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Cerecor Reports Second Quarter 2018 Financial Results

BALTIMORE, Aug. 09, 2018 (GLOBE NEWSWIRE) -- Cerecor Inc. (NASDAQ: CERC), an integrated biopharmaceutical company focused on pediatric healthcare and developing innovative therapies that make a difference in the lives of patients (“Cerecor” or the “Company”) today announced financial results for the second quarter and first half of 2018.

“We made strong progress on our pledge to aggressively transform the Company by building an exceptional core management team, expanding our sales through further integration of our pediatric products acquired from Avadel in February and progressing our pipeline of transformational neurology assets”, said Peter Greenleaf, Chief Executive Officer.

Recent Corporate Highlights

  • Cerecor made key hires to build the organization into an innovative specialty pharmaceutical company focused on accelerating both our in-line business as well as our pipeline, including:            
  • James Harrell Jr. as the Company’s Executive Vice President of Marketing and Investor Relations.  Mr. Harrell, with over 25 years of biopharmaceutical experience, brings a breadth of commercial and marketing success to the organization. 
  • Joseph Miller, as the Company’s Chief Financial Officer.  Mr. Miller comes to Cerecor with over 20 years of finance experience, holding senior finance positions across the biotech, pharmaceutical and life sciences sectors. 
  • Dr. Pericles Calias, as the Company’s Chief Scientific Officer. Dr. Calias joins Cerecor with over 25 years biopharmaceutical experience in clinical development across the drug and device sectors of healthcare.                          
  • The Company generated its first significant sales from AcipHex® Sprinkle™ and Cefaclor for Oral Suspension as the Company continues its progress of integrating these and the other pediatric products it acquired from Avadel in February.
  • The Company finalized its Phase 1 clinical development plan for CERC 301 focused on patients with neurogenic orthostatic hypotension (nOH) associated with Parkinson’s Disease. The Company enrolled its first patient in the Phase 1 study on August 1, 2018.  The Company expects a targeted readout during the first half of 2019.  Parkinson’s-associated nOH is an orphan disease resulting from the failure of the autonomic nervous system to regulate blood pressure in response to postural change like standing up, due to the inadequate release of norepinephrine. 

Second Quarter 2018 Financial Results

Net revenues for the 2018 second quarter were $4.8 million, a $4.6 million increase over the second quarter of 2017.  Net revenues increased as a result of product sales related to our November 2017 acquisition of TRx Pharmaceuticals, LLC (“TRx Acquisition”) and the purchase of Avadel Pharmaceuticals PLC’s marketed pediatric products (“Avadel Pediatric Products Acquisition”). 

Cost of products sold, general and administrative, sales and marketing and amortization expense increased by $1.4 million, $1.6 million, $2.0 million and $1.2 million respectively for the second quarter of 2018 as compared to same period in 2017.  The increases were directly related to the TRx Acquisition and the Avadel Pediatric Product Acquisition and their corresponding impact on business activities. 

Research and development ("R&D") expenses increased to $1.1 million for the second quarter of 2018, compared to $0.5 million for the second quarter of 2017. This increase resulted from increased preclinical costs and toxicology studies in support of the clinical development of CERC-301 for nOH.

Net loss for the second quarter was $6.0 million an increase of $4.2 million over the prior year net loss of $1.8 million.  Net loss for the quarter was driven mainly by an intangible asset impairment charges due to the termination of the PAI sales agreement acquired from TRx, amortization intangible assets, stock-based compensation, legal costs and acquisition and integration related charges. 

As of June 30, 2018, the Company had $62.1 million in total assets including cash and cash equivalents of $2.2 million and receivables of $7.2 million, $3.8 million of which is for an escrowed receivable that is expected to be released and collected in August 2018. Total liabilities were $42.9 million, which included $19.0 million of current liabilities and $14.4 million of long-term debt, and total stockholder’s equity was $19.2 million.

Second Quarter 2018 EBITDA

Cerecor reported Adjusted EBITDA (as defined below) of ($1.3) million for the second quarter of 2018, compared to ($1.5) million for the second quarter of 2017.  A table to reconcile the GAAP net loss to Non-GAAP Adjusted EBITDA for the respective periods follows:

               
   Three Months Ended June 30, Six Months Ended June 30, 
   2018  2017  2018  2017  
           
   (in thousands) 
 GAAP Net loss $(6,007) $(1,799) $(9,890) $(3,759) 
 Adjustments:         
 Income tax expense 16    40    
 Interest expense, net 242  26  343  83  
 Amortization of intangible assets 1,233    2,250    
 Depreciation 6  6  12  6  
 Inventory step-up adjustment recorded in earnings 132    177    
 EBITDA $(4,378) $(1,767) $(7,068) $(3,670) 
 Non-GAAP Adjustments:         
 Share based compensation 608  256  851  588  
 Change in fair value of contingent consideration, warrant liability and unit purchase option liability 9  (2) 295  2  
 Restructuring costs     213    
 Acquisition and integration related expenses 361    678    
 Impairment of intangible assets 1,702    1,702    
 Lachlan legal arbitration costs 437    860    
   Total Non-GAAP Adjustments 3,117  254  4,599  590  
 Adjusted EBITDA $(1,261) $(1,513) $(2,469) $(3,080) 
               

Non-GAAP Financial Measures

This press release contains two financial metrics (EBITDA and Adjusted EBITDA) that are considered “non-GAAP” financial metrics under applicable Securities and Exchange Commission rules and regulations. These non-GAAP financial metrics should be considered supplemental to and not a substitute for financial information prepared in accordance with generally accepted accounting principles. The Company’s definition of these non-GAAP metrics may differ from similarly titled metrics used by companies. We define EBITDA as GAAP net income adjusted to exclude (i) taxes, (ii) interest expense, (iii) interest income, (iv) amortization of intangibles, (v) depreciation, and (vi) inventory step-up adjustment recognized in earnings. Our Adjusted EBITDA the adjusts for specified items that can be highly variable or difficult to predict, and various non-cash items, namely including (i) share-based compensation expense, (ii) change in fair value of contingent consideration, warrant liability and unit purchase option liability (iii) one-time severance payments, (iv) restructuring costs, (v) acquisition and integration-related expenses, (vi) impairment of intangible assets, and (vii) costs related to the Ulesfia arbitration.  The Company views these non-GAAP financial metrics as a means to facilitate management’s financial and operational decision-making, including evaluation of the Company’s historical operating results and comparison to competitors’ operating results. These non-GAAP financial metrics reflect an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results, may provide a more complete understanding of factors and trends affecting the Company’s business.

The determination of the amounts that are excluded from these non-GAAP financial metrics is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts. Because non-GAAP financial metrics exclude the effect of items that will increase or decrease the Company’s reported results of operations, management strongly encourages investors to review the Company’s GAAP consolidated financial statements and its publicly-filed reports in their entirety.

We changed our definition of Adjusted EBITDA during the second quarter of 2018 to exclude: change in fair value of contingent consideration, warrant liability and unit purchase option liability; and impairment of intangible assets. We believe this change provides a more transparent and comparable view of our financial performance.  Accordingly, all prior periods reflected in this press release have been recast to reflect the current definition.

Outlook

Based upon our current performance, the Company is increasing its full-year 2018 net revenue guidance to $17 to $19 million and projects its 2018 adjusted EBITDA to be approximately break-even by fiscal year-end. These estimates are forward-looking statements that reflect management’s current expectations for Cerecor’s 2018 performance.  Actual results may vary materially, whether as a result of market conditions, or other factors, including those described in the “Risk Factors” sections of our SEC filings.

About Cerecor

Cerecor is an integrated biopharmaceutical company focused on pediatric healthcare and developing innovative therapies that make a difference in the lives of patients. The Company’s pipeline is led by CERC-301, which Cerecor currently intends to explore as an adjunctive treatment for Neurogenic Orthostatic Hypotension (nOH) and other potential orphan and neurological indications.  Cerecor has initiated a Phase I safety study in 2018. Cerecor is continuing to progress additional clinical and pre-clinical compounds, CERC-611 and CERC-406. The Company’s R&D efforts are partially supported by profits from its franchise of commercial medications led by prescribed dietary supplements Poly-Vi-Flor® (multivitamin and fluoride supplement tablet, chewable) and Tri-Vi-Flor® (multivitamin and fluoride supplement suspension/drops) as well as its prescribed drugs Karbinal™ ER, AcipHex® Sprinkle™, and Cefaclor for Oral Suspension.

For more information about Cerecor, please visit www.cerecor.com.

Forward-Looking Statements

This press release may include forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are subject to significant risks and uncertainties that are subject to change based on various factors (many of which are beyond Cerecor’s control), which could cause actual results to differ from the forward-looking statements. Such statements may include, without limitation, statements with respect to Cerecor’s plans, objectives, projections, expectations and intentions and other statements identified by words such as “projects,” “may,” “will,” “could,” “would,” “should,” “continue,” “seeks,” “aims,” “predicts,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “potential,” or similar expressions (including their use in the negative), or by discussions of future matters such as: our 2018 outlook; the development of product candidates or products; potential attributes and benefits of product candidates; the expansion of Cerecor’s drug portfolio, Cerecor’s ability to identify new indications for its current portfolio; and new product candidates that could be in-licensed, and other statements that are not historical. These statements are based upon the current beliefs and expectations of Cerecor’s management but are subject to significant risks and uncertainties, including: risks associated with acquisitions, including the need to quickly and successfully integrate acquired assets and personnel; Cerecor’s cash position and the potential need for it to raise additional capital; retention, integration and reliance on key personnel, including Mr. Greenleaf and our newly hired executives; drug development costs and timing; and those other risks detailed in Cerecor’s filings with the Securities and Exchange Commission. Actual results may differ from those set forth in the forward-looking statements. Except as required by applicable law, Cerecor expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Cerecor’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.


Cerecor Inc.

Unaudited Condensed Consolidated Statements of Operations 

              
   Three Months Ended Six Months Ended
   June 30, June 30,
   2018  2017  2018  2017
 Revenues        
 Product revenue, net $4,710,919  $  $8,971,038  $ 
 Sales force revenue 74,219    296,875   
 Grant revenue   157,800    542,006 
 Total revenues, net 4,785,138  157,800  9,267,913  542,006 
          
 Operating expenses:        
 Cost of product sales 1,422,957    2,286,582   
 Research and development 1,082,698  493,649  2,732,475  1,446,719 
 General and administrative 3,041,955  1,439,146  5,949,318  2,769,410 
 Sales and marketing 2,042,015    3,578,378   
 Amortization expense 1,233,035    2,250,444   
 Impairment of intangible assets 1,701,875    1,701,875   
 Total operating expenses 10,524,535  1,932,795  18,499,072  4,216,129 
 Loss from operations (5,739,397) (1,774,995) (9,231,159) (3,674,123)
 Other (expense) income:        
 Change in fair value of contingent consideration, warrant liability and unit purchase option liability (9,321) 2,111  (295,340) (1,650)
 Other income     18,654   
 Interest expense, net (242,407) (25,631) (342,810) (83,379)
 Total other expense, net (251,728) (23,520) (619,496) (85,029)
 Net loss before taxes (5,991,125) (1,798,515) (9,850,655) (3,759,152)
 Income tax expense 16,351    39,664   
 Net loss $(6,007,476) $(1,798,515) $(9,890,319) $(3,759,152)
 Net loss per share of common stock, basic and diluted $(0.19) $(0.14) $(0.31) $(0.32)
 Weighted-average shares of common stock outstanding, basic and diluted 32,245,281  13,265,877  31,783,875  11,697,535 
              
 (a)  The consolidated condensed consolidated statements of operations for the second quarter ended June 30, 2018 and 2017 have been derived from the reviewed financial statements but do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
  


Cerecor Inc.
Condensed Consolidated Balance Sheets

        
   June 30, 2018  December 31, 2017
   (unaudited)  
 Assets    
 Current assets:    
 Cash and cash equivalents $2,179,775  $2,472,187 
 Accounts receivable, net 3,308,324  2,935,025 
 Other receivables 88,020  427,241 
 Escrowed cash receivable 3,757,677  3,752,390 
 Inventory, net 1,540,534  382,153 
 Prepaid expenses and other current assets 954,454  703,225 
 Restricted cash-current portion 9,527  1,959 
 Total current assets 11,838,311  10,674,180 
 Property and equipment, net 58,417  44,612 
 Intangibles assets, net 32,003,161  17,664,480 
 Goodwill 18,070,283  14,292,282 
 Restricted cash, net of current portion 175,042  131,353 
 Total assets $62,145,214  $42,806,907 
 Liabilities and stockholders’ equity    
 Current liabilities:    
 Accounts payable $2,939,939  $1,298,980 
 Accrued expenses and other current liabilities 10,334,695  7,531,122 
 Income taxes payable 2,171,048  2,259,148 
 Long-term debt- current portion 1,050,000   
 Contingent consideration-current portion 2,549,638   
 Total current liabilities 19,045,320  11,089,250 
 Long term debt, net of current portion 14,376,566   
 Contingent consideration, net of current portion 8,223,003  2,576,633 
 Deferred tax liability, net 30,908  7,144 
 License obligations 1,250,000  1,250,000 
 Other long-term liabilities   24,272 
 Total liabilities 42,925,797  14,947,299 
 Stockholders’ equity:    
 Preferred stock—$0.001 par value; 5,000,000 shares authorized at June 30, 2018 and December 31, 2017; zero shares issued and outstanding at June 30, 2018 and December 31, 2017    
 Common stock—$0.001 par value; 200,000,000 shares authorized at June 30, 2018 and December 31, 2017; 33,790,686 and 31,266,989 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively 33,792  31,268 
 Additional paid-in capital 87,241,204  83,338,136 
 Contingently issuable shares   2,655,464 
 Accumulated deficit (68,055,579) (58,165,260)
 Total stockholders’ equity 19,219,417  27,859,608 
 Total liabilities and stockholders’ equity $62,145,214  $42,806,907 
        
        
 (a)  The condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017 have been derived from the reviewed and audited financial statements, respectively.  They do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
  


Thursday, August 9, 2018 - 06:30