
| Net profit/loss(-) per share, undiluted | 5 | -0,20 | -0,72 | -0,81 | -1,73 | -2,78 |
| Net profit/loss(-) per share, diluted | 5 | -0,20 | -0,72 | -0,81 | -1,73 | -2,78 |
| (Amounts in NOK 1 000) | Note | 30.06.2014 | 30.06.2013 | 31.12.2013 |
|---|---|---|---|---|
| Non-currrent assets | ||||
| Machinery & equipment | 3 293 | 4 044 | 3 681 | |
| Other investments | 6, 7 | 63 106 | 47 764 | 51 969 |
| Deferred tax asset | 49 109 | 40 840 | 49 109 | |
| Total non-current assets | 115 508 | 92 648 | 104 759 | |
| Current assets | ||||
| Inventory | 11 867 | 10 871 | 12 624 | |
| Receivables | 15 893 | 16 834 | 17 085 | |
| Cash & cash equivalents | 7 | 140 743 | 198 503 | 167 258 |
| Total current assets | 168 503 | 226 208 | 196 967 | |
| Total assets | 284 011 | 318 856 | 301 726 | |
| Equity and liabilities | ||||
| Equity | ||||
| Share capital | 8 | 10 697 | 10 697 | 10 697 |
| Other paid-in capital | 36 046 | 73 755 | 34 777 | |
| Retained earnings | 215 212 | 202 421 | 223 649 | |
| Shareholders' equity | 261 955 | 286 873 | 269 123 | |
| Long-term liabilities | ||||
| Other non-current liabilities | 2 658 | 1 989 | 2 296 | |
| Total long-term liabilities | 2 658 | 1 989 | 2 296 | |
| Current liabilities | 19 398 | 29 994 | 30 307 | |
| Total liabilities | 22 056 | 31 983 | 32 603 | |
| Total equity and liabilities | 284 011 | 318 856 | 301 726 |
| 2014 | 2013 | 2014 | 2013 | 2013 | |
|---|---|---|---|---|---|
| (Amounts in NOK 1 000) | 2Q | 2Q | 1.1-30.06 | 1.1-30.06 | 1.1-31.12 |
| Equity at beginning of period | 272 922 | 344 898 | 269 123 | 380 268 | 380 268 |
| Treasury shares, net change | - | 302 | - | -271 | 2 125 |
| Share-based compensation (share options employees) | 251 | 394 | 1 263 | 956 | 2 177 |
| Dividend | - | -42 481 | - | -42 481 | -42 481 |
| Comprehensive income | -11 218 | -16 239 | -8 431 | -51 599 | -72 966 |
| Equity at end of period | 261 955 | 286 873 | 261 955 | 286 873 | 269 123 |
| 2014 | 2013 | 2014 | 2013 | 2013 | |
|---|---|---|---|---|---|
| (Amounts in NOK 1 000) | 2Q | 2Q | 1.1-30.06 | 1.1-30.06 | 1.1-31.12 |
| Profit/loss(-) before tax | -4 206 | -15 189 | -17 249 | -36 603 | -67 154 |
| Depreciation and amortisation | 363 | 349 | 736 | 708 | 1 460 |
| Share-based compensation | 251 | 394 | 1 263 | 956 | 2 176 |
| Net interests | -1 415 | -2 324 | -2 303 | -4 324 | -7 362 |
| Changes in working capital | -1 872 | -5 463 | -7 503 | -8 821 | -7 000 |
| Other operational items | -2 915 | -15 283 | -3 401 | -16 144 | -21 842 |
| Net cash flow from operations | -9 795 | -37 516 | -28 457 | -64 227 | -99 722 |
| Cash flow from investments | 816 | 850 | 1 942 | 2 664 | 4 518 |
| Cash flow from financing activities | - | -42 179 | - | -42 752 | -40 356 |
| Net change in cash during the period | -8 979 | -78 845 | -26 515 | -104 315 | -135 560 |
| Cash & cash equivalents at beginning of period | 149 723 | 277 348 | 167 258 | 302 819 | 302 819 |
| Cash & cash equivalents at end of period | 140 743 | 198 503 | 140 743 | 198 503 | 167 258 |
| Q2 2014 | Cancer | Dermatology | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Own | ||||||||
| (Amounts in NOK 1 000) | sales | Partner | R&D | Sum | Partner | R&D | Sum | |
| Sales Revenues | 11 070 | 12 759 | - | 23 829 | 547 | - | 547 | 24 376 |
| Milestone revenues | - | - | - | - | 1 132 | - | 1 132 | 1 132 |
| Cost of goods sold | -521 | -1 506 | - | -2 027 | - | - | - | -2 027 |
| Gross profit | 10 548 | 11 253 | - | 21 801 | 1 680 | - | 1 680 | 23 481 |
| Gross profit of sales % | 95 % | 88 % | 91 % | 92 % | ||||
| Operating expenses | -14 470 | -3 537 | -9 302 | -27 309 | -196 | -1 645 | -1 840 | -29 149 |
| Operating profit/loss (-) recurring | -3 922 | 7 716 | -9 302 | -5 508 | 1 484 | -1 645 | -161 | -5 669 |
| Q2 2013 | Cancer | Dermatology | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Own | ||||||||
| (Amounts in NOK 1 000) | sales | Partner | R&D | Sum | Partner | R&D | Sum | |
| Sales Revenues | 10 430 | 10 970 | - | 21 400 | - | - | - | 21 400 |
| Milestone revenues | - | - | - | - | 1 050 | - | 1 050 | 1 050 |
| Cost of goods sold | -528 | -1 568 | - | -2 096 | - | - | - | -2 096 |
| Gross profit | 9 902 | 9 402 | - | 19 304 | 1 050 | - | 1 050 | 20 355 |
| Gross profit of sales % | 95 % | 86 % | 90 % | 90 % | ||||
| Operating expenses | -15 919 | -7 834 | -8 025 | -31 779 | -337 | -2 188 | -2 525 | -34 304 |
| Operating profit/loss (-) recurring | -6 017 | 1 568 | -8 025 | -12 474 | 714 | -2 188 | -1 475 | -13 949 |
| 1 Jan - 30 June 2014 | Cancer | Dermatology | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Own | ||||||||
| (Amounts in NOK 1 000) | sales | Partner | R&D | Sum | Partner | R&D | Sum | |
| Sales Revenues | 19 976 | 23 186 | - | 43 163 | 724 | - | 724 | 43 887 |
| Milestone revenues | - | - | - | - | 2 284 | - | 2 284 | 2 284 |
| Cost of goods sold | -1 036 | -2 529 | - | -3 565 | - | - | - | -3 565 |
| Gross profit | 18 940 | 20 657 | - | 39 597 | 3 009 | - | 3 009 | 42 606 |
| Gross profit of sales % | 95 % | 89 % | 92 % | 92 % | ||||
| Operating expenses | -29 190 | -7 717 | -20 753 | -57 660 | -412 | -3 952 | -4 364 | -62 024 |
| Operating profit/loss (-) recurring | -10 249 | 12 940 | -20 753 | -18 062 | 2 597 | -3 952 | -1 355 | -19 418 |
| 1 Jan - 30 June 2013 | Cancer | Dermatology | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Own | ||||||||
| (Amounts in NOK 1 000) | sales | Partner | R&D | Sum | Partner | R&D | Sum | |
| Sales Revenues | 16 825 | 19 223 | - | 36 048 | - | - | 36 048 | |
| Milestone revenues | - | - | - | - | 2 075 | - | 2 075 | 2 075 |
| Cost of goods sold | -909 | -2 532 | - | -3 441 | - | - | -3 441 | |
| Gross profit | 15 916 | 16 691 | - | 32 607 | 2 075 | - | 2 075 | 34 683 |
| Gross profit of sales % | 95 % | 87 % | 90 % | 90 % | ||||
| Operating expenses | -31 519 | -16 185 | -18 804 | -66 508 | -764 | -5 007 | -5 771 | -72 280 |
| Operating profit/loss (-) recurring | -15 602 | 506 | -18 804 | -33 901 | 1 311 | -5 007 | -3 696 | -37 597 |
Photocure ASA is a public limited company domiciled in Norway. The business of the Group is associated with research, development, production, distribution, marketing and sales of pharmaceutical products and related technical medical equipment. The Company's shares are listed on the Oslo Stock Exchange. The Company's registered office is Hoffsveien 4, NO-0275 Oslo, Norway.
Photocure Group (Photocure) comprises Photocure ASA and the wholly owned subsidiary Photocure Inc. that is a US registered company.
These condensed interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. These interim financial statements should be read in conjunction with the consolidated financial statements for the year ended 31 December 2013 (the Annual Financial Statements) as they provide an update of previously reported information. The accounting policies used are consistent with those used in the Annual Financial Statements. The presentation of the interim financial statements is consistent with the Annual Financial Statements. The interim report has not been subject to an audit. The Board of Directors approved the interim financial statements on 25 August 2014.
Photocure has Norwegian kroner (NOK) as its functional currency and presentation currency. In the absence of any statement to the contrary, all financial information is reported in whole thousands. As a result of rounding adjustments, the figures in the financial statements may not add up to the totals.
The new and amended standards and interpretations from IFRS that were adopted by the EU with effect from 2014 are expected to have no significant impact to Photocure's interim financial statements. Photocure has not chosen an early implementation of any new or amended IFRS's or IFRIC interpretations.
Preparation of the annual accounts in accordance with IFRS requires the use of judgment, estimates and assumptions that have consequences for recognition in the balance sheet of assets and liabilities, the estimation of contingent liabilities and recorded revenues and expenses. The use of estimates and assumptions is based on the best discretionary judgment of the Group management.
| 2014 | 2013 | 2014 | 2013 | 2013 | |
|---|---|---|---|---|---|
| (Amounts in NOK 1 000) | 2Q | 2Q | 1.1-30.06 | 1.1-30.06 | 1.1-31.12 |
| Sales revenues | 24 376 | 21 401 | 43 887 | 36 049 | 79 307 |
| Signing fees and milestone revenues | 1 132 | 1 050 | 2 284 | 2 075 | 4 309 |
| Cost of goods sold | -2 027 | -2 096 | -3 565 | -3 441 | -6 829 |
| Gross profit | 23 481 | 20 355 | 42 606 | 34 683 | 76 787 |
| Other income | 17 | 353 | 17 | 276 | 1 591 |
| Payroll expenses | -15 002 | -16 342 | -35 058 | -36 629 | -73 388 |
| R&D costs excl. payroll expenses/other operating exp. | -4 185 | -3 100 | -7 723 | -6 243 | -15 729 |
| Ordinary depreciation and amortisation | -363 | -349 | -736 | -708 | -1 460 |
| Other operating expenses | -9 618 | -14 866 | -18 524 | -28 976 | -59 647 |
| Total operating revenue and operating expenses | -29 150 | -34 304 | -62 024 | -72 280 | -148 633 |
| Operating result recurring | -5 669 | -13 949 | -19 418 | -37 597 | -71 846 |
Restructuring costs have been incurred with NOK 3.7 million in 2013 and relates to implemented headcount reductions and organizational changes. The costs incurred in this process are reported as non-recurring restructuring costs from Q2 in 2013.
The results of the Allumera segment is restated as discontinued operations in the 2013 quarterly financial statements according to IFRS 5.
| 2014 | 2013 | 2014 | 2013 | 2013 | |
|---|---|---|---|---|---|
| (Amounts in NOK 1 000) | 2Q | 2Q | 1.1-30.06 | 1.1-30.06 | 1.1-31.12 |
| Market value adjustment PCI Biotech Holding ASA | -6 378 | -890 | 8 900 | -15 130 | -14 092 |
| Currency translation | -634 | -160 | -83 | 134 | 76 |
| Total other comprehensive income | -7 012 | -1 050 | 8 818 | -14 996 | -14 015 |
Items may be subsequently reclassified to profit or loss.
Earnings per share (EPS) are calculated on the basis of the profit/loss for the year after tax excluding other comprehensive items. The result is divided by weighted average number of outstanding shares over the year, reduced by acquisition of treasury shares. The diluted earnings per share is calculated by adjusting the average number of outstanding shares by the number of employee options that can be exercised. Anti-dilution effects are not taken into consideration.
| Continued operations | |||
|---|---|---|---|
| (Figures indicate the number of shares) | 06.30.2014 | 06.30.2013 | 12.31.2013 |
| Ordinary shares 1 January | 21 393 301 | 21 393 301 | 21 393 301 |
| Effect of treasury shares | -72 976 | -182 072 | -152 619 |
| Effect of share options exercised | - | - | - |
| Weighted average number of shares | 21 320 325 | 21 211 229 | 21 240 682 |
| Effect of outstanding share options | 20 824 | 91 992 | 61 074 |
| Weighted average number of diluted shares | 21 341 149 | 21 303 221 | 21 301 756 |
| Earnings per share in NOK | -0,81 | -1,72 | -2,76 |
| Earnings per share in NOK diluted | -0,81 | -1,72 | -2,76 |
| (Amounts in NOK 1 000) | 06.30.2014 | 06.30.2013 | 12.31.2013 |
|---|---|---|---|
| Market value PCI Biotech Holding ASA | 41 533 | 31 595 | 32 633 |
| Booked part of remaining settlement from sale of | |||
| Metvix/Aktilite | 21 572 | 16 169 | 19 335 |
| Total other investments | 63 106 | 47 764 | 51 969 |
The table below analyses financial assets recognized in the balance sheet at fair value according to the valuation method.
The different levels have been defined as follows:
| Market value hierarchy | ||||
|---|---|---|---|---|
| (Amounts in NOK 1 000) | Level 1 | Level 2 | Level 3 | Total |
| Financial assets available for sale: | ||||
| - Shares in PCI Biotech Holding ASA | 41 533 | - | - | 41 533 |
| - Money market funds | 120 734 | - | - | 120 734 |
| Total | 162 267 | - | - | 162 267 |
Registered share capital in Photocure ASA amounts to:
| Nominal | Share | ||
|---|---|---|---|
| No. of | value per | capital in | |
| shares | share | NOK | |
| Share capital at 30 June 2014 | 21 393 301 | NOK 0.50 | 10 696 651 |
| Share capital at 31 December 2013 | 21 393 301 | NOK 0.50 | 10 696 651 |
| Treasury shares: | |||
| Holdings of treasury shares at 31 December 2013 | 72 976 | 36 488 | |
| Buy-back of treasury shares | - | NOK 0.50 | - |
| Share option exercise | - | NOK 0.50 | - |
| Holdings of treasury shares at 30 June 2014 | 72 976 | 36 488 |
The table below indicates the status of authorizations at 30 June 2014:
| (Figures indicate the number of shares) | Purchase, treasury shares |
Ordinary share issue |
Employee share issues |
|---|---|---|---|
| Authorisation issued at the General Meeting on 27 May 2014 | 2 139 330 | 2 139 330 | 800 000 |
| Share issues after the General Meeting on 27 May 2014 | - | - | - |
| Purchase of treasury shares | - | - | - |
| Remaining under authorisations at 30 June 2014 | 2 139 330 | 2 139 330 | 800 000 |
Shares owned, directly or indirectly, by members of the board, the President and CEO and senior management and their closely related associates as of 30 June 2014:
| No. of | No. of subscription |
||
|---|---|---|---|
| Name | Position | shares | rights |
| Mats Pettersson | Board member | 5 000 | - |
| Kjetil Hestdal | President and CEO | 66 373 | 163 500 |
| Ambaw Bellete | Head, US Cancer Commercial Operations | - | 29 300 |
| Erik Dahl | Chief Financial Officer | - | 45 000 |
| Kathleen Deardorff | Chief Operating Officer | - | 110 295 |
| Inger Ferner Heglund | Vice President Research and Development | 8 200 | 105 680 |
| Grete Hogstad | Vice President Strategic Marketing | 10 500 | 82 200 |
| Espen Njåstein | Head, Nordic Cancer Commercial Operations | - | 34 350 |
| Gry Stensrud | Vice President Technical Development & Operations | 6 | 85 350 |
At 30 June 2014, employees in Photocure had the following share option schemes:
| Year of allocation | |||||
|---|---|---|---|---|---|
| 2014 | 2012/2013 | 2012 | 2011 | 2010 | |
| Option programme | 2014 | 2012 | 2011 | 2010-I | 2009 |
| Number | 317 000 | 330 718 | 315 694 | 264 875 | 78 750 |
| Exercise price (NOK) | 27,39 | 38,50 | 48,75 | 42,00 | 18,30 |
| Date of expiry (31 December) | 2018 | 2017 | 2016 | 2015 | 2014 |
The number of employee options and average exercise prices for Photocure, and developments during the year:
| 30.06.2014 | 31.12.2013 | |||
|---|---|---|---|---|
| Average exercise |
No. of | Average exercise |
||
| No. of shares | price (NOK) | shares | price (NOK) | |
| Outstanding at start of year | 1 013 637 | 41 | 1 050 792 | 41 |
| Allocated during the year | 326 000 | 27 | 346 649 | 39 |
| Become invalid during the year | 32 600 | 39 | 178 525 | 42 |
| Exercised during the year | - | - | 205 279 | 29 |
| Expired during the year | - | - | - | - |
| Outstanding at end of period | 1 307 037 | 38 | 1 013 637 | 41 |
| Exercisable options at end of period | 990 037 | 40 | 680 175 | 41 |
Average exercise price for allocated, invalid, outstanding and exercisable options are all adjusted for paid dividend of NOK 2.00 in 2013.
Overview of the major shareholders at 30 June 2014:
| Account | ||||
|---|---|---|---|---|
| Shareholder | type | Citizen | No of shares | % |
| RADIUMHOSPITALETS FORSKNINGSSTIFTELSE | NOR | 3 029 000 | 14,16 % | |
| J.P. MORGAN CHASE BANK N.A. LONDON | NOM | GBR | 1 957 334 | 9,15 % |
| FONDSFINANS SPAR | NOR | 1 600 000 | 7,48 % | |
| KLP AKSJE NORGE VPF | NOR | 1 030 000 | 4,81 % | |
| GEZINA AS | NOR | 919 477 | 4,30 % | |
| KOMMUNAL LANDSPENSJONSKASSE | NOR | 890 000 | 4,16 % | |
| MP PENSJON PK | NOR | 700 000 | 3,27 % | |
| SKAGEN VEKST | NOR | 626 466 | 2,93 % | |
| ODIN NORGE | NOR | 512 267 | 2,39 % | |
| DANSKE INVEST NORSKE INSTIT. II. | NOR | 422 703 | 1,98 % | |
| VERDIPAPIRFONDET EIKA NORGE | NOR | 406 517 | 1,90 % | |
| BERGEN KOMMUNALE PENSJONSKASSE | NOR | 400 000 | 1,87 % | |
| VERDIPAPIRFONDET DNB SMB | NOR | 375 000 | 1,75 % | |
| DANSKE INVEST NORSKE AKSJER INST | NOR | 360 714 | 1,69 % | |
| VICAMA AS | NOR | 345 384 | 1,61 % | |
| VERDIPAPIRFONDET DNB NORGE (IV) | NOR | 287 193 | 1,34 % | |
| RUL AS | NOR | 281 475 | 1,32 % | |
| POLAR CAPITAL GLOBAL HSBC BANK PLC. | GBR | 254 537 | 1,19 % | |
| FONDSFINANS FARMASI | NOR | 218 000 | 1,02 % | |
| ARENDALS FOSSEKOMPANI | NOR | 200 000 | 0,93 % | |
| Total 20 largest shareholders | 14 816 067 | 69,26 % | ||
| Total other shareholders | 6 577 234 | 30,74 % | ||
| Total number of shares | 21 393 301 | 100,00 % |
Kjetil Hestdal, President and CEO Mobile: +47 913 19 535 E-mail: [email protected]
Erik Dahl, CFO Mobile: +47 450 55 000 E-mail: [email protected]
Hoffsveien 4 NO – 0275 Oslo Norway Telephone: +47 22 06 22 10 Fax: +47 22 06 22 18
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