Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Cipher Pharmaceuticals Fourth Quarter Results and Full Year 2021 Conference Call. At this time, all participants are in a listen-only mode. Following today's presentation, instructions will be given for the question and answer session. If anyone needs assistance at any time during the call, you may press star followed by the zero on your push button phone. As a reminder, this conference is being recorded Friday, March 18th, 2022. On behalf of the speakers that follow, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking statements within the meaning of the safe harbor provisions of the Canadian provincial securities laws. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on such statements.
Certain material factors or assumptions are implied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that could cause results to vary, please refer to risks identified in the company's annual information form and other filings with Canadian regulatory authorities. Except as required by Canadian securities laws, the company does not undertake to update any forward-looking statements. Such statements speak only as of the date made. I will now turn the call over to Mr. Craig Mull, Interim Chief Executive Officer of the company. Please go ahead, Mr. Mull.
Thank you, operator, and good morning, everyone. Joining me today is Scott Langille, Cipher's CFO. On today's call, I will make opening remarks before passing the call over to Scott to review the financial results in detail. Following our prepared remarks, we will open the call for questions. Note that all amounts are in U.S. dollars unless otherwise stated. Cipher's fiscal 2021 results demonstrated positive momentum as revenue, adjusted EBITDA and EPS all showed growth over the prior period. Our continued efforts to reduce cost structure resulted in our earnings per share increasing 81% to $0.29 or CAD 0.37 from $0.16 in the prior year. Earnings per common share, excluding legal provisions and loss on disposal of assets increased to $0.37 from $0.16 in 2020, an increase of.
Sorry, an increase of 131%. We generated $13.8 million in cash from operating activities in the twelve months ending December 31st, 2021, ending the year with $20.5 million in cash on the balance sheet and no long-term debt. With our pristine balance sheet and our strong cash flow from operating activities, we feel the company is in an excellent position for its next phase of growth as we continue to actively pursue profitable growth opportunities and maximize the income generated from our current portfolio of assets. A key focus for Cipher during 2021 was to negotiate a new cost-effective distribution agreements for the company's portfolio and to review existing distribution agreements with an emphasis on improving visibility and long-term profitability.
In February 2021, we entered into a co-promotion agreement with Verity Pharmaceuticals Inc for the marketing, sales and co-promotion of BRINAVESS and AGGRASTAT. The partnership will help us to manage our cost efficiently and drive profitability within our hospital business. Additionally, we have realigned our distribution of a number of key products with an aim to increase royalties generated from the products. In September 2021, Cipher entered into a distribution and supply agreement with Amneal Pharmaceuticals. Under the agreement, Amneal was granted exclusive rights to market and sell LIPOFEN and fenofibrate in the U.S.. Additionally, Cipher also intends to assume direct distribution of DURELA in Canada, which is expected to commence April 1st of this year. Furthermore, in the second quarter, we launched Absorica AG with our marketing partner, Sun Pharmaceutical Industries, in order to broaden our Cipher's isotretinoin portfolio and maximize its value.
Subsequent to year-end, we announced an extension of the royalty agreement granting Sun the exclusive right to sell, distribute Absorica and Absorica AG through December 2026 and Absorica LD through December 2024. Under the terms of the amendment, Cipher will continue to earn a royalty on U.S. net sales from Sun Pharma's isotretinoin portfolio and will continue to be responsible for manufacturing the supplied product. The amendment extends the relationship from November 30, 2022 until December 31st, 2026. We believe that this four-year extension is a testament to the success of our strategy and provides Cipher with an additional four years of visibility into stable revenue and cash flow from the isotretinoin portfolio, which will further enhance our balance sheet and provide us with additional flexibility to pursue our growth plans. We continue to maintain a strong focus optimizing our cost structure to maximize profitability.
During the year, we assigned the lease for the corporate operations head office to an arm's-length third party. It is expected that the assignment of the lease will result in net savings of approximately CAD 2.2 million over the remainder of the lease term. With strong control of our cost structure and stable cash flow from operations, in September 2021, we renewed our NCIB for 1,541,455 common shares, representing 10% of the company's public float. For the fiscal year, the company repurchases 1.2 million shares under its normal course issuer bid. Fourth quarter results showed relatively stable revenue as we continue to transition through the launch of Absorica AG.
In the fourth quarter, revenue was $5.9 million compared to $6.1 million in the prior year. Product revenue increased 36% to $3.1 million compared to $2.3 million in the prior year, while licensing revenue declined $2.8 million from $3.9 million in the prior year. Product revenue continues to be driven by the strength of Epuris, which ended the quarter with a market share of 41% compared to 40% in the prior year. Licensing revenue from Absorica was $1.6 million compared to $3 million in the comparative period, but up sequentially from $1.4 million in the third quarter of 2021.
We are pleased to see the sequential growth in license revenue from Absorica as we transition through a stocking and destocking phase due to the launch of the authorized generic in the second quarter. Currently, in our isotretinoin portfolio, Cipher is receiving royalties from Sun Pharma for the branded product, Absorica, the authorized generic, as well as Absorica LD. In addition, we recently announced an extension of this partnership from November 30th, 2022 through December 31st, 2026 for Absorica and Absorica AG, which will extend our revenue and cash flow stream of this portfolio. Overall, Cipher has assembled an attractive portfolio of assets beyond our current marketed products and will continue to move these products towards commercialization.
Our balance sheet now has over $20 million in cash and no debt, placing Cipher in an excellent position to continue to execute on the NCIB and to actively pursue product and business acquisitions in a prudent manner with a focus on near-term profitability. In addition, extending our relationship with Sun Pharma provides us an additional four years of visibility on the isotretinoin portfolio. We are particularly excited about opportunities in the legacy asset space. We are evaluating a number of potential products and feel that asset values and cash flow dynamics are quite compelling. I will now turn the call over to Scott for a financial review. Scott?
Thanks, Craig, and good morning, everyone. I will now provide a financial update for our fourth quarter results. Total revenue was $5.9 million in the quarter, compared to $6.9 million for the comparative period. Licensing revenue was $2.8 million for the quarter, compared to $3.9 million for the prior year. Licensing revenue from Absorica in the U.S. was $1.6 million compared to $3 million in the prior year, but up sequentially from $1.4 million in the third quarter. Absorica's market share for the year ended December 31st, 2021 was approximately 2.7 million compared to 6.2 million for the year ended December 31, 2020.
Licensing revenue from extended release tramadol product, which is ConZip in the U.S. and DURELA in Canada, was $0.1 million for the three months ended December 31st, 2021, relatively unchanged for the prior year. LIPOFEN and the authorized version of LIPOFEN was $1.3 million for the quarter compared to $0.8 million for the prior year. The increase was due to a change in the distribution partners effective September 2021 and related to the terms of the distribution and supply agreement. Product revenue increased by $0.8 million or 36% to $3.1 million for the fourth quarter compared to $2.3 million for the comparable period in 2020.
Selling, general, and administrative expense was $1 million for the fourth quarter, a decrease of $ 0.8 million compared to $ 1.9 million for the three months ended December 31st, 2021. Total operating expenses for the fourth quarter was CAD 2 million, a decrease of CAD 6 million compared to $ 8 million for the prior period. The decrease was primarily driven by the impairment of intangible assets related to TRULANCE of $ 5.3 million taken in 2020. Income from continuing operations was $ 2.8 million or $ 0.11 per basic and diluted share for the quarter compared to $ 0.1 million or 0 per basic and diluted share for the comparative period. Adjusted EBITDA for the fourth quarter was $ 4.1 million compared to $ 3.9 million for the prior year.
The company had $20 million in cash and no debt for September 31st, 2021. Cipher generated $13.8 million in cash from operating activities for the twelve months ended of 2021. I will now turn the call back to Craig for closing remarks.
Thanks, Scott. With a profitable business, a strong balance sheet, a reduced cost structure, and a four-year extension of our relationship with Sun Pharma, we feel that we are in an excellent position to accelerate our strategic promotional efforts to drive market share in our core brands and actively pursue business acquisitions. We'll now open the call to questions. Operator?
Of course. Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you're on a speakerphone, please pick up your handset and make sure mute function is turned off so that your signal reaches our equipment. Again, it is star one if you would like to ask a question, and we'll pause just for a moment to allow everyone an opportunity to signal for questions. Again, it is star one if you would like to ask a question. We'll take our first question from Mike Shimmick. Please go ahead.
Yeah, hi. I have a couple questions about MOB-015 . I was wondering when you would expect the Canadian launch date to happen. If everything goes well with regards to product expectations, what we could expect revenues to ultimately be from that product? That's my first question, and second question is regarding to reporting currency, if you ever expect to change to a Canadian currency for reporting. That's my two questions.
Let me start by answering the first question and then I'll turn it to Scott to answer the second question. MOB-015, a product developed by Moberg. We have, as you know, the Canadian licensing and distribution rights for that product. We have announced previously that the company completed some phase 3 trials, and the results showed excellent cure rates for the product. Yet there was issues with the coloring of the nail. We have been working with Moberg, and they have decided that they're going to conduct a second phase III trial in the U.S. to lower the dose and enhance the results.
We're working with them and at this point in time, we don't know the timeframe for them to complete that study. It would be in our best interest to wait for the results of that study, which are likely to show even greater positive results than they were in the first initial phase III trial. We're working with them, and we'll need to complete that study before we move on to the commercialization in the Canadian market. On the second question, Scott, can you respond?
Yeah, absolutely. I think there's certainly a possibility of switching from U.S. to Canadian, but frankly, I think it'll be driven through business development efforts. If depending on which side of the border we make an acquisition and when, it'll be driven on the timing and if the legacy asset or business development opportunity happens in the U.S., that may dictate that we stay with U.S. dollars. If it's a large Canadian acquisition, we may well move to Canadian reporting, Canadian dollar reporting. So the timing and currency would certainly depend on future business development opportunities.
Thank you.
We'll go ahead and move on to our next question from Andre Uddin with Research Capital. Please go ahead.
Hi, Craig and Scott. Just looking at some of the products whereby you receive licensing revenues, I'm just wondering if any of your potential partners expect to increase the price of those products to match inflation.
Well, Andre, each year, we submit for price increases on our products, and the distributors do as well. Depending on the product and the market, we generally seek increases of at least the inflationary rates.
Okay. That's it for me. Thank you.
We'll move on to our next question from Dean Trier. Please go ahead.
Hey, good morning, fellas. I have a couple of questions. I noticed the Epuris market share ticked down just a little bit from, I think it was 43% in the prior quarter and now, 41%. Just wondering if that's just a normal fluctuation or if that's anything to look at as an investor to look into.
I think it's just a variation. We monitor the product's growth over a longer period of time, and it continues to grow. I'm not taking anything by that one quarter's results. The product
Okay.
Continues to show strong growth.
Okay. Thank you. That's helpful. I believe in Q3 you announced that Italmex was launching Epuris in Mexico. Just wondering if we could get an update on how that's going and what we can expect in 2022 from that.
Sorry, did you say the Mexican market? Is that what you're referring to?
Yeah. Yes. That's what I was referring to.
We, through Galephar, have a partnership down there with a company called Italmex. They are a large player in Latin American markets and Mexico. The product was approved by their regulatory group, and they have placed orders for some initial stocking of the product. We believe that, you know, there will be significant royalties generated from that, but not in the realm of the Canadian or the U.S. market. Obviously, their pricing is much lower in Mexico than the U.S. and Canada as well.
Okay. That's it for me. Thank you.
Okay.
We'll take our next question from Peter Raytec with Raytec Consulting. Please go ahead.
Good morning, gentlemen. Congratulations on another solid quarter. I think this is a question directed to Scott, and it relates to the non-capital loss carryforwards. Scott, what level approximately are those unused and non-capital loss carryforwards currently at? And when is the nearest term expiry of any of them?
I'm gonna ask my colleague, David Miller, if he's got that information handy. Dave, do you have that handy?
Yeah. It's in the financial statements. I'll have to just pull them up. I believe the earliest expiry is 2026. Hang on. Look up the tax note here.
Yeah. I wasn't able to access that statement this morning, before I got on. Maybe it's up now. Do you have it, Dave?
Non-capital losses are $ 211 million, but expiring and varying amounts from 2026 to 2039.
Okay.
Then the near term ones, and I know this is a projection, is it anticipated they'll be able to be utilized before expiry? Because I appreciate there's a progression over time, and I appreciate they're very substantial, and I do appreciate they have value too, off-balance sheet value.
Yes. Well, we've applied losses through 2020 and 2021, so we continue to utilize those losses as we file tax returns.
Right. In 2020, 2021, my understanding is virtually zero income taxes have been paid, federal income taxes in any event in Canada.
Yeah. We're utilizing the Cardium losses when filing taxes, and you'll notice a difference. From an audit viewpoint, the auditors wanted us to continue to accrue taxes on the financial statements. In our filing returns, we are utilizing the Cardium loss.
Yeah. No. Because I did see that in the EBITDA calculation, and that's what I assumed was happening.
That's correct.
Clearly that's enhancing cash flow and retained cash, clearly. It's got to be significantly enhancing those amounts. The expectation is it would continue to do so for some time to come.
That's correct.
One follow-up question, if I could, and this may tie into the question about Mexico. I'm not certain how far that Italmex, and I'm not sure I've got that company name right. Sorry, Craig. What initiatives, if any, are being pursued in the South American market? Specifically I'm thinking about a place like Brazil with the massive population and the massive market there in terms of specifically the isotretinoin portfolio, et cetera.
Peter, nice to hear from you. It's Craig here. We have a distribution agreement with Sun Pharma for Brazil. Yes, it is a large market. The problem is the regulatory regime in Brazil makes it very difficult to get products approved. We are working with Sun to do that. We've turned up the heat on Sun to move that project ahead. There are difficulties with getting approval from the regulatory authorities.
Yes. No, I'm familiar with that from other circumstances, and I do understand that. So efforts are continuing in that regard, and do you have any sense of? I know it's always tough to predict timelines, particularly associated with regulatory authorities, particularly in jurisdictions such as that. Do you have any sense as to timing at all on that?
No, I don't. It appears that the real issue is that Brazil only wants to buy products that are made in Brazil.
Ah.
We're trying to find ways to accommodate that requirement as best we can. It is a complicated process there. You know, I think it's purposely difficult and challenging because of their aim of wanting to manufacture their own products.
Understood. Okay, thank you for that clarification. Again, congratulations on another solid quarter.
Thanks, Peter.
With that does conclude our question and answer session. I would now like to turn the call back over to Mr. Craig Mull for any additional closing remarks.
Thank you for joining us today. We look forward to reporting on our progress throughout the balance of 2022 as we execute on the priorities discussed today. Thanks again. Have a great day.
With that does conclude today's call. Thank you for your participation. You may now disconnect.