NASDAQ: CPHR TSX: CPH Investor Presentation October 2015
NASDAQ: CPHR
TSX: CPH
Investor Presentation
October 2015
Forward-looking Statements
Statements made in this news release 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 three products; integration difficulties and other risks if we acquire or in-license technologies or product candidates;
reliance on third parties for the marketing of our 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; generate 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; 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; foreign currency risk; 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 law; litigation in the
pharmaceutical industry concerning the manufacture and supply of novel versions of existing drugs that are the subject of conflicting patent rights;
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; and our operating results may fluctuate significantly; we may be unsuccessful in evaluating material risks
involved in complete and future acquisitions; we may be unable to identify, acquire or integrate acquisition targets successfully; operations in the
U.S.; and inability to meet covenants on our credit facilities. 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
5 by 5 Growth Strategy
3
Value Creation
Next 5 years - by 2020
1. North American product portfolio by 5 products,
2. Launch two new first-to-the-market products
3. Grow Canadian Dermatological business to $50 Million
4. Grow our US Derm business to $ 250 Million
5. Grow our Royalty stream to $ 50 Million
….Accelerates EBITDA
Executing on Our Strategy
4
3-Pronged Approach to Value Creation
CANADA
Derm Focus
Transformative
Efficient Technology
USA M&A
Derm Focus
Acquisitions: Accretivein 2 years
Licensing: Cash flow 2 years; NPV 5 years
Low Cost Acqusitions
Long Term Value
Drivers
Acquisitions: Accretivein 2 years
Licensing: Cash flow 2 years; NPV 5 years
Providing
innovative
solutions for
patients with
skin conditions
Cipher Pharmaceuticals
• Specialty pharmaceutical dermatology growth company with a diversified and growing revenue streams
• Robust portfolio of commercial and late-stage products
• Established North American commercial presence
• Active M&A and product acquisition activity, supplemented by in-licensing
• Management team with proven track record of commercial and regulatory success
• 10 Consecutive quarterly and last 3 years record earnings, revenue, EBITDA & CA$H
Top Performing TSX Stock 2012 to 2014
5
h
Market Facts
6
Cipher Pharmaceuticals Inc.
Ticker / ListingCPH (TSX)
CPHR (NASDAQ)
Market Cap ~$128.7 million @ $4.95 (September 30, 2015)
Shares O/S 26.0 million
52-Week Price Range $ 4.77 - $ 19.52 Cdn
Headquarters Mississauga, Ontario
Management Board of DirectorsShawn Patrick O’Brien
President and CEO
Norman Evans, C.A.
CFO
Joan Chypyha
GM & President, Cipher Canada
Linda Angaritis
VP, Global Regulatory Compliance
and Quality
Louise Blythe
VP, Regulatory Affairs
Lynne Bulger
VP, Medical & Clinical Affairs
Lorne Markowitz
VP, Marketing & Sales
Brian Rosenberger
VP, Alliance & Portfolio Management
Peter Weiler
VP, Business Development
Gerald McDole (Chair)
Stefan Aigner
William Claypool
John Mull
Thomas Wellner
Stephen Wiseman
Senior Management & Board
7
Cipher USJoe Pecora
President & GM, USA
Mark Spina
SVP of Finance & Treasury
Elizabeth Prout
VP of Finance & HR
Chuck Jenkins
VP of Marketing
Daniel Ward
Medical Director
Mark Reed
Director of Sales
Art Waite
Director of Operations
Our Core Competencies
• North American sales &
marketing (US & Canada)
• Customer focus
• Commercial partnerships
• In-licensing / M&A
• Clinical Development
• Regulatory Affairs
• Supply chain management
8
54 Clinical trials
6 New Drug Applications
14 Licensing partners
6 Final FDA/Health
Canada approvals
12 Product revenue
streams
Efficient Drug Developer > 18X sales to R&D Invested
Execution of Company Strategy
Adds US Commercial Platform
Strengthens Access to Capital
Transaction Rationale
• Provides infrastructure to launch North American products• 31 reps covering 28 states across the U.S.
• Partnership with leading specialty pharma financier• Proceeds will finance Innocutis and future BD activities
• Establishes commercial presence in the U.S.
+
Entrance into U.S. Commercial Dermatology Market
9
Product Portfolio
• Fully integrated US
pharmaceutical company
focused on dermatology
• Seven marketed products
• Experienced team with 50
employees including 31 sales
reps
Overview
Product Indication
Recurrent Herpes Labialis
Nail Dystrophy
Dermal Ulcers
Acne
Onychomycosis
Keratosis
Hyperpigmentation
10
BenefitOnly treatment proven to reduce the occurrence of future
outbreaks
Territory North America
Patent status Three patents with expiration in 2027 and 2030
Commercial status U.S. launch Q3 2014
Canadian approval: Expected in 2016
11
1Leveraging Sitavig’s clinical benefit with clear messages to
prescribing dermatologists through direct sales calls and
customer education
2
Direct-to-patient promotion to build awareness of Sitavig’s
superior clinical performance
• 30,000 Sitavig flyers dispensed to 18,000 unique cold
sore sufferers in six weeks
• Dramatic increase in online searches, website “hits” and
co-pay card redemptions
3Implementation of managed care program that leverages
Sitavig’s superior clinical performance and the value to both
patients and payors
12
Sitavig® Growth Strategy
Immediate impact on Sitavig prescriptions
464
680
759
675 682
594565
591
644
554 552
717
74
460
658
720616
578
516490
508
555
459 445
552
0
100
200
300
400
500
600
700
800
900
1000
TRx
SITAVIG - Sum of TRx Count SITAVIG - Sum of NRx Count
Sitavig® Growth Strategy Already Driving Scripts
July:
30%
vs June
13
Expanded Product Portfolio
14
Dermatology Products Other Products
Dermadexin™ (CE Mark)
Seborrheic dermatitis
Pruridexin™ (in EU reg.)
Chronic pruritis
ASF-1096 (Phase-2 )
Discoid lupus erythematosus
Sitavig®
Recurrent Herpes Labialis
Nuvail™
Nail Dystrophy
Bionect®
Dermal Ulcers
Inova®
Acne
CLN8™
Mild/Moderate Onychomycosis
Umecta ®
Keratosis
Aclaro™
Hyperpigmentation
Ozenoxacin (2nd Phase-3 ongoing)
Impetigo
Nanolipolee (pre-IND)
Melanoma
Absorica™/ Epuris®
Severe nodular acne
Beteflam® (In Canadian reg.)
Plaque psoriasis
Lipofen ®
High cholesterol
ConZip ® /Durela ®
Once-daily treatment of moderately
severe pain
31 US and 7 Canadian Sales Reps
CF101 (Phase 3)
Severe plaque psoriasis &
rheumatoid arthritis
Vaniqa®
Enzyme inhibitor for hair growth
Actikerall®
Hyperkeratotic actinic keratosis
Indication Severe acne
BenefitSignificantly more reliable
absorption under variable dietary
conditions
Territory Americas and Pacific Rim
Patent status4 U.S. patents issued. (Expires Sept 2021)
Paragraph IV Certification Notice Sept 2013
Commercial statusU.S. launch Q4 2012 (Absorica™)
Canadian launch in June 2013 (Epuris®)
Chile expected to launch H1 2016
Brazil expected launch Q4 2016
Available Strengths10 mg, 20 mg, 25 mg*, 30 mg, 35 mg*, 40 mg
* Absorica only
About CIP-Isotretinoin (Absorica™/Epuris®)
15
“83%Greater absorption under
fasted conditions
Not interchangeable
Dose without
regard to meals”
Our formulation is best in class
16
FDA Package InsertCIP-ISOTRETINOIN: Profile
Mean P
lasm
a Isotr
etinoin
Conc.
(ng/m
L)
Phase I: Study No. 2003-627
Single dose study Accutane 40mg vs.
CIP-Isotretinoin (20mg X 2)
Fed Condition
AUC: 106.0
Cmax: 100.6
CIP-Isotretinoin 2 x 20mg
Accutane® 40mg
Single dose study Accutane 40mg vs.
CIP-Isotretinoin (20mg X 2)
Fasted Condition
Mean P
lasm
a Isotr
etinoin
Conc.
(ng/m
L)
CIP-ISOTRETINOIN: Profile AUC: 178.8
Cmax: 200.2
CIP-Isotretinoin 2 x 20mg
Accutane® 40mg
• Marketing partner:
Ranbaxy Pharmaceuticals
• ~50 full time dermatology
reps
• Strong market penetration
• Revenue of $5.1M for
Q2 2015 compared with
$5.3M for Q2 2014
• Growing Iso Rx Market,
with Rx for Absorica up
1.8% in Q2 2015
compared to Q2 2014
• Marketed by Cipher
• Cornerstone of Canadian
commercial operation
• 7 dedicated reps
• Revenue1 up 77% to
$0.9M for Q2 2015
compared with $0.5M for
Q2 2014
• Market size of $16.4 M in
2014, with Rx increasing
by 9.8% by Q2 2015
17
Absorica market share holding steady in 19-20% range
Epuris market share up to 20% in August‘15 from 10% in Q2 2014
• Will be marketed by
Andrómaco in Chile
• Recently out-licensed to
Ranbaxy in Brazil
• Other territories in Latin
America being pursued
U.S. Canada Latin America
Absorica™ & Epuris® Market Expansion
1. Cdn$
Absorica™: Growing Market Penetration
Source: IMS Health
18
DR REDDY'S
13%
MYLAN, 21%
CIPHER, 19.2%
TEVA 33%
AKORN14%
Aug 2015 Market Share
Trend in L6M
19.2%
0%
5%
10%
15%
20%
25%
-
5,000
10,000
15,000
20,000
25,000
No
v-1
2
Dec
-12
Jan
-13
Feb
-13
Mar
-13
Ap
r-1
3
May
-13
Jun
-13
Jul-
13
Au
g-1
3
Sep
-13
Oct
-13
No
v-1
3
Dec
-13
Jan
-14
Feb
-14
Mar
-14
Ap
r-1
4
May
-14
Jun
-14
Jul-
14
Au
g-1
4
Sep
-14
Oct
-14
No
v-1
4
Dec
-14
Jan
-15
Feb
-15
Mar
-15
Ap
r-1
5
May
-15
Jun
-15
Jul-
15
Au
g-1
5
Iso
tre
tin
oin
mar
ket
shar
e
TRx
Absorica Monthly TRx
TRx TRx Market share
Epuris® : Growing Market Penetration
Aug 2015 Market Share
Trend in L6M
52%28%
20%
Roche
Cipher
Mylan
19.9%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Iso
tre
tin
oin
Mar
ket
Shar
e
TRx
Epuris Monthly TRx
TRx Market Share
IndicationFenofibrate formulation for high
cholesterol (triglycerides)
BenefitOptimum absorption when taken with
meals
Territory Americas & Pacific Rim
Patent status U.S. patent issued (exp. Jan 2015)
Commercial statusU.S. launch October 2007
Authorized Generic launched Q2 2014
About Lipofen®
20
Competes in US$1.3B fenofibrate market
Lipofen® Product Update
• Marketed by Kowa Pharmaceuticals since 2007
– Strong presence in lipid management market with Lipofen and Livalo (pitavastatin)
– 250+ primary care representatives
• Q2 2015 revenue of $0.9M compared with $1.8M for Q2 2014
• Q2 2014 elevated by higher shipments for launch of authorized generic
• Kowa reducing its commercial effort
• Authorized generic launched pre-emptively in Q2 2014
• Declining fenofibrate market
• Authorized generic has flattened the Rx decline
21
Product continues to perform well
IndicationModerate to moderately severepain (e.g. osteoarthritis)
Benefits
Once-daily dosing Rapid absorptionReliable absorption under fed and fasted conditions
Territory Global
Patent statusU.S. & Canada patents issued. (Exp. April 2022)
Commercial Status
U.S. launch Q4 2011 (ConZip®) by
Vertical Pharmaceuticals
Canada launch Q2 2012 (Durela®)
by Medical Futures Inc.
LATAM – Tecnofarma – 18 countries
Initial launch for Argentina
expected Q4 2015
CIP-TRAMADOL ER (ConZip®/Durela®)
22
ConZip®/Durela®: Product Update
• Marketed by Vertical
Pharmaceuticals
• 75 reps
• Avista Capital invested
in Vertical in Q4 2013
• Market size in 2014
exceeded US$76M
• AG launched July 2015
• Marketed by
Medical Futures,
acquired by Tribute
• 22 reps
• P1 Position
• Q2 2015 sales increased
by 20% compared to
Q2 2014
23
• Will be marketed by
Tecnofarma International
in several jurisdictions,
including Brazil and
Mexico, launches starting
in Q4 2015
U.S. Canada Latin America
Quarterly Revenue Growth
24
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
Adjusted for one-time milestones
$U
S m
illio
ns
Quarterly Cash Balance
25
$-
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
Q1 2012Q2 2012Q3 2012Q4 2012Q1 2013Q2 2013Q3 2013Q4 2013Q1 2014Q2 2014Q3 2014Q4 2014Q1 2015Q2 2015
$U
S m
illio
ns
Multi-pronged Approach to Value Creation
26
5 by 5 Growth Strategy
27
Value Creation
Next 5 years - by 2020
1. North American product portfolio by 5 products,
2. Launch two new first-to-the-market products
3. Grow Canadian Dermatological business to $50 Million
4. Grow our US Derm business to $ 250 Million
5. Grow our Royalty stream to $ 50 Million
….Accelerates EBITDA
Cipher Investment Highlights
Customer-focused North American Dermatology company
Well capitalized to drive long-term, sustained earnings growth
Commercial infrastructure to support additional in-licensing / M&A
Seasoned management team with commercial expertise
Diversified portfolio of commercial-stage dermatology products
28
Inspire Innovate Deliver
Inspire
Innovate
Deliver
NASDAQ: CPHR
TSX: CPH
Investor Presentation
October 2015