Earnings Release • Feb 27, 2014
Earnings Release
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Results for fourth quarter and full year 2013
26 February 2014
Photocure (OSE:PHO), a Norwegian specialty pharmaceutical company focused on photodynamic technologies in cancer and dermatology, announces its results for fourth quarter and full year 2013.
(Numbers in brackets are for the corresponding period in 2012)
| Figures in NOK million | 4Q 2013 | 4Q 2012 | Change | FY 2013 | FY 2012 | Change |
|---|---|---|---|---|---|---|
| Sales revenues Hexvix / Cysview | 24.5 | 19.1 | 28 % | 77.9 | 67.8 | 16 % |
| Sales revenues API | 0.7 | 0.6 | 1.4 | 7.3 | -81 % | |
| Signing fee & milestone revenues | 1.1 | 27.6 | -62 % | 4.3 | 58.7 | -93 % |
| Total revenues | 26.3 | 47.3 | -44 % | 83.6 | 133.8 | -38 % |
| Gross profit | 24.4 | 47.3 | -44 % | 83.6 | 133.8 | -38 % |
| Research and development expenses | 9.8 | 13.3 | -27 % | 34.0 | 50.1 | -32 % |
| Sales and marketing expenses | 14.8 | 18.7 | -21 % | 69.4 | 70.2 | -3 % |
| Operating result excl. restructuring & one-off |
-10.5 | 2.5 | -63.0 | -39.2 | ||
| Operating result incl. non-recurring | -19.1 | 2.5 | -75.5 | -39.2 | ||
| Net profit/loss | -7.4 | 3.3 | -57.2 | -47.9 | ||
| Earnings per share, diluted (NOK) | -0.35 | 0.10 | -2.68 | -2.24 |
"It has been a mixed year for Photocure in our commercial operations and R&D pipeline. Our flagship product Hexvix/Cysview continued a positive growth trajectory driven by strong performance in the Nordic and in partner territories. However, the recent CMS ruling will have negative impact on our sales growth and we are working to secure a long-term sustainable reimbursement solution for Cysview.
The successful completion of the phase 2b trial of Cevira in women with HPV related diseases of the cervix, was a significant achievement towards securing a strategic partnership. Although the change in diagnostic classification means we have not received fast track designation in the US at this time, we are confident in the potential of this innovative drug. Securing regulatory alignment on the phase 3 registration program for Visonac with the FDA and EU regulatory bodies, coupled with achieving agreement with Galderma, places Photocure in a strong position to explore potential partnerships for developing this promising acne treatment."
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.
Total sales revenues for Hexvix/Cysview increased 28% to NOK 24.5 million (NOK 19.1 million) in the fourth quarter. Hexvix/Cysview continues to have underlying strong volume growth in the major markets. Furthermore fourth quarter growth is driven primarily by continued customer demand, price increases and a stronger Euro. For the full year sales revenues were NOK 77.9 million, an increase of 16% from previous year. Hexvix/Cysview global in-market value increased through 2013 by 18% to NOK 150 million. Global in-market unit sales increased 11%.
Photocure's own sales in the US and Nordic region increased 34% to NOK 13.0 million in the fourth quarter, driven by customer demand in all countries as well as price increases in the Nordics.
Nordic revenues were up 33% in the quarter and 21% for the year, driven by strong customer demand and price increases. In the quarter price increases of 5% were successfully implemented in Denmark, Sweden and Finland.
Photocure's unit sales in the Nordic region increased 10% in the fourth quarter and 8% for the full year Strong double digit unit sales growth has continued through the fourth quarter and for the full year in Sweden and Norway, 38% and 20% respectively. The unit growth was driven by both an increase in patients per blue light cystoscope (BLC) as well as an increase in the number of BLCs installed.
Market share is estimated to be 38% across the Nordic region.
In the US, the revenue for the fourth quarter increased 37% as compared to last year, driven by unit growth as well as price increases. For the full year revenue increased 68%, albeit from a low base.. Full year unit growth was 51%.
The US Medicare reimbursement payments for drugs and procedures are annually reviewed by CMS (Centers for Medicare & Medicaid Services). For 2014 CMS has created a new package category that Cysview will be included in. The code packages payment for the drug into the overall procedure reimbursement, which gives
hospitals a weaker incentive to use Cysview. The rule became effective 1 January 2014.
As anticipated, the ruling from CMS negatively impacted fourth quarter placements of BLCs in the US. By year end, the total number of BLCs was 49, including 36 permanent installations, 3 under evaluation and 10 awaiting capital approval for purchase, which is short of expectations.
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.
End user unit sales by Ipsen, Photocure's partner in Europe, increased 15% in the fourth quarter and 10% for the full year, with double digit volume growth in key markets.
Revenue increased 23% in the fourth quarter, driven by the strong customer demand and supply to partner. For the full year revenues increased 5%.
The volume growth in 2013 follows the transition period of Hexvix to Ipsen in 2012 and reflects Ipsen's significant efforts and solid execution in the key markets in Europe. During the fourth quarter, Ipsen achieved stronger reimbursement for 2014 in Italy and France.
| Figures in NOK million | 4Q 2013 | 4Q 2012 | Change | FY 2013 | FY 2012 | Change |
|---|---|---|---|---|---|---|
| Total own sales | 13.0 | 9.7 | 34 % | 38.1 | 29.5 | 29 % |
| Revenues from partners | 11.5 | 9.4 | 23 % | 39.8 | 37.9 | 5 % |
| Total revenue | 24.5 | 19.1 | 28 % | 77.9 | 67.5 | 16 % |
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 the fifth most common type of cancer in the US. An estimated 75,000 new cases will be diagnosed with cancer of the bladder in 2012, with an estimated 15,000 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 (Licensed to Salix) |
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.
Visonac has successfully completed a phase 2b study 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, the design and analysis for the pivotal phase 3 clinical trials has been secured.
During the fourth quarter Photocure successfully renegotiated with Galderma the terms related to Visonac development and commercialization. The new terms allow Photocure to pursue the optimum development and commercialization strategy for Visonac including exploration of potential partnerships at a significantly earlier stage. At the end of 2013 Photocure initiated discussions with potential partners for the further development and commercialization of Visonac.
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 900M US 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.
HPV is the most common sexually transmitted disease causing approx. 500,000 new cases of cervical cancer annually world-wide. CIN1 (cervical intraepithelial neoplasia) are mild, lowgrade lesions caused by HPV infection. Highgrade lesions - CIN2 or CIN3 - are more severe abnormalities that have a higher and more rapid likelihood of progressing to cancer if left untreated.
Photocure has successfully completed a phase 2b study with positive results for Cevira in the treatment of HPV associated diseases of the cervix. Cevira showed a statistically significant and sustained lesion response and high HPV clearance in CIN2 patients. This was further supported by high clearance of HPV subtypes 16 and 18, which carry high oncogenic risk in the overall population.
Based on the positive results of the phase 2b trial, health economic models have been designed to evaluate the impact of Cevira on treating this large and underserved patient population. Cevira has the potential to deliver important cost savings to the healthcare system as compared to the current standard of care.
As part of our aim to secure the optimal development of Cevira based on the strong phase 2b data, Photocure reinitiated its interaction with the US FDA. This included submission of an application for Fast Track Designation for treatment of patients with CIN2.
FDA informed Photocure that the application for Fast Track Designation for Cevira cannot be granted at this time. FDA encouraged Photocure to re-evaluate the clinical data in accordance with the recently published diagnostic consensus classification system where severity of disease is divided as either low grade or high grade, in place of previous categorization by grade of lesion severity (CIN 1, CIN 2 and CIN 3).
Photocure will continue the discussion with FDA on identification of the appropriate patient population for phase 3 in accordance with current clinical management guidelines. The current management guidelines recommend distinct treatment options for women with CIN2 and CIN3, particularly for the large group of women of child bearing potential. This is to avoid overtreatment of women with CIN 2 due to the potential morbidities caused by invasive treatments.
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 FDA.
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.
Photocure's partner Salix Pharmaceuticals, a US based company that develops and markets prescription pharmaceutical products for the prevention and treatment of gastrointestinal diseases, is developing Lumacan.
An exploratory study to evaluate an enema formulation is underway, and, if successful, an additional study may be conducted to explore oral test formulations.
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 2012).
The financial report as of 31 December 2013 has been prepared in accordance with IAS 34 Interim Financial Reporting and follows the same principles as the Annual Report for 2012.
The US based Allumera business is reported as discontinued operations from fourth quarter of 2012 according to IFRS 5. All income statements have been restated to reflect this. Please refer note 10 for further information and restatement specifications.
Overall, revenues in the fourth quarter as well as full year are driven by strong growth of Hexvix/Cysview, however this is offset by a decline in sales of active pharmaceutical ingredients as well as lower milestone revenues.
In the fourth quarter the end user volume growth of Hexvix/Cysview increased 14%. Total Hexvix/Cysview sales revenues for the quarter were NOK 24.5 million, an increase of 28% from NOK 19.1 million recorded in fourth quarter last year. Full year Hexvix/Cysview sales revenues increased to NOK 77.9 million compared to last year NOK 67.5 million.
Total revenues in the fourth quarter were NOK 26.3 million, down from fourth quarter 2012 driven by lower milestone revenues in the quarter. Full year total revenues were NOK 83.6 million (NOK 133.8 million), also impacted by lower milestone revenues.
Operating costs continue to be well controlled and are significantly below last year. Total operating costs net of other income excluding restructuring costs and one-off items amounted to NOK 34.9 million (NOK 43.1 million) in the fourth quarter. For the full year operating costs from continued operations were NOK 139.8 million (NOK 163.7 million).
| MNOK | Q4 '13 Change | FY '13 Change | ||
|---|---|---|---|---|
| Research & Development Sales & Marketing Other Opex |
9,8 14,8 10,3 |
-27 % -21 % -8 % |
34,0 68,4 37,4 |
-32 % -3 % -14 % |
| Operating expenses | 34,9 | -19 % | 139,8 | -15 % |
| Restructuring | -0,3 | 3,7 | ||
| One-Off items | 8,9 | 8,9 | ||
| Total | 43,5 | 1 % | 152,3 | -7 % |
One-off items relate to a payment to Galderma of USD 1.5 million in the fourth quarter giving Photocure freedom to explore potential partnerships at a significantly earlier stage for Visonac.
Full year restructuring costs are NOK 3.7 million and relate to implemented headcount reductions and organizational changes. The changes reflect plans for the continued development of the product pipeline as well as a streamlining of the marketing support organization and administrative support.
Research and development (R&D) costs were NOK 9.8 million (NOK 13.3 million) in the fourth quarter. The primary R&D cost driver in the quarter has been work related to Cevira and Visonac as well as obligatory regulatory work related to Hexvix/Cysview. For the full year total R&D costs were NOK 34.0 million, down 32% from last year NOK 50.1 million.
Marketing and sales costs decreased by 21% to NOK 14.8 million (NOK 18.7 million) in the fourth quarter compared to the same quarter last year. The decrease is mainly due to the finalization of the funding of the marketing activities with Ipsen.
The commercial activities in the US were at level with the same quarter last year. Year to date marketing and sales spending was NOK 68.4 million (NOK 70.2 million).
Photocure had an operating loss of NOK 10.5 million (profit of NOK 2.5 million) before restructuring costs and one-off items for the fourth quarter. The increase in loss is mainly driven by reduction in milestone revenues and partly offset by increased revenues from Hexvix/Cysview and reduced operating costs. Operating loss after restructuring costs and oneoff items was NOK 19.1 million (profit of NOK 2.5 million) for the fourth quarter and was NOK 75.5 million (loss of NOK 39.2 million) for the full year.
Net financial items were NOK 1.8 million for the fourth quarter and NOK 8.7 million (NOK 8.2 million) for the full year.
Photocure recorded a net loss from continued operations of NOK 58.6 million (loss of NOK 30.1 million) for the year. Discontinued operations include Allumera net operating result and restructuring costs related to the exit.
Photocure is the largest shareholder in PCI Biotech Holding ASA with 19.35% of the shares. The market value of the shareholding was NOK 32.6 million at 31 December 2013, resulting in a market value adjustment of negative NOK 14.1 million for the year.
Cash and cash equivalents were NOK 167.3 million at 31 December 2013 compared to 302.8 million at 31 December 2012. The company has paid a dividend of NOK 42.5 million in the second quarter.
Shareholders' equity was NOK 269.1 million at 31 December 2013, an equity ratio of 89%. At the end of 2012, shareholders' equity was NOK 380.3 million (88%).
As of 31 December 2013, Photocure held 52,976 own shares.
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 2012.
The main focus for Photocure during 2014 continues to be driving sales of its marketed product and to establish partnerships to continue the momentum in its development pipeline.
Key to driving the 2014 sales is continued strong growth in the Nordic region and building upon the commercial partnership with Ipsen and increasing sales for Cysview in the US. We have seen a good development throughout 2013 for Ipsen and expect this to continue into 2014. Our success for Cysview will to a large extent depend on the reimbursement situation in US, even though we believe we will be able to offset some of a possible negative impact from lack of reimbursement through selective account targeting and development of larger current accounts. Our expectation for global in-market unit sales for 2014 is an increase of minimum 10%.
With respect to the development of the new product pipeline, the priorities continue to be
Given the focus on profitable growth, cost containment will also be important in 2014. We expect to end 2014 with a cash reserve in excess of NOK 105 million, excluding milestones.
Oslo, 26 February 2014
Åse Aulie Michelet Chairman
Jon Hindar Mats Pettersson
Xavier Yon Kjetil Hestdal President and CEO
| 2013 | 2012 | 2013 | 2012 | ||
|---|---|---|---|---|---|
| (all amounts in NOK 1 000 except per share data) | Note | 4Q | 4Q | 1.1-31.12 | 1.1-31.12 |
| Sales revenues | 25 180 | 19 731 | 79 307 | 75 082 | |
| Signing fee and milestone revenues | 1 140 | 27 597 | 4 309 | 58 741 | |
| Total revenues | 26 320 | 47 328 | 83 616 | 133 823 | |
| Cost of goods sold | -1 926 | -1 737 | -6 829 | -9 405 | |
| Gross profit | 24 394 | 45 591 | 76 787 | 124 418 | |
| Other income | 765 | 590 | 1 591 | 2 242 | |
| Indirect manufacturing expenses | 2 | -2 555 | -2 832 | -7 751 | -12 337 |
| Research and development expenses | 2 | -9 758 | -13 284 | -33 976 | -50 083 |
| Marketing and sales expenses | 2 | -14 828 | -18 679 | -68 418 | -70 188 |
| Business development and administrative expenses | 2 | -17 380 | -8 907 | -40 079 | -33 300 |
| Operating profit/loss(-) recurring | -19 362 | 2 480 | -71 846 | -39 248 | |
| Restructure costs | 3 | 295 | 0 | -3 694 | 0 |
| Operating profit/loss(-) incl. non-recurring | -19 067 | 2 480 | -75 540 | -39 248 | |
| Financial income | 2 366 | 2 569 | 10 119 | 12 766 | |
| Financial expenses | -615 | -213 | -1 431 | -4 530 | |
| Net financial profit/loss(-) | 1 751 | 2 356 | 8 688 | 8 236 | |
| Profit/loss(-) before tax | -17 317 | 4 836 | -66 852 | -31 012 | |
| Tax expenses | 8 204 | 890 | 8 204 | 890 | |
| Net profit/loss(-) continued operations | -9 113 | 5 726 | -58 648 | -30 122 | |
| Discontinued operations | 1 | -43 | -2 421 | -302 | -17 778 |
| Net profit/loss(-) | -9 156 | 3 305 | -58 950 | -47 900 | |
| Other comprehensive income | 4 | 3 870 | -4 990 | -14 015 | -11 356 |
| Total comprehensive income | -5 286 | -1 685 | -72 966 | -59 256 | |
| Net profit/loss(-) per share, undiluted | 5 | -0,43 | 0,07 | -2,78 | -2,25 |
| Net profit/loss(-) per share, diluted | 5 | -0,43 | 0,07 | -2,77 | -2,24 |
| (Amounts in NOK 1 000) | Note | 31.12.2013 | 31.12.2012 |
|---|---|---|---|
| Non-currrent assets | |||
| Machinery & equipment | 3 681 | 4 111 | |
| Other investments | 6, 7 | 51 969 | 59 951 |
| Deferred tax asset | 49 109 | 40 840 | |
| Total non-current assets | 104 759 | 104 902 | |
| Current assets | |||
| Inventory | 12 624 | 9 826 | |
| Receivables | 17 085 | 15 432 | |
| Cash & cash equivalents | 7 | 167 258 | 302 818 |
| Total current assets | 196 967 | 328 077 | |
| Total assets | 301 726 | 432 978 | |
| Equity and liabilities | |||
| Equity | |||
| Share capital | 8 | 10 697 | 10 697 |
| Other paid-in capital | 34 777 | 71 197 | |
| Retained earnings | 223 649 | 298 374 | |
| Shareholders' equity | 269 123 | 380 268 | |
| Long-term liabilities | |||
| Other non-current liabilities | 2 296 | 1 621 | |
| Total long-term liabilities | 2 296 | 1 621 | |
| Current liabilities | 30 307 | 51 089 | |
| Total liabilities | 32 603 | 52 710 | |
| Total equity and liabilities | 301 726 | 432 978 |
| 2013 | 2012 | 2013 | 2012 | |
|---|---|---|---|---|
| (Amounts in NOK 1 000) | 4Q | 4Q | 1.1-31.12 | 1.1-31.12 |
| Equity at beginning of period | 271 836 | 381 383 | 380 268 | 439 337 |
| Treasury shares, net change | 1 907 | -223 | 2 125 | -6 338 |
| Share-based compensation (share options employees) | 666 | 768 | 2 176 | 6 527 |
| Dividend | -42 481 | |||
| Other items | 25 | |||
| Comprehensive income | -5 286 | -1 685 | -72 966 | -59 256 |
| Equity at end of period | 269 123 | 380 268 | 269 123 | 380 268 |
| 2013 | 2012 | 2013 | 2012 | |
|---|---|---|---|---|
| (Amounts in NOK 1 000) | 4Q | 4Q | 1.1-31.12 | 1.1-31.12 |
| Profit/loss(-) before tax | -17 360 | 2 415 | -67 154 | -48 790 |
| Depreciation and amortisation | 404 | 399 | 1 460 | 1 535 |
| Share-based compensation | 666 | 768 | 2 176 | 6 527 |
| Net interests | -1 519 | -2 387 | -7 362 | -8 901 |
| Changes in working capital | 1 339 | 6 325 | -7 000 | 3 430 |
| Other operational items | -1 302 | 19 987 | -21 842 | -8 728 |
| Net cash flow from operations | -17 771 | 27 507 | -99 722 | -54 928 |
| Cash flow from investments | 899 | 1 671 | 4 518 | 9 073 |
| Cash flow from financing activities | 1 907 | -223 | -40 356 | -6 500 |
| Net change in cash during the period | -14 965 | 28 955 | -135 560 | -52 355 |
| Cash & cash equivalents at beginning of period | 182 224 | 273 864 | 302 818 | 355 173 |
| Cash & cash equivalents at end of period | 167 258 | 302 818 | 167 258 | 302 818 |
| 4Q 2013 | Cancer | Dermatology | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Own | ||||||||
| (Amounts in NOK 1 000) | sales | Partner | R&D | Sum | Partner | R&D | Sum | |
| Sales Revenues | 12 976 | 11 522 | - | 24 498 | 683 | - | 683 | 25 181 |
| Milestone revenues | 0 | - | - | 0 | 1 140 | - | 1 140 | 1 140 |
| Cost of goods sold | -716 | -1 211 | - | -1 927 | - | 0 | -1 927 | |
| Gross profit | 12 260 | 10 311 | - | 22 571 | 1 823 | 0 | 1 823 | 24 394 |
| Gross profit of sales % | 94 % | 89 % | 92 % | 92 % | ||||
| Operating expenses | -15 544 | -4 857 | -10 743 | -31 144 | -9 511 | -3 101 | -12 612 | -43 756 |
| Operating profit/loss (-) ctnd oper. | -3 284 | 5 454 | -10 743 | -8 573 | -7 688 | -3 101 | -10 789 | -19 362 |
| 4Q 2012 | Cancer | Dermatology | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Own | ||||||||
| (Amounts in NOK 1 000) | sales | Partner | R&D | Sum | Partner | R&D | Sum | |
| Sales Revenues | 9 718 | 9 384 | - | 19 102 | 629 | - | 629 | 19 731 |
| Milestone revenues | 0 | 0 | 25 160 | 25 160 | 2 437 | - | 2 437 | 27 597 |
| Cost of goods sold | -915 | -824 | - | -1 738 | 0 | - | 0 | -1 737 |
| Gross profit | 8 803 | 8 560 | 25 160 | 42 524 | 3 066 | 0 | 3 066 | 45 591 |
| Gross profit of sales % | 91 % | 91 % | 91 % | 100 % | 100 % | 91 % | ||
| Operating expenses | -16 174 | -8 276 | -13 724 | -38 174 | -425 | -4 512 | -4 937 | -43 111 |
| Operating profit/loss (-) ctnd oper. | -7 370 | 285 | 11 436 | 4 350 | 2 641 | -4 512 | -1 871 | 2 480 |
| 1 Jan - 31 December 2013 | Cancer | Dermatology | Total | |||||
|---|---|---|---|---|---|---|---|---|
| (Amounts in NOK 1 000) | Own sales |
Partner | R&D | Sum | Partner | R&D | Sum | |
| Sales Revenues | 38 134 | 40 430 | - | 78 564 | 743 | - | 743 | 79 307 |
| Milestone revenues | 0 | - | - | 0 | 4 309 | - | 4 309 | 4 309 |
| Cost of goods sold | -2 040 | -4 789 | - | -6 829 | - | 0 | -6 829 | |
| Gross profit | 36 094 | 35 641 | - | 71 735 | 5 052 | 0 | 5 052 | 76 787 |
| Gross profit of sales % | 95 % | 88 % | 91 % | 91 % | ||||
| Operating expenses | -62 097 | -25 735 | -39 325 | -127 157 | -10 628 | -10 848 | -21 476 | -148 633 |
| Operating result recurring oper. | -26 003 | 9 906 | -39 325 | -55 422 | -5 576 | -10 848 | -16 424 | -71 846 |
| 1 Jan - 31 December 2012 | Cancer | Dermatology | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Own | ||||||||
| (Amounts in NOK 1 000) | sales | Partner | R&D | Sum | Partner | R&D | Sum | |
| Sales Revenues | 29 525 | 38 304 | - | 67 829 | 7 252 | - | 7 252 | 75 081 |
| Milestone revenues | 0 | 22 550 | 25 160 | 47 710 | 11 032 | - | 11 032 | 58 742 |
| Cost of goods sold | -3 007 | -6 385 | - | -9 391 | -14 | - | -14 | -9 405 |
| Gross profit | 26 518 | 54 469 | 25 160 | 106 148 | 18 270 | 0 | 18 270 | 124 418 |
| Gross profit of sales % | 90 % | 83 % | 86 % | 100 % | 100 % | 87 % | ||
| Operating expenses | -56 510 | -36 344 | -53 861 | -146 715 | -1 708 | -15 244 | -16 951 | -163 667 |
| Operating profit/loss (-) ctnd oper. | -29 992 | 18 126 | -28 701 | -40 567 | 16 562 | -15 244 | 1 318 | -39 248 |
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 2012 (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 26 February 2014.
Photocure has NOK (Norwegian kroner) 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 2013 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.
In the process of applying the principles of accounting, the Group management has made the following judgments and estimates that are of significance for recognized values in the interim financial statements for 2013:
Photocure announced 1 October 2012 the decision to exit its Allumera® cosmetic dermatology business in the US. The commercial organization was downsized immediately after the announcement.
The Allumera segment is reported as discontinued operations from 4th quarter of 2012 according to IFRS 5. For further information about revenue and expenses related to the Allumera business in 2012, please refer to the separate table in Note 10.
| 2013 | 2012 | 2013 | 2012 | |
|---|---|---|---|---|
| (Amounts in NOK 1 000) | 4Q | 4Q | 1.1-31.12 | 1.1-31.12 |
| Sales revenues | 25 180 | 19 731 | 79 307 | 75 082 |
| Signing fees and milestone revenues | 1 140 | 27 597 | 4 309 | 58 741 |
| Cost of goods sold | -1 926 | -1 737 | -6 829 | -9 405 |
| Gross profit | 24 394 | 45 591 | 76 787 | 124 418 |
| Other income | 765 | 590 | 1 591 | 2 242 |
| Payroll expenses | -16 999 | -22 221 | -73 388 | -76 520 |
| R&D costs excl. payroll expenses/other | -6 625 | -5 701 | -15 729 | -23 782 |
| Ordinary depreciation and amortisation | -404 | -385 | -1 460 | -1 545 |
| Other operating expenses | -20 493 | -15 394 | -59 647 | -64 061 |
| Total operating revenue and operatin | -43 756 | -43 111 | -148 633 | -163 666 |
| Operating result recurring | -19 362 | 2 480 | -71 846 | -39 248 |
Restructuring costs have been incurred with NOK 3.7 million for the year and relates to implemented headcount reductions and organizational changes. During 2013 a total of 10 employees left the company. The changes are made possible by plans for the continued development of the product pipeline as well as a streamlining of the marketing support organization and administrative support.
| 2013 | 2012 | 2013 | 2012 | |
|---|---|---|---|---|
| (Amounts in NOK 1 000) | 4Q | 4Q | 1.1-31.12 | 1.1-31.12 |
| Market value adjustment PCI Biotech Holding ASA | 3 708 | -5 043 | -14 092 | -10 828 |
| Currency translation | 161 | 53 | 76 | -528 |
| Total other comprehensive income | 3 870 | -4 990 | -14 015 | -11 356 |
Earnings per share (EPS) are calculated on the basis of the profit/loss for the year after tax but excluding other comprehensive items. The result is divided by a 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.
| Total | Continued | Total | Continued | |
|---|---|---|---|---|
| (Figures indicate the number of shares) | 12.31.2013 | 12.31.2013 | 12.31.2012 | 12.31.2012 |
| Ordinary shares 1 January | 21 393 301 | 21 393 301 | 21 393 301 | 21 393 301 |
| Effect of treasury shares | -152 619 | -152 619 | -133 510 | -133 510 |
| Effect of share options exercised | 0 | 0 | 0 | 0 |
| Weighted average number of shares | 21 240 682 | 21 240 682 | 21 259 791 | 21 259 791 |
| Effect of outstanding share options | 61 074 | 61 074 | 89 884 | 89 884 |
| Weighted average number of diluted shares | 21 301 756 | 21 301 756 | 21 349 675 | 21 349 675 |
| Earnings per share in NOK | -2,78 | -2,76 | -2,25 | -1,42 |
| Earnings per share in NOK diluted | -2,77 | -2,75 | -2,24 | -1,41 |
| (Amounts in NOK 1 000) | 12.31.2013 | 12.31.2012 |
|---|---|---|
| Market value PCI Biotech Holding ASA | 32 633 | 46 725 |
| Booked part of remainig settlement from sale of | ||
| Metvix/Aktilite | 19 336 | 13 226 |
| Total other investments | 51 969 | 59 951 |
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:
| Level 1: | Noted prices in active markets for corresponding assets or liabilities |
|---|---|
| Level 2: | Available value measurements other than the noted prices classified as Level 1, either |
| directly observable in the form of agreed prices or indirectly as derived from the | |
| price of equivalent. | |
| Level 3: | Value measurements of assets or liabilities that are not based on observed market values |
| (Amounts in NOK 1 000) | ||||
|---|---|---|---|---|
| Market value hierarchy | Level 1 | Level 2 | Level 3 | Total |
| Financial assets available for sale: | ||||
| - Shares in PCI Biotech Holding ASA | 32 633 | 32 633 | ||
| - Money market funds | 148 543 | 148 543 | ||
| Total | 181 176 | 0 | 0 | 181 176 |
Registered share capital in Photocure ASA amounts to:
| No. of shares |
Nominal value per share |
Share capital in NOK |
|
|---|---|---|---|
| Share capital at 31 December 2013 Share capital at 31 December 2012 |
21 393 301 21 393 301 |
NOK 0.50 NOK 0.50 |
10 696 651 10 696 651 |
| Treasury shares: Holdings of treasury shares at 31 December 2012 Buy-back of treasury shares Share option exercise Holdings of treasury shares at 31 December 2013 |
178 255 100 000 -205 279 72 976 |
NOK 0.50 NOK 0.50 |
89 128 50 000 -102 640 36 488 |
The table below indicates the status of authorisations at 31 December 2013:
| (Figures indicate the number of shares) | Purchase, treasury shares |
Ordinary share issue |
Employee share issues |
|---|---|---|---|
| Authorisation issued at the General Meeting on 22 May 2013 Share issues after the General Meeting on 22 May 2013 |
2 139 330 | 2 139 330 0 |
800 000 0 |
| Purchase of treasury shares Remaining under authorisations at 31 December 2013 |
0 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 31 December 2013:
| No. of | |||
|---|---|---|---|
| No. of | subscription | ||
| Name | Position | shares | rights |
| Chairman | |||
| Åse Aulie Michelet | 9 500 | ||
| Jon Hindar | Board member | 8 000 | |
| Mats Pettersson | Board member | 5 000 | |
| Eva Steiness | Board member | 5 300 | |
| Kjetil Hestdal | President and CEO | 66 373 | 138 500 |
| Ambaw Bellete | Head, US Cancer Commercial Operations | - | 15 300 |
| Erik Dahl | Chief Financial Officer | - | 30 000 |
| Kathleen Deardorff | Chief Operating Officer | - | 95 295 |
| Inger Ferner Heglund | Vice President Research and Development | 8 200 | 88 680 |
| Grete Hogstad | Vice President Strategic Marketing | 10 500 | 69 200 |
| Espen Njåstein | Head, Nordic Cancer Commercial Operations | - | 16 350 |
| Gry Stensrud | Vice President Technical Development & Operation | 6 | 68 350 |
At 31 December 2013, employees in Photocure had the following share option schemes:
| Year of allocation | 2012/2013 | 2012 | 2011 | 2010 |
|---|---|---|---|---|
| Option programme | 2012 | 2011 | 2010-I | 2009 |
| Number | 338 893 | 322 569 | 273 425 | 78 750 |
| Exercise price (NOK) | 38,50 | 48,75 | 42,00 | 18,30 |
| Date of expiry (31 December) | 2017 | 2016 | 2015 | 2014 |
The number of employee options and average exercise prices for Photocure, and developments during the year:
| 31.12.2013 | 31.12.2012 | ||||
|---|---|---|---|---|---|
| Average | Average | ||||
| No. of | exercise | No. of | exercise | ||
| shares | price (NOK) | shares | price (NOK) | ||
| Outstanding at start of year | 1 050 792 | 41,27 | 975 094 | 36,23 | |
| Allocated during the year | 346 649 | 38,50 | 351 219 | 49,87 | |
| Become invalid during the year | 178 525 | 42,09 | 155 812 | 42,70 | |
| Exercised during the year | 205 279 | 29,01 | 119 709 | 23,62 | |
| Expired during the year | - | - | - | - | |
| Outstanding at end of period | 1 013 637 | 41,14 | 1 050 792 | 41,27 | |
| Exercisable options at end of period | 680 175 | 40,81 | 672 491 | 37,44 |
Average exercise price for allocated, invalid, outstanding and exercisable options are all adjusted for paid dividend of NOK 2.00 in 2013.
Photocure announced 1 October 2012 the decision to exit its Allumera® cosmetic dermatology business in the US. The commercial organization was downsized immediately after the announcement.
The Allumera segment is reported as discontinued operations from 4th quarter of 2012 according to IFRS 5. The following table reconciles discontinued and continued operations by quarter 2012. No adjustments are done to the balance sheet.
| Total operations | |||||
|---|---|---|---|---|---|
| 2012 | 2012 | 2012 | 2012 | 2012 | |
| (all amounts in NOK 1 000) | 1Q | 2Q | 3Q | 4Q | FY |
| Sales revenues | 20 135 | 17 258 | 20 914 | 20 014 | 78 321 |
| Signing fee and milestone revenues | 14 084 | 14 196 | 2 864 | 27 597 | 58 741 |
| Total revenues | 34 219 | 31 454 | 23 779 | 47 611 | 137 062 |
| Cost of goods sold | -2 116 | -2 671 | -3 231 | -1 864 | -9 882 |
| Gross profit | 32 103 | 28 783 | 20 548 | 45 747 | 127 180 |
| Operating expenses | -46 604 | -44 020 | -47 895 | -45 687 | -184 206 |
| Operating profit/loss(-) | -14 501 | -15 238 | -27 347 | 60 | -57 026 |
| Discontinued operations | |||||
|---|---|---|---|---|---|
| 2012 | 2012 | 2012 | 2012 | 2012 | |
| (all amounts in NOK 1 000) | 1Q | 2Q | 3Q | 4Q | FY |
| Sales revenues | 1 230 | 940 | 786 | 283 | 3 239 |
| Signing fee and milestone revenues | |||||
| Total revenues | 1 230 | 940 | 786 | 283 | 3 239 |
| Cost of goods sold | -85 | -75 | -190 | -127 | -477 |
| Gross profit | 1 145 | 865 | 596 | 156 | 2 762 |
| Operating expenses | -5 973 | -6 394 | -5 598 | -2 577 | -20 541 |
| Operating profit/loss(-) | -4 828 | -5 529 | -5 002 | -2 421 | -17 779 |
| Continued operations | |||||
|---|---|---|---|---|---|
| 2012 | 2012 | 2012 | 2012 | 2012 | |
| (all amounts in NOK 1 000) | 1Q | 2Q | 3Q | 4Q | FY |
| Sales revenues | 18 905 | 16 318 | 20 128 | 19 731 | 75 082 |
| Signing fee and milestone revenues | 14 084 | 14 196 | 2 864 | 27 597 | 58 741 |
| Total revenues | 32 989 | 30 514 | 22 993 | 47 328 | 133 823 |
| Cost of goods sold | -2 031 | -2 596 | -3 041 | -1 737 | -9 405 |
| Gross profit | 30 958 | 27 918 | 19 952 | 45 591 | 124 418 |
| Operating expenses | -40 631 | -37 626 | -42 297 | -43 111 | -163 665 |
| Operating profit/loss(-) | -9 673 | -9 709 | -22 345 | 2 480 | -39 247 |
Overview of the major shareholders at 31 December 2013:
| Shareholder | Account type | Citizen | No of shares | % |
|---|---|---|---|---|
| RADIUMHOSPITALETS FORSKNINGSSTIFTELSE | NOR | 3 029 000 | 14,16 % | |
| J.P. Morgan Chase Bank | NOM | GBR | 1 957 334 | 9,15 % |
| FONDSFINANS SPAR | NOR | 1 550 000 | 7,25 % | |
| GEZINA AS | NOR | 1 193 571 | 5,58 % | |
| KLP AKSJE NORGE VPF | NOR | 930 000 | 4,35 % | |
| SKAGEN VEKST | NOR | 920 401 | 4,30 % | |
| KOMMUNAL LANDSPENSJONSKASSE | NOR | 890 000 | 4,16 % | |
| ODIN NORGE | NOR | 679 037 | 3,17 % | |
| MP PENSJON PK | NOR | 500 000 | 2,34 % | |
| DANSKE INVEST NORSKE C/O DANSKE CAPITAL | NOR | 430 203 | 2,01 % | |
| VERDIPAPIRFONDET WARRENWICKLUND NO | NOR | 406 517 | 1,90 % | |
| DANSKE INVEST NORSKE | NOR | 368 824 | 1,72 % | |
| VICAMA AS | NOR | 345 384 | 1,61 % | |
| BERGEN KOMMUNALE PENSJONSKASSE | NOR | 300 000 | 1,40 % | |
| VERDIPAPIRFONDET DNB | NOR | 290 000 | 1,36 % | |
| RUL AS | NOR | 274 131 | 1,28 % | |
| VERDIPAPIRFONDET DNB IV | NOR | 265 162 | 1,24 % | |
| MYNA AS | NOR | 262 000 | 1,22 % | |
| HSBC BANK PLC | NOM | GBR | 251 782 | 1,18 % |
| ARENDALS FOSSEKOMPANI | NOR | 200 000 | 0,93 % | |
| Total 20 largest shareholders | 15 043 346 | 70,32 % | ||
| Total other shareholders | 6 349 955 | 29,68 % | ||
| Total number of shares | 21 393 301 | 100,00 % |
For more information, please contact:
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]
Photocure ASA Hoffsveien 4 NO – 0275 Oslo Norway
Telephone: +47 22 06 22 10 Fax: +47 22 06 22 18
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