Quarterly Report • Oct 29, 2015
Quarterly Report
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28 October 2015
(Numbers in brackets are for the corresponding period in 2014)
| Figures in NOK million | 3Q 2015 | 3Q 2014 | Change | 9M 2015 | 9M 2014 | Change | FY 2014 |
|---|---|---|---|---|---|---|---|
| Sales revenues | 29.3 | 24.9 | 17 % | 89.1 | 68.8 | 30 % | 93.6 |
| Signing fee & milestone revenues | 6.6 | 31.9 | 11.1 | 34.2 | 35.4 | ||
| Total revenues | 35.9 | 56.8 | -37 % | 100.2 | 103.0 | -3 % | 129.0 |
| Operating expenses | 36.6 | 31.4 | 16 % | 105.8 | 93.4 | 13 % | 127.6 |
| EBIT (Operating result) | -2.7 | 23.8 | -11.8 | 4.4 | -5.6 | ||
| EBIT commercial franchise | 9.0 | 5.7 | 59 % | 23.1 | 11.1 | 109 % | 15.9 |
| EBIT development portfolio | -11.7 | 18.1 | -34.9 | -6.7 | -21.5 | ||
| Profit/loss(-) before PCI and tax | 0.1 | 24.2 | -7.3 | 6.9 | 1.5 | ||
| Earnings per share, diluted (NOK) | -0.23 | 1.13 | -1.25 | 0.32 | -1.16 | ||
| Cash & cash equivalents | 139.5 | 166.9 | 165.2 |
"In the third quarter of 2015, we continued to deliver growth. With the increased profitability of our commercial franchise we continue to make significant progress towards our goal of becoming a sustainable Specialty Pharma Company.
The new Hexvix distribution agreement with BioSyent Pharma, as well as the filing of the marketing authorization application in Australia by Juno Pharmaceuticals provides an additional foundation for the future growth of the Hexvix/Cysview brand as we work to ensure that bladder cancer patients gain access to improved patient management in regions outside the current territories.
Furthermore, we were pleased to announce after the quarter end that the first patient has been enrolled in our Phase 3 market expansion trial with Hexvix/Cysview. In this trial we will compare flexible blue light cystoscopy with Hexvix/Cysview with standard white light cystoscopy in the outpatient/surveillance setting. We expect to report results from this study in 2017.
In terms of our pipeline, we reached alignment with the FDA on the Cevira Phase 3 registration program through the SPA process and we were granted additional patent protection in Europe for Cevira which further strengthens the patent portfolio around this novel drug-device for HPV related cervical lesions".
Photocure's strategy is to create a Specialty Pharmaceutical Company maximizing its commercial presence and the opportunity of its flagship brand Hexvix/Cysview in urology. In addition, the company will continue to leverage its core competence developing products based on its proprietary Photodynamic Technology Platform targeting unmet medical needs in urology, dermatology and gynecology. We will seek to develop and commercialize new products alone or in partnerships with others to capture the full potential of our products.
Our commercial segment continued to improve sales and profit in the third quarter. Third quarter total revenue increased 38% compared to the same period last year, resulting in an EBIT improvement of 59% to NOK 9.0 million. Revenue increased 39% in the first nine months to NOK 100.2 million; EBIT was NOK 23.1 million and the EBIT margin was 23%, up from 15% last year.
| MNOK | Q3 '15 | YTD '15 YTD '14 | |
|---|---|---|---|
| Nordic - Hexvix | 8,1 | 26,4 | 22,5 |
| US - Cysview | 5,3 | 15,7 | 8,5 |
| Partner - Hexvix | 13,5 | 40,5 | 36,2 |
| Hexvix / Cysview Total API revenues Signing fee & milestones Total revenues YoY growth |
27,0 2,3 6,6 35,9 38 % |
82,6 6,5 11,1 100,2 39 % |
67,2 1,6 3,4 72,2 |
| Gross profit | 33,9 | 94,0 | 67,1 |
| Operating expenses | -24,8 | -70,9 | -56,0 |
| EBIT | 9,0 | 23,1 | 11,1 |
| EBIT margin | 25 % | 23 % | 15 % |
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, and has strategic partnerships for the commercialization of Hexvix in Europe, Canada, Australia and New Zealand.
Global in-market sales of Hexvix/Cysview continued to grow compared to same period prior year, up 22% to NOK 51 million in the third quarter, and up 19% to NOK 155 million in the first nine months. Global in-market unit sales for the third quarter increased 8% compared to 2014. Unit volume increased 7% in the first nine months compared to prior year.
Total sales revenues for Hexvix/Cysview increased 12% to NOK 27.0 million (NOK 24.1 million) in the third quarter, and up 23% to NOK 82.6 million (NOK 67.2 million) in the first nine months. Revenue growth was positively impacted by foreign exchange rates, increased demand in major markets and price increases.
Photocure's sales revenues from its sales force in the US and Nordic region increased 22% to NOK 13.5 million in the third quarter. In the first nine months sales revenues increased 35%, to NOK 42.1 million, reflecting strong growth in both regions. Revenue in constant currencies grew 20% in the first nine months compared to the previous year.
Nordic revenues increased 11% in the third quarter compared to last year. Revenues grew 17% in the first nine months, mainly driven by customer demand and price increases. Revenue in constant currencies grew 12% in the first nine months.
Photocure's in-market unit sales in the Nordic region increased 14% in the third quarter and 9% in the first nine months. Sweden, the key growth area in Nordic, continued to develop positively, posting 21% growth in unit sales in the first nine months. Overall Hexvix market share in the Nordic region is approximately 39%.
In the US, third quarter revenue increased 42% compared to third quarter last year. Revenue increased 84% in the first nine months, driven by volume growth, positive foreign exchange rate effects and price increases. Revenue growth in constant currency was 42% in the first nine months compared to the same period in 2014.
Unit sales in the US decreased 5% in the third quarter but increased 29% overall in the first nine months, compared to same period last year. The decrease in the third quarter was partly driven by a single large order from US National Cancer Institute (NCI) in third quarter 2014.
The US growth is driven both by the number of permanent blue light cystoscopes (BLCs) installed at leading US hospitals/urology centers and by increased average usage per center. The total number of permanent BLCs installed at leading US hospitals/urology centers at end of the third quarter was 62, an increase of 27% from the same quarter 2014 (49). At year end 2014, 51 BLCs were installed.
In the US, Photocure continues to work closely with key stakeholders to secure a long-term sustainable solution for Cysview Medicare reimbursement. A bill to secure coverage for US Medicare bladder patient access to state of the art treatment using up to date technology, including Cysview, continues to gain support of Congressional members and progress through the legislative process. Photocure will continue its work to obtain reimbursement for Cysview in the US and support the work needed to secure the passage of the bill.
Partner revenue increased 4% in the third quarter, negatively impacted by the timing of supply stocks to our partner in previous quarters. Revenue increased 12% to NOK 40.5 million in the first nine months compared to the same period prior year. Revenue in constant currency grew 5% year to date.
End user unit sales increased 8% in the third quarter. Germany and France delivered double digit volume growth in the third quarter. Unit growth for partner was 5% in the first nine months, impacted by a decline in first quarter unit sales as a consequence of a 2014 price increase in Germany.
In August Photocure appointed BioSyent Pharma as exclusive distributor for the commercialization of Cysview in Canada. Under the terms of the agreement, Photocure will receive up to USD 1 million in milestone payments for the rights to Cysview in the territory, of which USD 650,000 was received in September 2015.
In May, Photocure and Juno Pharmaceuticals signed an exclusive distribution agreement for Hexvix in Australia and New Zealand. At signing, Photocure received EUR 250 000 and will receive an additional EUR 250 000 upon approval of Hexvix in the territory. Juno is responsible for the regulatory filings, and filed, according to plan, a marketing authorization application (MAA) for the registration of Hexvix in Australia in September.
In June, Photocure received marketing approval for Hexvix from the Ministry of Health in Russia. Photocure is evaluating potential commercial partners in Russia.
Hexvix/Cysview (hexaminolevulinate hydrochloride) is an innovative breakthrough technology for the diagnosis and management of non-muscle invasive bladder cancer. It is designed to selectively target malignant cells in the bladder and induce fluorescence during a cystoscopic procedure using a blue light enabled cystoscope. Using Hexvix/Cysview as an adjunct to standard white-light cystoscopy enables the urologist to better detect and remove lesions, leading to a reduced risk of recurrence. Hexvix/Cysview is approved in Europe, US, Canada and Russia.
Bladder cancer has a high incidence, and is the fourth most common type of cancer in males in the US. An estimated 75,000 new cases of bladder cancer were diagnosed in 2014, with an estimated 15,600 people dying from the disease, according to the American Cancer Society. In Europe bladder cancer is the fifth most common cancer with an estimated 167 000 newly diagnosed cases and 59 000 deaths due to the disease in 2012 (Witjes JA et al., Eur Urol 2014). If bladder cancer is detected at an early stage, management and outcome for the patient is improved.
| 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 ready |
| Hexvix® Cysview® |
Detection of bladder cancer, surveillance segment |
Phase 3 initiated |
An expansion of the use of Hexvix/Cysview into the surveillance patient segment will open a market segment estimated to be 2-3 times larger than the current segment. Hexvix/Cysview is currently used to optimize patient management through improved diagnosis and resection (TURB) in a surgical procedure. After patients are initially diagnosed and treated by TURB, they undergo cystoscopy examinations every 3-9 months. This surveillance is performed in the out-patient/office setting using flexible cystoscopes to detect any
suspicious new lesions requiring referral for additional TURBs.
Following positive early clinical experience with flexible cystoscopes in this new segment, Photocure has initiated a 360 patient phase 3 clinical study examining bladder cancer detection rates using Cysview blue light flexible cystoscopy vs white light flexible cystoscopy. The study design is in alignment with FDA to obtain label expansion and fulfill the Cysview post marketing commitments.
Patient recruitment started in October. Final results are expected in 2017 with possible FDA approval in 2018. In addition to the registration study, Photocure will generate additional clinical data by supporting Investigator Initiated Trials.
Visonac is a novel patented photodynamic treatment in late-stage development for treating moderate to severe, inflammatory acne. Visonac has been developed in combination with Photocure's innovative full face red light lamp, Nedax®. The estimated global market value of available treatments in this segment, oral antibiotics and retinoids, is USD 900 million annually. Visonac will address a large unmet medical need as a second line treatment option for patients with moderate to severe acne estimated to affect more than 2 million patients each year in the EU and US.
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 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 of the global pivotal phase 3 registration program has been secured.
The intellectual property portfolio for Visonac was recently further strengthened by the grant of an additional key patent in Europe. The patent protects the use of Visonac in a method of photodynamic treatment of acne, wherein the side effects of such a treatment are reduced by low MAL concentrations in combination with short incubation time. The patent expires in 2028 and may form the basis for SPCs (supplementary protection certificates), which would extend the protection for Visonac in Europe by up to 5 years, i.e. 2033.
Photocure's strategy is to establish a strategic partnership for Visonac for further development and commercialization. Discussions with companies that are leaders in dermatology continue to take place.
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. 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. Cevira is the first in class of possible new medical treatments in this therapeutic area. The market opportunity for a successful product is significant. Each year in EU and the US approximately 1 million women are diagnosed with high grade lesions and an estimated 10-15 million women are diagnosed with oncogenic HPV.
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.
After submission of proposed phase 3 protocols for a Special Protocol Assessment Review (SPAR) in the first quarter of 2015, FDA approved the Special Protocol Agreement (SPA) in August. The SPA defines the size, design and analysis of clinical trials that will form the primary basis of approval. Ensuring regulatory alignment before initiating the Phase 3 registration trials reduces the risk of the development program and is an
1 http://healthcare.globaldata.com/media-center/press-
releases/pharmaceuticals/novel-product-launches-to-reinvigorateacne-treatment-market-by-2018-says-globaldata
important milestone in the continued development of Cevira. With alignment with FDA on Phase 3 clinical studies now obtained, Photocure plans to finalize necessary documentation for the Cevira device to ensure readiness for the Phase 3 trial.
In September a new patent for Cevira was granted in Europe. The patent protects the Cevira device including its use in combination with the Cevira drug until 2029, and complements the company's proprietary European patent, which claims different aspects of the Cevira device and Photocure's registered European Community design, covering the appearance of the device, i.e. lines, contours, colors, shape, texture and/or materials. The patent expires in 2029, while the design expires in April 2038. In US, Photocure has patents granted to 2030.
Cevira has the potential to treat HPV induced cervical high grade disease and prevent the development of cervical cancer which globally affects more than 500,000 women annually. Photocure will continue discussions with leading companies in women's healthcare to secure a strategic partnership to support the phase 3 development and commercialization of Cevira.
(Numbers in brackets are for the corresponding period in 2014; references to the prior year refer to a comparison to the first nine months of 2014, unless otherwise stated).
Photocure has continued improving its financial performance in the third quarter and first nine months, with double-digit growth in revenues from Hexvix/Cysview and improved operating results before one-off milestone revenues.
Revenues in the third quarter were NOK 35.9 million, a decline of 37% from the same quarter last year (NOK 56.8 million). The decline was driven by the termination fee paid by Salix in third quarter 2014. Excluding milestones and termination fees, revenues in the third quarter increased 17%.
This increase was driven mainly by continued market penetration of Hexvix/Cysview, price increases and sales of API as well as changes in currency exchange rates. Revenues excluding milestones and termination fees for the first nine months of 2015 increased 30% to NOK 89.1 million (NOK 68.8 million).
Total Hexvix/Cysview sales revenues for the third quarter were NOK 27.0 million, an increase of 12% from last year (NOK 24.1 million). Sales revenue grew 23% in the first nine months to NOK 82.6 million (NOK 67.2 million). The US operation accounted for almost half of this growth. In constant currencies the revenue grew 12% in the first nine months.
Total operating costs were NOK 36.6 million (NOK 31.4 million) in the third quarter, an increase of 16%. Operating costs were up 13% to NOK 105.8 million in the first nine months (up approximately 2% in constant currency). The increases in operating costs were mainly within sales and marketing expenses and to a large extent driven by changes in currency exchange rates as well as increased activities related to expanding the use of Hexvix/Cysview into the flexible surveillance patient segment.
| MNOK | Q3 '15 | YTD '15 |
|---|---|---|
| Research & Development | 6,7 | 21,5 |
| YoY growth | -4 % | -6 % |
| Sales & Marketing | 18,2 | 52,5 |
| YoY growth | 39 % | 29 % |
| Other Opex | 11,7 | 31,8 |
| YoY growth | 3 % | 7 % |
| Operating expenses | 36,6 | 105,8 |
| YoY growth | 16 % | 13 % |
Third quarter research and development (R&D) costs were NOK 6.7 million (NOK 7.0 million). The R&D costs relate to regulatory work and maintenance and expansion of our intellectual property as well as the development of the current pipeline. R&D costs were NOK 21.5 million in the first nine months, a decline of 6% from the prior year. The primary development activities in 2015 have been the initiation of the Cysview flexible scope / post marketing commitment trial in the U.S and regulatory work related to Cevira. Expenses related to the Cysview flexible scope / post marketing commitment trial are capitalized.
Marketing and sales costs increased 39% to NOK 18.2 million (NOK 13.1 million) in the third quarter compared to same period prior year, significantly impacted by changes in currency exchange rates, particularly the USD/NOK. Marketing and sales costs for the first nine months were NOK 52.5 million, an increase of 29% from last year (12% in constant currencies).
Operating result (EBIT) was at NOK -2.7 million for the third quarter. Last year third quarter EBIT was NOK 23.8 million, impacted by the termination fee from Salix of NOK 30.8 million. Excluding the termination fee from Salix third quarter EBIT improved with NOK 4.2 million from prior year. First nine months EBIT was NOK -11.8 million (NOK 4.4 million). Impact from currency translation was approximately NOK 2.0 million negative for the first nine months and neutral in third quarter.
EBIT in the commercial segment was NOK 9.0 million in the third quarter compared to NOK 5.7 million last year. Development products had an EBIT of NOK -11.7 million in the third quarter compared to NOK -12.6 million third quarter last year excluding the termination fee from Salix.
Net financial items excluding impairment loss of shares in PCI Biotech were NOK 2.8 million (NOK 0.3 million) in the third quarter and NOK 4.5 million in the first nine months (NOK 2.5 million). Photocure had at quarter end 9.96% of the shares in PCI Biotech Holding ASA. The market value of the shareholding was NOK 8.6 million at 30 September 2015, resulting in a negative market value adjustment of NOK 0.3 million for the third quarter and first nine months, in addition to NOK 7.7 million impairment loss from previous quarters.
Photocure recorded a net profit before tax of NOK 0.1 million in the third quarter (profit of NOK 24.2 million) and a loss of NOK 15.0 million (profit of NOK 6.9 million) for the first nine months 2015.
Net cash flow from operations was negative NOK 4.8 million in the third quarter (positive NOK 25.2 million) and negative NOK 19.2 million in the first nine months (negative NOK 3.2 million). The changes reflect the Salix termination fee in 2014 partly offset by improved operational results in 2015. Net cash flow from investments was negative NOK 3.9 million in the third quarter and negative NOK 9.0 million year to date. This includes investments in intangible assets of NOK 10.5 million mainly related to the initiation of the phase 3 market expansion and post-marketing commitment trial for Cysview.
Cash and cash equivalents were NOK 139 million at 30 September 2015. Third quarter net change in cash was negative NOK 7.2 million compared to last year positive NOK 26.1 million. Net change in cash during the first nine months was negative NOK 25.8 million, compared to last year negative NOK 0.4 million.
Shareholders' equity was NOK 218 million at 30 September 2015, an equity ratio of 87%. At the end of 2014, shareholders' equity was NOK 240 million (89%).
As of 30 September 2015, Photocure held 35,476 own shares.
Photocure is exposed to risk and uncertainty factors, which may affect some or all of the company's activities. Photocure has financial risk, market risk as well as operational risk and risk related to development of new products.
The most important risks the company is exposed to for 2015 are associated with market development for Hexvix/Cysview, progress of outlicensing activities, 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 2014.
Photocure expects revenues to continue to grow in 2015 driven by an increase of Hexvix/Cysview in-market unit sales of approximately 10%.
Photocure has through the Hexvix/Cysview franchise built considerable experience in the urology sector. The Company will explore strategic alternatives to capitalize on its strength in the sector and expand the Hexvix/Cysview franchise into the bladder cancer surveillance market with the initiation of a phase 3 trial. The Company expects this trial to cost USD 8.5 million over 3 years, of which an estimated USD 2.5 million (NOK 20 million) will be invested in 2015.
Operating expenses are expected to increase moderately in constant currencies due to increased sales and marketing activities supporting increased revenues and activities in the surveillance market.
Photocure is committed to establishing strategic partnerships for its pipeline products and securing regulatory pathways to market access. The Company has received approval of the Special Protocol Agreement (SPA) from the US FDA on the design of the Phase 3 clinical registration program for Cevira.
The Board of Directors and CEO Photocure ASA
Oslo, 28 October 2015
Bente-Lill B Romøren Chairperson
Synne H. Røine Tom Pike
Xavier Yon Lars Rønn Kjetil Hestdal President and CEO
| 2015 | 2014 | 2015 | 2014 | 2014 | ||
|---|---|---|---|---|---|---|
| (all amounts in NOK 1 000 except per share data) | Note | 3Q | 3Q | 1.1-30.09 | 1.1-30.09 | 1.1-31.12 |
| Sales revenues | 29 254 | 24 928 | 89 130 | 68 815 | 93 586 | |
| Signing fee and milestone revenues | 6 614 | 31 896 | 11 100 | 34 180 | 35 366 | |
| Total revenues | 35 868 | 56 824 | 100 230 | 102 995 | 128 951 | |
| Cost of goods sold | -2 010 | -1 610 | -6 187 | -5 175 | -6 996 | |
| Gross profit | 33 858 | 55 214 | 94 043 | 97 820 | 121 955 | |
| Indirect manufacturing expenses | 2 | -2 977 | -2 459 | -7 513 | -5 990 | -9 187 |
| Research and development expenses | 2 | -6 705 | -6 974 | -21 536 | -22 992 | -32 554 |
| Marketing and sales expenses | 2 | -18 198 | -13 074 | -52 474 | -40 629 | -54 561 |
| Business development and administrative exp. | 2 | -8 690 | -8 890 | -24 293 | -23 810 | -31 284 |
| Operating expenses | -36 570 | -31 397 | -105 816 | -93 421 | -127 586 | |
| Operating profit/loss(-) | -2 712 | 23 817 | -11 773 | 4 399 | -5 631 | |
| Financial income | 2 484 | 1 526 | 6 823 | 4 598 | 9 787 | |
| Financial expenses | 308 | -1 184 | -2 343 | -2 087 | -2 630 | |
| Net financial profit/loss(-) excluding PCI | 2 792 | 342 | 4 480 | 2 511 | 7 157 | |
| Profit/loss(-) before PCI and tax | 80 | 24 159 | -7 293 | 6 910 | 1 526 | |
| Impairment loss shares in PCI Biotech Holding | - | - | -7 669 | - | -8 181 | |
| Profit/loss(-) before tax | 80 | 24 159 | -14 962 | 6 910 | -6 655 | |
| Tax expenses | 3 | -5 055 | - | -11 787 | - | -18 047 |
| Net profit/loss(-) | -4 974 | 24 159 | -26 749 | 6 910 | -24 701 | |
| Other comprehensive income | 4 | -406 | -9 476 | -280 | -658 | -7 392 |
| Total comprehensive income | -5 380 | 14 683 | -27 029 | 6 252 | -32 093 | |
| Net profit/loss(-) per share, undiluted | 5 | -0,23 | 1,13 | -1,25 | 0,32 | -1,16 |
| Net profit/loss(-) per share, diluted | 5 | -0,23 | 1,13 | -1,25 | 0,32 | -1,16 |
| (Amounts in NOK 1 000) | Note | 30.09.2015 | 30.09.2014 | 31.12.2014 |
|---|---|---|---|---|
| Non-currrent assets | ||||
| Machinery & equipment | 6 | 2 553 | 2 892 | 3 056 |
| Intangible assets | 6 | 9 122 | 57 | 38 |
| Other investments | 7, 8 | 39 488 | 54 475 | 42 355 |
| Deferred tax asset | 3 | 19 811 | 49 109 | 31 063 |
| Total non-current assets | 70 974 | 106 533 | 76 512 | |
| Current assets | ||||
| Inventory | 14 905 | 13 729 | 13 237 | |
| Receivables | 24 116 | 17 952 | 15 585 | |
| Cash & cash equivalents | 7 | 139 465 | 166 850 | 165 245 |
| Total current assets | 178 486 | 198 531 | 194 067 | |
| Total assets | 249 460 | 305 064 | 270 579 | |
| Equity and liabilities | ||||
| Equity | ||||
| Share capital | 9 | 10 738 | 10 697 | 10 697 |
| Other paid-in capital | 42 310 | 36 563 | 37 801 | |
| Retained earnings | 164 641 | 229 994 | 191 560 | |
| Shareholders' equity | 217 689 | 277 253 | 240 058 | |
| Long-term liabilities | ||||
| Other non-current liabilities | 3 674 | 2 838 | 3 055 | |
| Total long-term liabilities | 3 674 | 2 838 | 3 055 | |
| Current liabilities | 28 096 | 24 972 | 27 466 | |
| Total liabilities | 31 770 | 27 810 | 30 521 | |
| Total equity and liabilities | 249 460 | 305 064 | 270 579 |
| 2015 | 2014 | 2015 | 2014 | 2014 | |
|---|---|---|---|---|---|
| (Amounts in NOK 1 000) | 3Q | 3Q | 1.1-30.09 | 1.1-30.09 | 1.1-31.12 |
| Equity at beginning of period | 220 952 | 261 956 | 240 057 | 269 124 | 269 123 |
| Capital increase | 1 497 | - | 2 415 | - | |
| Share-based compensation (share options employees) | 619 | 615 | 2 245 | 1 877 | 2 343 |
| Other items | - | - | - | - | 686 |
| Comprehensive income | -5 380 | 14 683 | -27 029 | 6 252 | -32 093 |
| Equity at end of period | 217 689 | 277 253 | 217 689 | 277 253 | 240 058 |
| 2015 | 2014 | 2015 | 2014 | 2014 | |
|---|---|---|---|---|---|
| (Amounts in NOK 1 000) | 3Q | 3Q | 1.1-30.09 | 1.1-30.09 | 1.1-31.12 |
| Profit/loss(-) before tax | 80 | 24 159 | -14 962 | 6 910 | -6 655 |
| Depreciation and amortisation | 1 095 | 361 | 2 423 | 1 097 | 1 469 |
| Gain sale of financial asets | - | - | -1 342 | - | - |
| Impairment loss shares | - | - | 7 669 | - | 8 181 |
| Share-based compensation | 619 | 615 | 2 245 | 1 878 | 2 343 |
| Net interests | 405 | -871 | -643 | -3 159 | -4 138 |
| Changes in working capital | -3 201 | 1 702 | -9 568 | -7 266 | -1 954 |
| Other operational items | -3 809 | -730 | -5 038 | -2 681 | -5 335 |
| Net cash flow from operations | -4 810 | 25 235 | -19 215 | -3 221 | -6 089 |
| Machinery & equipment investment | -31 | - | -471 | -346 | -748 |
| Intangible asset investment | -3 463 | - | -10 494 | - | - |
| Received financial payments | -405 | 871 | 1 985 | 3 159 | 4 138 |
| Cash flow from investments | -3 899 | 871 | -8 980 | 2 813 | 3 390 |
| Cash flow from financing activities | 1 497 | - | 2 415 | - | 686 |
| Net change in cash during the period | -7 212 | 26 106 | -25 780 | -408 | -2 013 |
| Cash & cash equivalents at beginning of period | 146 677 | 140 744 | 165 245 | 167 259 | 167 259 |
| Cash & cash equivalents at end of period | 139 465 | 166 850 | 139 465 | 166 850 | 165 245 |
Photocure has evaluated the group use of segments in the reporting to align internal and external reporting. Based on this the group has decided to change the segment reporting from 2015. The new segment structure is Commercial Franchise and Development Portfolio. Commercial Franchise includes Hexvix /Cysview by sales channel, own sales and partner sales, and other sales, currently including sale of active ingredients. Development Portfolio is split by development of commercial products and pipeline products.
The change is implemented from first quarter 2015. Segment reporting for 2014 has been restated to comply with new structure.
| 3Q 2015 | Commercial Franchise Development Portfolio |
|||||||
|---|---|---|---|---|---|---|---|---|
| Hex/Cys | Hex/Cys | Other | Total | Hex/Cys | Total | Grand | ||
| (Amounts in NOK 1 000) | Own sales | Partner | Sales | Sales | Develop. | Pipeline | R&D | Total |
| Sales Revenues | 13 477 | 13 512 | 2 264 | 29 253 | - | - | - | 29 253 |
| Milestone revenues | - | 5 350 | 1 264 | 6 614 | - | - | - | 6 614 |
| Cost of goods sold | -598 | -1 412 | - | -2 010 | - | - | - | -2 010 |
| Gross profit | 12 880 | 17 450 | 3 528 | 33 858 | - | - | - | 33 858 |
| Gross profit of sales % | 96 % | 90 % | 100 % | 93 % | 93 % | |||
| R&D | - | - | - | - | -1 587 | -5 118 | -6 705 | -6 705 |
| Sales & marketing | -14 948 | -2 213 | - | -17 161 | - | -1 038 | -1 038 | -18 198 |
| Other & allocations | -2 902 | -4 614 | -146 | -7 661 | -724 | -3 281 | -4 005 | -11 667 |
| Operating expenses | -17 850 | -6 827 | -146 | -24 822 | -2 311 | -9 437 | -11 748 | -36 570 |
| Operating profit/loss (-) recurring | -4 970 | 10 623 | 3 383 | 9 036 | -2 311 | -9 437 | -11 748 | -2 712 |
| 3Q 2014 | Commercial Franchise | Development Portfolio | ||||||
|---|---|---|---|---|---|---|---|---|
| Hex/Cys | Hex/Cys | Other | Total | Hex/Cys | Total | Grand | ||
| (Amounts in NOK 1 000) | Own sales | Partner | Sales | Sales | Develop. | Pipeline | R&D | Total |
| Sales Revenues | 11 068 | 13 013 | 848 | 24 928 | - | - | - | 24 928 |
| Milestone revenues | - | - | 1 142 | 1 142 | - | 30 754 | 30 754 | 31 896 |
| Cost of goods sold | -409 | -1 201 | - | -1 610 | - | - | - | -1 610 |
| Gross profit | 10 659 | 11 812 | 1 990 | 24 460 | - | 30 754 | 30 754 | 55 214 |
| Gross profit of sales % | 96 % | 91 % | 100 % | 94 % | 94 % | |||
| R&D | - | - | - | - | -1 172 | -5 802 | -6 974 | -6 974 |
| Sales & marketing | -11 084 | -1 149 | - | -12 234 | - | -840 | -840 | -13 074 |
| Other & allocations | -2 662 | -3 655 | -218 | -6 535 | -413 | -4 401 | -4 814 | -11 349 |
| Operating expenses | -13 747 | -4 804 | -218 | -18 769 | -1 584 | -11 043 | -12 627 | -31 396 |
| Operating profit/loss (-) recurring | -3 088 | 7 008 | 1 771 | 5 692 | -1 584 | 19 710 | 18 126 | 23 818 |
| 1 Jan - 30 September 2015 | Commercial Franchise | Development Portfolio | ||||||
|---|---|---|---|---|---|---|---|---|
| Hex/Cys | Hex/Cys | Other | Total | Hex/Cys | Total | Grand | ||
| (Amounts in NOK 1 000) | Own sales | Partner | Sales | Sales | Develop. | Pipeline | R&D | Total |
| Sales Revenues | 42 064 | 40 521 | 6 545 | 89 130 | - | - | - | 89 130 |
| Milestone revenues | - | 7 450 | 3 651 | 11 100 | - | - | - | 11 100 |
| Cost of goods sold | -1 811 | -4 376 | - | -6 187 | - | - | - | -6 187 |
| Gross profit | 40 253 | 43 595 | 10 195 | 94 043 | - | - | - | 94 043 |
| Gross profit of sales % | 96 % | 89 % | 100 % | 93 % | 93 % | |||
| R&D | - | - | - | - | -4 556 | -16 980 | -21 536 | -21 536 |
| Sales & marketing | -43 748 | -6 158 | - | -49 906 | - | -2 568 | -2 568 | -52 474 |
| Other & allocations | -8 413 | -12 141 | -442 | -20 995 | -2 216 | -8 593 | -10 810 | -31 805 |
| Operating expenses | -52 161 | -18 299 | -442 | -70 902 | -6 772 | -28 142 | -34 914 | -105 816 |
| Operating profit/loss (-) recurring | -11 909 | 25 296 | 9 753 | 23 141 | -6 772 | -28 142 | -34 914 | -11 773 |
| 1 Jan - 30 September 2014 | Commercial Franchise | Development Portfolio | ||||||
|---|---|---|---|---|---|---|---|---|
| Hex/Cys | Hex/Cys | Other | Total | Hex/Cys | Total | Grand | ||
| (Amounts in NOK 1 000) | Own sales | Partner | Sales | Sales | Develop. | Pipeline | R&D | Total |
| Sales Revenues | 31 044 | 36 199 | 1 572 | 68 815 | - | - | - | 68 815 |
| Milestone revenues | - | - | 3 426 | 3 426 | - | 30 754 | 30 754 | 34 180 |
| Cost of goods sold | -1 445 | -3 730 | - | -5 175 | - | - | - | -5 175 |
| Gross profit | 29 599 | 32 469 | 4 998 | 67 066 | - | 30 754 | 30 754 | 97 819 |
| Gross profit of sales % | 95 % | 90 % | 100 % | 92 % | 92 % | |||
| R&D | - | - | - | - | -2 533 | -20 459 | -22 992 | -22 992 |
| Sales & marketing | -35 118 | -3 174 | - | -38 292 | - | -2 337 | -2 337 | -40 628 |
| Other & allocations | -7 790 | -9 297 | -627 | -17 714 | -1 172 | -10 913 | -12 085 | -29 800 |
| Operating expenses | -42 908 | -12 471 | -627 | -56 006 | -3 705 | -33 709 | -37 414 | -93 420 |
| Operating profit/loss (-) recurring | -13 309 | 19 998 | 4 370 | 11 060 | -3 705 | -2 955 | -6 661 | 4 399 |
| 1 Jan - 31 December 2014 | Commercial Products | Development products | ||||||
|---|---|---|---|---|---|---|---|---|
| Hex/Cys | Hex/Cys | Other | Total | Hex/Cys | Total | Grand | ||
| (Amounts in NOK 1 000) | Own sales | Partner | Sales | Sales | Develop. | Pipeline | R&D | Total |
| Sales Revenues | 45 693 | 46 320 | 1 572 | 93 585 | - | - | - | 93 585 |
| Milestone revenues | - | - | 4 612 | 4 612 | - | 30 754 | 30 754 | 35 366 |
| Cost of goods sold | -2 175 | -4 821 | - | -6 996 | - | - | - | -6 996 |
| Gross profit | 43 519 | 41 499 | 6 184 | 91 201 | - | 30 754 | 30 754 | 121 955 |
| Gross profit of sales % | 95 % | 90 % | 100 % | 93 % | 93 % | |||
| R&D | - | - | - | - | -4 088 | -28 467 | -32 555 | -32 555 |
| Sales & marketing | -46 186 | -4 555 | - | -50 741 | - | -3 819 | -3 819 | -54 560 |
| Other & allocations | -10 826 | -12 889 | -838 | -24 553 | -1 552 | -14 367 | -15 919 | -40 473 |
| Operating expenses | -57 012 | -17 444 | -838 | -75 295 | -5 640 | -46 653 | -52 293 | -127 587 |
| Operating profit/loss (-) recurring | -13 494 | 24 055 | 5 346 | 15 907 | -5 640 | -15 899 | -21 539 | -5 632 |
Photocure ASA is a public limited company domiciled in Norway. The business of the Company 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 2014 (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 with the exception of the changes to the segment reporting as described in the section for segment reporting. 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 28 October 2015.
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 2015 did not have any significant impact on the reporting in 2015. Photocure has not chosen an early implementation of any new or amended IFRS's or IFRIC interpretations.
Preparation of the 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.
| 2015 | 2014 | 2015 | 2014 | 2014 | |
|---|---|---|---|---|---|
| (Amounts in NOK 1 000) | 3Q | 3Q | 1.1-30.09 | 1.1-30.09 | 1.1-31.12 |
| Sales revenues | 29 254 | 24 928 | 89 130 | 68 815 | 93 586 |
| Signing fees and milestone revenues | 6 614 | 31 896 | 11 100 | 34 180 | 35 366 |
| Cost of goods sold | -2 010 | -1 610 | -6 187 | -5 175 | -6 996 |
| Gross profit | 33 858 | 55 214 | 94 043 | 97 820 | 121 955 |
| Other income | - | - | - | - | - |
| Payroll expenses | -21 170 | -18 676 | -59 525 | -53 734 | -73 008 |
| R&D costs excl. payroll expenses/other operating exp. | -2 738 | -2 753 | -10 146 | -10 476 | -15 197 |
| Ordinary depreciation and amortisation | -1 095 | -361 | -2 423 | -1 097 | -1 469 |
| Other operating expenses | -11 567 | -9 607 | -33 722 | -28 114 | -37 912 |
| Total operating expenses | -36 570 | -31 397 | -105 816 | -93 421 | -127 586 |
| Operating result | -2 712 | 23 817 | -11 773 | 4 399 | -5 631 |
| (Amounts in NOK 1 000) | 30.09.2015 31.12.2014 | |
|---|---|---|
| Income tax expense | ||
| Tax payable | 535 | |
| Changes in deferred tax | 11 252 | 18 047 |
| Total income tax expense | 11 787 | 18 047 |
| Tax base calculation | ||
| Profit before income tax | -14 962 | -6 653 |
| Permanent differences | 8 323 | 10 636 |
| Temporary differences | 11 705 | -7 148 |
| Utilisation of tax loss carried forward | -30 342 | -61 610 |
| Increase tax loss carried forward | 25 276 | 64 775 |
| Tax base | 0 | 0 |
| Temporary differences: | ||
| Total | -141 797 | -130 092 |
| Tax loss carried forward | 401 604 | 407 756 |
| Net temporary differences | 259 807 | 277 664 |
| Write down of deferred tax benefit | -186 431 | -162 614 |
| Deferred tax benefit | 73 376 | 115 050 |
| Deferred tax asset | 19 812 | 31 064 |
The Company has recognized a deferred tax asset regarding net temporary differences in the parent company in Norway but not for the subsidiary Photocure Inc. The parent company has a profit before tax in 2014 of NOK 66.5 million and a taxable profit as of end September 2015 to be utilized by the tax loss carried forward in Norway. The deferred tax asset is of this reason decreased by NOK 18.0 million as of 31 December 2014 to NOK 31.1 million and decreased by NOK 11.2 million as of end September 2015 to NOK 19.8 million. The basis for the recognition is the assessment that it is more-likely-than-not that the deferred tax benefit will be utilized. There is no expiry on losses to be carried forward in Norway while it expires after 20 years in US.
| 2015 | 2014 | 2015 | 2014 | 2014 | |
|---|---|---|---|---|---|
| (Amounts in NOK 1 000) | 3Q | 3Q | 1.1-30.09 | 1.1-30.09 | 1.1-31.12 |
| Market value adjustment PCI Biotech Holding ASA | -297 | -9 642 | -297 | -741 | -7 884 |
| Currency translation | -109 | 166 | 17 | 83 | 491 |
| Total other comprehensive income | -406 | -9 476 | -280 | -658 | -7 392 |
Items may be subsequently reclassified to profit or loss.
Earnings per share 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.
| Continued operations | ||
|---|---|---|
| (Figures indicate the number of shares) | 30.09.2015 | 31.12.2014 |
| Ordinary shares 1 January Effect of treasury shares |
21 393 301 - |
21 393 301 -72 154 |
| Effect of share options exercised | -18 849 | - |
| Weighted average number of shares | 21 374 452 | 21 321 147 |
| Effect of outstanding share options | 70 546 | 15 618 |
| Weighted average number of diluted shares | 21 444 998 | 21 336 765 |
| Earnings per share in NOK | -1,25 | -1,16 |
| Earnings per share in NOK diluted | -1,25 | -1,16 |
| Machinery & | ||
|---|---|---|
| (Amounts in NOK 1 000) | equipment | Intangible |
| Net book value 31.12.14 | 3 056 | 38 |
| Net investments 30.09.15 | 510 | 10 494 |
| Depreciation and amortization | -1 014 | -1 410 |
| Net book value 30.09.15 | 2 553 | 9 122 |
Photocure has from 2015 capitalized a new clinical study for Cysview in US and a project for new solvent device
| (Amounts in NOK 1 000) | 30.09.2015 | 31.12.2014 |
|---|---|---|
| Market value PCI Biotech Holding ASA | 8 603 | 16 569 |
| Booked part of remaining settlement from sale of | ||
| Metvix/Aktilite | 30 884 | 25 786 |
| Total other investments | 39 488 | 42 355 |
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 | 8 603 | - | - | 8 603 |
| - Money market funds | 118 994 | - | - | 118 994 |
| Total | 127 598 | - | - | 127 598 |
Registered share capital in Photocure ASA amounts to:
| Nominal | Share | ||
|---|---|---|---|
| No. of | value per | capital in | |
| shares | share | NOK | |
| Share capital at 30 September 2015 | 21 476 295 | NOK 0.50 | 10 738 148 |
| Share capital at 31 December 2014 | 21 393 301 | NOK 0.50 | 10 696 651 |
| Treasury shares: | |||
| Holdings of treasury shares at 31 December 2014 | 35 476 | 17 738 | |
| Buy-back of treasury shares | - | NOK 0.50 | - |
| Share option exercise | - | NOK 0.50 | - |
| Holdings of treasury shares at 30 September 2015 | 35 476 | 17 738 |
The table below indicates the status of authorizations at 30 September 2015:
| (Figures indicate the number of shares) | Purchase, treasury shares |
Ordinary share issue |
Employee share issues |
|---|---|---|---|
| Authorisation issued at the General Meeting on 30 April 2015 | 2 139 330 | 2 139 330 | 800 000 |
| Share issues after the General Meeting on 30 April 2015 | - | - | 82 994 |
| Purchase of treasury shares | - | - | - |
| Remaining under authorisations at 30 September 2015 | 2 139 330 | 2 139 330 | 717 006 |
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 September 2015:
| No. of | |||
|---|---|---|---|
| No. of | subscription | ||
| Name | Position | shares | rights |
| Kjetil Hestdal | President and CEO | 103 873 | 166 000 |
| Ambaw Bellete | Head, US Cancer Commercial Operations | - | 54 100 |
| Erik Dahl | Chief Financial Officer | - | 69 000 |
| Kathleen Deardorff | Chief Operating Officer | - | 135 095 |
| Inger Ferner Heglund | Vice President Research and Development | 8 200 | 104 930 |
| Grete Hogstad | Vice President Strategic Marketing | 10 500 | 97 450 |
| Espen Njåstein | Head, Nordic Cancer Commercial Operations | - | 57 650 |
| Gry Stensrud | Vice President Technical Development & Operations | 6 | 106 100 |
| Tom Pike | Board member | 3 400 | - |
At 30 September 2015, employees in Photocure had the following share option schemes:
| Year of allocation | |||||
|---|---|---|---|---|---|
| 2015 | 2014 | 2012/2013 | 2012 | 2011 | |
| Option programme | 2015 | 2014 | 2012 | 2011 | 2010 |
| Number | 363 870 | 215 336 | 275 593 | 268 744 | 224 750 |
| Exercise price (NOK) | 32,78 | 27,39 | 38,50 | 48,75 | 42,00 |
| Date of expiry (31 December) | 2019 | 2018 | 2017 | 2016 | 2015 |
The number of employee options and average exercise prices for Photocure, and developments during the year:
| 30.09.2015 | 31.12.2014 | ||||
|---|---|---|---|---|---|
| Average | Average | ||||
| No. of | exercise | No. of | exercise | ||
| shares | price (NOK) | shares | price (NOK) | ||
| Outstanding at start of year | 1 153 312 | 39,05 | 1 013 637 | 41,14 | |
| Allocated during the year | 407 700 | 32,78 | 326 000 | 27,39 | |
| Become invalid during the year | 129 725 | 38,66 | 107 575 | 38,52 | |
| Exercised during the year | 82 994 | 29,10 | 37 500 | 18,30 | |
| Expired during the year | - | - | 41 250 | 18,30 | |
| Outstanding at end of period | 1 348 293 | 37,81 | 1 153 312 | 39,05 | |
| Exercisable options at end of period | 997 478 | 40,07 | 852 631 | 41,84 |
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 September 2015:
| Account | No of | |||
|---|---|---|---|---|
| Shareholder | type | Citizen | shares | % |
| J.P. MORGAN CHASE BANK N.A. LONDON | NOM | GBR | 3 153 874 | 14,69 % |
| RADIUMHOSPITALETS FORSKNINGSSTIFTELSE | NOR | 1 929 000 | 8,98 % | |
| FONDSFINANS NORGE | NOR | 1 435 226 | 6,68 % | |
| KLP AKSJE NORGE VPF | NOR | 1 279 984 | 5,96 % | |
| KOMMUNAL LANDSPENSJONSKASSE | NOR | 950 000 | 4,42 % | |
| MP PENSJON PK | NOR | 800 000 | 3,73 % | |
| SKAGEN VEKST | NOR | 626 466 | 2,92 % | |
| DANSKE INVEST NORSKE INSTIT. II. | NOR | 422 703 | 1,97 % | |
| VERDIPAPIRFONDET EIKA NORGE | NOR | 406 517 | 1,89 % | |
| BERGEN KOMMUNALE PENSJONSKASSE | NOR | 370 000 | 1,72 % | |
| FONDSFINANS GLOBAL HELSE | NOR | 361 000 | 1,68 % | |
| DANSKE INVEST NORSKE AKSJER INST | NOR | 360 714 | 1,68 % | |
| VICAMA AS | NOR | 345 384 | 1,61 % | |
| ARTAL AS | NOR | 302 600 | 1,41 % | |
| VERDIPAPIRFONDET DNB NORGE (IV) | NOR | 287 193 | 1,34 % | |
| RUL AS | NOR | 281 475 | 1,31 % | |
| POLAR CAPITAL GLOBAL HSBC BANK PLC. | GBR | 254 537 | 1,19 % | |
| SVENSKA HANDELSBANKEN | SWE | 250 000 | 1,16 % | |
| VERDIPAPIRFONDET DNB SMB | NOR | 215 000 | 1,00 % | |
| HOLMEN SPESIALFOND | NOR | 200 000 | 0,93 % | |
| Total 20 largest shareholders | 14 231 673 | 66,27 % | ||
| Total other shareholders | 7 244 622 | 33,73 % | ||
| Total number of shares | 21 476 295 | 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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