FULL YEAR REPORT 2019 - Cosmo Pharma/media/Files/C/Cosmo...This presentation may include...

Cosmo Pharmaceuticals

FULL YEARREPORT2019


SAFE HARBOUR

This presentation may include forward-looking statements that are based on our management’s beliefs and assumptionsand on information currently available to our management.The inclusion of forward-looking statements should not be regarded as a representation by Cosmo that any of its plans willbe achieved. Actual results may differ materially from those set forth in this presentation due to the risks and uncertaintiesinherent in Cosmo’s ability to develop and expand its business, successfully complete development of its current productcandidates and current and future collaborations for the development and commercialization of its product candidates andreduce costs (including staff costs), the market for drugs to treat IBD diseases, Cosmo’s anticipated future revenues, capitalexpenditures and financial resources and other similar statements, may be “forward-looking” and as such involve risks anduncertainties and risks related to the collaboration between Partners and Cosmo, including the potential for delays in thedevelopment programs for its products. No assurance can be given that the results anticipated in such forward lookingstatements will occur. Actual events or results may differ materially from Cosmo’s expectations due to factors which include,but are not limited to, increased competition, Cosmo’s ability to finance expansion plans, the results of Cosmo’s researchand development activities, the success of Cosmo’s products, regulatory, legislative and judicial developments or changes inmarket and/or overall economic conditions. Cosmo assumes no responsibility to update forward-looking statements or toadapt them to future events or developments.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof,and Cosmo undertakes no obligation to revise or update this presentation.

Full Year Report 20192


AGENDA

01 INTRODUCTION AND 2019 KEY EVENTSAlessandro Della Chà, CEO

02 2019 FINANCIAL REVIEWNiall Donnelly, CFO

03 2020 OUTLOOK & KEY PRIORITIESAlessandro Della Chà, CEO

04 QUESTIONS AND ANSWERSAlessandro Della Chà, CEO



• Cosmo, as a pharmaceutical company, is exempt from business shutdown provisions in Italy

• Production is up and running, drugs are being shipped and all items needed for our activity are being received

• Cosmo holds stocks of API, excipients and materials to enable continued production for quite some time even if regular supply of these materials should be interrupted

• Employees are present where necessary and policies are in place to protect their health and welfare, non-production related personnel are working remotely


CORONAVIRUS UPDATE


• Cosmo assumes the coronavirus pandemic will significantly slow down or stop clinical development and/or FDA activity at least for part of 2020, this year therefore may be a different year from the one which we had envisaged

• Cosmo has significant cash and equity resources available to withstand this storm

• As a result of the actions which we have taken in 2019 and on the assumption of FDA approval of Byfavo™ Cosmo will be back to operating profit in 2020


CORONAVIRUS UPDATE


Market Cap CHF 936 millionNet Cash €268 million

45% Stake in Cassiopea

at IPO Offer Price CHF153m

Employees234

19.6% stake in RedHill at cost $42m 14.1% stake in Acacia at cost €21m8.2% stake in Paion AG at cost €10m

FY 2019Revenues

€62.5 million

6 Full Year Report 2019

Treasury shares at cost €46 million

Loan to Cassiopea €12 million

COSMO PHARMACEUTICALS N.V.


Providing solutions for colon diseases

3 marketed therapeuticsLialda/MezavantUceris/Cortiment

Aemcolo/RelaFalk 2 marketed medtech products

EleviewGI Genius (EU)

Rich development pipeline

Stakes in other pharma companies:45.1% Cassiopea19.6% RedHill14.1% Acacia Pharma8.2% Paion


COSMO PHARMACEUTICALS N.V.


INTRODUCTION AND KEY EVENTS

ALESSANDRO DELLA CHÀ, CEO



KEY EVENTS

• Byfavo™ sub-licensed to Acacia Pharma Group in January 2020, €10m upfront payment in Acacia Pharma shares plus an investment of €10m resulting in a 14.1% stake in the company. Additional €20m in Acacia Pharma shares due on approval of Byfavo™ by the FDA and first sales plus up to US$105m on achievement of Byfavo™ commercial milestones.

• Aemcolo™ licensed to RedHill Biopharma for high twenty percent royalty plus potential regulatory and commercial cash milestones totalling up to US$100m. Redhill Biopharma American Depositary Shares received as down-payment and together with investment of US$36.3m made in the company resulting in Cosmo taking a 19.56% stake in the company.

• Aemcolo™ Phase II proof of concept study in IBS-D progressed.

• Significant progress made with the FDA in relation to the second Methylene Blue MMX phase III trial design and endpoints, with next step in 2020 being the submission of the final clinical protocol and start of new trial.



KEY EVENTS - CONTINUED

• Marketing Authorisation Application for Methylene Blue MMX 200mg tablets filed with the European Medicines Agency

• Revolutionary artificial intelligence device, GI Genius™, for the detection of lesions during colonoscopy, unveiled and subsequent worldwide validation distribution deal entered into with Medtronic.

• Further collaboration agreement entered into with Medtronic in the artificial intelligence field.

• Eleview® distribution agreement entered into with Medtronic for USA, China and South America and subsequently expanded to worldwide agreement (with the exception of Canada and Japan).

• Investigational New Drug (IND) for new chemical entity CB-03-10 for new oncologic product accepted by the FDA.



KEY EVENTS - CONTINUED

• Byfavo™ NDA accepted by the FDA, PDUFA date of 5 July 2020.

• U.S. cost base eliminated delivering significant reduction in operating expenses.

• Health Canada approved Eleview® which will be commercialised by Pharmascience under the existing licence and supply agreement.

• Associate Cassiopea filed its Winlevi NDA with the FDA with a PDUFA date of 27 August 2020 set and announced very positive results of Breezula® full phase II clinical trial.



• RedHill is an Israeli company with US operations listed on Nasdaq (NASDAQ: RDHL)

• Run by a highly experienced GI management team

• Rich and interesting pipeline of proprietary products

• Talicia® approved by the FDA for the treatment of H. pylori infection in adults

• RedHill is also developing RHB-104 against Crohn’s disease (first phase III successfully completed)


REDHILL BIOPHARMA DEAL


• Outlicense of Aemcolo™ for the U.S.

• Aemcolo™ will be promoted by a sales force of 40 reps as of now and 140 reps as of February 2020

• Down-payment of $12m in RDHL ADS (listed on NASDAQ)

• Royalties in the high twenties including supply of product

• Regulatory and commercial milestones totalling additional $ 100m


REDHILL BIOPHARMA DEAL

• Take over by RedHill of all marketing activities, including digital marketing

• Shift of development responsibilities and related costs

• Additional cash investment by Cosmo of $36.3m in RDHL ADS

• Total investment $48.3m (cash + down-payment),

equal to 19.6% of the

share capital of RDHL


• Acacia Pharma is an English company with U.S. operations listed on Euronext (EURONEXT: ACPH)

• Run by a management team highly experienced in U.S. hospital sales

• Barhemsys® was approved by the FDA for PONV (Post Operative Nausea and Vomiting) in February 2020

• Acacia is also developing Barhemsys® for CINV (Chemotherapy Induced Nausea and Vomiting)


ACACIA PHARMA DEAL


• Sublicense of Byfavo™ for the U.S.

• Byfavo™ will be promoted initially by a sales force of 30 reps

• Down-payment of €10m in ACPH shares (listed on EURONEXT) + €10m Cosmo direct investment in ACPH shares (currently 14.1% of share capital)

• Royalties equal to the royalties due to Paion AG

• Regulatory and commercial milestones totalling € 125m, of which € 20m at approval and first sale of Byfavo™

• Take over by Acacia of all marketing activities

• Shift of development responsibilities and related costs

• Additional financing of Cosmo of €10m upon approval of Barhemsys and of further €25m upon approval of Byfavo™

• Total investment in ACPH shares (if Byfavo™ is approved): €40m


ACACIA PHARMA DEAL

Cosmo Pharmaceuticals 16 Full Year Report 2019

PRODUCTS UPDATE

GI Genius™

• Australian regulatory approval was received in February 2020

• The U.S. trial required for FDA approval has commenced

• Sales in Europe commenced at the end of 2019

• Sales in U.S. are expected to begin immediately after U.S. approval

• The trial required for U.S. registration started as scheduled in January but the coronavirus pandemic is slowing down the opening of sites and patient recruitment. It now looks unlikely that we will be able to finish the trial as originally scheduled by the end of H1 2020, we are not yet in a position to assess the extent of the delay but we hope it will not be material


PRODUCTS UPDATEAemcolo™• We have progressed the IBS-D phase II clinical program and three Investigator Initiated Studies have commenced in the

U.S. for the treatment of Uncomplicated Acute Diverticulitis, Minimal Hepatic Encephalopathy and Small Intestine Bacterial Overgrowth (SIBO)

• As a consequence of travel restrictions and bans which have been put in place by most countries following the outbreak of the pandemic, it is expected that Aemcolo™ sales will likely be adversely affected in 2020, though we are not yet in a position to assess the potential impact

Byfavo™• The PDUFA date for Byfavo™ was April 5, 2020, this has now been moved by the FDA to July 5, 2020

• The delay stems from a request for additional information by the FDA on an excipient in Byfavo’s™ formulation. The FDA requested additional information and additional tests on the excipient, which resulted in a significant volume of new data

• The FDA therefore communicated that it needed more time to review the additional information and this led to the delay, which we assume will have no impact on approval


PRODUCTS UPDATE

Eleview®• Eleview® sales are also likely to be impacted by the ongoing pandemic, as all promotion has now been either slowed

down or moved on-line

• We are not yet in a position to assess the potential impact

Methylene Blue MMX

• In February 2019 we announced the filing of a Marketing Authorisation Application with the EMEA

• We have progressed our discussions with the FDA to prepare for the requested second phase III trial. We have now submitted the complete protocol and statistical analysis plan for final comment by the FDA

• Subject to reaching agreement with the FDA on the final protocol, the trial is expected to start in H2 2020, ongoing pandemic permitting


• Announced positive results from Phase III Acne Open-Label Safety Study Evaluating Winlevi®

• Announced Very Positive Phase II Twelve Months Results for Breezula®

• Filed Winlevi’s NDA with the FDA (PDUFA August 27, 2020)

• Started the Breezula Phase II POC in women


CASSIOPEA – 45.09% OWNED BY COSMO


• Cassiopea, as an Italian company, cannot operate with negative equity

• A small capital increase (max €20m) will be executed within June either through a rights offering to all shareholders or a private placement to selected investors

• Cosmo will subscribe its stake and eventually all un-opted rights

• The FDA has postponed the visit to Lainate to approve the site for the manufacturing of Winlevi® which was scheduled for March 2020 to May 2020 to Lainate to approve the site for the manufacturing of Winlevi

• Further delay in the inspection to the coronavirus pandemic might result in a shift of the PDUFA date


CASSIOPEA – 45.09% OWNED BY COSMO


2019 FINANCIAL REVIEW

NIALL DONNELLY, CFO



2019 F INANCIAL HIGHLIGHTS


• Revenue €62.5m vs €65.6m last year

• Expenses reduced by 9.0% to €74.8m of which €14.6m related to our U.S. organisation and will not re-occur

• Operating loss €12.3m vs €16.6m last year

• Net financial expenses €3.9m vs net financial income €4.6m last year• Imputed convertible bond interest €8.2m (€4.4m paid) partially offset by net gains on investments and net FX gains

• Loss after taxes for the period €24.5m (2018: loss after tax of €18.1m) including share of Cassiopea loss €5.1m (2018: €5.4m)

Cosmo Pharmaceuticals Full Year Report 2019

INCOME STATEMENT - REVENUE

Revenue by product/nature €million

Revenue % split

23

Uceris, 15%

Cortiment, 6%

Lialda\Mezavant\Mesavancol,

35%

Eleview, 3%

Licence fees, up-front fees and

milestones, 20%

Generic Manufacturing

and Other, 20%

• Revenue €62.5m vs €65.6m last year• Lialda/Mesavant/Measvancol revenue increased by €1.1 million to €21.8m• Uceris income was €9.3m (2018: €17.5m), net sales by Bausch were US$66.1m (2018:

US$96.7m)• Cortiment income was €3.9m (2018: €3.9m) net sales by Ferring were €16.0m (2018: €15.1m)• Upfront fees and milestones includes license fee of €11.5m relating to the Aemcolo RedHill deal• Eleview revenue was €2.2m (2018: €6.8m)

9

4

22

2

13 13

18

4

21

7 6

11

-

5

10

15

20

25

2019

2018


INCOME STATEMENTEUR 1,000 2019 2018 Change

Revenue 62,495 65,617 (3,122)

Cost of sales (25,053) (22,058) (2,995)

Gross Profit 37,442 43,559 (6,117)

Other income 753 886 (133)

Research and development (15,160) (10,428) (4,732)

S,G&A (35,342) (50,638) 15,296

Net operating expenses (49,749) (60,180) 10,431

Operating loss (12,307) (16,621) 4,314

Net financial (expense) / income (3,933) 4,615 (8,548)

Share of result of associates (5,064) (5,453) 389

Loss before taxes (21,304) (17,459) (3,845)

Income tax expenses (3,190) (598) (2,592)

Loss after taxes for the period (24,494) (18,057) (6,437)


• Revenue €62.5m vs €65.6m last year

• Expenses reduced by €7.4m to €74.8m of which €14.6m related to our U.S. organisation

• Operating loss €12.3m vs €16.6m last year

• Net financial expenses €3.9m vs net financial income €4.6m last year

• Imputed convertible bond interest €8.2m (€4.4m paid) partially offset by net gains on investments and net FX gains

• Loss after taxes for the period €24.5m (2018: loss after tax of €18.1m) including share of Cassiopea loss €5.1m (2018: €5.4m)


STATEMENT OF F INANCIAL POSITION – SUMMARY


EUR 1,000 2019 2018 Change

Cash and cash equivalents and investments in funds 268,209 375,766 (107,557)

Other current & non-current assets 316,951 249,920 67,031

Liabilities (191,427) (180,832) (10,595)

Total Equity 393,733 444,854 (51,121)

• Cash and investments in funds €268.2m

• Other current & non-current assets include shareholdings in PAION AG, RedHill, and Volition RX €53.9m, investment in Cassiopea carried at €125.5m, intangible assets of €49.2m, property plan and equipment of €30.2m and trade and other receivables of €35.2m

• Liabilities mainly consist of the liability component of the convertible bonds of €158.2m, deferred tax liabilities of €8.8m, lease liabilities of €5.6m trade payables of €5.5m and accruals of €2.2m


STATEMENT OF F INANCIAL POSITION – SUMMARY


Total Assets €585.2m

Total liabilities €191.4m

Equity €393.7m

26


CASHFLOWEUR 1,000 FY 2019 FY 2018

Loss for the period before tax (21,304) (17,459)

Income taxes paid (net) (1,252) (4,156)

Adjustment for non-monetary item 12,736 14,906

Change in net working capital (9,027) (3,455)

Net cash flows from operating activities (18,847) (10,164)

Investments in property, plant and equipment (2,245) (1,898)

Investments in other intangible assets (15,068) (7,774)

Disposals of property, plant and equipment - 28

Net (outflows)/inflows from the investment in/disposal of financial assets (21,667) (64,851)

Interest received 212 2,793

Loan to associate (10,000) -

Net cash flow due to Linkverse acquisition - (79)

Proceeds from loans 80 -

Cash flows from investing activities (48,688) (71,781)



CASHFLOW – CONTINUEDEUR 1,000 FY 2019 FY 2018

Interest paid on convertible bonds (4,375) -

Repayments of interest-bearing loans and borrowings (1,752) (665)

Purchase of treasury shares (25,333) (18,353)

Issue of convertible bond - 166,250

Transaction costs related to loans and borrowings - (2,841)

Acquisition of non-controlling interest – Linkverse (3,000) -

Cashflows from financing activities (34,460) 144,391

Net increase/(decrease) in cash and cash equivalents (101,995) 62,446

Cash and cash equivalents at the beginning of the year 210,689 144,944

Net foreign exchange differences 1,693 3,299

Total cash and cash equivalents at the end of the year 101,387 210,689



2020 OUTLOOK & KEY PRIORITIES

ALESSANDRO DELLA CHÀ, CEO



Cosmo has announced the sublicense of its Byfavo™ U.S. rights to Acacia Pharma, taking an initial 14.1% stake and providing finance for Acacia Pharma’s US expansion

COSMO EXPECTS TO RETURN TO OPERATING PROFIT IN 2020 (SUBJECT TO FDA APPROVAL OF BYFAVO™)

Cosmo announced the very successful outcome of the first investigator initiated study of GI Genius™

Cosmo has announced substantial alignment reached with FDA on the second phase III study for MB MMX

January 10

January 21

February 20


EVENTS SO FAR IN 2020

February 28 Cosmo announced Australian regulatory approval of GI Genius ™


Following delay in approval of MB MMX in the US Cosmo has decided to shift strategy to:

Enter into partnerships with selective players in exchange of equity stake and/or milestones/royalties or combination of both (Medtronic, RedHill, Acacia Pharma)

01Develop new product opportunities with partners

02


STRATEGY GOING FORWARD


Cosmo has no long-termstrategic objectives for Cassiopea

which is considered as a financial investmentto be monetized in due course

Cosmo, upon this shift of strategy, will thoroughly reassess its need for cash in the medium term and consider options for

the eventual excess cash


STRATEGY GOING FORWARD


PRODUCT INDICATION PH I PH II PH III

Aemcolo™ IBS-D

Acute Uncomplicated Diverticulitis*

Small Intestine BacteriaI Overgrowth (SIBO)*

Minimal Hepatic Encephalopathy*

Byfavo™ Procedural Sedation

Methylene Blue MMX Lesion detection during colonoscopy

CB-03-10 Oral AR antagonist against solid tumors

GI-Genius™ Lesion detection during colonoscopy (US registration)

* Investigator Initiated Studies

33

NDA FILED – PDUFA 5 July 2020


DEVELOPMENT PIPELINE

Cosmo Pharmaceuticals 34

Q2MB MMXEU approval

2020 H1

Q3ByFavo™US approval for procedural sedation

MB MMXStart of 2nd Phase III requiredfor U.S. approval

Q4GI Genius™US trial completion

Aemcolo™Phase II IBS-D results

2020 H2


Key priorities for 2020

• Complete the U.S. trial for GI Genius™

• Commence the Methylene Blue MMX confirmatory Phase III trial

• Conclude our Aemcolo™ phase II IBS-D trial

• Progress our product pipeline

• All milestones potentially influenced by the pandemic

UPCOMING MILESTONES


2020 GUIDANCE

• The coronavirus pandemic has the potential to interrupt Aemcolo™ sales and delay our clinical trials

• Notwithstanding the current circumstances we continue to operate our manufacturing facilities and ship products

• Guidance is based on obtaining FDA approval for Byfavo™

- Revenue in the range of €52m - €56m- Total expenses in the range of €48m - €50m (of which ESOP €7.2m and

Depreciation & Amortisation €6.4m)- Operating profit in the range of €2m - €8m


SUMMARY

During 2019 Cosmo has executed a complex repositioning following the delay of Methylene Blue MMX. After the deals with Medtronic, RedHill and Acacia we are now fully back to our business-to-business model. The current environment is unexpected and challenging, but we have worked hard in the past to set our facilities up to the highest standards, to build up our ample cash and equity resources and to advance a fully-fledged pipeline of new products. We therefore expect to be in a favourable position when the situation stabilises, business opportunities will arise and companies will look for solid and reliable partners. For these reasons Cosmo looks to the future with optimism.


THANK YOU


Cosmo Pharmaceuticals NVRiverside IISir John Rogerson’s Quay Dublin 2, [email protected]

Mr. Alessandro Della Cha, [email protected]

Mr. Niall Donnelly, [email protected]+353 1 817 03 70


mailto:[email protected]



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