ADVANZ PHARMA to Acquire Correvio in a Deal
Valued at US$76 Million
Correvio to Hold a Meeting of Its
Securityholders by No Later than May 20,
2020
Transaction Expected to Close During the
Second Quarter of 2020
NASDAQ: CORV TSX: CORV
VANCOUVER, March 30, 2020 /CNW/ - Correvio Pharma Corp.
(NASDAQ: CORV) (TSX: CORV), a specialty pharmaceutical company
focused on commercializing hospital drugs, today reported financial
results for the full year ended December 31,
2019 and commented on recent accomplishments and plans.
"Our marketed products portfolio set a new annual record
generating $32.6 million for the full
year 2019, delivering 14% growth over our 2018 full year revenues,"
said Mark H.N. Corrigan, MD, Chief
Executive Officer of Correvio. "On the corporate front,
earlier in March we announced our entry into an agreement for
global pharmaceutical company ADVANZ PHARMA to acquire Correvio in
an all-cash transaction, which includes acquiring all issued and
outstanding shares and the repayment of our debt obligations.
As a next step toward the closing of that transaction, we will be
working to hold a securityholders' meeting by May 20, 2020. On behalf of the entire
Correvio management team and the Board of Directors, we are
extremely pleased with the selection of ADVANZ PHARMA and the value
of the overall transaction, and we unanimously recommend that our
securityholders vote in favour of the proposed acquisition, which
is expected to close during the second quarter."
Recent Highlights
ADVANZ PHARMA to Acquire Correvio
- Correvio announced its entry into an arrangement agreement
("Arrangement Agreement") whereby ADVANZ PHARMA Corp. Limited
(TSX:ADVZ), through its wholly-owned subsidiary Mercury Pharma
Group Limited, will acquire all of the issued and outstanding
shares of Correvio. The acquisition is expected to have a
total purchase price of approximately US$76
million, which includes the repayment of certain Correvio
indebtedness. The Boards of Directors of both companies have
unanimously approved the transaction, which remains subject to
approval by Correvio securityholders.
Under the terms of the
transaction, ADVANZ PHARMA will pay US$0.42 per issued and outstanding share, valuing
Correvio's equity at approximately US$28
million on a fully diluted basis. Correvio has agreed
to hold a meeting of its securityholders by no later than
May 20, 2020 in order for
securityholders to consider and, if deemed advisable, approve the
transaction. The transaction is subject to certain other
customary closing conditions and is expected to be completed during
the second quarter of 2020.
Full Year 2019 Financial Results
Amounts, unless specified otherwise, are expressed in U.S.
dollars and in accordance with generally accepted accounting
principles used in the United States of
America (U.S. GAAP).
Correvio recorded a net loss of $35.2
million (basic loss per share of $0.79) for the year ended December 31, 2019 compared to a net loss of
$16.6 million (basic loss per share
of $0.47) for the year ended
December 31, 2018. The increase
in net loss was due to the recognition of a one-time gain of
$18.5 million in 2018 on the
disposition of the Canadian business portfolio to Cipher
Pharmaceuticals in May 2018.
Revenue for the year ended December 31,
2019 was $32.6 million
compared to revenue of $28.7 million
for the year ended December 31, 2018.
The 14% increase in revenue was primarily due to an increase
in sales of our antibiotic products (Xydalba™ and
Zevtera®/Mabelio®), partially offset by a
decrease in sales of our cardiology products (Aggrastat®
and Brinavess®).
Gross margin for the year ended December
31, 2019 was 69.9% compared to 71.1% for the year ended
December 31, 2018. The
fluctuation in gross margin was primarily due to changes in product
mix as we had a higher percentage of revenues from our antibiotic
products during the year ended December 31,
2019. Additionally, we recognized $1.5 million of deferred licensing revenue upon
the termination of a distributor agreement in December 2018.
Our gross margin for the year ended December
31, 2018 would have been lower without this licensing
revenue.
SG&A expense was $46.3 million
for the year ended December 31, 2019
compared to $42.6 million for the
year ended December 31, 2018.
The increase in SG&A expense was due to higher regulatory
and medical costs associated with the resubmission of the Brinavess
New Drug Application, as well as higher stock-based compensation
expense. These were partially offset by the one-time
transaction costs associated with the disposition of the Canadian
business portfolio to Cipher Pharmaceuticals, which took place in
the second quarter of 2018.
Interest expense was $7.5 million
for the year ended December 31, 2019,
compared to $6.0 million for the year
ended December 31, 2018. The
increase was due to interest being accrued on a higher long-term
debt principal amount under the term loan agreement with CRG as
well as an increase in the accretion of our long-term debt under
the effective interest method which is recorded as interest
expense. During the year ended December 31,
2019, we accrued in-kind interest of $1.7 million.
Liquidity and Outstanding Share Capital
At December 31, 2019, the Company
had cash, cash equivalents, and restricted cash of $15.2 million. As of March 27, 2020, there were 66,190,987 common
shares issued and outstanding, and 4,468,100 common shares issuable
upon the exercise of outstanding stock options (of which 3,275,688
were exercisable) at a weighted average exercise price of CAD
$4.69 per share, and 91,118
restricted share units outstanding.
About Correvio Pharma Corp.
Correvio Pharma Corp. is a specialty pharmaceutical company
focused on providing innovative, high-quality brands that meet the
needs of acute care physicians and patients. With a commercial
presence and distribution network covering over 60 countries
worldwide, Correvio develops, acquires and commercializes brands
for the in-hospital, acute care market segment. The Company's
portfolio of approved and marketed brands includes:
Xydalba™ (dalbavancin hydrochloride), for the treatment
of acute bacterial skin and skin structure infections (ABSSSI);
Zevtera®/Mabelio® (ceftobiprole medocaril
sodium), a cephalosporin antibiotic for the treatment of community-
and hospital-acquired pneumonia (CAP, HAP); Brinavess®
(vernakalant IV) for the rapid conversion of recent onset atrial
fibrillation to sinus rhythm; Aggrastat® (tirofiban
hydrochloride) for the reduction of thrombotic cardiovascular
events in patients with acute coronary syndrome. Correvio's
pipeline of product candidates includes Trevyent®, a
drug device combination that is designed to deliver treprostinil,
the world's leading treatment for pulmonary arterial
hypertension.
Correvio is traded on the NASDAQ Capital Market (CORV) and the
Toronto Stock Exchange (CORV). For more information, please visit
our web site www.correvio.com.
Forward-Looking Statement Disclaimer
Certain statements in this news release contain "forward-looking
statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995 or "forward-looking information"
under applicable Canadian securities legislation (collectively,
"forward-looking statements"). Forward-looking statements include
statements that may relate to our plans, objectives, goals,
strategies, future events, future revenue or performance, capital
expenditures, financing needs and other information that may not be
based on historical fact. Forward-looking statements can often be
identified by the use of terminology such as "believe", "may",
"plan", "will", "estimate", "continue", "anticipate", "intend",
"expect", "look forward to" and similar expressions.
Forward-looking statements are necessarily based on estimates and
assumptions made by us based on our experience and perception of
historical trends, current conditions and expected future
developments, as well as other factors we believe are
appropriate.
By their very nature, forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause
the actual results, performance, achievements, events or
developments to be materially different from any future results,
performance, achievements, events or developments expressed or
implied by such forward-looking statements. These forward-looking
statements include, but are not limited to, statements relating to
anticipated benefits of the Arrangement to Correvio and its
securityholders; the timing and receipt of required securityholder
and court approvals for the Arrangement; the ability of Correvio
and ADVANZ PHARMA to satisfy the other conditions to, and to
complete, the Arrangement, the anticipated timing of mailing of the
information circulars regarding the Arrangement, the closing of the
Arrangement, the intention to seek a delisting of the common shares
of Correvio on Nasdaq and TSX, expectations regarding the impact of
this transaction on Correvio and ADVANZ PHARMA's financial and
operating results, strategy and business; the intention of ADVANZ
PHARMA to bring additional products into its portfolio; regulatory
approvals of products and the anticipated timing thereof; and the
anticipated timing of the completion of the arrangement.
In respect of the forward-looking statements and information
concerning the anticipated completion of the proposed Arrangement
and the anticipated timing for completion of the Arrangement,
Correvio has provided them in reliance on certain assumptions and
believes that they are reasonable at this time, including the
assumptions as to the time required to prepare and mail
securityholder meeting materials, including the required management
information circular; the ability of the parties to receive, in a
timely manner, the necessary securityholder and court approvals;
and the ability of the parties to satisfy, in a timely manner, the
other conditions to the closing of the Arrangement. These dates may
change for a number of reasons, including unforeseen delays in
preparing meeting materials, inability to secure necessary
securityholder and court approvals in the time assumed or the need
for additional time to satisfy the other conditions to the
completion of the Arrangement. Accordingly, you should not place
undue reliance on the forward-looking statements and information
contained in this news release concerning these times.
These statements reflect Correvio's current views with respect
to future events and are necessarily based upon a number of
assumptions and estimates that, while considered reasonable by
Correvio, are inherently subject to significant business, economic,
competitive, political and social uncertainties and contingencies.
Many factors, both known and unknown, could cause actual results,
performance or achievements to be materially different from the
results, performance or achievements that are or may be expressed
or implied by such forward-looking statements or information and
Correvio has made assumptions and estimates based on or related to
many of these factors. Such factors include, without limitation:
risks associated with the arrangement and acquisitions generally,
such as the failure to satisfy the closing conditions contained in
the arrangement agreement, the occurrence of a material adverse
effect or other events which may give the parties a basis on which
to terminate the arrangement agreement, the ability of the parties
to complete and mail the management information circular to be
prepared in connection with the special meeting of securityholders
of Correvio, the ability to hold the meeting within the time frames
indicated, and the approval of the transaction by the
securityholders of Correvio and the risks and uncertainties facing
Correvio as discussed in the annual report and detailed from time
to time in our other filings with the Securities and Exchange
Commission ("SEC") available at www.sec.gov and the Canadian
securities regulatory authorities at www.sedar.com. In particular,
we direct your attention to Correvio's Annual Report on Form 40-F
for the year ended December 31, 2018
and its quarterly report filed November 14,
2019 for the third quarter of 2019. All of the risks and
certainties disclosed in those filings are hereby incorporated by
reference in their entirety into this news release.
While Correvio makes these forward-looking statements in good
faith, given these risks, uncertainties and factors, you are
cautioned not to place undue reliance on any forward-looking
statements made in this press release. All forward-looking
statements made herein are made as of the date hereof based on our
current expectations and we undertake no obligation to revise or
update such forward-looking statements to reflect subsequent
events, information or circumstances, except as required by law.
Investors are cautioned that forward-looking statements are not
guarantees of future performance and accordingly investors are
cautioned not to put undue reliance on forward-looking statements
due to their inherent uncertainty.
Correvio® and the Correvio Logo are the proprietary
trademarks of Correvio Pharma Corp.
Aggrastat® and Brinavess™® are trademarks
owned by Correvio and its affiliates worldwide.
Xydalba™ is a trademark of Allergan Pharmaceuticals
International Limited, and used under license.
Zevtera® and Mabelio® are trademarks owned by
Basilea Pharmaceutica International Ltd., and used under
license.
Trevyent® is a trademark of United Therapeutics
Corporation and used under license.
All other trademarks are the property of their respective
owners.
CORREVIO PHARMA CORP.
(formerly Cardiome Pharma
Corp.)
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars, except share amounts)
|
|
December
31,
2019
|
December 31,
2018
|
|
|
|
Assets
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
13,299
|
$
|
15,596
|
|
Restricted
cash
|
1,945
|
1,974
|
|
Accounts receivable,
net of allowance for doubtful accounts of $92 (2018 -
$102)
|
11,987
|
7,723
|
|
Inventories
|
3,563
|
4,158
|
|
Prepaid expenses and
other assets
|
977
|
841
|
|
31,771
|
30,292
|
|
|
|
Property and
equipment
|
452
|
512
|
Right-of-use assets
from operating leases
|
2,057
|
-
|
Intangible
assets
|
22,232
|
26,469
|
Long-term
inventories
|
1,763
|
1,663
|
Goodwill
|
318
|
318
|
Deferred income tax
assets
|
300
|
383
|
|
$
|
58,893
|
$
|
59,637
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
11,295
|
$
|
9,403
|
|
Current portion of
long-term debt
|
17,688
|
-
|
|
Current operating
lease liabilities
|
812
|
-
|
|
29,795
|
9,403
|
|
|
|
Long-term
debt
|
27,238
|
41,517
|
Deferred
revenue
|
1,228
|
1,252
|
Long-term operating
lease liabilities
|
1,466
|
-
|
Other long-term
liabilities
|
-
|
555
|
|
59,727
|
52,727
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common
stock
|
385,057
|
359,295
|
|
Authorized - unlimited number without par value
|
|
|
|
Issued
and outstanding – 55,382,228 (2018 – 36,233,162)
|
|
|
|
Additional paid-in
capital
|
42,734
|
40,456
|
|
Deficit
|
(444,928)
|
(409,744)
|
|
Accumulated other
comprehensive income
|
16,303
|
16,903
|
|
(834)
|
6,910
|
|
$
|
58,893
|
$
|
59,637
|
CORREVIO PHARMA CORP.
(formerly Cardiome Pharma Corp.)
Consolidated Statements of Operations and Comprehensive Loss
For the years ended December 31,
2019, 2018 and 2017
(Expressed in thousands of U.S. dollars, except share and per share
amounts)
|
December
31,
2019
|
December
31,
2018
|
December
31,
2017
|
Revenue:
|
|
|
|
Product and royalty
revenues
|
$
|
32,634
|
$
|
27,051
|
$
|
23,811
|
Licensing and other
fees
|
-
|
1,623
|
197
|
|
32,634
|
28,674
|
24,008
|
Cost of goods
sold
|
9,827
|
8,294
|
6,776
|
Gross
margin
|
22,807
|
20,380
|
17,232
|
Expenses:
|
|
|
|
Selling, general and
administration
|
46,319
|
42,578
|
36,694
|
Amortization and
depreciation
|
3,941
|
4,143
|
3,517
|
|
|
50,260
|
46,721
|
40,211
|
Operating
loss
|
(27,453)
|
(26,341)
|
(22,979)
|
|
|
|
|
Other (expense)
income:
|
|
|
|
Gain on disposal of
Canadian Operations
|
-
|
18,489
|
-
|
Other expense on
modification of long-term debt
|
-
|
-
|
(1,451)
|
Interest
expense
|
(7,512)
|
(5,977)
|
(5,695)
|
Other
expense
|
(303)
|
(578)
|
(511)
|
Foreign exchange gain
(loss)
|
263
|
(2,134)
|
1,188
|
|
(7,552)
|
9,800
|
(6,469)
|
Loss before income
taxes
|
(35,005)
|
(16,541)
|
(29,448)
|
Income tax
expense
|
(179)
|
(38)
|
(363)
|
Net loss
|
$
|
(35,184)
|
$
|
(16,579)
|
$
|
(29,811)
|
|
|
|
|
Other comprehensive
loss:
|
|
|
|
Foreign currency
translation adjustments
|
(600)
|
(226)
|
791
|
Comprehensive
loss
|
$
|
(35,784)
|
$
|
(16,805)
|
$
|
(29,020)
|
Loss per common
share
|
|
|
|
|
Basic and
diluted
|
$
|
(0.79)
|
$
|
(0.47)
|
$
|
(0.90)
|
Weighted average
common shares outstanding
|
|
|
|
|
Basic
|
44,275,800
|
35,148,303
|
33,192,480
|
|
Diluted
|
44,275,800
|
35,148,303
|
33,227,924
|
CORREVIO PHARMA CORP.
(formerly Cardiome Pharma
Corp.)
Consolidated Statements of Cash Flows
For the years ended December 31,
2019, 2018 and 2017
(Expressed in thousands of U.S. dollars)
|
December
31,
2019
|
December
31, 2018
|
December
31,
2017
|
Operating
activities:
|
|
|
|
Net
loss
|
$
|
(35,184)
|
$
|
(16,579)
|
$
|
(29,811)
|
Items not affecting
cash:
|
|
|
|
|
Amortization
|
3,941
|
4,143
|
3,517
|
|
Accretion of
long-term debt
|
1,950
|
794
|
1,549
|
|
Interest paid in-kind
on long-term debt
|
1,749
|
1,679
|
778
|
|
Stock-based
compensation expense
|
2,424
|
1,678
|
2,065
|
|
Write-down of
inventory
|
159
|
340
|
295
|
|
Gain on disposal of
Canadian Operations
|
-
|
(18,489)
|
-
|
|
Unrealized foreign
exchange loss (gain)
|
129
|
1,863
|
(1,738)
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
(4,083)
|
(2,036)
|
448
|
|
Inventories
|
233
|
400
|
(1,533)
|
|
Prepaid expenses and
other assets
|
(63)
|
43
|
510
|
|
Deferred
revenue
|
(3)
|
(1,604)
|
(197)
|
|
Accounts payable and
accrued liabilities
|
1,725
|
1,930
|
(675)
|
|
Other long-term
liabilities
|
(52)
|
59
|
(31)
|
Net cash
used in operating activities
|
(27,075)
|
(25,779)
|
(24,823)
|
|
|
|
|
Investing
activities:
|
|
|
|
|
Proceeds on disposal
of Canadian Operations
|
376
|
19,095
|
-
|
|
Purchase of property
and equipment
|
(129)
|
(284)
|
(5)
|
|
Purchase of
intangible assets
|
(32)
|
(4,705)
|
(5,229)
|
Net cash provided by
(used in) investing activities
|
215
|
14,106
|
(5,234)
|
|
|
|
|
Financing
activities:
|
|
|
|
|
Issuance of common
stock
|
26,994
|
5,392
|
8,487
|
|
Share issue
costs
|
(2,069)
|
(231)
|
(1,072)
|
|
Issuance of common
stock upon exercise of stock options
|
-
|
258
|
384
|
|
Income tax withholdings
on vesting of restricted share units
|
-
|
(23)
|
(65)
|
|
Proceeds from issuance
of long-term debt
|
-
|
-
|
20,000
|
|
Financing fees on
issuance of long-term debt
|
(288)
|
(21)
|
(518)
|
|
Payment of deferred
consideration
|
-
|
-
|
(2,815)
|
Net cash provided by
financing activities
|
24,637
|
5,375
|
24,401
|
|
|
|
|
Decrease in cash and
cash equivalents during the year
|
(2,223)
|
(6,298)
|
(5,656)
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
(103)
|
(313)
|
532
|
Cash, cash
equivalents, and restricted cash, beginning of year
|
17,570
|
24,181
|
29,305
|
Cash, cash
equivalents, and restricted cash, end of year
|
$
|
15,244
|
$
|
17,570
|
$
|
24,181
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
Interest
paid
|
$
|
3,934
|
$
|
3,778
|
$
|
3,477
|
Interest
received
|
120
|
149
|
95
|
Net income taxes paid
(received)
|
101
|
146
|
(334)
|
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SOURCE Correvio Pharma Corp