MIAMI, Feb. 09, 2017 (GLOBE NEWSWIRE) -- The Female Health Company / Veru Healthcare (NASDAQ:FHCO) (the Company) today reported its financial results for the fiscal 2017 first quarter ended December 31, 2016. The Company’s fiscal 2017 first-quarter financial results include the operations of Aspen Park Pharmaceuticals, Inc. since the acquisition date, October 31, 2016.
“We are excited about the progress we are making to advance our multiple drug candidates and the incredible growth opportunities they represent,” said Mitchell Steiner, MD, President and Chief Executive Officer of The Female Health Company / Veru Healthcare. “Given the size of our company, to have this many high quality shots on goal is quite unique. In recent weeks, we have strengthened our leadership team and, with guidance from our board of directors, refocused our strategy to rapidly move our drug portfolio forward.”
“With regard to our proprietary Tamsulosin DRS (Delayed Release Sachet) product, a slow release granule formulation that addresses the large patient population of men with benign prostatic hyperplasia (BPH), we plan to initiate the formulation selection, single dose bioequivalence clinical trial next month. Our sales and marketing team is working to add new revenues from FC2 available as a prescription product for reimbursement, by capitalizing on existing Federal and State laws that mandate coverage of female condoms. As we are facing a sexually transmitted disease (STD) epidemic in the US and FC2 provides dual protection against unwanted pregnancies and STDs, we believe FC2 is without equal as a contraception product for women who want to take control of their sexual health and protect themselves from STDs.”
“Building on the positive momentum from our recent meeting with the FDA Advisory Committee held on December 6, 2016, we are preparing an Investigational New Drug (IND) application for MSS-722, our proprietary oral drug candidate for the treatment of male infertility. We believe our product has the potential to improve sperm count and sperm quality in infertile men thereby potentially avoiding more intrusive and expensive alternatives for couples trying to have children. And finally, we have requested a pre-IND meeting with the FDA for APP-944, our product for the treatment of hot flashes in men with advanced prostate cancer who are receiving hormonal therapies.”
Commenting on the Company’s financial results, Dr. Steiner added, “Last year’s first quarter included extraordinarily large tender shipments of FC2 to the Brazilian Ministry of Health. Excluding this unusual Brazilian tender, FC2 unit sales were the same in the current year first quarter compared with the prior-year first quarter. Our fiscal 2017 first quarter financial performance was impacted by non-recurring acquisition-related costs, as well as fees associated with securing our intellectual property. We received a $2.8 million payment related to a past due obligation from Brazil, strengthening our balance sheet and providing additional financial flexibility, and we are optimistic that we will receive additional payments related to past due obligations in 2017. Nonetheless, these financial results continue to support the rationale for the Company’s recent merger as a revenue diversification and growth strategy. We are now positioned for financial growth from multiple new near-term sources of revenue that will add to our inconsistent global public health sector business. We anticipate immediate and near term revenues from FC2 commercial business and Tamsulosin DRS, respectively.”
- Unit sales of FC2 were 6.3 million in the fiscal 2017 first quarter. This compares with the prior year first quarter unit sales of 15.4 million, which included an unusually large tender of 9.1 million units to the Brazil Ministry of Health as well as 6.3 million from other customers. Excluding the Brazilian order, unit sales were the same in the fiscal 2017 first quarter compared with the same period last year.
- In January, 2017, established a dedicated sales and marketing team, with the goal of coordinating prelaunch, launch, and sales and marketing activities to gain market share and drive business growth for the Company’s currently marketed products, as well as its drug development candidates.
- On January 4, 2017, announced that, through its exclusive distributor in Brazil, Semina Indústria e Comércio Ltda (Semina), the Company received a payment of $2.8 million related to past due obligations from the Brazilian Ministry of Health. The payment represents the full amount owed on the two oldest open invoices and reduces the amount owed on 2015 invoices from $8.0 million to $5.2 million. The amount owed for 2016 invoices is $7.8 million, for a total outstanding balance of $13.1 million after the payment. Semina has informed the company that additional payments are expected in 2017.
- On December 7, 2016, announced its plan for a Phase 2 clinical trial for MSS-722, the company’s proprietary oral drug candidate for the treatment of male infertility, following the company’s presentation and FDA guidance resulting from the Bone, Reproductive and Urologic Drugs Advisory Committee of FDA on December 6, 2016.
Fiscal First Quarter Results: 2017 vs. 2016
For the first quarter of fiscal 2017, net revenues were $3.2 million. This compares with the near record net revenues for the first quarter of fiscal 2016 of $8.2 million, which included net revenues of $4.8 million from Brazil. Gross profit was $1.7 million, or 51% of net revenues, compared with $5.4 million, or 66% of net revenues, for the first quarter of fiscal 2016. Operating expenses were $3.5 million, which includes non-recurring acquisition-related expenses of $826,000 and amortization of intangible assets of $27,000, as well as increased employee compensation expense, legal expense and costs associated with intellectual property rights. The $826,000 of non-recurring acquisition-related expenses includes warrant expense of $543,000 for warrants to the Company’s outside financial advisor, Torreya, as part of the acquisition. This compares with operating expenses of $3.0 million for the prior year first quarter. Net loss was $1.4 million, or $0.04 per share, versus net income of $1.5 million, or $0.05 per diluted share, for the first quarter of fiscal 2016.
Significant quarter-to-quarter variations in the Company’s results have historically resulted from the timing and shipment of large orders rather than from any fundamental changes in the business or the underlying demand for female condoms. Two of the largest customers for FC2 operate in markets where the government health ministries are either still under a multi-year tender or have had a multi-year tender recently expire, and as a result significant orders from these customers during the remainder of fiscal 2017 are unlikely. The Company is also currently seeing pressure on spending for FC2 by large global agencies and donor governments in the developed world. As a result, the Company may continue to experience challenges for unit sales of FC2 in the global public sector for the remainder of fiscal 2017.
The Company expects to host a conference call in early to mid-March to update investors on the Company’s product commercialization and drug development progress. Shareholders and other interested parties with questions may contact Kevin Gilbert at 312-366-2633 or KGilbert@veruhealthcare.com.
About The Female Health Company / Veru Healthcare
The Female Health Company / Veru Healthcare is a pharmaceutical and medical device company, with a focus on the development and commercialization of pharmaceuticals that qualify for the FDA's 505(b)(2) accelerated regulatory approval pathway as well as the 505(b)(1) pathway. The Company does business both as "Veru Healthcare" and as "The Female Health Company" and is organized as follows:
- Veru Healthcare manages the Pharmaceuticals Division, which develops and commercializes pharmaceutical products for men's and women's health and oncology.
- Veru Healthcare manages the Consumer Health / Medical Devices Division, which is focused on commercializing sexual healthcare products and devices for the consumer market, including the Company's FC2 Female Condom® in the consumer health products sector and PREBOOST® medicated individual wipes, which are a male genital desensitizing drug product that helps in the prevention of premature ejaculation.
- The Female Health Company manages the Global Public Health Division, which is focused on the global public health sector FC2 business. This division markets the Company’s Female Condom (FC2) to entities, including ministries of health, government health agencies, U.N. agencies, nonprofit organizations and commercial partners, that work to support and improve the lives, health and well-being of women around the world.
More information about the Female Health Company/ Veru Healthcare and its products can be found at www.femalehealth.com, www.veruhealthcare.com and www.femalecondom.org. For corporate and investor-related information about the Company, please visit www.FHCinvestor.com.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995:
The statements in this release which are not historical fact are "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this release include statements relating to the regulatory pathway to secure FDA approval of the Company's drug candidates, the impact of FHC's strategies on operating results, long-term demand for female condoms, PREBOOST®, Tamsulosin DRS and MSS-722, the expectation of additional payments from the Brazilian Ministry of Health in 2017, and anticipated immediate and near-term revenues. These statements are based upon the Company's current plans and strategies, and reflect the Company's current assessment of the risks and uncertainties related to its business, and are made as of the date of this release. The Company assumes no obligation to update any forward-looking statements contained in this release as a result of new information or future events, developments or circumstances. Such forward-looking statements are inherently subject to known and unknown risks and uncertainties. The Company's actual results and future developments could differ materially from the results or developments expressed in, or implied by, these forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to, the following: product demand and market acceptance; competition in the Company's markets and the risk of new competitors and new competitive product introductions; risks relating to the ability of the Company to obtain sufficient financing on acceptable terms when needed to fund development and operations; risks related to the development of the Company's product portfolio, including clinical trials, regulatory approvals and time and cost to bring to market; many of the Company's products are at an early stage of development and the Company may fail to successfully commercialize such products; risks related to intellectual property, including licensing risks; government contracting risks, including the appropriations process and funding priorities, potential bureaucratic delays in awarding contracts, process errors, politics or other pressures, and the risk that government tenders and contracts may be subject to cancellation, delay or restructuring; a governmental tender award indicates acceptance of the bidder's price rather than an order or guarantee of the purchase of any minimum number of units, and as a result government ministries or other public sector customers may order and purchase fewer units than the full maximum tender amount; the Company's reliance on its international partners in the consumer sector and on the level of spending on the female condom by country governments, global donors and other public health organizations in the global public sector; the economic and business environment and the impact of government pressures; risks involved in doing business on an international level, including currency risks, regulatory requirements, political risks, export restrictions and other trade barriers; the Company's production capacity, efficiency and supply constraints; risks related to the costs and other effects of litigation; the Company’s ability to identify, successfully negotiate and complete suitable acquisitions or other strategic initiatives; the Company’s ability to successfully integrate acquired businesses, technologies or products; and other risks detailed in the Company's press releases, shareholder communications and Securities and Exchange Commission filings, including the Company's Form 10-K for the year ended September 30, 2016. These documents are available on the "SEC Filings" section of our website at www.veruhealthcare.com/investors.
FINANCIAL SCHEDULES FOLLOW
|The Female Health Company|
|Unaudited Condensed Consolidated Balance Sheets|
|December 31,||September 30,|
|Accounts receivable, net||8,390,949||10,775,200|
|Income tax receivable||2,196||2,387|
|Prepaid expenses and other current assets||720,944||634,588|
|Total current assets||15,121,794||16,289,901|
|Other trade receivables||7,837,500||7,837,500|
|Other non-current assets||178,579||189,219|
|Plant and equipment, net||798,247||825,087|
|Deferred income taxes||8,872,764||13,482,000|
|Intangible assets, net||20,873,271||0|
|Accrued expenses and other current liabilities||3,046,439||2,380,571|
|Total current liabilities||4,373,743||3,346,477|
|Deferred income taxes||1,709,260||110,069|
|Series 4 preferred stock||17,981,883||0|
|Total stockholders' equity||35,240,027||33,933,411|
|Total liabilities and stockholders’ equity||$||60,561,087||$||38,623,707|
|The Female Health Company|
|Unaudited Condensed Consolidated Statements of Operations|
|Three Months Ended|
|Cost of sales||1,591,315||2,828,322|
|Operating (loss) income||(1,874,690||)||2,392,555|
|Interest and other expense, net||(9,621||)||(27,795||)|
|Foreign currency transaction loss||(11,939||)||(44,944||)|
|(Loss) income before income taxes||(1,896,250||)||2,319,816|
|Income tax (benefit) expense||(530,069||)||829,453|
|Net (loss) income||$||(1,366,181||)||$||1,490,363|
|Net (loss) income per basic common share outstanding||$||(0.04||)||$||0.05|
|Basic weighted average common shares outstanding||30,976,140||28,633,372|
|Net (loss) income per diluted common share outstanding||$||(0.04||)||$||0.05|
|Diluted weighted average common shares outstanding||30,976,140||28,993,943|
|The Female Health Company|
|Unaudited Condensed Consolidated Statements of Cash Flows|
|Three Months Ended|
|Net (loss) income||$||(1,366,181||)||$||1,490,363|
|Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:|
|Depreciation and amortization||89,284||114,406|
|Amortization of intangible assets||26,729||0|
|Deferred income taxes||(591,573||)||746,452|
|Loss on disposal of fixed assets||4,469||111|
|Changes in current assets and liabilities, net of effects of acquisition of a business||2,142,996||(2,905,907||)|
|Net cash provided by (used in) operating activities||1,165,965||(431,231||)|
|Net cash used in investing activities||(65,623||)||(2,942||)|
|Net increase (decrease) in cash||1,100,342||(434,173||)|
|Cash at beginning of period||2,385,082||4,105,814|
|Cash at end of period||$||3,485,424||$||3,671,641|
Contact: Kevin Gilbert: 312-366-2633
Source:The Female Health Company