Parnell announces a new contract manufacturing agreement for one animal health product and a memorandum of understanding for two additional products with a global multi-national; revenue in the first half of 2019 down 12% compared to 2018 due to timing of technology transfer revenues versus prior year; and holds 2019 guidance for a 17 – 25% increase over 2018 revenue and an EBITDA range of $7.5 – $8.5m.
SYDNEY, AUSTRALIA / ACCESSWIRE / October 15, 2019 / Parnell Pharmaceuticals Holdings Ltd (OTC PINK:PARNF) today announced the signing of a new technology transfer agreement for the manufacture and CMC dossier development of the first of three animal health products with a large multi-national organization.
Brad McCarthy, CEO and Executive Director, said, “We are very pleased to announce the signing of this new agreement, which commences with one product immediately and with a memorandum of understanding in place for an additional two products over the coming twelve to eighteen months. Not only does this add to our blue-chip customer base of CMO customers, it further reinforces the reputation and capabilities of our sterile injectable facility and its exemplary quality management system and technical people here in Sydney, Australia.” Full details will remain confidential, as per the non-disclosure provisions of the agreement.
“We also completed an FDA routine re-inspection of our facility in the month of July receiving zero 483 observations. This was a very positive result for a sterile injectable facility and a further endorsement of our manufacturing competencies,” Mr. McCarthy continued.
Parnell also provides an update on its financial results for the half year ended 30 June 2019 comprising; revenue of $11.8 million compared to $13.5 million for the corresponding period in 2018, and a $0.7 million increase in operating expenses from increased investment in US Production and Manufacturing, combining to deliver a $2.8 million reduction over the same period in 2018 in Earnings Before Interest, Tax, Depreciation, Amortization and Other Income/(Expense) (EBITDAOI) to $1.0 million.
Mr. McCarthy said, “Reductions in our revenue and EBITDAOI compared to the first half of 2018 were attributable to our not securing a new Contract Manufacturing (CMO) agreement in the first half of 2019. Otherwise, the sales and order generating performance of all our established business units are tracking well at the half year point and costs remain well under control. Although closing slightly later than we would have preferred, this new agreement further utilizes the available capacity in our facility and contributes to maintaining our full year EBITDA guidance.”
Business Segment Performance
Unless otherwise specified, all amounts are presented in Australian Dollars (AUD).
“Sales of our proprietary products and CMO product revenues in the first half grew 3% over the corresponding period in 2018,” Mr. McCarthy stated. “In contrast, technology transfer revenue from new CMO contracts was Nil for the first half of 2019 compared to $2.2 million in the first half of 2018.”
“In Production Animal sales to June 30, 2019 increased 6% over the corresponding period in 2018 to $6.5 million, continuing our solid momentum in our established markets,” Mr. McCarthy said. “In the first half of 2019 our US Companion Animal business sales were slightly behind plan but management of expenses enables this business to remain in sight of our full year EBITDA targets. Our Australian Companion business continues to grow, being up 4% over the first half of 2018.”
“As previously communicated, our Board issued provisional full-year 2019 guidance at 17-25% revenue growth to $31 – $33 million, and an EBITDAOI range of $7.5 – $8.5 million, over our 2018 results of $26.5 million revenue and $6.1 million,” Mr. McCarthy said. “At the end of the first half we remain on track to deliver those results, although the delayed timing of securing a new contract manufacturing agreement may result in some associated revenue pushing into the following year.”
Corporate Updates
Dr. Alan Bell, Executive Director and Chairman of the Board, said “As previously communicated, further inside-director loans to the Company were necessary during Quarter 2 to accommodate ongoing cash-flow needs given the absence of revenue from new CMO contracts and the later delivery dates for CMO batches on order from established customers. Those loans totalled $600,000 in Quarter 2, and were made under the same terms as those advanced in Quarter 1 as reported in the March 31 Business Results.”
Work on the human generic agreement with our large global pharma partner continued apace during the period. During the period, the project expanded to address known technical challenges related to the complexity of the chemical structure. We believe the technical plan to achieve the agreed milestones is robust, well supported by both parties, and bolstered by external expertise. We anticipate there will be more progress to report later in 2019, subject to the confidentiality provisions of the governing agreement.
As reported previously we are the subject of an employment claim by our former CEO following his dismissal in 2017 and have filed a counter-suit. Our attempts to date at a negotiated settlement have failed and the trial has recently commenced.
Commercial Highlights to 30 June 2019
Unless otherwise specified, all amounts are presented in Australian Dollars (AUD).
Regarding the Company’s financial performance at the end of Quarter Two 2019, your directors report the following achievements:
Total revenue was $11.8 million for the six months ended June 30, 2019, being $1.7 million (13%) down over the same period in 2018.
Our operating segments performed as follows:
As a result, EBITDAOI decreased to $1.0 million for the six months ended June 30, 2019, compared to $3.8 million for the same period in 2018.
2019 Guidance
Unless otherwise specified, all amounts are presented in Australian Dollars (AUD).
Mr. McCarthy said, “We maintain our 2019 full year guidance of a revenue range of $31.0 to $33.0 million and an EBITDAOI range of $7.5 to $8.5 million based on securing the recent third-party manufacturing contract as stated above. However, dependent on timing of activities to be conducted under this agreement and achievement of certain additional milestones in previous agreements, we expect that some of these revenues may push into 2020.”
Financial Results for the six months ended 30 June 2019:
Unless otherwise specified, all amounts are presented in Australian Dollars (AUD).
Total revenue was $11.8 million for the six months ended June 30, 2019, a 13% decrease compared to $13.5 million for the same period in 2018. A detailed description of the revenue performance by business unit is provided above.
Expenses:
Earnings Before Interest, Tax, Depreciation, Amortization and Other Income/(Expense) (EBITDAOI) & Total Comprehensive Loss:
The unaudited Financial Statements for the six months ended June 30, 2019 compared to prior year are presented below.
About Parnell
Parnell (OTC: PARNF) is a fully integrated pharmaceutical company focused on developing, manufacturing and commercializing innovative animal and human health solutions. Parnell is a technology and clinical science leader in dairy reproduction, marketing its proprietary brands estroPLAN and GONAbreed via its dedicated sales force and digital technology mySYNCH in the USA and Australia-New Zealand, and via distributors in other markets. Parnell has a rapidly growing contract manufacturing business supplying industry majors with specialized sterile injectable products. Recently, Parnell leveraged its novel intellectual property position in the Pentosan Polysulfate drug class to address the human market through a new contract with a major global human health company. In companion animal, Parnell manufactures and markets its proprietary canine osteoarthritis brands Zydax and Glyde.
For more information on the company and its products, please visit www.parnell.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements and information within the meaning of the U.S. Private Securities Reform Act of 1995. Words such as “may,” “anticipate,” “estimate,” “expects,” “projects,” “intends,” “plans,” “develops,” “believes,” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. Forward-looking statements represent management’s present judgment regarding future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks include, but are not limited to, risks and uncertainties regarding Parnell’s research and development activities, its ability to conduct clinical trials of product candidates and the results of such trials, as well as risks and uncertainties relating to litigation, government regulation, economic conditions, markets, products, competition, intellectual property, services and prices, key employees, future capital needs, dependence on third parties, and other factors, including those described in Parnell’s Annual Report on Form 20-F filed with the Securities and Exchange Commission, or SEC, on March 31, 2017, along with its other reports filed with the SEC. In light of these assumptions, risks, and uncertainties, the results and events discussed in any forward-looking statements contained in this press release might not occur. Investors are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this press release. Parnell is under no obligation, and expressly disclaims any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise.
For more information, contact:
Parnell Pharmaceuticals Holdings
Brad McCarthy
Phone: +61 2 9667 4411
Email: brad.mccarthy@parnell.com
Consolidated Statements of Comprehensive Loss (Unaudited)
|
For the Six -Months Ended June 30, | |||||||
|
2019 | 2018 | ||||||
|
($AUD) | ($AUD) | ||||||
Revenue
|
11,787,958 | 13,524,043 | ||||||
Cost of goods sold
|
(4,866,879 | ) | (4,422,353 | ) | ||||
Gross Margin
|
6,921,079 | 9,101,689 | ||||||
Selling and Marketing expenses
|
(2,807,085 | ) | (2,596,049 | ) | ||||
Regulatory, R&D expenses
|
(535,263 | ) | (360,074 | ) | ||||
Administration Expenses
|
(2,612,851 | ) | (2,359,438 | ) | ||||
E.B.I.T.D.A.O.I.
|
965,881 | 3,786,128 | ||||||
|
||||||||
|
||||||||
Depreciation and Amortization expenses
|
(1,523,239 | ) | (1,145,442 | ) | ||||
Finance costs
|
(4,202,181 | ) | (2,880,478 | ) | ||||
Other income/(expense)
|
192,840 | 2,375,486 | ||||||
(Loss)/profit before income tax
|
(4,566,699 | ) | 2,135,694 | |||||
Income tax expense
|
0 | 0 | ||||||
(Loss)/profit for the year
|
(4,566,699 | ) | 2,135,694 | |||||
|
||||||||
|
||||||||
Foreign currency translation
|
(544,944 | ) | (3,681,300 | ) | ||||
Total comprehensive loss for the year
|
(5,111,643 | ) | (1,545,606 | ) | ||||
|
||||||||
|
Consolidated Balance Sheets (Unaudited)
|
30 June 2019
AUD$
|
31 December 2018
AUD$
|
||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash and cash equivalents
|
3,414,577 | 4,400,647 | ||||||
Trade and other receivables
|
1,481,129 | 1,739,466 | ||||||
Inventories
|
3,128,015 | 3,194,154 | ||||||
Prepayments
|
236,746 | 444,313 | ||||||
TOTAL CURRENT ASSETS
|
8,260,467 | 9,778,580 | ||||||
NONCURRENT ASSETS
|
||||||||
Trade and other receivables
|
61,750 | 60,200 | ||||||
Property, plant and equipment
|
15,311,739 | 10,593,307 | ||||||
Intangible assets
|
13,429,035 | 13,052,325 | ||||||
TOTAL NONCURRENT ASSETS
|
28,802,524 | 23,705,832 | ||||||
TOTAL ASSETS
|
37,062,991 | 33,484,412 | ||||||
|
||||||||
|
||||||||
LIABILITIES
|
||||||||
CURRENT LIABILITIES
|
||||||||
Trade and other payables
|
6,723,779 | 5,974,086 | ||||||
Borrowings
|
21,071 | 9,718 | ||||||
Provision for employee benefits
|
842,060 | 780,970 | ||||||
TOTAL CURRENT LIABILITIES
|
7,586,910 | 6,764,774 | ||||||
NONCURRENT LIABILITIES
|
||||||||
Trade and other payables
|
4,694,087 | 62,319 | ||||||
Borrowings
|
48,210,445 | 45,032,806 | ||||||
Provision for employee benefits
|
210,806 | 152,127 | ||||||
TOTAL NONCURRENT LIABILITIES
|
53,115,338 | 45,247,252 | ||||||
TOTAL LIABILITIES
|
60,702,248 | 52,012,026 | ||||||
NET ASSETS
|
(23,639,257 | ) | (18,527,614 | ) | ||||
|
||||||||
|
||||||||
EQUITY
|
||||||||
Ordinary shares
|
63,515,902 | 63,515,902 | ||||||
Share-based compensation reserve
|
3,251,515 | 3,251,515 | ||||||
Reserves
|
(7,567,280 | ) | (7,022,336 | ) | ||||
Accumulated losses
|
(82,839,394 | ) | (78,272,695 | ) | ||||
TOTAL EQUITY
|
(23,639,257 | ) | (18,527,614 | ) | ||||
|
||||||||
|
SOURCE: Parnell Pharmaceuticals Holdings Ltd.
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https://www.accesswire.com/563027/Parnell-Pharmaceuticals-Holdings-Ltd-Announces-New-CDMO-Agreement-and-Business-Update
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