JEFFERIES 2016 GLOBAL HEALTHCARE CONFERENCE
JUNE 10, 2016
Shawn Patrick O’Brien
President & CEO
Forward-looking statements
The words “may”, “will”, “could”, “should”, “would”, “suspect”, “outlook”, “believe”, “plan”, “anticipate”, “estimate”, “expect”, “intend”, “forecast”, “objective”, “hope” and “continue” (or the negative thereof), and
words and expressions of similar import, are intended to identify forward-looking statements.
Statements made in this presentation may be forward-looking and therefore subject to various risks and uncertainties. The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan",
"anticipate", "estimate", "expect", "intend", "forecast", "objective", "hope" and "continue" (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking
statements. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. Factors that
could cause results to vary include those identified in the Company's Annual Information Form, Form 40-F and other filings with Canadian and U.S. securities regulatory authorities.
These factors include, but are not limited to, our ability to enter into in-licensing, development, manufacturing and marketing and distribution agreements with other pharmaceutical companies and keep such
agreements in effect; our dependency on a limited number of products; integration difficulties and other risks if we acquire or in-license technologies or product candidates; reliance on third parties for the
marketing of certain products; the product approval process is highly unpredictable; the timing of completion of clinical trials; reliance on third parties to manufacture our products; we may be subject to product
liability claims; unexpected product safety or efficacy concerns may arise; we generate license revenue from a limited number of distribution and supply agreements; the pharmaceutical industry is highly
competitive; requirements for additional capital to fund future operations; dependence on key managerial personnel and external collaborators; no assurance that we will receive regulatory approvals in the U.S.,
Canada or any other jurisdictions; certain of our products are subject to regulation as controlled substances; limitations on reimbursement in the healthcare industry; limited reimbursement for products by
government authorities and third-party payor policies; various laws pertaining to health care fraud and abuse; reliance on the success of strategic investments and partnerships; the publication of negative
results of clinical trials; unpredictable development goals and projected time frames; rising insurance costs; ability to enforce covenants not to compete; risks associated with the industry in which it operates; we
may be unsuccessful in evaluating material risks involved in completed and future acquisitions; we may be unable to identify, acquire or integrate acquisition targets successfully; operations in the U.S.; inability
to meet covenants under our credit facilities; compliance with privacy and security regulation; our policies regarding returns, allowances and chargebacks may reduce revenues; certain regulations could restrict
our activities; additional regulatory burden and controls over financial reporting; reliance on third parties to perform certain services; general commercial litigation, class actions, other litigation claims and
regulatory actions; being a foreign private issuer may limit the information available to U.S. shareholders; we may lose our foreign private issuer status which could result in significant additional costs; the
potential violation of intellectual property rights of third parties; our efforts to obtain, protect or enforce our patents and other intellectual property rights related to our products; changes in U.S., Canadian or
foreign patent laws; litigation in the pharmaceutical industry concerning the manufacture and supply of novel and generic versions of existing drugs; inability to protect our trademarks from infringement;
shareholders may be further diluted; volatility of our share price; a significant shareholder; we do not currently intend to pay dividends; our operating results may fluctuate significantly; and our debt obligations
will have priority over the Common Shares in the event of a liquidation, dissolution or winding up. All forward-looking statements presented herein should be considered in conjunction with such filings. Except as
required by Canadian or U.S. securities laws, the Company does not undertake to update any forward-looking statements; such statements speak only as of the date made.
2
GALDERMA, VALEANT, ALLERGAN, LEO
Consolidation
has depleted the field
$21 billion
2014 global derm sales*
* Kalorama Information: World Market for Prescription Dermatological Drugs, 9th Edition
3
Dermatology: A very attractive market
45 indications
Product sales matter
88%
of dermatologists
welcome sales reps*
Rep friendly
Addressable market with less than 60 North American reps
* Cegedim Relationship Management, Jan 2015
4
BUILDING A DERMATOLOGY GROWTH COMPANY
Cipher Pharmaceuticals
INSPIRE
INNOVATE
DELIVER
Cash-flow
Products
Commercial capabilities
5
DURABLE CASH-FLOWS TO SUPPORT GROWTH
Royalty stream portfolio
4
7
streams
licensing
agreements
Absorica
~
10 % US$26
million
average
royalty rate
2015 licensing
revenue
Lipofen
ConZip
Durela
Growing to $50 million revenue by 2020*
* Canadian dollars
6
INITIAL PRODUCT PORTFOLIO
Dermatology products
13
directly
marketed
products
Sitavig
AL12 Lotion
Nuvail
Pro-12 Mousse
Bionect
Aclaro
Inova
Epuris
CLN8
Vaniqa
Umecta
Actikerall
9
product launches
from 5 products
in 2016/2017
Beteflam
Drive to $300 million revenue by 2020*
* Figure comprised of US$250 million and CAD$50 million from respective markets
7
AN UNDERTREATED AND
UNDER-THE-RADAR CONDITION
COLD SORES
80 million
A frequent, painful and
unpleasant condition
PATIENT
MARKET
“Cold sores (are) the most stigmatizing skin disorder”*
* Journal of American Academy of Dermatology; September 2015.
8
BREAKTHROUGH DATA DELIVERING REAL RELIEF
SITAVIG®
TIME TO RECUR
ABORTIVE EPISODES
35% of patients aborted
135
130
304
120
109
105
DAYS
199
90
Sitavig
Placebo
n=771
p=0.042
Sitavig
Placebo
Patent protection
2027/2030
n=537
p=0.041
Only treatment proven to reduce the occurrence of future outbreaks
9
Growth strategy driving scripts
SITAVIG - Sum of TRx Count
SITAVIG -Sum of NRx Count
829
728
656
562
622
547
539
452
559 560
497
502 506
473
594
522 522
627
643
710
630
571
553
523
506
474
484
+30%
411 399
405 403
372
increase in TRx
Q1 2015 to
Q1 2016
Source: IMS Health
Apr-16
Mar-16
Feb-16
Jan-16
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
Beginning of
marketing
spend
May-15
Apr-15
Feb-15
Cipher
acquires
Innocutis
Jan-15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
472 472
430
Reduced
marketing spend
by Innocutis
63
Jul-14
518 500
636
Mar-15
376
576 591
678
10
DETAILING, POSITIONING, MARKETING, TEAM
Customer focus matters
Seroquel
Pulmicort Respules
>$1.0 B
$5.8 B
$110 M
After two
years of
marketing
Phase 4 trials
White papers
Promotional materials
New indications
Market research
$160 M
Peak sales
after revamped
commercial
strategy
After three
years of
marketing
Peak sales
after revamped
commercial
strategy
Unlocking latent value
11
PARTNERED vs DIRECT MARKET ACCESS STRATEGY
Commercial execution matters
Absorica
Epuris
18.0% *
marketed by Cipher in Canada
marketed by Ranbaxy in the U.S
15,000
15%
10,000
10%
5,000
25.0%
5,000
20.0%
4,000
15.0%
Markt share
20%
TRx
20,000
6,000
Market share
25%
TRx
25,000
3,000
10.0%
2,000
5%
5.0%
1,000
Apr-16
Mar-16
Jan-16
Feb-16
Dec-15
Oct-15
Nov-15
Sep-15
Jul-15
Aug-15
Jun-15
Apr-15
May-15
Mar-15
Jan-15
Feb-15
Dec-14
Oct-14
Nov-14
Sep-14
Jul-14
0.0%
Aug-14
0
Jun-14
Jan-16
Mar-16
Nov-15
Jul-15
Sep-15
May-15
Jan-15
Mar-15
Nov-14
Jul-14
Sep-14
May-14
Jan-14
Mar-14
Nov-13
Sep-13
Jul-13
May-13
Jan-13
Mar-13
Nov-12
0%
May-14
-
Making an impact direct to market
Source: IMS Health
* Management estimate for April 2016
12
METHOD TO BUILDING A LOYAL BRAND WITH DERMATOLOGISTS
Impact customer service
Listen
Execute
Evaluate
Dermatologists are commercially minded physicians
13
INTEGRATED CAPABILITIES TO LAUNCH PRODUCTS INTO THE U.S.
Cipher U.S.
9
commercial
products
2
products
pending
approval
33
reps
covering
25 states
Proven leadership
14
ESTABLISHED CHANNEL INTO CANADA
Cipher Canada
4
commercial
derm
products
4
products
pending
approval or
launch
7
reps
Established relationships built on trust
15
5 by 5 growth strategy
Next 5 years –
by 2020
1. Expand North American product portfolio by 5 products
2. Launch two new first-to-the-market products
3. Grow Canadian derm business to CAD$50 million
4. Grow our US derm business to US$250 million
5. Grow our royalty stream to CAD$50 million
Current portfolio delivers $100+ million EBITDA by 2020
16
Strong dermatology portfolio
United States
Canada
Candidate | indication
Europe
Pre-Clinical
Phase I
Phase II
Phase II/III
Phase III
Reg Review
Approved
Market
DermadexinTM
seborrheic dermatitis
Beteflam Patch
plaque psoriasis
Sitavig™
cold sores
PruridexinTM
chronic pruritus
Ozenoxacin
impetigo
> 90% R&D
expenditures
borne by
partners
CF101
plaque psoriasis
CF101
rheumatoid arthritis
ASF-1096
discoid lupus erythematosus
Nanolipolee-007
late stage melanoma
Tattoo Removal Cream
17
2016 milestones
CLINICAL
REGULATORY
COMMERCIAL
CF-101 Phase 2/3 Psoriasis
Canadian data 2015
Launch Phase 3 in 2016
Sitavig acceptance for
Canadian review
Q1 2016
4 Canadian product launches
Beteflam
Actikerall
ASF-1096 Phase 2 data
Launch Phase 2b in 2016
Pruridexin EU approval
Q1 2016
3 U.S. launches
Bionect Foam
Dermadexin & Pruridexin
Canadian approvals
H2 2016
Tramadol Latin American
launch
Ozenoxacin acceptance
for Canadian review
Q2 2016
Isotretinoin Latin American
launch
Dermadexin & Pruridexin
US approvals H2 2016
25
15
5
revenue
streams
2018
revenue
streams
2016
revenue
streams
2015
Commercial machine plus pipeline
18
Growing our top-line
$US millions
$34.40
$9.7
$8.8
$8.0
$6.9 * $7.1
$5.4
[VALU
E]
$9.1
$8.5
[VALU
E] *
[VALUE] $7.4
$6.6
$5.4
[VALU
E]
$3.3
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016
Quarterly revenue
2012
2013
2014
2015
Annual revenue
*Adjusted for one-time milestones
19
FY 2015 performance
(millions)
$27.3
$27.5
$25.9
$19.8
$5.5
$3.7
$10.1
$9.8
$2.0
Licensing
revenue
$0
US Revenue
Canadian
Revenue*
Op Ex**
Adjusted
EBITDA
2014
2015
* in Canadian dollars
** excluding amortization
20
Q1 2016 performance
(millions)
$7.8
$6.7
$5.9
$4.0
$2.2
$3.1
$0.9
$0.7
Licensing
revenue
$0
US Revenue
Canadian
Revenue
Op Ex**
-$0.3
Adjusted
EBITDA
Q1 2015
Q1 2016
** excluding amortization
21
Strong cash position to invest
in commercial strategy
$9 M cash utilized to
acquire Innocutis and 2
products
6 products acquired
50
45
40
$US millions
35
30
25
20
15
10
5
0
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Access to capital through $100 million facility with Athyrium
22
Market facts
Ticker / listing
CPHR (NASDAQ)
CPH (TSX)
Market cap
(05/27/2016)
~US$152 million
at US$6.00
Share o/s
26.2 million
0.6 million warrants
52-week price range
US$3.55 - US$10.25
Headquarters
Mississauga, Ontario
23
Senior management and board
Shawn Patrick O’Brien
President and CEO
Gerald McDole
Chair
Dr. Renee Tannenbaum
Director
Norman Evans, C.A.
CFO
Dr. John Mull
Director
Rosemary Crane
Director
Ralph Bohrer
GM & President,
Cipher US
Stephen Wiseman
Director
​
Joan Chypyha
GM & President,
Cipher Canada
Brian Rosenberger
Vice President, Alliance & Strategic
Portfolio Management​
Dr. Stefan Aigner
Director
Dr. William Claypool
Director
Thomas Wellner
Director
​
24
Time is ripe
for a new voice
INSPIRE
INNOVATE
DELIVER
25