Press Releases & Company News

Cosmo reports very strong increase in revenues and profits in first-half 2012 and substantial progress in development portfolio – confirms outlook

Lainate, Italy – 30 July 2012 – Cosmo Pharmaceuticals S.p.A. (SIX: COPN) announced today its half-year results for the period ended 30 June 2012.

Financial highlights

• Total revenues grew by 149% or EUR 24.4 million to EUR 40.7 million.
  • EUR 21.8 million were due to one-time signing fees and milestones
• Revenues from manufacturing of MMX^® products increased by 56.9%.   
• Royalties on MMX^® products increased by 19.8%.
• Revenues from third party manufacturing declined by 13.3%.
• The operating result jumped to EUR 25.2 million.
• Profit after taxes increased by more than 5 times to EUR 18.7 million.
• Cash and cash equivalents stood at EUR 31.9 million, an increase of 134% and financial assets available for sale increased by 145% to EUR 44.8 million.
• For the second half management expects no further signing fees and milestone income but reiterates a positive operational outlook and expects to post a solid operating profit for 2012.  
• On July 30, Cosmo and Cristoforo Colombo Srl, the related company holding the real estate including the offices and manufacturing plant rented to Cosmo, entered into a preliminary agreement whereas Cosmo agreed to buy 100 % of Cristoforo Colombo for a price of EUR 13.1 million payable in cash and Cosmo shares. This transaction will be completed in the third quarter and is taking place in consideration of the Company’s necessity of expanding its manufacturing capacity and its desire to have direct control of its strategic facilities.

Operational highlights

• Lialda^® continues gaining market share.
• Budesonide MMX^® regulatory approval dates expected in H2 2012.
• Phase III clinical trials for Rifamycin SV MMX^® in USA completed, in EU ongoing.
• CB-03-01 licensed out world-wide. Phase II for acne started in US.
• Three phase II trials for Methylene Blue MMX^® completed with superior top line results.

Mauro Ajani, CEO of Cosmo Pharmaceuticals, commented: “I am very pleased with the first half 2012. The signing of the license agreement for CB-03-01 brought us USD 25 million, but even more importantly, one of the world’s premier specialty pharma companies as a partner. Our Lialda^® business continues growing strongly and the approval process of Cortiment®/Uceris® - the brand names of Budesonide MMX^® - is moving ahead with the regulators decisions expected in H2. I am however most proud of our achievements with Methylene Blue MMX^® which completed three phase II trials and will be publishing preliminary results soon. This is a diagnostic product which will help Gastroenterologists identify colon cancer better and earlier and thus, if approved, save thousands of lives. I am convinced that it will become the most important product of Cosmo. Last but not least, our investment in Santarus has developed strongly, more than doubling in value to EUR 44.8 million which catapulted comprehensive income to EUR 42.2 million.”  

In the first six months, revenues reached EUR 40.7 million, an increase of 149.3% compared to the same period last year. This was driven principally by the USD 25 million signing fee for CB-03-01 and the USD 4 million milestone attained for the acceptance of NDA filing of Uceris®. Recurring business also improved nicely by 17.2%, driven primarily by a 56.9% increase in MMX^® manufacturing revenues, and a 19.8% increase in royalties. Contract drug manufacturing revenues decreased by 13.3% because client order volumes decreased.

Cost management continues tight. While net operating expenses increased by EUR 3.3 million or 27.3%, this was primarily due to the budgeted external preclinical and clinical trial costs (plus EUR 1.8 million) and higher personnel expenses (plus 0.7 million) mainly due to an increase of total personnel by 14 persons to 161 persons. Cost of goods sold increased by 9.9%. The operating result consequently increased by more than six times to EUR 25.2 million and after tax profit increased by more than five times to EUR 18.7 million. The basic and diluted profit per share, dividing the net profit attributable to shareholders by the weighted average number of ordinary shares during the period, reached EUR 1.377, up more than five times in comparison to the first half of 2011.   

Cash and cash equivalents at the end of the period totalled EUR 31.9 million, an increase of 134% from the end of last year. Net working capital increased by EUR 4.5 million to EUR 9.1 million.  Financial assets available for sale increased by 145% or EUR 26.5 million to EUR 44.8 million due to an addition of 906’412 SNTS shares (at a price of USD 4.41) received in lieu of a USD 4 million milestone and the increase of the share price from USD 3.31 to USD 7.09 in H1 2012.  

Key consolidated financial figures

The Half-Year Report 2012 with further information was published on 30 July 2012, 7am CET, and is available for download at:

http://www.cosmopharma.com/ir/first-half.aspx

Outlook

Management expects Lialda® sales to continue growing at historical levels in H2. This will drive MMX manufacturing revenues and royalties. The regulators decision on Cosmo’s applications for marketing of Cortiment® in the EU respectively Uceris® in the USA are expected in H2 2012. Cosmo expects to receive the phase II data report on Methylene Blue MMX and the report of Santarus phase III Rifamycin SV MXX® in traveller’s diarrhoea in H2. However neither Ferring, Cosmo’s EU partner nor Santarus, the US partner are expecting to launch this year, so no royalty, manufacturing income nor milestones from them, are budgeted for H2 2012. Full year profits are thus expected to be only slightly higher than half year results.

Half year 2012 results conference call at 11am CET on 30 July 2012

Mauro Ajani, CEO, and Chris Tanner, CFO, will present the half year results and discuss the outlook for 2012 at a conference call to be held today at 11am CET.

The dial-in numbers:

+41 (0)91 610 56 00           Continental Europe

+44 (0) 203 0595 862         UK

+1 (1) 866 291 41 66          USA

The presentation is available for download at:

http://www.cosmopharma.com/ir/presentations.aspx  

About Cosmo Pharmaceuticals

Cosmo is a speciality pharmaceutical company that aims to become a global leader in optimised therapies for selected Gastrointestinal and topically treated Skin Disorders. The Company’s proprietary clinical development pipeline specifically addresses innovative treatments for IBD, such as Ulcerative Colitis and Crohn’s Disease, and Colon Infections. Cosmo’s first MMX^® product that has reached the market is Lialda^® / Mezavant^® / Mesavancol^® a treatment for IBD that is licensed globally to Giuliani and Shire Limited. Cosmo’s proprietary MMX^® technology is at the core of the company’s product pipeline and was developed from its expertise in formulating and manufacturing gastrointestinal drugs for international clients at its GMP (Good Manufacturing Practice) facilities in Lainate, Italy. The technology is designed to deliver active ingredients in a targeted manner in the intestines.

Next events

Full-year results 2012 reporting               27 March 2013

Annual General Meeting                          23 April 2013

Contact:

Dr. Chris Tanner, CFO and Head of Investor Relations

Cosmo Pharmaceuticals S.p.A.                          

Tel: +39 02 9333 7453

ctanner@cosmopharma.com

Some of the information contained in this press release contains forward-looking statements.  Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. Cosmo undertakes no obligation to publicly update or revise any forward-looking statements.

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