Along with existing resources, this will allow it to accelerate the successful launch campaign of its évolis® hair growth products and proceed with the toxicology component of its preclinical anti-midkine antibody program.
In April, the company received strong positive results in all measured areas of its independently conducted, randomized, blinded and placebo controlled human clinical study of the évolis ONE formulation.
The company also anticipates significant increase in sales in the fourth quarter of the 2015 financial year and beyond due to the expansion of pharmacy distribution in Australia and its Japanese growth.
The eight month loan is secured against the company's research and development tax credit, which is expected in November 2015.
This is expected to be a little over the loan amount.
During the period of the loan the lenders have the right to require Cellmid to issue new ordinary fully paid shares at $0.034 per share to reduce the principal amount.
The maximum number of shares that may be issued in respect of the principal amount is 29,411,765.
Interest will be accrued monthly at an annual rate of 15% with a maximum interest liability of $100,000 during the course of the loan.
The lenders have the right to require Cellmid to issue fully paid ordinary shares in lieu of payment of the accrued interest at $0.023 per share during the course of the loan. The maximum number of shares that may be issued in respect of the interest is 4,347,826.
During 3Q FY2015 ending 31st March 2015, Cellmid reported a 35.5% increase in receipts from customer to $478,000 from $308,000 in the previous quarter.
Total sales were up 27% to $386,241 from its existing distribution channels in Australia and Japan.
Sales relating to the expanded Australian pharmacy distribution and the commercial launch of the new Andeprong® Scientist brand in Japan are not included in the 3Q FY2015 numbers.
Cellmid has received orders already for the extended pharmacy range and will commence shipping to wholesalers in May 2015.
As a result of the major expansion of the distribution and additional product lines Cellmid expects significant increase in sales in 4Q FY2015.
Consumer Health Division
Cellmid has been focusing on growing the Australian pharmacy distribution and implemented major structural expansion to the division during the March quarter:
- An increase in pharmacy distribution from 230 actively ordering stores to approximately 1,500 by the end of 4Q FY2015, with a target of over 2000 stores by the end of the calendar year. This means that the évolis® range of hair growth products will be available nationally in more than 30% of all Australian pharmacies and stocked by all major distributors;
- Increased shelf space from 70mm to 480mm in most stores. This additional shelf space is the result of four new products within the évolis® range; shampoos and 'Active Packs' for men and women;
- A general practitioner (GP) sales force of 18 professional product representatives has been appointed on a contract basis and expected to make close to 25,000 personal calls nationally on doctors in the first twelve months introducing évolis®; and
- A contract pharmacy sales force of eight representatives will be appointed from mid-May to manage the pharmacy sales nationally. Cellmid had no pharmacy or GP representation during the past twelve months and these changes are expected to increase sell-through of the évolis® range of hair growth products by virtue of referrals and improved store representation.
Its Japanese distribution continues to improve and is expected to deliver strong sales in 4Q FY2015. Some of the highlights include the following:
- The first lot of the new Andeprong® Scientist range has been shipped to Natural Garden. Launch of this product has been delayed from November 2014 to April 2015 due to scheduling of a marketing campaign. Initial sales indicate that Natural Garden will be able to achieve its target of minimum 30,000 unit sales per year;
- Cellmid has secured two one-hour shows on the QVC shopping channel during the reporting period focusing on the Japanese Jo-Ju® brand. The product has outperformed QVC's sales expectations in these scheduled times and Cellmid is currently negotiating for additional shows in more popular time slots;
- Japan is the basis for Cellmid's Chinese distribution. Orders for Lexilis® Black and Jo-Ju® have been received in April for shipping in July 2015; and
- Cellmid has negotiated, through its Japanese office, its first "own brand" contract with a Chinese retailer. Product development commenced and the first products are expected to be shipped in September 2015.
évolis® ONE Clinical Study
Cellmid's new product évolis® ONE that uses its FGF5 inhibitor formulation, was developed in-house by the company's scientists and product development team.
A 32 patient study showed a statistically significant 80.2% reduction in hair loss over 112 days with twice daily use.
The trial was conducted by AMA Laboratories, INC. in New York, a leading independent CRO specialising in dermatological product testing.
The optimised, market ready formulation is already under GMP manufacture.
Timing and geographic region for the launch of évolis® ONE is currently assessed as part of the company's global marketing strategy.
The $1 million loan funding comes as the company prepares for sales growth in the current quarter from its consumer health division.
This will accelerate the successful launch campaign of its évolis® hair growth products, which will further support sales growth looking ahead.
Funds will also allow the company to proceed with the toxicology component of its preclinical anti-midkine antibody program.
Cellmid had $1.7 million in cash as at 31st March 2015.
Share Price Catalysts
- Significant increase in Consumer Health Business expected;
- Further expansion of distribution in other countries;
- In the therapeutic and diagnostic business, completion of the safety study in the company's first in class antibody program. This has already been tested in rats and cynomolgus monkeys; and
- Royalty from licence to Pacific Edge.
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