Aralez Pharmaceuticals Resorts to Cost Saving After Q1 Net Loss

Aralez Pharmaceuticals Inc. (NASDAQ:ARLZ)

Aralez Pharmaceuticals Inc. (NASDAQ:ARLZ) posted a first-quarter net loss of $27.5 million or $0.42 a share just days after reporting a reduction in its sales force as it looks to save on costs of operation. The 32% reduction in the sales force is part of a strategic realignment of resources as the company moves to pay more emphasis on its Zontivity launch.

Q1 Financial Results

Revenues in the quarter more than tripled to highs of $26 million compared to $8.1 million in Q1 2016. Net product revenues came in at $6.7 million helped by the acquisition of Tribute as well as product sales of Yosprala and Fibricor. Toprol-XL and Zontivity generated net revenues of $15.6 million with Vimovo generating net revenues of $3.7 million.

The cost of product revenues, on the other hand, increased to $2.8 million from $2.5 million. Aralez Pharmaceuticals Inc. (NASDAQ:ARLZ) attributes the increase to the new product portfolio to the merger in February. SG&A expenses dipped to $30.8 million from $37.5 million driven by merger costs.

For the full year ending December 31, 2017, Aralez Pharmaceuticals Inc. (NASDAQ:ARLZ) says it expects net revenues of between $80 million and $100 million. The company also expects its EBITDA to be around $5 million.

Cost Saving Push

During the quarter Aralez Pharmaceuticals Inc. (NASDAQ:ARLZ) initiated a cost saving initiatives that is expected to reduce operational expenses by $23 million going forward. The scheme includes reduction of sales force while also shifting focus to territories with highest growth opportunities.

Focusing on Canadian core growth brands has already come into play as part of an effort that seeks to reinvigorate sales growth. Aralez Pharmaceuticals board of directors has also agreed or trimmed the cash portion of their fees as part of the cost-saving push.

“We are making a bold and significant change to our pricing strategy for Yosprala® aimed at allowing all patients to access the product for only $10.00 per month. In addition, we continue to implement our cost savings plan to further improve our cost structure and balance sheet to maximize and preserve our financial flexibility,” said Chief executive officer, Adrian Adams.

Aralez Pharmaceuticals Inc. (NASDAQ:ARLZ) has also entered into a licensing agreement with a multinational pharmaceutical company through its subsidiary Pozen Inc. As part of the non-exclusive license agreement, Pozen is to receive $4 million in an upfront payment which will also pave way for other milestone payments and royalties.

Aralez Pharmaceuticals Inc. (NASDAQ:ARLZ) was unchanged in Friday’s trading session after rallying by 0.47% to end the week at $2.13 a share.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

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Monica has an undergraduate degree in Accounting and an MBA she earned - with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

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