UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934
For the month of August, 2014
COMMISSION FILE NO. 000-29338
CARDIOME PHARMA CORP.
(formerly NORTRAN PHARMACEUTICALS INC.)
____________________________________________
(Translation of Registrant’s name into English)
Suite 405, 6190 Agronomy Rd
Vancouver, British Columbia, V6T 1Z3, CANADA
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F
| Form 20-F * | Form 40-F T |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): *
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): *
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange act of 1934.
| Yes * | No T |
This Form 6-K is hereby filed and incorporated by reference in the registrant’s Registration Statements on Form F-10 (File No. 333-137935), Form F-3 (File No. 333-131912), Form S-8 (333-136696) and Form S-8 (333-125860).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CARDIOME PHARMA CORP. | ||
| Date: August 12, 2014 | /s/ JENNIFER ARCHIBALD | |
| Jennifer Archibald | ||
| Chief Financial Officer | ||
EXHIBIT INDEX
| EXHIBIT | DESCRIPTION OF EXHIBIT | |
| 99.1 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
| 99.2 | Consolidated Financial Statements | |
| 99.3 | Material Change Report dated August 12 | |
| 99.4 | Certificate of Filing - CEO | |
| 99.5 | Certificate of Filing - CFO | |
Exhibit 99.1
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This management discussion and analysis (“MD&A”) of Cardiome Pharma Corp. (“Cardiome”) for the period ended June 30, 2014 is as of August 7, 2014. We have prepared this MD&A with reference to National Instrument 51-102 “Continuous Disclosure Obligations” of the Canadian Securities Administrators. Under the U.S./Canada Multijurisdictional Disclosure System, we are permitted to prepare this MD&A in accordance with the disclosure requirements of Canada, which are different from those of the United States. This MD&A should be read in conjunction with our interim unaudited consolidated financial statements and notes thereto for the three and six months ended June 30, 2014 and our MD&A for the year ended December 31, 2013. Our consolidated financial statements are prepared in accordance with generally accepted accounting principles used in the United States of America (“U.S. GAAP”). All amounts are expressed in U.S. dollars unless otherwise indicated.
The forward-looking statements in this discussion regarding our expectations of our future performance, liquidity and capital resources, as well as marketing plans, future revenues from sales of BRINAVESS™ and AGGRASTAT™, the expected completion of the transition of global rights to vernakalant to Cardiome by Merck, known as MSD outside the United States and Canada, our intention to continue discussions with the U.S. Food and Drug Administration regarding potential development plans for the vernakalant programs in the United States, and other non-historical statements, are based on our current expectations and beliefs, including certain factors and assumptions, as described in our most recent Annual Information Form, but are also subject to numerous risks and uncertainties, as described in the “Risk Factors” section of our Annual Information Form. As a result of these risks and uncertainties, or other unknown risks and uncertainties, our actual results may differ materially from those contained in any forward-looking statements. The words “believe”, “may”, “plan”, “will”, “estimate”, “continue”, “anticipate”, “intend”, “expect” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We undertake no obligation to update forward-looking statements, except as required by law. Additional information relating to Cardiome, including our most recent Annual Information Form, is available by accessing the Canadian Securities Administrators’ System for Electronic Document Analysis and Retrieval (“SEDAR”) website at www.sedar.com or the U.S. Securities and Exchange Commission’s (“SEC”) Electronic Document Gathering and Retrieval System (“EDGAR”) website at www.sec.gov/edgar.
OVERVIEW
We are a specialty pharmaceutical company dedicated to the development and commercialization of cardiovascular therapies that will improve the quality of life and health of patients suffering from heart disease. We strive to find innovative, differentiated medicines that provide therapeutic and economic value to patients, physicians and healthcare systems. We currently have two marketed, in-hospital, cardiology products, BRINAVESS™ and AGGRASTAT™, which are commercially available in numerous markets outside of the United States.
BRINAVESS™ (vernakalant (IV)), was approved in the European Union in September 2010 and is currently registered and approved in approximately 50 countries for the rapid conversion of recent onset atrial fibrillation to sinus rhythm in adults (for non-surgery patients with atrial fibrillation of seven days or less) and for use in post-cardiac surgery patients with atrial fibrillation of three days or less. BRINAVESS™ is recommended as a first-line therapy in the European Society of Cardiology atrial fibrillation guidelines for the cardioversion of recent-onset atrial fibrillation in patients with no, or minimal, structural heart disease.
AGGRASTAT™ (tirofiban HCL) is a reversible GP IIb/IIIa inhibitor (an intravenous anti-platelet drug) for use in Acute Coronary Syndrome (“ACS”) patients. We acquired the ex-U.S. marketing rights to AGGRASTAT™ as part of the transaction in which we also acquired Correvio LLC (“Correvio”), a privately held pharmaceutical company headquartered in Geneva, Switzerland, in November of 2013.
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Both BRINAVESS™ and AGGRASTAT™ are available commercially outside of the United States either directly through our own sales force in Europe or via our global distributor and partner network.
BRINAVESS™ (Vernakalant (IV))
We have exclusive, global marketing rights to BRINAVESS™, the intravenous formulation of vernakalant, and are responsible for all future development and commercialization of the product, subject to ongoing transfer of certain rights from Merck Sharp & Dohme Corp. (“Merck”) and its affiliates to us, which has been delayed in certain jurisdictions due to routine regulatory requirements and is expected to be completed in 2014. Prior to September 2013, global marketing rights to vernakalant (IV) were held by Merck under two collaboration and license agreements (the “Collaboration Agreements”).
North America
In December 2006, our former partner, Astellas Pharma US, Inc. (“Astellas”), filed a New Drug Application (“NDA”) for vernakalant (IV) with the U.S. Food and Drug Administration (“FDA”). In August 2008, Astellas received an action letter from the FDA, informing Astellas that the FDA had completed its review of the NDA for vernakalant (IV) and that the application was approvable. The letter requested additional information associated with the risk of previously identified events experienced by a subset of patients during the clinical trials as well as a safety update from ongoing or completed studies of vernakalant (IV), regardless of indication, dosage form or dose level. The action letter further indicated that if the response to their requests was not satisfactory, additional clinical studies may be required.
In August 2009, we, together with our former partner Astellas, announced that Astellas would undertake a single confirmatory additional Phase 3 clinical trial (“ACT 5") under a Special Protocol Assessment. The decision to conduct another trial was reached following extended discussions between Astellas and the FDA to define the best regulatory path forward for vernakalant (IV). ACT 5 began enrolment of recent onset atrial fibrillation patients without a history of heart failure in October 2009.
In October 2010, a clinical hold was placed on the ACT 5 study of vernakalant (IV) following a single unexpected serious adverse event of cardiogenic shock experienced by a patient with atrial fibrillation who received vernakalant (IV).
In July 2011, Merck acquired the rights for the development and commercialization of vernakalant (IV) in North America. All terms, responsibilities and payments that Astellas committed to under the North American Vernakalant (IV) Agreement were assumed by Merck without change. Merck and the FDA agreed to terminate the ACT 5 study. Merck began discussions with the FDA to determine the next steps for the development of vernakalant (IV) in the United States.
Merck was responsible for 75% of all the remaining development costs related to seeking regulatory approval in North American markets, and all marketing and commercialization costs for vernakalant (IV) in North America. Under the North American Vernakalant (IV) Agreement we had the right to additional milestone payments with respect to any subsequent drugs developed under the agreement.
In September 2012, Merck gave notice to us of its termination of the North American Vernakalant (IV) Agreement. In May 2013, we completed the transfer of sponsorship of the U.S. Investigational New Drugs (“INDs”) for vernakalant (IV) and vernakalant (oral) and the transfer of the NDA for vernakalant (IV) from Merck to us. We have initiated discussions with the FDA regarding potential development paths for the vernakalant programs in the United States.
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Rest of World (Outside North America)
In April 2009, we entered into the Collaboration Agreements with Merck for the development and commercialization of vernakalant. The Collaboration Agreements provided an affiliate of Merck with exclusive rights outside of North America to vernakalant (IV).
Under the terms of the Collaboration Agreements, Merck paid us an initial fee of $60.0 million. In addition, we were eligible to receive up to an additional $200.0 million in payments, of which we received $45.0 million, based on the achievement of certain milestones associated with the development and approval of vernakalant products, and up to $100.0 million for milestones associated with approvals in other subsequent indications of both the intravenous and oral formulations. Also, we were eligible to receive tiered royalty payments on sales of any approved products and had the potential to receive up to $340.0 million in additional milestone payments based on achievement of significant sales thresholds. Merck was responsible for all costs associated with the development, manufacturing and commercialization of these product candidates.
In July 2009, our former partner Merck submitted a Marketing Authorization Application (“MAA”) to the European Medicines Agency (“EMA”) seeking marketing approval for vernakalant (IV) in the European Union, and as a result of the submission we received a $15.0 million milestone payment from Merck.
In June 2010, the Committee for Medicinal Products for Human Use of the EMA recommended marketing approval of vernakalant (IV) for the conversion of recent onset atrial fibrillation to sinus rhythm in adults and in September 2010, vernakalant (IV) received marketing approval under the trade name BRINAVESS™ in the European Union, Iceland and Norway. This milestone triggered a $30.0 million milestone payment from Merck. After receipt of marketing approval, Merck began its commercial launch of BRINAVESS™ in a number of European countries.
In September 2012, Merck gave notice to us of its termination of the Collaboration Agreements. On April 25, 2013, we entered into a Transition Agreement with Merck (the “Transition Agreement”) to amend and supplement the provisions of the Collaboration Agreements governing their rights and responsibilities in connection with the termination of the Collaboration Agreements and transfer of rights to, and responsibilities for, vernakalant to us. Pursuant to the Transition Agreement, we took responsibility for worldwide sales, marketing, and promotion of vernakalant (IV) on April 25, 2013. Regulatory product rights and product distribution responsibility were transferred to us upon transfer of the marketing authorizations in the relevant countries, subject to the ongoing transfer of certain rights from Merck and its affiliates to us, which has been delayed in some jurisdictions due to routine regulatory requirements and is expected to be completed in 2014.
In June 2013, we announced the decision by the European Commission to allow the transfer of the centrally-approved marketing authorisation for BRINAVESS™ from Merck to us. We are now the marketing authorization holder for BRINAVESS™ in the member states of the European Union. As a result, royalties on sales and the promotional services fee we previously received from Merck ceased on July 1, 2013 and we began benefiting from all sales of BRINAVESS™ throughout the world.
On September 16, 2013, we announced the completion of the transfer from Merck to us of commercialization responsibility for BRINAVESS™ in the European Union and the responsibility to complete the post-marketing study for BRINAVESS™. We are now supplying BRINAVESS™ under our own trade dress in the European Union.
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During the six months ended June 30, 2014, we continued to seek new partners to distribute BRINAVESSTM. We entered into commercialization agreements with Tamro AB, Nomeco A/S, Logista Pharma S.A., VIANEX S.A., and UDG Healthcare PLC to distribute BRINAVESS™ in Sweden, Denmark, Spain, Greece, and Ireland respectively. In addition, we announced that our partner, AOP Orphan Pharmaceuticals AG, headquartered in Vienna, Austria, is now making BRINAVESS™ available to physicians and patients in Switzerland, the Czech Republic, Poland, Slovenia, Slovakia, Hungary, Latvia and Romania.
Vernakalant (oral)
Vernakalant (oral) is being developed as an oral maintenance therapy for the long-term prevention of atrial fibrillation recurrence. In July and September 2006, we announced positive top line results for the sequential 300 mg and 600 mg dosing groups, respectively, from the Phase 2a pilot study of vernakalant (oral). In July 2008, we announced positive clinical results from the Phase 2b clinical study of vernakalant (oral) to further evaluate the safety and tolerability, pharmacokinetics and efficacy of vernakalant (oral).
In April 2009, we entered into the Collaboration Agreements with Merck for the development and commercialization of vernakalant. The agreement provided an affiliate of Merck with exclusive global rights to vernakalant (oral).
In November 2011, Merck completed an additional multiple rising-dose Phase I study to explore the safety, tolerability, pharmacokinetics and pharmacodynamics of higher doses of vernakalant (oral) than previously studied in healthy subjects and that in this study, vernakalant (oral) was well-tolerated at increased exposures. We also announced that Merck had scheduled, to start in late 2011, an additional Phase I trial assessing the safety and tolerability of vernakalant (oral) when dosed for a more extended period of time at higher exposures.
In March 2012, Merck informed us of its decision to discontinue further development of vernakalant (oral). In September 2012, we announced that Merck would return the global marketing and development rights for vernakalant (oral) to us in connection with Merck’s termination of the Collaboration Agreements. In May 2013, we completed the transfer of sponsorship of the IND for vernakalant (oral) from Merck to us. We are continuing to assess the appropriate development plan for vernakalant (oral).
AGGRASTAT™ for Acute Coronary Syndrome
AGGRASTAT™ contains tirofiban hydrochloride, which is a reversible GP IIb/IIIa inhibitor for use in indicated Acute Coronary Syndrome patients. AGGRASTAT™ is used to help assist the blood flow to the heart and to prevent chest pain and/or heart attacks (both STEMI – ST-elevation myocardial infarction, and NONSTEMI – non-ST-elevation myocardial infarction). It works by preventing platelets, cells found in the blood, from forming into blood clots within the coronary arteries and obstructing blood flow to the heart muscle which can result in a heart attack. The medicine may also be used in patients whose heart vessels are dilated with a balloon (percutaneous coronary intervention or PCI, a procedure used to open up blocked or obstructed arteries in the heart in order to improve the blood flow to the heart muscle (myocardium)) with or without the placement of a coronary stent. AGGRASTAT™ is administered intravenously, and has been on the market for many years with an excellent safety and efficacy profile.
In May 2014, we entered into an agreement with AOP Orphan Pharmaceuticals AG to commercialize AGGRASTAT™ in selected European markets. Key AOP Orphan countries for AGGRASTAT™ include Austria, Hungary, Switzerland, and other Eastern European states.
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Pre-clinical
We continue to support pre-clinical research and development work externally through academic research collaborations. The focus of the technology is on modulating cellular proteins (ion channels) that gate the movement of ions across the cell membrane to control a variety of essential functions ranging from the contraction of muscles, to the secretion from glands, to responses to foreign bodies and inflammation. The wide variety of such proteins provides a broad area for the development of therapeutics useful in a large number of human disorders.
The following table summarizes the current status of our programs:
|
Program |
Stage of Development |
Current Status |
| Vernakalant (IV) | FDA New Drug Application (NDA) | Approvable letter received in 2008 |
| European Marketing Authorisation Application (MAA) | Marketing approval received in September 2010 under trade name BRINAVESS™ | |
| European Comparator (AVRO) Study | Final results released in Q2-2010 | |
| Phase 3 Asia Pacific study | Study terminated as part of Merck’s termination of the Collaboration Agreements Analysis of data ongoing | |
| Phase 3 ACT 5 study | Study terminated | |
| Post approval study |
SPECTRUM (post approval safety study) initiated in Q4-2011 Study continuing | |
| Vernakalant (oral) | Phase 2b Clinical Trial | Final results released in Q3-2008 |
| Pharmacokinetic/ pharmacodynamics studies |
Phase 1 PK/PD studies completed |
CORPORATE UPDATE
Senior Secured Term Loan Facility
On July 18, 2014, we announced the closing of a senior, secured term loan facility with MidCap Financial, LLC for up to $22 million in two tranches bearing interest at a rate of Libor plus 8%. The first tranche of $12 million is available for working capital and general corporate purposes. The second tranche of up to $10 million is available to support a product or company acquisition. The loan carries a term of 48 months and is secured by substantially all of our assets.
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Long-Term Incentives
On May 9, 2014, the Board of Directors approved a Restricted Share Unit Plan (“RSU Plan”) and certain amendments to Cardiome’s incentive stock option plan (“Stock Option Plan”) to provide long-term incentives to employees and directors. The RSU Plan and the amendments to the Stock Option Plan were approved by the shareholders on June 16, 2014 at the annual general and special meeting of the shareholders.
Common Share Financing and Secondary Offering
On March 11, 2014, we completed a prospectus offering of 1,500,000 common shares from treasury at CAD $10.00 per common share for net proceeds of $12.4 million. Additionally, 1,500,000 common shares were sold in a secondary offering from CarCor Investment Holdings LLC (“CarCor”), the shareholder from which we purchased Correvio, at CAD $10.00 per common share for net proceeds of $12.7 million. We did not receive any of the proceeds of the sale of common shares by CarCor. This short form prospectus offering was made on a bought deal basis pursuant to an underwriting agreement with Canaccord Genuity Corp., acting as sole bookrunner and co-lead underwriter, and Cormark Securities Inc., acting as co-lead underwriter.
As stated in the prospectus pursuant to which this financing was effected, we currently intend to use the proceeds for working capital and general corporate purposes (approximately 50% of net proceeds from the offering received by us), and the advancement of our business objectives outlined under “Our Strategy” in the short form prospectus, including, without limitation, for (a) regulatory costs of vernakalant (IV) and vernakalant (oral) (approximately 20% of net proceeds from the offering received by us) and (b) expansion of our sales and marketing efforts for BRINAVESS™ and AGGRASTAT™ in Europe and other parts of the world (approximately 30% of net proceeds from the offering received by us). Since March 11, 2014, the closing date of the financing, some of the proceeds we received from the financing were used for working capital and general corporate expenditures.
At The Market Sales Issuance Agreement
On February 18, 2014, we filed a prospectus supplement in each of the provinces of Canada, other than Québec, and the United States to qualify and register the distribution of our common shares having an aggregate offer price of up to $8.9 million in “at the market” distributions effected from time to time pursuant to an At The Market Sales Issuance Agreement that we entered into on the same day with MLV & Co. LLC, as agent (the “ATM Offering”). No sales in the ATM Offering will be made in Canada. As of June 30, 2014, we have sold 30,513 of our common shares in the ATM Offering for gross proceeds of $0.3 million.
As stated in the prospectus supplement pursuant to which the ATM Offering financing is effected, we currently intend to use the net proceeds from the sale of the common shares offered in the ATM Offering primarily for working capital and general corporate purposes, including to fund expansion of our sales and marketing efforts for BRINAVESS™ and AGGRASTAT™ in Europe and other parts of the world, for funding clinical development and regulatory costs of vernakalant (IV) and vernakalant (oral), and for advancement of our other business objectives outlined under “Our Strategy” in the base shelf prospectus pursuant to which the ATM Offering is affected.
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INTERNAL CONTROLS OVER FINANCIAL REPORTING
There were no changes in our internal controls over financial reporting that occurred during the three and six months ended June 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
Our interim consolidated financial statements are prepared in accordance with U.S. GAAP. These accounting principles require us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting periods. We believe that the estimates and assumptions upon which we rely are reasonable based upon information available at the time that these estimates and assumptions were made. Actual results may differ from these estimates under different assumptions or conditions. Significant areas requiring management estimates include the recoverability of inventories, the assessment of net recoverable value and amortization period of intangible assets, accrual of clinical trial and research expenses, revenue recognition, bad debt and doubtful accounts, income taxes, accounting for stock-based compensation expense, and commitments and contingencies.
The significant accounting policies that we believe are the most critical in fully understanding and evaluating our reported financial results include revenue recognition, impairment of long-lived assets, useful lives of intangible assets, clinical trial accounting and stock-based compensation. These and other significant accounting policies are described more fully in Note 2 of our annual consolidated financial statements for the year ended December 31, 2013. There have been no material changes to these accounting policies during the three and six months ended June 30, 2014.
RESULTS OF OPERATIONS
Second Quarter Overview
We recorded a net loss of $4.2 million ($0.26 loss per share) for the three months ended June 30, 2014, compared to a net loss of $3.1 million ($0.20 loss per share) for the three months ended March 31, 2014. The increase in net loss recorded for the three months ended June 30, 2014 was due to an increase in selling, general and administration costs.
Three and Six Months Ended June 30, 2014 Compared to Three and Six Months Ended June 30, 2013
We recorded a net loss of $4.2 million ($0.26 per share) for the three months ended June 30, 2014 (“Q2-2014”), compared to a net loss of $2.8 million ($0.22 per share) for the three months ended June 30, 2013 (“Q2-2013”). On a year-to-date basis, we recorded a net loss of $7.4 million ($0.46 per share) for the six months ended June 30, 2014, compared to a net income of $15.6 million ($1.25 per share) for the six months ended June 30, 2013.
The net losses for the three and six months ended June 30, 2014 were primarily due to operating, marketing, and selling costs of both BRINAVESS™ and AGGRASTAT™. The net income for the six months ended June 30, 2013 was primarily due to the recognition of a non-reoccurring $20.8 million gain on the settlement of debt owed to Merck.
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Revenue
Revenue for Q2-2014 was $7.7 million, an increase of $7.6 million from $0.1 million in Q2-2013. Revenue for the six months ended June 30, 2014 and 2013 was $15.3 million and $0.1 million, respectively. Revenue in 2014 is comprised primarily of product revenue, whereas in 2013, revenue was comprised of licensing and other fees we received from our collaborative partners.
Product revenue in 2014 was comprised of sales of BRINAVESS™ and AGGRASTAT™. After the transfer of commercialization responsibility from Merck to us on September 16, 2013, we began to recognize product revenues from the sale of BRINAVESS™ in countries where the marketing authorization had been transferred to us from Merck. The increase in product revenue for the three and six months ended June 30, 2014 compared to the same periods of the prior year was primarily due to the revenue generated from the sales of AGGRASTAT™ and to the recognition of all worldwide revenues of BRINAVESS™.
Licensing, royalty and other fees for Q2-2014 represent royalty revenue from licensees, which are based on third-party sales of licensed products. In Q2-2013, licensing, royalty and other fees primarily represented royalties from our former collaborative partner.
Cost of Goods Sold
Cost of goods sold related to the sale of BRINAVESS™ and AGGRASTAT™ for the three and six months ended June 30, 2014 was $2.2 million and $3.7 million, respectively. We did not have any cost of goods sold in the three and six months ended June 30, 2013 as we did not have any product revenue until Q3-2013.
Cost of goods sold is comprised primarily of expenditures incurred in purchasing inventory, production or conversion, distribution and logistics costs, as well as quality control and monitoring costs.
Selling, General and Administration Expenditures
Selling, general and administration (“SG&A”) expenditures primarily consist of costs incurred to support the commercialization of BRINAVESS™ and the continued sales of AGGRASTAT™, wages and benefits (including stock-based compensation), office and administration costs, business development costs, consulting fees and professional fees.
SG&A expenditures for Q2-2014 were $8.8 million compared to $3.0 million for Q2-2013. On a year-to-date basis, we incurred total SG&A expenditures of $16.8 million for the six months ended June 30, 2014, compared to $5.2 million for the same period in 2013. The increase was primarily due to an increase in costs associated with our sales and marketing efforts to support the commercialization of BRINAVESS™ and the continued sales of AGGRASTAT™, and certain one-time costs.
Other Income and Expenses
Other income and expenses consists of sublease income, interest income and expense and foreign exchange gains and losses.
Other expense for Q2-2014 was $0.1 million, compared to other income of $0.2 million for Q2-2013. For the six months ended June 30, 2014, other expense was $0.4 million, compared to other income of $21.2 million for the six months ended June 30, 2013. Other expense for the six months ended 2014 was related primarily to interest expense on the deferred consideration arising from the acquisition of Correvio, whereas other income for the six months ended June 30, 2013 was related to the $20.8 million gain on the settlement of debt owed to Merck.
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QUARTERLY FINANCIAL INFORMATION
The following table summarizes selected unaudited consolidated financial data for each of the last eight quarters, prepared in accordance with U.S. GAAP:
| Quarter ended | ||||||||||||||||
| (In thousands of U.S. dollars except per share amounts) | June 30, 2014 | March 31, 2014 | December 31, 2013 | September 30, 2013 | ||||||||||||
| Total revenue(1) | $ | 7,667 | $ | 7,592 | $ | 3,867 | $ | 477 | ||||||||
| Cost of goods sold(1) | 2,243 | 1,493 | 889 | 47 | ||||||||||||
| Selling, general and administration(2) | 8,808 | 7,999 | 7,282 | 3,954 | ||||||||||||
| Research and development | 59 | 245 | 40 | 31 | ||||||||||||
| Restructuring(4) | - | - | 1,337 | - | ||||||||||||
| Net loss | $ | (4,240 | ) | $ | (3,134 | ) | $ | (7,232 | ) | $ | (3,614 | ) | ||||
| Basic and diluted loss per share(3) | $ | (0.26 | ) | $ | (0.20 | ) | $ | (0.53 | ) | $ | (0.29 | ) | ||||
| Quarter ended | ||||||||||||||||
| (In thousands of U.S. dollars except per share amounts) | June 30, 2013 | March 31, 2013 | December 31, 2012 | September 30, 2012 | ||||||||||||
| Total revenue | $ | 107 | $ | 60 | $ | 84 | $ | 63 | ||||||||
| Selling, general and administration(2) | 2,974 | 2,209 | 2,208 | 2,496 | ||||||||||||
| Research and development | 35 | 370 | 385 | 449 | ||||||||||||
| Restructuring(4) | (57 | ) | (73 | ) | 35 | 9,036 | ||||||||||
| Gain on settlement of debt | - | 20,834 | 11,218 | - | ||||||||||||
| Net income (loss) | $ | (2,774 | ) | $ | 18,393 | $ | 7,744 | $ | (13,412 | ) | ||||||
| Basic and diluted earnings (loss) per share (3) | $ | (0.22 | ) | $ | 1.47 | $ | 0.63 | $ | (1.10 | ) | ||||||
| (1) | Effective Q3-2013 and Q4-2013, total revenue and cost of goods sold include amounts related to the sales of BRINAVESS™ and AGGRASTAT™, respectively. |
| (2) | Effective Q1-2013, SG&A includes costs incurred to support the commercialization of BRINAVESS™. Effective Q4-2013, SG&A includes costs incurred to support the commercialization of AGGRASTAT™. |
| (3) | Earnings (loss) per share for the periods presented have been adjusted on a retroactive basis to reflect the April 12, 2013 one-for-five share consolidation. |
| (4) | Employee termination benefits related to the Q3 2012 workforce reduction and to the employee rationalization of Correvio. |
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Variations in our revenue, expenses and net income (loss) for the periods above resulted primarily from the following factors:
Revenue:
The increase in revenue over the past five quarters was primarily due to product sales of BRINAVESS™ and AGGRASTAT™. We began benefitting from worldwide sales from BRINAVESS™ in Q3-2013. Following the acquisition of Correvio in Q4-2013, we began recording sales of AGGRASTAT™. The increase in revenue relates primarily to sales of AGGRASTAT™.
Cost of Goods Sold:
The increase in cost of goods sold over the past four quarters was due to the product sales of BRINAVESS™ and AGGRASTAT™, with the increase relating primarily to sales of AGGRASTAT™.
Research and Development Expenditures:
R&D expenses significantly decreased after Q2-2012 following our decision to eliminate our internal research activities. Research and development costs now include pre-clinical research and development work done externally through collaborations.
Selling, General and Administration Expenditures:
The increase in SG&A expenditures over the past five quarters was due to costs incurred to support the commercialization of BRINAVESS™ starting in Q2-2013 and to support the sales of AGGRASTAT™ following the acquisition of Correvio in Q4-2013.
Restructuring:
Restructuring costs were related to employee termination benefits incurred in connection with the acquisition of Correvio in Q4-2013 and the workforce reductions in Q3-2012.
Gain on settlement of debt:
The debt settlement agreement with Merck in Q4-2012 and the resulting payments of the settlement amounts in Q4-2012 and Q1-2013 resulted in the gains on settlement of debt.
Net income (loss):
The timing and quantum of our revenues and expenses discussed above resulted in the variations in net income (loss). Our net income for Q1-2013 and Q4-2012 were also positively affected by the $20.8 million and $11.2 million gain on the settlement of debt owed to Merck, respectively.
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LIQUIDITY AND CAPITAL RESOURCES
Our operational activities during the three months ended June 30, 2014 were financed mainly by the cash from our financing activities in Q1. At June 30, 2014, we had working capital of $14.5 million, compared to $10.6 million at December 31, 2013. We had available cash reserves comprised of cash and cash equivalents of $9.4 million at June 30, 2014 compared to $11.0 million at December 31, 2013.
On July 18, 2014, we announced the closing of a senior, secured term loan facility for up to $22 million to be made available to us by MidCap Financial, LLC in two tranches with an interest rate of the London Interbank Offered Rate (“Libor”) plus 8%. We intend to use the proceeds of the first tranche of $12 million for working capital and general corporate purposes, including the expansion of our sales and marketing efforts for BRINAVESS™ and AGGRASTAT™ in Europe and other parts of the world. The second tranche of up to $10 million is available to support a product or company acquisition. The $22 million loan carries a term of 48 months and is secured by substantially all of our assets.
We believe that our cash position, proceeds from the common share offering completed in March 2014, proceeds from the loan facility described above, expected future cash inflows from the sale of BRINAVESS™ and AGGRASTAT™, and expected proceeds from the ATM Offering will be sufficient to finance our operational and capital needs for at least 18 months. In particular, we believe our cash reserves and expected cash inflows from the sale of BRINAVESS™ and AGGRASTAT™ will fund further development and commercialization of our products, operational, and strategic activities. However, our future cash requirements may vary materially from those now expected due to a number of factors, including the costs associated with commercialization efforts, clinical trials, and strategic opportunities. As a result, in the future it may be necessary to raise additional funds. These funds may come from sources such as entering into strategic collaboration arrangements, the issuance of shares from treasury, or alternative sources of financing. However, there can be no assurance that we will be able to successfully raise sufficient funds to continue the development and commercialization of our products and our operational activities.
Sources and Uses of Cash
| For the Three Months Ended June 30 | For the Six Months Ended June 30 | |||||||||||||||
| (in thousands of U.S. dollars) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Cash used in operating activities | $ | (3,328 | ) | $ | (6,042 | ) | $ | (12,624 | ) | $ | (8,524 | ) | ||||
| Cash used in investing activities | (54 | ) | (35 | ) | (69 | ) | (53 | ) | ||||||||
| Cash (used in) provided by financing activities | (732 | ) | 55 | 10,807 | (12,921 | ) | ||||||||||
| Effect of foreign exchange rate on cash and cash equivalents | 231 | (18 | ) | 255 | (62 | ) | ||||||||||
| Net decrease in cash and cash equivalents | $ | (3,883 | ) | $ | (6,040 | ) | $ | (1,631 | ) | $ | (21,560 | ) | ||||
Cash used in operating activities in the three months ended June 30, 2014 was $3.3 million, compared to cash used in operating activities of $6.0 million for the same period of 2013. The decrease in cash used was primarily due to the purchase of inventory from Merck during the three months ended June 30, 2013. Cash used in operating activities for the six months ended June 30, 2014 was $12.6 million, an increase of $4.1 million from $8.5 million used in operating activities for the same period in 2013. The increase in cash used was primarily due to the timing of customer receipts and payment of liabilities.
| 11 |
Cash used in investing activities in the three and six months ended June 30, 2014 and 2013 were not significant.
Cash used in financing activities was $0.7 million for the three months ended June 30, 2014, which relates to the deferred consideration payments for the acquisition of Correvio, as compared to cash provided by financing activities of $0.1 million for the three months ended June 30, 2013, which relates to proceeds on the sale of property and equipment that we no longer require.
Cash provided by financing activities for the six months ended June 30, 2014 was $10.8 million, compared to the cash used by financing activities of $12.9 million for the six months ended June 30, 2013. In the first half of 2014, we received net proceeds of $12.4 million from our common share offering completed in Q1-2014, whereas in Q1-2013, we repaid $13.0 million of debt owed to Merck.
Contractual Obligations
As of June 30, 2014, and in the normal course of business, we have the following obligations to make future payments, representing contracts and other commitments that are known and committed.
| Contractual Obligations | Payment due by period | |||||||||||||||||||||||||||
| (In thousands of U.S. dollars) | 2014 | 2015 | 2016 | 2017 | 2018 | Thereafter | Total | |||||||||||||||||||||
| Commitments for clinical and other agreements | $ | 2,270 | $ | 1,757 | $ | 12 | $ | 7 | $ | 7 | $ | - | $ | 4,053 | ||||||||||||||
| Supplier purchase commitment | 1,373 | 1,716 | - | - | - | - | 3,089 | |||||||||||||||||||||
| Deferred consideration | 2,089 | 5,361 | 1,637 | 9,087 | ||||||||||||||||||||||||
| Interest expense on deferred consideration | 525 | 700 | 164 | - | - | - | 1,389 | |||||||||||||||||||||
| Operating lease obligations | 200 | 283 | 219 | 124 | 124 | 83 | 1,033 | |||||||||||||||||||||
| Total | $ | 6,457 | $ | 9,817 | $ | 2,032 | $ | 131 | $ | 131 | $ | 83 | $ | 18,651 | ||||||||||||||
| 12 |
Outstanding Share Capital
As of August 7, 2014, there were 16,520,072 common shares issued and outstanding, and 1,138,312 common shares issuable upon the exercise of outstanding stock options at a weighted average exercise price of CAD $4.42 per share.
OFF-BALANCE SHEET ARRANGEMENTS
We have no material undisclosed off-balance sheet arrangements that have or are reasonably likely to have, a current or future effect on our results of operations, financial condition, revenues or expenses, liquidity, capital expenditures or capital resources that is material to investors.
FINANCIAL INSTRUMENTS AND RISKS
We are exposed to credit risks and market risks related to changes in interest rates and foreign currency exchange rates, each of which could affect the value of our current assets and liabilities. We invest our cash reserves in fixed rate, highly liquid and highly rated financial instruments such as treasury bills, commercial papers and banker’s acceptances. At June 30, 2014, our cash and cash equivalents were primarily held as cash, the majority of which was denominated in Canadian dollars. We do not believe that the results of operations or cash flows would be affected to any significant degree by a sudden change in market interest rates relative to our investment portfolio, due to the relative short-term nature of the investments and our current ability to hold fixed income investments to maturity. We have not entered into any forward currency contracts or other financial derivatives to hedge foreign exchange risk. We are subject to foreign exchange rate fluctuations that could have a material effect on our future operating results or cash flows.
SUBSEQUENT EVENT
On July 23, 2014, we entered into a lease agreement for office space of approximately 10,967 square feet in Vancouver, British Columbia, Canada. The lease carries a term of 10 years, with a renewal option of 5 years, and is expected to begin on or about December 1, 2014. In addition to the base rent payments, we will be obligated to pay certain customary amounts for our share of operating expenses and tax obligations. The lease agreement includes lease inducements, which will be amortized on a straight-line basis over the term of the lease, in accordance with our accounting policy.
| 13 |
Exhibit 99.2
| Consolidated Financial Statements | ||
| (Expressed in thousands of United States (U.S.) dollars) | ||
| (Prepared in accordance with generally accepted accounting principles used in the United States of America (U.S. GAAP)) | ||
| CARDIOME PHARMA CORP. | ||
| Periods ended June 30, 2014 and 2013 | ||
| (Unaudited) | ||
CARDIOME PHARMA CORP.
Consolidated Balance Sheets
(Unaudited)
(Expressed in thousands of U.S. dollars, except share amounts)
(Prepared in accordance with U.S. GAAP)
| June 30, 2014 | December 31, 2013 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 9,353 | $ | 10,984 | ||||
| Restricted cash (note 5) | 2,428 | 2,323 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $552 (December 31, 2013 - $325) | 7,313 | 6,674 | ||||||
| Inventories (note 6) | 6,455 | 6,597 | ||||||
| Prepaid expenses and other assets | 3,034 | 1,749 | ||||||
| 28,583 | 28,327 | |||||||
| Property and equipment (note 7) | 564 | 618 | ||||||
| Intangible assets (note 8) | 17,093 | 18,069 | ||||||
| Goodwill | 318 | 318 | ||||||
| $ | 46,558 | $ | 47,332 | |||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities (note 9) | $ | 9,327 | $ | 14,003 | ||||
| Current portion of deferred consideration (note 3) | 4,769 | 3,688 | ||||||
| 14,096 | 17,691 | |||||||
| Deferred consideration (note 3) | 4,317 | 6,997 | ||||||
| 18,413 | 24,688 | |||||||
| Stockholders’ equity: | ||||||||
| Common stock | 284,518 | 272,083 | ||||||
| Authorized - unlimited number with no par value | ||||||||
| Issued and outstanding – 16,520,072 (2013 – 14,958,277) | ||||||||
| Additional paid-in capital | 33,625 | 33,349 | ||||||
| Deficit | (308,120 | ) | (300,746 | ) | ||||
| Accumulated other comprehensive income | 18,122 | 17,958 | ||||||
| 28,145 | 22,644 | |||||||
| $ | 46,558 | $ | 47,332 | |||||
Contingencies (note 14)
Subsequent events (note 16)
See accompanying notes to the consolidated financial statements.
CARDIOME PHARMA CORP.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(Expressed in thousands of U.S. dollars, except share and per share amounts)
(Prepared in accordance with U.S. GAAP)
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product revenues | $ | 6,500 | $ | - | $ | 13,062 | $ | - | ||||||||
| Licensing, royalty and other fees | 1,167 | 107 | 2,197 | 167 | ||||||||||||
| 7,667 | 107 | 15,259 | 167 | |||||||||||||
| Cost of goods sold | 2,243 | - | 3,736 | - | ||||||||||||
| 5,424 | 107 | 11,523 | 167 | |||||||||||||
| Expenses: | ||||||||||||||||
| Selling, general and administration | 8,808 | 2,974 | 16,807 | 5,210 | ||||||||||||
| Amortization (notes 7 and 8) | 564 | 108 | 1,100 | 216 | ||||||||||||
| Research and development | 59 | 35 | 304 | 405 | ||||||||||||
| Restructuring (note 13) | - | (57 | ) | - | (130 | ) | ||||||||||
| 9,431 | 3,060 | 18,211 | 5,701 | |||||||||||||
| Operating loss | (4,007 | ) | (2,953 | ) | (6,688 | ) | (5,534 | ) | ||||||||
| Other (income) expense: | ||||||||||||||||
| Interest (income) expense | 226 | (11 | ) | 480 | (27 | ) | ||||||||||
| Gain on settlement of debt (note 10) | - | - | - | (20,834 | ) | |||||||||||
| Other income | (18 | ) | (176 | ) | (117 | ) | (328 | ) | ||||||||
| Foreign exchange (gain) loss | (131 | ) | 8 | 50 | 36 | |||||||||||
| 77 | (179 | ) | 413 | (21,153 | ) | |||||||||||
| Net income (loss) before income taxes | (4,084 | ) | (2,774 | ) | (7,101 | ) | 15,619 | |||||||||
| Provision for income taxes | 156 | - | 273 | - | ||||||||||||
| Net income (loss) | $ | (4,240 | ) | $ | (2,774 | ) | $ | (7,374 | ) | $ | 15,619 | |||||
| Other comprehensive income: | ||||||||||||||||
| Foreign currency translation adjustments | 2 | - | 164 | - | ||||||||||||
| Comprehensive income (loss) | $ | (4,238 | ) | $ | (2,774 | ) | $ | (7,210 | ) | $ | 15,619 | |||||
| Earnings (loss) per common share (note 12) | ||||||||||||||||
| Basic and diluted | $ | (0.26 | ) | $ | (0.22 | ) | $ | (0.46 | ) | $ | 1.25 | |||||
| Weighted average common shares outstanding (note 12) | ||||||||||||||||
| Basic | 16,520,072 | 12,470,335 | 15,931,887 | 12,470,335 | ||||||||||||
| Diluted | 16,520,072 | 12,470,335 | 15,931,887 | 12,491,987 | ||||||||||||
See accompanying notes to the consolidated financial statements.
CARDIOME PHARMA CORP.
Consolidated Statements of Stockholders’ Equity
(Unaudited)
(Expressed in thousands of U.S. dollars)
(Prepared in accordance with U.S. GAAP)
For the six months ended June 30, 2014 | Common stock | Additional paid-in capital | Deficit | Accumulated other comprehensive income | Total stockholders’ equity | |||||||||||||||
| Balance at December 31, 2013 | $ | 272,083 | $ | 33,349 | $ | (300,746 | ) | $ | 17,958 | $ | 22,644 | |||||||||
| Net loss | — | — | (7,374 | ) | — | (7,374 | ) | |||||||||||||
| Issuance of common stock | 13,821 | — | — | — | 13,821 | |||||||||||||||
| Share issue costs | (1,415 | ) | — | — | — | (1,415 | ) | |||||||||||||
| Reallocation of additional paid in capital arising from stock based | 29 | (29 | ) | — | — | — | ||||||||||||||
| compensation related to exercise of options | ||||||||||||||||||||
| Stock-based compensation expense recognized | — | 305 | — | — | 305 | |||||||||||||||
| Foreign currency translation adjustments | — | — | — | 164 | 164 | |||||||||||||||
| Balance at June 30, 2014 | $ | 284,518 | $ | 33,625 | $ | (308,120 | ) | $ | 18,122 | $ | 28,145 | |||||||||
| For the six months ended June 30, 2013 | Common stock | Additional paid-in capital | Deficit | Accumulated other comprehensive income | Total stockholders’ equity | |||||||||||||||
| Balance at December 31, 2012 | $ | 262,439 | $ | 32,754 | $ | (305,519 | ) | $ | 18,185 | $ | 7,859 | |||||||||
| Net income | — | — | 15,619 | — | 15,619 | |||||||||||||||
| Stock-based compensation expense recognized | — | 216 | — | — | 216 | |||||||||||||||
| Balance at June 30, 2013 | $ | 262,439 | $ | 32,970 | $ | (289,900 | ) | $ | 18,185 | $ | 23,694 | |||||||||
See accompanying notes to the consolidated financial statements.
CARDIOME PHARMA CORP.
Consolidated Statements of Cash Flows
(Unaudited)
(Expressed in thousands of U.S. dollars)
(Prepared in accordance with U.S. GAAP)
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||||||
| Operating activities: | ||||||||||||||||
| Net income (loss) for the period | $ | (4,240 | ) | $ | (2,774 | ) | $ | (7,374 | ) | $ | 15,619 | |||||
| Items not affecting cash: | ||||||||||||||||
| Amortization (notes 7 and 8) | 564 | 108 | 1,100 | 216 | ||||||||||||
| Stock-based compensation | 170 | 123 | 396 | 216 | ||||||||||||
| Gain on settlement of debt (note 10) | - | - | (20,834 | ) | ||||||||||||
| Unrealized foreign exchange (gain) loss | (105 | ) | - | (50 | ) | 24 | ||||||||||
| Other | - | (39 | ) | - | (12 | ) | ||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Restricted cash | (91 | ) | - | (116 | ) | - | ||||||||||
| Accounts receivable | (187 | ) | (338 | ) | (696 | ) | 453 | |||||||||
| Inventories | 959 | (2,800 | ) | 120 | (2,800 | ) | ||||||||||
| Prepaid expenses and other assets | (151 | ) | (85 | ) | (1,305 | ) | (118 | ) | ||||||||
| Accounts payable and accrued liabilities | (247 | ) | (237 | ) | (4,699 | ) | (1,288 | ) | ||||||||
| Net cash used in operating activities | (3,328 | ) | (6,042 | ) | (12,624 | ) | (8,524 | ) | ||||||||
| Investing activities: | ||||||||||||||||
| Purchase of property and equipment | (14 | ) | (13 | ) | (17 | ) | (13 | ) | ||||||||
| Purchase of intangible assets | (40 | ) | (22 | ) | (52 | ) | (40 | ) | ||||||||
| Net cash used in investing activities | (54 | ) | (35 | ) | (69 | ) | (53 | ) | ||||||||
| Financing activities: | ||||||||||||||||
| Issuance of common stock, net of share issue costs | (4 | ) | - | 12,406 | - | |||||||||||
| Proceeds from sale of property and equipment | - | 55 | - | 79 | ||||||||||||
| Repayment of long-term debt (note 10) | - | - | - | (13,000 | ) | |||||||||||
| Payment of deferred consideration (note 3) | (728 | ) | - | (1,599 | ) | - | ||||||||||
| Net cash (used in) provided by financing activities | (732 | ) | 55 | 10,807 | (12,921 | ) | ||||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | 231 | (18 | ) | 255 | (62 | ) | ||||||||||
| Decrease in cash and cash equivalents during the period | (3,883 | ) | (6,040 | ) | (1,631 | ) | (21,560 | ) | ||||||||
| Cash and cash equivalents, beginning of period | 13,236 | 25,747 | 10,984 | 41,267 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 9,353 | $ | 19,707 | $ | 9,353 | $ | 19,707 | ||||||||
| Supplemental cash flow information: | ||||||||||||||||
| Interest paid | $ | 247 | $ | - | $ | 543 | $ | - | ||||||||
| Interest received | - | 11 | - | 27 | ||||||||||||
| Net income taxes paid | 135 | - | 180 | - | ||||||||||||
See accompanying notes to the consolidated financial statements.
CARDIOME PHARMA CORP.
Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)
(Prepared in accordance with U.S. GAAP)
As at and for the three and six months ended June 30, 2014 and 2013
| 1. | Basis of presentation: |
These unaudited interim consolidated financial statements have been prepared by management in accordance with generally accepted accounting principles used in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars. They include all adjustments consisting solely of normal, reoccurring adjustments necessary for fair presentation of the periods presented. These unaudited interim consolidated financial statements do not include all note disclosures required by U.S. GAAP on an annual basis, and therefore should be read in conjunction with the annual audited consolidated financial statements for the year ended December 31, 2013 filed with the appropriate securities commissions. The results of operations for the three and six months ended June 30, 2014 and 2013 are not necessarily indicative of the results for the full year.
Cardiome Pharma Corp. (the “Company”) has financed its cash requirements primarily from share issuances, sales of BRINAVESSTM and AGGRASTATTM, payments from research collaborators, and licensing fees. The Company’s ability to attain profitability and positive cash flows from operations is dependent on a number of factors, including costs associated with commercialization efforts and clinical trials, the outcome of which cannot be predicted at this time. As a result, in the future it may be necessary for the Company to raise additional funds. These funds may come from sources such as entering into strategic collaboration arrangements, the issuance of shares from treasury, or alternative sources of financing. However, there can be no assurance that the Company will be able to successfully raise sufficient funds to continue the development and commercialization of our products and our operational activities.
| 2. | Significant Accounting Policies: |
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASC 606). The update is intended to clarify the principles of recognizing revenue, and to develop a common revenue standard for US GAAP and IFRS that would remove inconsistencies in revenue requirements, leading to improved comparability of revenue recognition practices across entities and industries. ASC Topic 606 contains a single model that applies to contracts with customers and two approaches to recognizing revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much, and when revenue is recognized. New estimates and judgmental thresholds have been introduced, which may affect the amount and/or timing of revenue recognized. The new standard is effective for annual and interim financial statements for fiscal years beginning after December 15, 2016. Early application is not permitted.
| 3. | Acquisition: |
On November 18, 2013, the Company completed the acquisition of Correvio LLC (“Correvio”) (the “Transaction”), a privately held pharmaceutical company headquartered in Geneva, Switzerland, focused on the worldwide marketing, excluding the United States, of AGGRASTATTM, a branded
| 2 |
CARDIOME PHARMA CORP.
Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)
(Prepared in accordance with U.S. GAAP)
As at and for the three and six months ended June 30, 2014 and 2013
| 3. | Acquisition (continued): |
prescription pharmaceutical. The Company acquired 100% of Correvio through the purchase of a combination of assets and shares of its subsidiaries in exchange for 19.9% of the Company’s outstanding shares (pro forma ownership of approximately 16.6%) and deferred consideration of $12,000. The deferred consideration will be repaid monthly at an amount equal to 10% of cash receipts from product sales and any applicable interest accrued at 10% compounded annually. The deferred consideration must be repaid in full by December 1, 2019.
The Transaction was accounted for as an acquisition of a business; accordingly, the assets acquired and liabilities assumed were recorded at their respective fair values as of the acquisition date. The determination of fair value requires management to make significant estimates and assumptions. The excess of the purchase price over the value assigned to the net assets acquired was recorded as goodwill. There have been no changes to the purchase price allocation since December 31, 2013. For further details, please refer to note 4 of the Company’s consolidated financial statements for the year ended December 31, 2013 for the purchase price allocation and related acquisition information.
| 4. | Financial instruments: |
The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities, and deferred consideration. The fair values of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued liabilities approximate their carrying values because of their short-term nature. As at June 30, 2014, the carrying value of the Company’s deferred consideration approximates its fair value based on current market borrowing rates. The deferred consideration is classified as Level 3 of the fair value hierarchy.
| 5. | Restricted cash: |
At June 30, 2014, restricted cash included $1,000 (December 31, 2013 - $1,000) relating to amounts held in escrow in a non-interest bearing account in connection with the acquisition of Correvio (note 3). This amount will be released from escrow upon the Company’s payment of all amounts owing under the deferred consideration liability plus all applicable accrued interest.
The Company also held restricted cash relating to deposits which are pledged as collateral for bank guarantees for sales contracts with various hospitals and health authorities and for value-added tax liabilities of $1,428 (December 31, 2013 - $1,158) and $nil (December 31, 2013 - $165), respectively. Average interest rates on these deposits range from nil to 0.01% (2013 - nil to 0.01%).
| 3 |
CARDIOME PHARMA CORP.
Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)
(Prepared in accordance with U.S. GAAP)
As at and for the three and six months ended June 30, 2014 and 2013
| 6. | Inventories: |
| June 30, | December 31, | |||||||
| 2014 | 2013 | |||||||
| Finished goods | $ | 3,203 | $ | 1,941 | ||||
| Work in process | 2,042 | 3,052 | ||||||
| Raw materials | 1,184 | 1,546 | ||||||
| Inventory consigned to others | 26 | 58 | ||||||
| $ | 6,455 | $ | 6,597 | |||||
During the quarter, the Company had a write down of $125 in finished goods inventory.
| 7. | Property and equipment: |
| Accumulated | Net book | |||||||||||
| As at June 30, 2014 | Cost | amortization | value | |||||||||
| Laboratory equipment | $ | 625 | $ | 514 | $ | 111 | ||||||
| Production equipment | 289 | 9 | 280 | |||||||||
| Software | 106 | 35 | 71 | |||||||||
| Computer equipment | 164 | 100 | 64 | |||||||||
| Leasehold improvements | 39 | 26 | 13 | |||||||||
| Furniture and office equipment | 39 | 14 | 25 | |||||||||
| $ | 1,262 | $ | 698 | $ | 564 | |||||||
| Accumulated | Net book | |||||||||||
| As at December 31, 2013 | Cost | amortization | value | |||||||||
| Laboratory equipment | $ | 629 | $ | 488 | $ | 141 | ||||||
| Production equipment | 286 | - | 286 | |||||||||
| Software | 96 | 13 | 83 | |||||||||
| Computer equipment | 144 | 87 | 57 | |||||||||
| Leasehold improvements | 39 | 17 | 22 | |||||||||
| Furniture and office equipment | 39 | 10 | 29 | |||||||||
| $ | 1,233 | $ | 615 | $ | 618 | |||||||
Amortization expense for the three and six months ended June 30, 2014 amounted to $37 and $72, respectively (three and six months ended June 30, 2013 - $25 and $51, respectively).
| 4 |
CARDIOME PHARMA CORP.
Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)
(Prepared in accordance with U.S. GAAP)
As at and for the three and six months ended June 30, 2014 and 2013
| 8. | Intangible assets: |
| Accumulated | Net book | |||||||||||
| As at June 30, 2014 | Cost | amortization | value | |||||||||
| Marketing rights | $ | 15,830 | $ | 990 | $ | 14,840 | ||||||
| Trade name | 1,131 | 71 | 1,060 | |||||||||
| Patents | 4,231 | 3,038 | 1,193 | |||||||||
| $ | 21,192 | $ | 4,099 | $ | 17,093 | |||||||
| Accumulated | Net book | |||||||||||
| As at December 31, 2013 | Cost | amortization | value | |||||||||
| Marketing rights | $ | 15,830 | $ | 199 | $ | 15,631 | ||||||
| Trade name | 1,131 | 14 | 1,117 | |||||||||
| Patents | 4,179 | 2,858 | 1,321 | |||||||||
| $ | 21,140 | $ | 3,071 | $ | 18,069 | |||||||
Amortization expense for the three and six months ended June 30, 2014 amounted to $527 and $1,028, respectively (three and six months ended June 30, 2013 - $83 and $165, respectively).
| 9. | Accounts payable and accrued liabilities: |
Accounts payable and accrued liabilities comprise:
| June 30, | December 31, | |||||||
| 2014 | 2013 | |||||||
| Trade accounts payable | $ | 3,054 | $ | 5,719 | ||||
| Employee-related accruals | 2,463 | 3,367 | ||||||
| Restructuring (note 13) | - | 732 | ||||||
| Interest payable | 86 | 125 | ||||||
| Other accrued liabilities | 3,724 | 4,060 | ||||||
| $ | 9,327 | $ | 14,003 | |||||
| 5 |
CARDIOME PHARMA CORP.
Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)
(Prepared in accordance with U.S. GAAP)
As at and for the three and six months ended June 30, 2014 and 2013
| 10. | Long term debt: |
On February 28, 2013, the debt settlement agreement dated December 10, 2012, and amended on December 31, 2012, between the Company and Merck Sharp and Dohme Corp. (formerly Merck & Co, Inc.) (Merck) was further amended, allowing the Company to pay the balance of the debt settlement amount prior to March 31, 2013. On March 1, 2013, the Company paid the remaining $13,000 of the $20,000 agreed-upon debt settlement payment, extinguishing all outstanding debt obligations to Merck. The Company recorded a gain on debt settlement of $20,834 for the three months ended March 31, 2013. With this final payment, all outstanding debt obligations are extinguished and Merck has released and discharged the collateral security taken in respect of the advances under the line of credit.
| 11. | Share capital: |
On February 18, 2014, the Company completed a prospectus supplement under which the Company may sell up to $8,900 of its common shares through at-the-market (ATM) offerings. On February 18, 2014, the Company sold 30,513 shares under an ATM offering and received gross proceeds of $289.
On March 11, 2014, the Company completed a prospectus offering of 1,500,000 common shares from treasury at CAD $10.00 per common share for net proceeds of $12,369. Additionally, 1,500,000 common shares were sold in a secondary offering from CarCor Investment Holdings LLC, the shareholder from which the Company purchased Correvio, at CAD $10.00 per common share for net proceeds of $12,720. This short form prospectus offering was made on a bought deal basis. The Company did not receive any of the proceeds of the sale of common shares by CarCor Investment Holdings LLC.
| 12. | Basic and diluted earnings (loss) per share: |
Reconciliations between basic and diluted earnings (loss) per share are set forth below for the three and six months ended June 30, 2014 and June 30, 2013, respectively:
| For the three months ended June 30 | 2014 | 2013 | ||||||
| Net loss | $ | (4,240 | ) | $ | (2,774 | ) | ||
| Weighted average number of common shares | ||||||||
| for basic income per share | 16,520,072 | 12,470,335 | ||||||
| Dilutive effect of options | - | - | ||||||
| Diluted weighted average number of common shares for diluted income per share | 16,520,072 | 12,470,335 | ||||||
| Basic and diluted loss per share | $ | (0.26 | ) | $ | (0.22 | ) | ||
| 6 |
CARDIOME PHARMA CORP.
Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)
(Prepared in accordance with U.S. GAAP)
As at and for the three and six months ended June 30, 2014 and 2013
| 12. | Basic and diluted earnings (loss) per share (continued): |
| For the six months ended June 30 | 2014 | 2013 | ||||||
| Net income (loss) | $ | (7,374 | ) | $ | 15,619 | |||
| Weighted average number of common shares | ||||||||
| for basic income per share | 15,931,887 | 12,470,335 | ||||||
| Dilutive effect of options | - | 21,652 | ||||||
| Diluted weighted average number of common shares for diluted income per share | 15,931,887 | 12,491,987 | ||||||
| Basic and diluted earnings (loss) per share | $ | (0.46 | ) | $ | 1.25 | |||
As at June 30, 2014, a total of 1,138,312 options are not included in the computation of diluted earnings per share because their effect is anti-dilutive for the period.
| 13. | Restructuring: |
In connection with the acquisition of Correvio in November 2013, the Company terminated several employees in its efforts to integrate Correvio’s operations.
In March and July of 2012, the Company reduced its workforce, exited redundant leased facilities and terminated certain contracts. The workforce reduction initiative was completed in 2012, with the related liability substantially paid out in the first quarter of 2013. Idle-use expense and other charges recognized in the year ended December 31, 2012 included lease termination costs. The majority of the liability associated with idle-use expense and other charges, which is related to redundant leased facilities, has been fully settled.
The following tables summarize the provisions related to the restructuring for the six months ended June 30, 2014 and June 30, 2013:
| Employee termination benefits | Idle-use expense and other charges | Total | ||||||||||
| Balance at December 31, 2013 | $ | 718 | $ | 14 | $ | 732 | ||||||
| Payments made | (718 | ) | - | (718 | ) | |||||||
| Non-cash items | - | (14 | ) | (14 | ) | |||||||
| Balance at June 30, 2014 | $ | - | $ | - | $ | - | ||||||
| 7 |
CARDIOME PHARMA CORP.
Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)
(Prepared in accordance with U.S. GAAP)
As at and for the three and six months ended June 30, 2014 and 2013
| 13. | Restructuring (continued): |
| Employee termination benefits | Idle-use expense and other charges | Total | ||||||||||
| Balance at December 31, 2012 | $ | 320 | $ | 247 | $ | 567 | ||||||
| Revisions to prior accruals | (12 | ) | (118 | ) | (130 | ) | ||||||
| Payments made | (308 | ) | (31 | ) | (339 | ) | ||||||
| Non-cash items | - | (50 | ) | (50 | ) | |||||||
| Balance at June 30, 2013 | $ | - | $ | 48 | $ | 48 | ||||||
| 14. | Contingencies: |
| (a) | The Company may, from time to time, be subject to claims and legal proceedings brought against it in the normal course of business. Such matters are subject to many uncertainties. Management believes that adequate provisions have been made in the accounts where required and the ultimate resolution of such contingencies will not have a material adverse effect on the consolidated financial position of the Company. |
| (b) | The Company entered into indemnification agreements with all officers and directors. The maximum potential amount of future payments required under these indemnification agreements is unlimited. However, the Company maintains appropriate liability insurance that limits the exposure and enables the Company to recover any future amounts paid, less any deductible amounts pursuant to the terms of the respective policies, the amounts of which are not considered material. |
| (c) | The Company has entered into various agreements with third parties that include indemnification provisions. These indemnification provisions generally require the Company to compensate the other party for certain damages and costs incurred as a result of third party claims or damages arising from these transactions. In some cases, the maximum potential amount of future payments that could be required under these indemnification provisions is unlimited. These indemnification provisions may survive termination of the underlying agreement. The nature of the indemnification obligations prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay. Historically, the Company has not made any indemnification payments under such agreements and no amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification obligations. |
| 8 |
CARDIOME PHARMA CORP.
Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)
(Prepared in accordance with U.S. GAAP)
As at and for the three and six months ended June 30, 2014 and 2013
| 15. | Segmented information: |
The Company previously operated in one business segment with substantially all of its consolidated assets and operations located in Canada.
During 2013, the Company began recognizing revenue from product sales at which time management began to measure the Company’s operations by the geographic area in which such products are sold.
| Three months ended June 30, 2014 | Europe | Rest of World | Total | |||||||||
| Revenue | 4,171 | 3,496 | 7,667 | |||||||||
| Cost of goods sold | 1,122 | 1,121 | 2,243 | |||||||||
| Interest expense (income) | 248 | (23 | ) | 225 | ||||||||
| Amortization expense on property and equipment | 12 | 25 | 37 | |||||||||
| Six months ended June 30, 2014 | Europe | Rest of World | Total | |||||||||
| Revenue | 8,195 | 7,064 | 15,259 | |||||||||
| Cost of goods sold | 1,870 | 1,866 | 3,736 | |||||||||
| Interest expense (income) | 503 | (24 | ) | 479 | ||||||||
| Amortization expense on property and equipment | 22 | 50 | 72 | |||||||||
| Three months ended June 30, 2013 | Europe | Rest of World | Total | |||||||||
| Revenue | - | 107 | 107 | |||||||||
| Cost of goods sold | - | - | - | |||||||||
| Interest income | - | (11 | ) | (11 | ) | |||||||
| Amortization expense on property and equipment | - | 25 | 25 | |||||||||
| Six months ended June 30, 2013 | Europe | Rest of World | Total | |||||||||
| Revenue | - | 167 | 167 | |||||||||
| Cost of goods sold | - | - | - | |||||||||
| Interest income | - | (27 | ) | (27 | ) | |||||||
| Amortization expense on property and equipment | - | 51 | 51 | |||||||||
| 9 |
CARDIOME PHARMA CORP.
Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in thousands of U.S. dollars except share and per share amounts and where otherwise indicated)
(Prepared in accordance with U.S. GAAP)
As at and for the three and six months ended June 30, 2014 and 2013
| 15. | Segmented information (continued): |
Property and equipment by geographic area were as follows:
| June 30, 2014 | December 31, 2013 | |||||||
| Europe | 113 | 132 | ||||||
| Rest of world | 451 | 486 | ||||||
| 564 | 618 | |||||||
| 16. | Subsequent events: |
On July 18, 2014, the Company announced the closing of a senior, secured term loan facility with MidCap Financial, LLC for up to $22 million in two tranches bearing interest at a rate of Libor plus 8%. The first tranche of $12 million is available for working capital and general corporate purposes. The second tranche of up to $10 million is available to support a product or company acquisition. The loan carries a term of 48 months and is secured by substantially all of the assets of the Company.
On July 23, 2014, the Company entered into a lease agreement for office space of approximately 10,967 square feet in Vancouver, British Columbia, Canada. The lease carries a term of 10 years, with a renewal option of 5 years, and is expected to begin on or about December 1, 2014. In addition to the base rent payments, the Company will be obligated to pay certain customary amounts for its share of operating expenses and tax obligations. The lease agreement includes lease inducements, which will be amortized on a straight-line basis over the term of the lease, in accordance with the Company’s accounting policy.
| 10 |
Exhibit 99.3
Form 51-102F3
MATERIAL CHANGE REPORT
| Item 1. | Name and Address of Reporting Issuer |
| Cardiome Pharma Corp. (“Cardiome” or the “Corporation”) | |
| 6190 Agronomy Rd, Suite 405 | |
| Vancouver, BC V6T 1Z3 | |
| Item 2. | Date of Material Change |
| August 11, 2014 | |
| Item 3. | News Release |
| August 11, 2014 – Vancouver, Canada. | |
| Item 4. | Summary of Material Change |
| Cardiome reported financial results for the second quarter and six months ended June 30, 2014. Amounts, unless specified otherwise, are expressed in U.S. dollars and in accordance with generally accepted accounting principles used in the United States (U.S. GAAP). | |
| Item 5. | 5.1 - Full Description of Material Change |
| See attached press release. | |
| 5.2 – Disclosure for Restructuring Transactions | |
| Not applicable. | |
| Item 6. | Reliance on subsection 7.1(2) of National Instrument 51-102 |
| Not applicable. | |
| Item 7. | Omitted Information |
| Not applicable. | |
| Item 8. | Executive Officer |
| Jennifer Archibald, Chief Financial Officer | |
| Telephone: 604-677-6905. | |
| Item 9. | Date of Report |
| This Material Change Report is dated August 12, 2014. |
Cardiome Reports Second Quarter 2014 Financial Results
NASDAQ: CRME
TSX: COM
Cardiome to conduct conference call and webcast today, August 11, at 8:00 a.m. Eastern (5:00 a.m. Pacific)
VANCOUVER, Aug. 11, 2014 /CNW/ - Cardiome Pharma Corp. (NASDAQ: CRME / TSX: COM) today reported financial results for the second quarter and six months ended June 30, 2014. 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). All share and per share amounts reflect the one-for-five share consolidation that occurred on April 12, 2013.
"Cardiome's financial results for the second quarter and first six months of 2014 are on track with our plan," stated William Hunter, M.D., Cardiome's president and CEO. "Sales for Brinavess continued to advance in response to our marketing and promotional efforts, but, as expected, were offset by the gradual sales decline for Aggrastat in the face of generic competition. In future quarters, we expect sales for Cardiome overall will increase as growth for Brinavess exceeds the erosion for Aggrastat."
Summary Results
Cardiome recorded a net loss of $4.2 million ($0.26 per common share) for the three months ended June 30, 2014 (Q2-2014), compared
to a net loss of $2.8 million ($0.22 per common share) for the three months ended June 30, 2013 (Q2-2013).
Total revenue for Q2-2014 was $7.7 million compared to $0.1 million in Q2-2013. In Q2-2014, revenues from the sale of BRINAVESS™ and AGGRASTAT® were $6.5 million, and licensing, royalty and other fees were $1.2 million. In Q2-2013, revenue was comprised of licensing and other fees received from Merck, our former collaborative partner.
Cost of goods sold for Q2-2014 was $2.2 million. No cost of goods sold was recorded for Q2-2013, as Cardiome did not have any product sales in Q2-2013.
Selling, general and administration expenditures for Q2-2014 were $8.8 million compared to $3.0 million for Q2-2013. The increase was primarily due to higher costs associated with sales and marketing efforts to support the commercialization of BRINAVESSTM and the continued sales of AGGRASTAT®, and certain one-time costs.
Liquidity and Outstanding Share Capital
At June 30, 2014, Cardiome had cash and cash equivalents of $9.4 million. As of August 7, 2014, the company had 16,520,072 common
shares issued and outstanding and 1,138,312 common shares issuable upon the exercise of outstanding stock options at a weighted-average
exercise price of CAD $4.42 per share.
Conference Call
Cardiome will hold a teleconference and webcast on Monday, August 11, 2014 at 8:00 a.m. Eastern (5:00 a.m. Pacific). To access
the conference call, please dial 416-764-8688 or 888-390-0546 and use conference ID 04422550. The webcast can be accessed through
Cardiome's website at www.cardiome.com.
Webcast and telephone replays of the conference call will be available approximately two hours after the completion of the call through September 8, 2014. Please dial 416-764-8677 or 888-390-0541 and enter code 422550# to access the replay.
About Cardiome Pharma Corp.
Cardiome Pharma Corp. is a specialty pharmaceutical company dedicated to the development and commercialization of cardiovascular
therapies that will improve the quality of life and health of patients suffering from heart disease. Cardiome has two marketed,
in-hospital, cardiology products, BRINAVESS™ (vernakalant IV), approved in Europe and other territories for the rapid conversion
of recent onset atrial fibrillation to sinus rhythm in adults, and AGGRASTAT® (tirofiban HCl) a reversible GP IIb/IIIa inhibitor
indicated for use in patients with acute coronary syndrome.
Cardiome is traded on the NASDAQ Capital Market (CRME) and the Toronto Stock Exchange (COM). For more information, please visit our web site at www.cardiome.com.
Forward-Looking Statement Disclaimer
Certain statements in this news release contain forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995 or forward-looking information under applicable Canadian securities legislation that may not be based on historical
fact, including without limitation statements containing the words "believe", "may", "plan", "will",
"estimate", "continue", "anticipate", "intend", "expect" and similar expressions.
Forward- looking statements may involve, but are not limited to, comments with respect to our objectives and priorities for the
remainder of 2014 and beyond, our strategies or future actions, our targets, expectations for our financial condition and the results
of, or outlook for, our operations, research and development and product and drug development. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be
materially different from any future results, events or developments expressed or implied by such forward-looking statements. Many
such known risks, uncertainties and other factors are taken into account as part of our assumptions underlying these forward-looking
statements and include, among others, the following: general economic and business conditions in the United States, Canada, Europe,
and the other regions in which we operate; market demand; technological changes that could impact our existing products or our
ability to develop and commercialize future products; competition; existing governmental legislation and regulations and changes
in, or the failure to comply with, governmental legislation and regulations; availability of financial reimbursement coverage from
governmental and third-party payers for products and related treatments; adverse results or unexpected delays in pre-clinical and
clinical product development processes; adverse findings related to the safety and/or efficacy of our products or products; decisions,
and the timing of decisions, made by health regulatory agencies regarding approval of our technology and products; the requirement
for substantial funding to expand commercialization activities; and any other factors that may affect our performance. In addition,
our business is subject to certain operating risks that may cause any results expressed or implied by the forward-looking statements
in this presentation to differ materially from our actual results. These operating risks include: our ability to attract and retain
qualified personnel; our ability to successfully complete pre-clinical and clinical development of our products; changes in our
business strategy or development plans; intellectual property matters, including the unenforceability or loss of patent protection
resulting from third-party challenges to our patents; market acceptance of our technology and products; our ability to successfully
manufacture, market and sell our products; the availability of capital to finance our activities; and any other factors described
in detail in our filings with the Securities and Exchange Commission available at www.sec.gov and the Canadian securities regulatory
authorities at www.sedar.com. Given these risks, uncertainties and factors, you are cautioned not to place undue reliance on such
forward-looking statements and information, which are qualified in their entirety by this cautionary statement. All forward-looking
statements and information made herein are based on our current expectations and we undertake no obligation to revise or update
such forward-looking statements and information to reflect subsequent events or circumstances, except as required by law.
| CARDIOME PHARMA CORP. Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (Expressed in thousands of U.S. dollars, except share and per share amounts) (Prepared in accordance with U.S. GAAP) | ||||||||||
| Three months ended | Six months ended | |||||||||
| June 30, 2014 |
June 30, 2013 |
June 30, 2014 |
June 30, 2013 | |||||||
| Revenue: | ||||||||||
| Product revenues | $ | 6,500 | $ | - | $ | 13,062 | $ | - | ||
| Licensing, royalty and other fees | 1,167 | 107 | 2,197 | 167 | ||||||
| 7,667 | 107 | 15,259 | 167 | |||||||
| Cost of goods sold | 2,243 | - | 3,736 | - | ||||||
| 5,424 | 107 | 11,523 | 167 | |||||||
| Expenses: | ||||||||||
| Selling, general and administration | 8,808 | 2,974 | 16,807 | 5,210 | ||||||
| Amortization | 564 | 108 | 1,100 | 216 | ||||||
| Research and development | 59 | 35 | 304 | 405 | ||||||
| Restructuring | - | (57) | - | (130) | ||||||
| 9,431 | 3,060 | 18,211 | 5,701 | |||||||
| Operating loss | (4,007) | (2,953) | (6,688) | (5,534) | ||||||
| Other (income) expense: | ||||||||||
| Interest (income) expense | 226 | (11) | 480 | (27) | ||||||
| Gain on settlement of debt | - | - | - | (20,834) | ||||||
| Other income | (18) | (176) | (117) | (328) | ||||||
| Foreign exchange (gain) loss | (131) | 8 | 50 | 36 | ||||||
| 77 | (179) | 413 | (21,153) | |||||||
| Net income (loss) before income taxes | (4,084) | (2,774) | (7,101) | 15,619 | ||||||
| Provision for income taxes | 156 | - | 273 | - | ||||||
| Net income (loss) | $ | (4,240) | $ | (2,774) | $ | (7,374) | $ | 15,619 | ||
| Other comprehensive income: | ||||||||||
| Foreign currency translation adjustments | 2 | - | 164 | - | ||||||
| Comprehensive income (loss) | $ | (4,238) | $ | (2,774) | $ | (7,210) | $ | 15,619 | ||
| Earnings (loss) per common share | ||||||||||
| Basic and diluted | $ | (0.26) | $ | (0.22) | $ | (0.46) | $ | 1.25 | ||
| Weighted average common shares outstanding | ||||||||||
| Basic | 16,520,072 | 12,470,335 | 15,931,887 | 12,470,335 | ||||||
| Diluted | 16,520,072 | 12,470,335 | 15,931,887 | 12,491,987 | ||||||
| CARDIOME PHARMA CORP. Consolidated Balance Sheets (Unaudited) (Expressed in thousands of U.S. dollars, except share amounts) (Prepared in accordance with U.S. GAAP) | |||||||
|
June 30, 2014 |
December 31, 2013 |
||||||
|
Assets
|
|||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 9,353 | $ | 10,984 | |||
| Restricted cash | 2,428 | 2,323 | |||||
|
Accounts receivable, net of allowance for doubtful accounts of $552 (December 31, 2013 - $325) |
7,313 | 6,674 | |||||
| Inventories | 6,455 | 6,597 | |||||
| Prepaid expenses and other assets | 3,034 | 1,749 | |||||
| 28,583 | 28,327 | ||||||
| Property and equipment | 564 | 618 | |||||
| Intangible assets | 17,093 | 18,069 | |||||
| Goodwill | 318 | 318 | |||||
| $ | 46,558 | $ | 47,332 | ||||
|
Liabilities and Stockholders' Equity
|
|||||||
| Current liabilities: | |||||||
| Accounts payable and accrued liabilities | $ | 9,327 | $ | 14,003 | |||
| Current portion of deferred consideration | 4,769 | 3,688 | |||||
| 14,096 | 17,691 | ||||||
| Deferred consideration | 4,317 | 6,997 | |||||
| 18,413 | 24,688 | ||||||
| Stockholders' equity: | |||||||
| Common stock | 284,518 | 272,083 | |||||
| Authorized - unlimited number with no par value | |||||||
| Issued and outstanding – 16,520,072 (2013 – 14,958,277) | |||||||
| Additional paid-in capital | 33,625 | 33,349 | |||||
| Deficit | (308,120) | (300,746) | |||||
| Accumulated other comprehensive income | 18,122 | 17,958 | |||||
| 28,145 | 22,644 | ||||||
| $ | 46,558 | $ | 47,332 | ||||
| CARDIOME PHARMA CORP. Consolidated Statements of Cash Flows (Unaudited) (Expressed in thousands of U.S. dollars) (Prepared in accordance with U.S. GAAP) | |||||||||||
| Three months ended | Six months ended | ||||||||||
| June 30, 2014 |
June 30, 2013 |
June 30, 2014 |
June 30, 2013 |
||||||||
| Operating activities: | |||||||||||
| Net income (loss) for the period | $ | (4,240) | $ | (2,774) | $ | (7,374) | $ | 15,619 | |||
| Items not affecting cash: | |||||||||||
| Amortization | 564 | 108 | 1,100 | 216 | |||||||
| Stock-based compensation | 170 | 123 | 396 | 216 | |||||||
| Gain on settlement of debt | - | - | (20,834) | ||||||||
| Unrealized foreign exchange (gain) loss | (105) | - | (50) | 24 | |||||||
| Other | - | (39) | - | (12) | |||||||
| Changes in operating assets and liabilities: | |||||||||||
| Restricted cash | (91) | - | (116) | - | |||||||
| Accounts receivable | (187) | (338) | (696) | 453 | |||||||
| Inventories | 959 | (2,800) | 120 | (2,800) | |||||||
| Prepaid expenses and other assets | (151) | (85) | (1,305) | (118) | |||||||
| Accounts payable and accrued liabilities | (247) | (237) | (4,699) | (1,288) | |||||||
| Net cash used in operating activities | (3,328) | (6,042) | (12,624) | (8,524) | |||||||
| Investing activities: | |||||||||||
| Purchase of property and equipment | (14) | (13) | (17) | (13) | |||||||
| Purchase of intangible assets | (40) | (22) | (52) | (40) | |||||||
| Net cash used in investing activities | (54) | (35) | (69) | (53) | |||||||
| Financing activities: | |||||||||||
| Issuance of common stock, net of share issue costs |
(4) | - | 12,406 | - | |||||||
| Proceeds from sale of property and equipment |
- | 55 | - | 79 | |||||||
| Repayment of long-term debt | - | - | - | (13,000) | |||||||
| Payment of deferred consideration | (728) | - | (1,599) | - | |||||||
| Net cash (used in) provided by financing activities | (732) | 55 | 10,807 | (12,921) | |||||||
| Effect of foreign exchange rate changes on cash and cash equivalents |
231 | (18) | 255 | (62) | |||||||
| Decrease in cash and cash equivalents during the period |
(3,883) | (6,040) | (1,631) | (21,560) | |||||||
| Cash and cash equivalents, beginning of period | 13,236 | 25,747 | 10,984 | 41,267 | |||||||
| Cash and cash equivalents, end of period | $ | 9,353 | $ | 19,707 | $ | 9,353 | $ | 19,707 | |||
| Supplemental cash flow information: | |||||||||||
| Interest paid | $ | 247 | $ | - | $ | 543 | $ | - | |||
| Interest received | - | 11 | - | 27 | |||||||
| Net income taxes paid | 135 | - | 180 | - | |||||||
SOURCE Cardiome Pharma Corp.
%CIK: 0001036141
For further information: Cardiome Investor Relations, (604) 676-6993 or Toll Free: 1-800-330-9928, Email: ir@cardiome.com
CO: Cardiome Pharma Corp.
CNW 07:00e 11-AUG-14
Exhibit 99.4
Form 52-109F2
Certification of interim filings - full certificate
I, William Hunter, President and Chief Executive Officer of Cardiome Pharma Corp., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Cardiome Pharma Corp. (the “issuer”) for the interim period ended June 30, 2014. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework (1992). |
| 5.2 | ICFR – material weakness relating to design: N/A |
| 5.3 | Limitation on scope of design: N/A |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2014 and ended on June 30, 2014 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
| Date: August 11, 2014 | |
| William Hunter | |
| William Hunter | |
| President and Chief Executive Officer | |
| 2 |
Exhibit 99.5
Form 52-109F2
Certification of interim filings - full certificate
I, Jennifer Archibald, Chief Financial Officer of Cardiome Pharma Corp., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Cardiome Pharma Corp. (the “issuer”) for the interim period ended June 30, 2014. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework (1992). |
| 5.2 | ICFR – material weakness relating to design: N/A |
| 5.3 | Limitation on scope of design: N/A |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2014 and ended on June 30, 2014 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
| Date: August 11, 2014 | |
| Jennifer Archibald | |
| Jennifer Archibald | |
| Chief Financial Officer |
| 2 |