Pharmsynthez Reports Full Year 2012 Results in line US GAAP Financial Reporting
OJSC Pharmsynthez (Leningrad region, MICEX: LIFE) (“Pharmsynthez” or “the Company”), the leading Russian biopharmaceutical company that specializes in the development, manufacture and distribution of pharmaceuticals, has today published its consolidated audited results for the full year period ending 31 December 2012, in line with US GAAP. The results were compiled by leading global auditor, Ernst & Young.
- Consolidated sales of $8.5million (2011: $6.7 million)
- Revenue of $12.7 million in 2012 inclusive of Government
- Consolidated gross profit $4.7 million (2011: $3.7 million)
- Stable gross margin at 55%
- EBITDA loss of $0.4 million (2011: $0.4 million) due to the strategic goal to increase R&D expenditures, exceeding the amount of Government
- Virexxa Phase II clinical trial planned to begin in the US and EU in the third quarter of 2013
- Myeloxen Phase IIa clinical research ongoing with results expected in the fourth quarter
- Pulmoxen Phase I trial to begin during the third quarter
Dmitry Genkin, Chairman of Pharmsynthez, commented, “These positive operating indicators, including the growth in revenue, were achieved mainly thanks to the successive realization of plans to expand into the pharmaceutical markets of the Former Soviet Union and wider international markets. This has been key strategic objective of the Board and we are confident this will help deliver further growth and value for shareholders.”
The growth in consolidated revenue from operations in 2012, as noted above, amounted to $1.8 million, up 27% from 2011. Sales by volume in the Russian Federation increased 6%, while in Ukraine they grew 3.2 times and 1.9 times in Estonia. Together with income from fulfilling R&D contracts financed by the Russian Ministry of Industry and Trade, the Company’s revenue totaled $12.7 million.
Consolidated gross profit for 2012 amounted to $4.7 million, up 26% or $1 million from 2011. Meanwhile the gross margin remained almost unchanged at 55%.
In total for 2012 the Company posted a total of $88,000 of comprehensive income in total versus a loss of $1.2 million the previous year.
Pharmsynthez’s commercial and management expenses grew 21% from the previous year and amounted to $4.8 million mainly due to salary expenses growth. Furthermore, the Company boosted its operational effectiveness by reducing the share of management expenses in revenue from 36% to 34%.
For 2012 the Company posted a $0.4 million loss on EBITDA versus a $0.4 million profit last year. The main reason for the decline in this indicator was reduced Government
The effect of other operating income in 2012 was minimal compared to 2011, when the Company posted $0.9 million in income from the revaluation of a land plot. Meanwhile, other operating expenses significantly increased to $0.9 million, and their main components, according to the rules for US GAAP in 2012 were $0.3 million in losses from FOREX changes, $0.1 million from property taxes, and $0.3 million from provision allocations.
The Company’s shareholder capital corresponding to its consolidated balance increased in 2012 by $2 million to $22.5 million. It should also be noted that in 2012 Pharmsynthez issued 2,605,067 ordinary shares at a nominal price of five rubles per share ($0.16 at 31.12.2012 exchange rate). Furthermore, 2,605,000 shares were swapped with Sympatica Pharmaceuticals Limited for a 100% stake in LifeBio Laboratories Limited. 67 shares were acquired by third parties.
At its Annual General Meeting of shareholders in June, the Company confirmed Ernst & Young as the auditor for OJSC Pharmsynthez for 2013. Pharmsynthez publishes US GAAP accounts to increase operational transparency.
The Company continued its intensive work towards developing innovative products for its own portfolio and developing the Company’s production base. As a result, the Company was able to make significant progress on its key projects.
Virexxa, for the treatment of endometrial cancer
Production of Virexxa has been organized in compliance with European cGMP standards. As requested by the FDA additional research was performed on the drug’s safety and action mechanism. Phase II clinical research for the drug was completed for patients with advanced and recurrent endometrial cancer in the Russian Federation. Phase II clinical research in the US and EU is planned for the third quarter of 2013.
Myeloxen, for the treatment of multiple sclerosis
A Phase IIa study of Myeloxen is ongoing in the Russian Federation with results of this study expected in the fourth quarter. The Company has focused on ensuring that Myeloxen is produced to the highest standards and production of Myeloxen is in compliance with European cGMP standards. New and unique production capacity has been developed and launched for this product, including a module for automated
Pulmoxen, for the treatment of cystic fibrosis
Pharmsynthez is a leading Russian pharmaceutical company focused on research, manufacture and distribution of active pharmaceutical ingredients (APIs), including those intended for import substitution. Pharmsynthez also produces medicines (Neovir, Segidrin, Fenasid and Penkrofton) used in oncology, gynecology, treatment of immunodeficiencies and tuberculosis.