Cipher Pharmaceuticals Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Cipher Pharmaceuticals fourth quarter results and full year 2021 conference call. At this time, all participants are in a listen only mode. Following today's presentation, instructions will be given for the question and answer session. If anyone needs assistance at any time during the call, you may press start followed by the zero on your push button phone. As a reminder, this conference is being recorded Friday, March 18, 2022. On behalf of the speakers that follow, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking statements within the meaning of the safe harbor provisions of the Canadian Provincial Securities Law. Forward-looking statements involve risk and uncertainties and undue reliance should not be placed on such statements. statements. Certain material factors or assumptions are implied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that could cause results to vary, please refer to the risks identified in the company's annual information form and other filings with Canadian regulatory authorities. Except as required by Canadian securities laws, the company does not undertake to update any forward-looking statements. Such statements speak only as of the date made. I would now like to turn the call over to Mr. Craig Moll and from Chief Executive Officer of the company. Please go ahead, Mr. Moll.

Thank you, Operator, and good morning, everyone. Joining me today is Scott Langell, CIFRS CFO. On today's call, I would like I will make opening remarks before passing the call over to Scott to review the financial results in detail. Following our prepared remarks, we will open the call for questions. Note that all amounts are in US dollars unless otherwise stated. Cypher's physical 2021 results demonstrated positive momentum as revenue adjusted EBITDA and EPS all showed growth over the prior period. Our continued efforts to reduce cost structure resulted in our earnings per share increasing 81% to 29 cents or 37 cents Canadian from 16 cents in the prior year. Earnings per common share excluding legal provisions and loss on disposal of assets Increased to 37 cents from 16 cents in 2020. An increase of. Sorry, an increase of 131%. We generated 13.8 million in cash from operating activities in the 12 months ending December 31st, 2021. ending the year with $20.5 million in cash on the balance sheet and no long-term debt. With our pristine balance sheet and our strong cash flow from operating activities, we feel the company is in an excellent position for its next phase of growth as we continue to actively pursue profitable growth opportunities and maximize the income generated from our current portfolio of assets. A key focus for Cypher during 2021 was to negotiate new cost-effective distribution agreements for the company's portfolio and to review existing distribution agreements with an emphasis on improving visibility and long-term profitability. In February 2021, we entered into a co-promotion agreement with Verity Pharmaceuticals for the marketing, sales, and co-promotion of Brennaves and Agristat. The partnership will help us to manage our costs efficiently and drive profitability within our hospital business. Additionally, we have realigned our distribution of a number of key products with an aim to increase royalties generated from the products. In September 2021, Cypher entered into a distribution and supply agreement with Anti Pharmaceuticals. Under the agreement, ANI was granted exclusive rights to market and sell Lipithin and Phenofibrate in the U.S. Additionally, Cypher also intends to assume direct distribution of Durella in Canada, which is expected to commence April 1st of this year. Furthermore, in the second quarter, we launched Absaroka AG with our marketing partner, Sun Pharmaceutical Industries. in order to broaden our CFR's isotretinoin portfolio and maximize its value. Subsequent to year-end, we announced an extension of the royalty agreement, granting Sun the exclusive right to sell, distribute, Absaroka and Absaroka AG through December 2026 and Absaroka LD through December 2024. Under the terms of the amendment, CFR will continue to earn a royalty on U.S. net sales from Sun Pharma's isotretinoin portfolio and will continue to be responsible for manufacturing the supply product. The amendment extends the relationship from November 30, 2022 until December 31, 2026. We believe that this four-year extension is a testament to the success of our strategy and provides CIFR with an additional four years of visibility into stable revenue and cash flow from the isotretinoin portfolio, which will further enhance our balance sheet and provide us with additional flexibility to pursue our growth plans. We continue to maintain a strong focus optimizing our cost structure to maximize profitability. During the year, we signed the lease for the corporate operations head office to an arm's length third party. It is expected that the assignment of the lease will result in net savings of approximately 2.2 million Canadian over the remainder of the lease term. With strong control of our cost structure and stable cash flow from operations, in September 2021, we renewed our NCIB for 1,541,000 455 common shares, representing 10% of the company's public float. For the physical year, the company repurchases 1.2 million shares under its normal course issuer bid. Fourth quarter results showed relatively stable revenue as we continued to transition through the launch of the Absaroka AG. In the fourth quarter, revenue was 5.9 million compared to 6.1 million in the prior year. Product revenue increased 36% to 3.1 million compared to 2.3 million in the prior year, while licensing revenue declined 2.8 million from 3.9 million in the prior year. Product revenue continues to be driven by the strength of Epirus, which ended the quarter with a market share of 41% compared to 40% in the prior year. Licensing revenue from Absaroka was $1.6 million compared to $3 million in the comparative period, but ups sequentially from $1.4 million in the third quarter of 2021. We are pleased to see the sequential growth in license revenue from Absaroka as we transition through a stocking and destocking phase due to the launch of the authorized generic in the second quarter. Currently, in our isotretinoin portfolio, Cypher is receiving royalties from Sun Pharma for the branded product, Absorica, the authorized generic, as well as Absorica LD. In addition, we recently announced an extension of this partnership from November 30th, 2022 through December 31st, 2026 for Absorica and Absorica AG. which will extend our revenue and cash flow stream of this portfolio. Overall, Cypher has assembled an attractive portfolio of assets beyond our current marketed products and will continue to move these products towards commercialization. Our balance sheet now has over $20 million in cash and no debt, placing Cypher in an excellent position to continue to execute on the NCIB and to actively pursue product and business acquisitions in a prudent matter with a focus on near-term profitability. In addition, extending our relationship with Sun Pharma provides us an additional four years of visibility on the ISO Tretinoin portfolio. We are particularly excited about opportunities in the legacy asset space. We are evaluating a number of potential products and feel that asset values and cash flow dynamics are quite compelling. I will now turn the call over to Scott for a financial review.

Scott? Thanks, Craig, and good morning, everyone. I will now provide a financial update for our fourth quarter results. Total revenue was $5.9 million in the quarter compared to $6.9 million for the comparative period. Licensing revenue was $2.8 million for the quarter compared to $3.9 million for the prior year. Licensing revenue from Absorica in the U.S. was $1.6 million compared to $3 million in the prior year, but up sequentially from $1.4 million in the third quarter. Absorica's market share for the year ended December 31st, 2021 was approximately $2.7 million compared to $6.2 million for the year ended December 31st, 2020. Licensing revenue from extended release tramadol product, which is a concept in the U.S. and Dorella in Canada, was $0.1 million for the three months ended December 31, 2021, relatively unchanged for the prior year. LipoFen and the authorized version of LipoFen was $1.3 million for the quarter compared to $0.8 million for the prior year. The increase was due to a change in the distribution partners effective September 2021 related to the terms of the distribution and supply agreements. product revenue increased by 0.8 million or 36% to 3.1 million for the fourth quarter compared to 2.3 million for the comparable period in 2020. Selling general and administrative expense was 1 million for the fourth quarter, a decrease of 0.8 million compared to 1.9 million for the three months ended December 31st, 2021. Total operating expenses for the fourth quarter was $2 million, a decrease of $6 million compared to $8 million for the prior period. The decrease was primarily driven by the impairment of intangible assets related to true lands of $5.3 million taken in 2020. Income from continuing operations was $2.8 million or $0.11 per basic and diluted share for the quarter compared to 0.1 million or zero per basic and diluted chair for the comparative period. Adjusted EBITDA for the fourth quarter was 4.1 million compared to 3.9 million for the prior year. The company had 20 million in cash and no debt for December 31st, 2021. Cypher generated 13.8 million in cash from operating activities for the 12 months ended of 2021. I will now turn the call back to Craig for closing remarks.