Trimel Pharmaceuticals Corporation
TSX : TRL

Trimel Pharmaceuticals Corporation

November 06, 2014 08:00 ET

Trimel Reports Third Quarter 2014 Financial Results

- Total quarterly revenue of $1.7 million, driven entirely by Estrace®

- Gross profit of ($0.3) million, Adjusted Gross Profit(1) of $1.4 million (79% of Estrace® sales)

- EBITDA(1) of ($3.4) million, Adjusted EBITDA(1) of $0.4 million

- Cash balance at quarter end was $10.8 million

TORONTO, ONTARIO--(Marketwired - Nov. 6, 2014) - Trimel Pharmaceuticals Corporation (TSX:TRL) today reported financial results for the three month period ended September 30, 2014 and highlighted important corporate activities. Unless otherwise noted, all dollars amounts shown in this press release are in U.S. dollars.

"Trimel has achieved yet another important milestone as we report revenues for the first time in our brief history. The acquisition of Estrace® during the third quarter enabled the Company to achieve sales of $1.7 million and positive Adjusted EBITDA of $0.4 million," said Tom Rossi, President and CEO of Trimel. "We continue to work towards transforming our business from being exclusively focused on product development to one that includes a commercial presence. A Natesto™ partnership agreement will further drive this transformation and management is focused on concluding a deal as expeditiously as possible."

Financial Results for the Three Months Ended September 30, 2014

Revenues for the three months ended September 30, 2014 were $1.7 million, versus nil for the prior year comparable period, and were derived entirely from the sales of Estrace® in Canada since its acquisition on July 16, 2014. Cost of sales for the three months ended September 30, 2014 of $2.0 million, versus nil for the prior year comparable period, also related to the acquisition of Estrace®. This cost of sales value of $2.0 million for third quarter 2014 reflects the sale of inventory that was acquired as part of the Estrace® acquisition. In accordance with International Financial Reporting Standards (IFRS), this acquired inventory was recorded at fair value, which does not reflect the expected future cost to purchase inventory directly from the third party manufacturer. As such, the gross profit margin reported in our statements will not reflect what is anticipated to be experienced in the normal course of business for Estrace® until such time as the effect of the fair value adjustment to the acquired inventory is absorbed under our first- in-first-out (FIFO) cost methodology (see "Adjusted Gross Profit" under "Non-IFRS Financial Measures" below).

Research and Development ("R&D") expenses were $1.0 million and $2.0 million respectively for the three months ended September 30, 2014 and 2013. The reduction in R&D expense is primarily due to the completion of a Tefina™ clinical trial in second quarter 2014 resulting in lower third quarter 2014 R&D expenses versus third quarter 2013.

Trimel incurred Selling, General and Administrative expenses of $1.5 million and $1.9 million respectively for the three months ended September 30, 2014 and 2013. The decrease in spending was primarily attributable to lower salaries, benefits and share-based compensation, and lower legal fees partially offset by selling expenses associated with Estrace®. Business acquisition costs of $2.3 million for the three months ended September 30, 2014, versus nil for the prior year comparable period, are related to advisory and other fees associated with the acquisition of Estrace®.

For the three months ended September 30, 2014, the Company incurred a net loss of $0.02 per share as compared to a net loss of $0.03 per share for the comparable 2013 period.

At September 30, 2014, the Company had total assets of $60.0 million, as compared to $28.1 million at December 31, 2013 and total liabilities of $33.4 million at September 30, 2014, as compared to $14.5 million at December 31, 2013. The $31.9 million increase in assets is primarily due to the acquisition of Estrace® (including purchased inventory) and higher receivable balances due to sales of Estrace® since acquisition, offset partially by lower prepaid assets as vendor deposits were transferred to inventory and fixed assets and a reduction in cash used during the period to fund activities. The $18.9 million increase in total liabilities is primarily attributable to an increase in debt financing associated with the acquisition of Estrace® partially offset by lower accrued liabilities due to a $4.25 million milestone obligation that was accrued at December 31, 2013 and paid to M&P Patent AG in January 2014.

The Company had a net cash outflow from operations of $4.7 million for the three months ended September 30, 2014 and had a cash balance of $10.8 million at September 30, 2014. The Company believes it has sufficient resources to fund its ongoing activities into 2015, depending on the timing of further clinical activities and barring unforeseen events.

1 See "Non-IFRS Financial Measures" below.

Corporate Highlights

Estrace® Acquisition

On July 16, 2014, the Company announced that it has acquired from Shire plc the Canadian rights for Estrace® (17-beta estradiol), a product indicated for the treatment of symptomatic relief of menopausal symptoms. Estrace® has been available on the Canadian market for 39 years and generated revenues of $9.9 million in 2013.

Private Placement

On July 30, 2014 the Company completed a private placement of 28,801,000 common shares of the Company at a price of CDN$0.62 per share for gross proceeds of CDN$17,856,620.

The Company used the full net proceeds from the private placement to repay a significant portion of a convertible promissory note previously issued in connection with the Estrace® acquisition to First

Generation Capital Inc. ("First Generation"), a company affiliated with Mr. Ian Ihnatowycz, the Chairman of the Board of Directors of the Company. Following this repayment, First Generation converted a portion of the note into a total of 8,945,796 common shares on August 22, 2014. Following such conversion, First Generation now holds approximately 23.7% of the Company's common shares. The indebtedness remaining under the note (approximately $4.6 million) following such conversion and repayment remains outstanding in accordance with the terms of the note and is no longer convertible into common shares.

As a result of the transactions noted above, the Company received an additional $5.0 million from its senior secured lender pursuant to the terms and conditions of its applicable senior credit facility. As at September 30, 2014, $25.0 million of principal amount remained outstanding under the senior secured credit facility.

Natesto™ Update

In July, we submitted a Request for Meeting to the Food and Drug Administration ("FDA") to discuss re- analysis of the data from the Natesto™ Phase 3 Clinical Study (TBS-1-2011-01) in hypogonadal males and Trimel's ability to use these analyses in support of a new submission for approval of a twice-daily ("BID") dose of Natesto™. The FDA was not supportive of Trimel's proposal and requested that we submit additional clinical data to support BID efficacy. Trimel is not in agreement with the FDA's position and has prepared and submitted a further submission to the FDA in support of its position. Trimel will continue to work with the FDA towards gaining approval for this lower dose level. In addition, we continue to work toward concluding a partnership arrangement for Natesto™ as expeditiously as possible.

Tefina™ Update

The Clinical Study Report relating to the recently completed Tefina™ Phase II trial has now been finalized. We look to formally request an End of Phase II meeting with the FDA to discuss the completed trial, as well as possible next steps in the development of Tefina™. A meeting date has not yet been scheduled, but we expect it to occur in late 2014 or early 2015.

Non-IFRS Financial Measures

These non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. When used, these measures are defined in such terms as to allow the reconciliation to the closest IFRS measure. These measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. Despite the importance of these measures to management in goal setting and performance measurement, we stress that these are non-IFRS measures that may have limits in their usefulness to investors.

We use non-IFRS measures, such as Adjusted Gross Profit, EBITDA, Adjusted EBITDA and the Supplemental Financial Information below to provide investors with a supplemental measure of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the valuation of issuers. We also use non- IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets, and to assess our ability to meet our future debt service, capital expenditure and working capital requirements.

The definition and reconciliation of Adjusted Gross Profit, EBITDA, Adjusted EBITDA and the Supplemental Financial Information used and presented by the Company to the most directly comparable IFRS measures follows below:

Adjusted Gross Profit

Adjusted Gross Profit is defined as gross profit plus the following expenses which are part of cost of sales: (i) amortization of intangible assets; (ii) charges to cost of sales resulting from fair market value adjustments to inventory as a result of a business acquisition; and (iii) other one-time or non-cash items. We use Adjusted Gross Profit as a key performance measure to assess our core gross profit and as a supplemental measure to evaluate the overall operating performance of our cost of sales.

The table below provides the reconciliation of gross profit to Adjusted Gross Profit:
For the three and nine months ended,
September 30, 2014
IFRS Adjustments Non-IFRS
REVENUE $ 1,747,841 $ 1,747,841
Cost of sales 2,025,967 (1,653,043) (a ) 372,924
Gross Profit (278,126 ) 1,374,917
a) Upon completion of the acquisition of the Canadian rights to Estrace®, we capitalized acquired intangible assets at fair market value. These intangible assets are amortized over their useful life and we recognize the amortization as a non-cash cost of sales. We adjusted for amortization of $374,602 recognized as it is a non-cash expense and we believe the exclusion facilitates investors' ability to more accurately compare our operating results to those of our peer companies and is reflective of how we internally manage the business.
Had the inventories acquired as part of the Estrace® acquisition been purchased directly from the third party manufacturer, the costs ascribed to it would have been lower by $1,278,441. Included in cost of sales for the reporting period are charges in respect of the inventory acquired from the seller of the Canadian rights of Estrace® related to the mark up between the third party manufacturer and seller of the Canadian rights to Estrace® and a fair value adjustment on acquisition in accordance with IFRS standards. Upon the acquisition, we took assignment of the third party manufacturing agreement and will be able, on a go forward basis, to purchase goods directly from the manufacturer at a lower cost than that included in unadjusted cost of sales for the reporting period in respect of the inventory acquired from the seller of the Canadian rights to Estrace®.

EBITDA and Adjusted EBITDA

EBITDA is defined as net income adjusted for income tax expense, depreciation and amortization, interest expense and non-cash changes to fair values associated with warrant liabilities. Management uses EBITDA to assess the Company's operating performance. A reconciliation of net income to EBITDA (and Adjusted EBITDA) is set out below.

Adjusted EBITDA is defined as net income adjusted for income tax expense, depreciation and amortization, losses related to amendments to the credit facilities, gain or loss on disposal of fixed assets, net interest expense, deferred financing fees, accretion expense, unrealized gains/losses on derivative instruments, and realized and unrealized gains/losses related to foreign exchange and other one-time or non-cash charges, as well as share-based payment expenses. We use Adjusted EBITDA as a key metric in assessing our business performance when we compare results to budgets, forecasts and prior years. Management believes Adjusted EBITDA is an important measure of operating performance and cash flow, and provides useful information to investors because it highlights trends in the business that may not otherwise be apparent when relying solely on IFRS measures, and eliminates items that have less bearing on operating performance and cash flow. It is an alternative to measure business performance to net income and operating income, and management believes Adjusted EBITDA is a better alternative measure of cash flow generation than, for example, cash flow from operations, particularly because it removes cash flow fluctuations caused by extraordinary changes in working capital.

For the three months ended For the nine months ended
September 30, September 30,
2014 2013 2014 2013
Net (loss) $ (4,526,585 ) $ (4,282,215 ) $ (14,565,301 ) $ (21,841,110 )
Adjustments:
Income tax (recovery) - (320,000 ) - (320,000 )
Amortization of intangible assets 448,552 73,950 596,452 221,850
Depreciation of property and equipment 192,497 188,730 1,271,008 601,291
Interest on long-term debt and other financing costs (1) 1,184,416 237,087 1,540,914 895,465
Interest income (24,912 ) (53,187 ) (74,069 ) (94,270 )
Fair value (gain)/loss on warrant liability (644,731 ) 12,914 (616,812 ) (134,000 )
EBITDA (3,370,763 ) (4,142,721 ) (11,847,808 ) (20,670,774 )
Acquisition Related Charges:
Inventory fair value and other adjustment (2) 1,278,441 - 1,278,441 -
Acquisition costs 2,277,424 - 2,277,424 -
Subtotal 3,555,865 - 3,555,865 -
Share based compensation 213,812 241,946 511,443 1,241,652
Impairment of intangible asset 4,709 40,041 49,847 49,379
Adjusted EBITDA 403,623 (3,860,734 ) (7,730,653 ) (19,379,743 )
(1) This figure includes interest expense and the amortization of deferred financing costs and accretion expense related to our outstanding debts.
(2) See note (a) to the table under "Adjusted Gross Profit" above.

Supplemental Financial Information

The following table provides a reconciliation of our reported statements of operations (under IFRS) to our adjusted statements of operations (Non-IFRS) for the three and nine months ending September 30, 2014 and 2013.

Adjusted net (loss)/income is defined as net (loss)/income adjusted for non-cash financing expenses, amortization of commercial intangible assets, share-based compensation, certain equipment impairment charges, specific acquisition related fees and expenses and other non-recurring expenses. This non-IFRS financial measure is presented solely to permit investors to more fully understand how management assesses performance. We believe these exclusions permit investors to more accurately compare our operating results to those of our peers.

The table below provides the reconciliation of net income/(loss) to Adjusted Net Income/(loss):

For the three months ended For the three months ended
September 30, 2014 September 30, 2013
IFRS Adjustments Non-IFRS IFRS Adjustments Non-IFRS
REVENUE $ 1,747,841 $ - $ 1,747,841 $ - $ - $ -
Cost of sales 2,025,967 (1,653,043 ) (a ) 372,924 - - -
Gross Profit (278,126 ) 1,653,043 1,374,917 - - -
EXPENSES
Research and development $ 1,035,611 $ (16,060 ) (b ) $ 1,019,551 $ 2,020,297 $ (27,747 ) (b ) $ 1,992,550
Selling, general and administrative 1,492,692 (202,461 ) (c ) 1,290,231 1,851,474 (254,240 ) (c ) 1,597,234
Business acquisition costs 2,277,424 (2,277,424 ) (d ) - - - -
Total operating expenses 4,805,727 (2,495,945 ) 2,309,782 3,871,771 (281,987 ) 3,589,784
FINANCE COSTS, NET
Interest on long-term debt and other financing costs 1,184,416 (545,825 ) (e ) 638,591 237,087 (76,886 ) (e ) 160,201
Interest income (24,912 ) (24,912 ) (53,187 ) (53,187 )
Foreign exchange (gain)/ loss (1,072,041 ) - (1,072,041 ) 533,630 533,630
Change in fair value of derivative financial instrument (644,731 ) 644,731 (f ) - 12,914 (12,914 ) (f ) -
(557,268 ) 98,906 (458,362 ) 730,444 (89,800 ) 640,644
TOTAL EXPENSES 4,248,459 (2,397,039 ) 1,851,420 4,602,215 (371,787 ) 4,230,428
LOSS BEFORE INCOME TAXES (4,526,585 ) 4,050,082 (476,503 ) (4,602,215 ) 371,787 (4,230,428 )
INCOME TAXES
Current - - - - - -
Deferred - - - (320,000 ) 320,000 (g ) -
- - - (320,000 ) 320,000 -
NET LOSS $ (4,526,585 ) $ 4,050,082 $ (476,503 ) $ (4,282,215 ) $ 51,787 $ (4,230,428 )
For the nine months ended For the nine months ended
September 30, 2014 September 30, 2013
IFRS Adjustments Non-IFRS IFRS Adjustments Non-IFRS
REVENUE $ 1,747,841 $ - $ 1,747,841 $ - $ - $ -
Cost of sales 2,025,967 (1,653,043 ) (a ) 372,924 - - -
Gross Profit (278,126 ) 1,653,043 1,374,917 - - -
EXPENSES
Research and development $ 5,384,929 $ 12,128 (b ) $ 5,397,057 $ 9,562,634 $ (129,767 ) (b ) $ 9,432,867
Research and development - Milestones 2,500,000 - 2,500,000 4,250,000 - 4,250,000
Selling, general and administrative 4,298,828 (573,418 ) (c ) 3,725,410 7,615,687 (1,161,264 ) (c ) 6,454,423
Business acquisition costs 2,277,424 (2,277,424 ) (d ) - - - -
Total operating expenses 14,461,181 (2,838,714 ) 11,622,467 21,428,321 (1,291,031 ) 20,137,290
FINANCE COSTS, NET
Interest on long-term debt and other financing costs 1,540,914 (694,905 ) (e ) 846,009 895,465 (257,610 ) (e ) 637,855
Interest income (74,069 ) (74,069 ) (94,270 ) (94,270 )
Foreign exchange (gain)/ loss (1,024,039 ) (1,024,039 ) 65,594 65,594
Change in fair value of derivative financial instrument (616,812 ) 616,812 (f ) - (134,000 ) 134,000 (f ) -
(174,006 ) (78,093 ) (252,099 ) 732,789 (123,610 ) 609,179
TOTAL EXPENSES 14,287,175 (2,916,807 ) 11,370,368 22,161,110 (1,414,641 ) 20,746,469
LOSS BEFORE INCOME TAXES (14,565,301 ) 4,569,850 (9,995,451 ) (22,161,110 ) 1,414,641 (20,746,469 )
INCOME TAXES
Current - - - - - -
Deferred - - - (320,000 ) 320,000 (g ) -
- - - (320,000 ) 320,000 -
NET LOSS $ (14,565,301 ) $ 4,569,850 $ (9,995,451 ) $ (21,841,110 ) $ 1,094,641 $ (20,746,469 )
a) See note (a) to the table under "Adjusted Gross Profit" above.
b) Adjustments to research and development expenses are as follows:
Adjustments for
the three months
Adjustments for
the nine months
ending
September 30,
ending
September 30,
2014 2013 2014 2013
Research and development
Share-based compensation 11,351 (11,631 ) (61,975 ) 90,389
Impairment loss on property and equipment 4,709 39,378 49,847 39,378
Total Research and development adjustments 16,060 27,747 (12,128 ) 129,767
Impairment loss on property and equipment mainly relates to the write down of assets held for sale to their fair value less cost to sell. We believe such exclusion facilitates investors' ability to more accurately compare our operating results to those of our peers.
c) Adjustments to selling, general and administrative expenses are as follows:
Adjustments for
the three months
Adjustments for
the nine months
ending
September 30,
ending
September 30,
2014 2013 2014 2013
Selling, general and administrative
Share-based compensation 202,461 253,577 573,418 1,151,263
Impairment loss on property and equipment - 663 - 10,001
Total Selling, general and administrative adjustments 202,461 254,240 573,418 1,161,264
Impairment loss on property and equipment mainly relates to the write down of assets held for sale to their fair value less cost to sell. We believe such exclusion facilitates investors' ability to more accurately compare our operating results to those of our peers.
d) The effects certain fees related to the acquisition of the Canadian rights to Estrace® are excluded because of the one-time nature of these particular expenses, and we believe such exclusion facilitates investors' ability to more accurately compare our expected normal-course operating results to those of our peers.
e) Deferred financing fees and accretion expense related to the long-term debt are excluded. We believe such exclusion facilitates an understanding of the effects the debt service obligations on our liquidity and comparisons to peer companies, and is reflective of how we internally manage the business.
f) The effects of the fair value adjustment to the financial derivative instruments are excluded because it is a non-cash expense, and consequently, we believe the exclusion of this value facilitates investors' ability to more accurately compare our operating results to those of our peers.
g) The effect of income tax is excluded as it relates to the expiry of warrants that triggered a capital gain equal to the cumulative value of the warrants. As a result, we recognized a deferred tax asset to the extent of the deferred tax liability created by the transaction. We believe this is a non- recurring transaction and that the exclusion of this value facilitates investors' ability to more accurately compare our operating results to those of our peers.

The information set out above is in summary form. Readers are encouraged to review the Company's annual information form, financial statements (and accompanying notes), together with management's discussion and analysis available on SEDAR at www.sedar.com and on the Company's website at www.trimelpharmaceuticals.com.

Conference Call Details

Shareholders are reminded of the conference call to discuss the Company's third quarter results to be held on November 7, 2014 at 8:30 a.m. (Toronto time). To access the call live, please dial 416-340-2216 or 1- 866-223-7781. Listeners are encouraged to dial in 10 minutes before the call begins to avoid delays. A replay of the conference call will be available until 7:00 p.m. (Toronto time) on Friday, November 14, 2014 by dialling 905-694-9451 or 1-800-408-3053, using access code: 3455434#.

About Trimel

Trimel is a specialty pharmaceutical company involved in the sale, distribution, and development of products with a focus in men's health, women's health, and respiratory medicine. Natesto™, a product utilizing Trimel's licensed nasal gel technology, has been approved for sale in the United States by the FDA. For more information, please visit www.trimelpharmaceuticals.com.

Notice regarding forward-looking statements:

Information in this press release that is not current or historical factual information may constitute forward looking information within the meaning of securities laws. Implicit in this information are assumptions regarding our future operational results. These assumptions, although considered reasonable by the company at the time of preparation, may prove to be incorrect. Readers are cautioned that actual performance of the company is subject to a number of risks and uncertainties, including with respect to the performance of Estrace®, and could differ materially from what is currently expected as set out above. For more exhaustive information on these risks and uncertainties you should refer to our annual information form dated March 5, 2014 which is available at www.sedar.com. Forward-looking information contained in this press release is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time, whether as a result of new information, future events or otherwise, except as required by applicable securities law.

TRIMEL PHARMACEUTICALS CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT SEPTEMBER 30, 2014
UNAUDITED
(expressed in U.S. Dollars)
ASSETS
September 30, December 31,
2014 2013
CURRENT
Cash$ 10,785,895 $ 18,111,145
Restricted cash- 23,505
Trade and other receivables1,665,484 29,915
Inventory6,759,772 1,913,772
Prepaids and other assets589,390 1,553,009
Assets classified as held for sale149,641 -
19,950,182 21,631,346
NON-CURRENT ASSETS
Property and equipment, net2,105,683 3,273,196
Intangible assets37,983,250 3,216,800
TOTAL ASSETS$ 60,039,115 $ 28,121,342
LIABILITIES
CURRENT
Accounts payable and accrued liabilities$ 4,752,448 $ 9,864,079
Current portion of long-term debt, net of issuance costs4,551,418 2,834,639
9,303,866 12,698,718
LONG-TERM
Long-term debt, net of issuance costs23,435,854 1,827,082
Derivative financial instruments653,760 20,977
TOTAL LIABILITIES$ 33,393,480 $ 14,546,777
SHAREHOLDERS' EQUITY
Share capital149,766,022 119,741,040
Warrants1,039,705 1,039,705
Contributed surplus8,498,680 7,987,237
Accumulated other comprehensive (loss)(4,539,916)(1,639,862)
Deficit(128,118,856)(113,553,555)
TOTAL SHAREHOLDERS' EQUITY26,645,635 13,574,565
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$ 60,039,115 $ 28,121,342
TRIMEL PHARMACEUTICALS CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013
UNAUDITED
(expressed in U.S. Dollars)
For the three months ended,
September 30,
For the nine months ended
September 30,
2014 2013 2014 2013
REVENUE$ 1,747,841 $ - $ 1,747,841 $ -
Cost of sales (includes amortization expense for the three and nine months ended September 30, 2014)2,025,967 - 2,025,967 -
Gross Profit(278,126)- (278,126)-
EXPENSES
Research and development$ 1,035,611 $ 2,020,297 $ 7,884,929 $ 13,812,634
Selling, general and administrative1,492,692 1,851,474 4,298,828 7,615,687
Business acquisition costs2,277,424 - 2,277,424 -
Total operating expenses4,805,727 3,871,771 14,461,181 21,428,321
FINANCE COSTS, NET
Interest on long-term debt and other financing costs1,184,416 237,087 1,540,914 895,465
Interest income(24,912)(53,187)(74,069)(94,270)
Foreign exchange (gain)/ loss(1,072,041)533,630 (1,024,039)65,594
Change in fair value of derivative financial instruments(644,731)12,914 (616,812)(134,000)
(557,268)730,444 (174,006)732,789
TOTAL EXPENSES4,248,459 4,602,215 14,287,175 22,161,110
LOSS BEFORE INCOME TAXES(4,526,585)(4,602,215)(14,565,301)(22,161,110)
INCOME TAXES
Current- - - -
Deferred- (320,000)- (320,000)
- (320,000)- (320,000)
NET LOSS$ (4,526,585)$ (4,282,215)$(14,565,301)$(21,841,110)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF INCOME TAX
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation adjustment(3,000,253)987,152 (2,900,054)(543,122)
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD$ (7,526,838)$ (3,295,063)$(17,465,355)$(22,384,232)
Basic and diluted weighted average shares outstanding186,328,047 148,296,762 168,193,477 124,304,088
Basic and diluted net loss per common share$ (0.02)$ (0.03)$ (0.09)$ (0.18)
TRIMEL PHARMACEUTICALS CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013
UNAUDITED
(expressed in U.S. Dollars)
Share capital Warrants Contributed surplus Accumulated other comprehensive income (loss)Deficit Total
Balance, January 1, 2013$ 78,214,661 $ 3,452,607 $ 4,318,927 $ 362,920 $ (81,598,627)$ 4,750,488
Net loss for the period- - - - (21,841,110)(21,841,110)
Cumulative translation adjustment- - - (543,122)- (543,122)
Total comprehensive loss for the period- - - (543,122)(21,841,110)(22,384,232)
Common shares, net of share issuance costs41,526,379 - - - - 41,526,379
Warrant expiry, net of tax- (2,412,902)2,092,902 - - (320,000)
Share based compensation- - 1,241,652 - - 1,241,652
Balance as at September 30, 2013$ 119,741,040 $ 1,039,705 $ 7,653,481 $ (180,202)$(103,439,737)$ 24,814,287
Balance, January 1, 2014$ 119,741,040 $ 1,039,705 $ 7,987,237 $ (1,639,862)$(113,553,555)$ 13,574,565
Net loss for the period- - - - (14,565,301)(14,565,301)
Cumulative translation adjustment- - - (2,900,054)- (2,900,054)
Total comprehensive loss for the period- - - (2,900,054)(14,565,301)(17,465,355)
Common shares, net of share issuance costs24,873,214 - - - - 24,873,214
Conversion of convertible debt and accrued interest5,151,768 - - - - 5,151,768
Value of conversion option that expired- - - - - -
Share based compensation- - 511,443 - - 511,443
Balance as at September 30, 2014$ 149,766,022 $ 1,039,705 $ 8,498,680 $ (4,539,916)$(128,118,856)$ 26,645,635
TRIMEL PHARMACEUTICALS CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013
UNAUDITED
(expressed in U.S. Dollars)
2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period$ (14,565,301)$ (21,841,110)
Items not requiring an outlay of cash:
Adjustment for foreign exchange (gain)/loss(687,753)(65,401)
Amortization of intangible assets596,452 221,850
Depreciation of property and equipment1,271,008 601,291
Interest on long-term debt and other financing costs1,540,914 895,465
Change in fair value of derivative financial instruments(616,812)(134,000)
Share based compensation511,443 1,241,652
Impairment of property and equipment49,847 49,379
Recovery of deferred income tax- (320,000)
Net changes in non-cash working capital items related to operating activities:
Trade and other receivables(1,600,308)39,955
Inventory616,717 -
Prepaids and other assets(57,517)(2,197,277)
Accounts payable and accrued liabilities(5,195,002)(1,887,635)
Provisions- (41,311)
(18,136,312)(23,437,142)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common shares, net of financing costs24,873,214 41,526,379
Proceeds from debt financing50,000,000 -
Payment of long-term debt obligations(20,262,571)(2,000,000)
Payment of capital lease obligations- (136,639)
Interest and financing fees paid(1,566,461)(488,256)
53,044,182 38,901,484
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment, net of deposits(245,821)(252,900)
Acquisition of business(41,410,758)-
Proceeds from sale of property and equipment14,568 3,240
Restricted cash22,762 -
(41,619,249)(249,660)
NET (DECREASE)/INCREASE IN CASH FOR THE PERIOD(6,711,379)15,214,682
Exchange (loss) on cash(613,871)(398,442)
CASH BEGINNING OF PERIOD18,111,145 9,216,999
CASH END OF PERIOD$ 10,785,895 $ 24,033,239

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