Moberg Pharma Announces Interim Report for January – September 2016

Moberg Pharma (STO:MOB)
PERIOD (JAN-SEPT 2016)*
· Revenue MSEK 244.9 (231.9)
· EBITDA MSEK 65.9 (42.4)
· EBITDA for Commercial Operations MSEK 76.0 (59.9)
· Operating profit (EBIT) MSEK 55.1 (34.1)
· Net profit after tax MSEK 35.1 (25.1)
· Earnings per share SEK 2.45 (1.76)
· Operating cash flow per share SEK -1.64 (pos: 1.99)
THIRD QUARTER (JUL-SEPT 2016)
· Revenue MSEK 104.1 (66.6)
· EBITDA MSEK 29.0 (13.8)
· EBITDA for Commercial Operations MSEK 32.6 (18.1)
· Operating profit (EBIT) MSEK 23.4 (10.9)
· Net profit after tax MSEK 12.8 (8.8)
· Earnings per share SEK 0.89 (0.61)
· Operating cash flow per share negative SEK 1.47 (pos: 0.80)
*Note that the profitability includes a capital gain of MSEK 41.1 in Q2
from divestment of Jointflex®, Fergon® and Vanquish®.
SIGNIFICANT EVENTS DURING THE THIRD QUARTER
· IND application for MOB-015 Phase 3 were submitted to, and approved
by, U.S. FDA. Corresponding applications were approved by the regulatory
authorities in Germany, Poland* and Canada.
· Patient enrollment for the MOB-015 Phase 3 studies has started in
North America and Europe.
· The acquisition of three brands in the U.S. from Prestige Brands was
completed on July 7. The purchase price amounted to MUSD 40 and Moberg
Pharma expects the acquired brands to contribute approximately MUSD 5 to
the company’s EBITDA for the 12 months following closing of the
transaction.
SIGNIFICANT EVENTS AFTER THE QUARTER
· A European patent was granted for BUPI. The patent is expected to
provide coverage through 2031.
· Moberg Pharma convened a bondholders’ meeting to increase the
company’s flexibility in connection with acquisition financing.
* The approval for Poland was in October.
CEO COMMENTARY
We had very positive momentum in Q3. The strategic investments in Q1 and
Q2 are clearly starting to pay off. Already now, the team has delivered
on all major milestones for 2016; we closed a major brand acquisition
which brings significant scale to our U.S. business and further
diversifies our portfolio; we received all regulatory approvals and
initiated patient enrolment to phase 3 trials for MOB-015 in North
America and Europe; and Kerasal Nail® continued to deliver record market
share in the U.S. confirming the success of the relaunch initiated
earlier this year.
Significant growth in sales and profitability
Total net sales in Q3 increased by 56% (56% at fixed exchange rates).
Net sales excluding divestments and acquisitions increased by 28%.
EBITDA increased by 110% to 29 MSEK, equivalent to an EBITDA margin of
28% for the quarter and 23% for the trailing 12 month period[1]. Gross
margin decreased in the quarter to 69% (73%) reflecting the change in
product mix. Commercial EBITDA margin increased to 31% (27%) for the
quarter and to 28% (25%) for the trailing 12 months, due to
proportionally lower costs.
Key milestones – Integration of acquired brands progressing and Phase 3
enrollment initiated for MOB-015
As expected, the acquired brands – and in particular New Skin® – made a
significant contribution to Q3 results. These products are sold through
Moberg’s current sales channels in the U.S, primarily in chain
drugstores and in mass retailers, which enables a smooth integration, an
overall improved position at U.S. retail and we can also benefit from
economies of scale by already having a sales platform in place. The
integration is progressing according to plan and is expected to be
finalized during Q4.
All health authority approvals have been obtained for initiation of
MOB-015 Phase 3 studies in U.S, Canada, Germany and Poland. Patient
enrollment has begun with the objective of enrolling 700 patients by
mid-2017. Both MOB-015 and BUPI have the potential to become major
growth drivers for us in the next few years through a combination of
license deals as well as a basis to start our own franchise in select
territories. For BUPI, the first patent approval in the EU was a key
milestone, securing IP protection to 2031.
Direct sales – Growth fueled by acquired brands and new all-time high
market share for Kerasal Nail®
Direct sales increased by 61% in the third quarter (a 60% increase at
fixed exchange rates). Excluding divestments and acquisitions, the
increase was 12%. For Kerasal Nail®, the effects of the marketing
investments during the peak season drove further market share increases
as well as improved profitability. L26W the market share increased to
29%[2], a five percentage point gain vs last year. Kerasal Nail® was
also a key driver to get the whole category as such back to growth over
the peak season (L26W: +2%). In the UK, launch activities are
progressing according to plan.
Growth also in distributor sales – in Asia as well as Europe
Distributor sales grew by 42% (40% at fixed exchange rates). Distributor
sales excluding divestments, i.e. distributor sales of Kerasal Nail and
Emtrix only, increased by 88%. Sales in RoW increased by 62% (excluding
divested brands) with Emtrix®/Kerasal Nail® continuing to establish
leading positions in most countries launched, most recently in Taiwan.
The dynamic Asian market represents a significant long-term growth
opportunity where a “glocal” strategy, reflecting the different market
conditions within the region, is key for success. We continue to deepen
the launch and lifecycle management strategy in close interaction with
our partner Menarini APAC. Sales to Europe grew by 158% (excluding
divested brands).
Positive momentum provides value creation opportunities
Excellent results and progress achieved to date enable additional value
creation opportunities. To ensure optimal financing of future
acquisition opportunities, we have engaged Carnegie Investment Bank as
adviser and summon today a bondholders’ meeting in which we propose to
gain further flexibility in our debt-financing. Our proposal is
supported by key bondholders and enables better access to the remaining
215 MSEK of the current bond facility in connection with further
acquisitions of profitable assets.
Our proven commercial niche strategy enables us to grow a profitable
business with a significant potential at reasonable risk. We have
several attractive business opportunities in front of us, including an
exclusive option to the end of 2017 to acquire Dermoplast, an attractive
dermatology brand from Prestige Brands. The option provides us with a
one-time right to perform an evaluation of Dermoplast on an exclusive
basis, and after such evaluation we may, at our own discretion, decide
if we wish to complete an acquisition or not. We have recently informed
Prestige Brands of our wish to initiate such evaluation.
All in all, I am very pleased with the progress and our prospects to
create value and take Moberg to the next level.
Peter Wolpert, CEO Moberg Pharma
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[1] Note that the trailing 12 months include the capital gain of 41,4
MSEK in Q2 2016 from the brand divestment
[2] U.S. retail sales of nail fungus products excluding private label in
Multi Outlet Stores over the last 26 weeks ending October 2, 2016 as
reported by SymphonyIRI
Telephone conference CEO Peter Wolpert will present the report at a
telephone conference today November 8, 2016 at 3:00 p.m. CET. Telephone:
SE +46-8-566 426 95 US: +1 646 502 51 20.
About this information
This information is information that Moberg Pharma AB is obliged to make
public pursuant to the EU Market Abuse Regulation and the Securities
Markets Act. The information was submitted for publication, through the
agency of the contact person set out above, at 8:00 a.m. CET on November
8, 2016.
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