Pediapharm Announces Second Quarter Financial Results; Revenues Increased by 58% vs Same Period Last Year

MONTREAL, QUEBEC--(Marketwired - Nov. 30, 2015) -

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Pediapharm Inc. ("Pediapharm" or the "Company") (TSX VENTURE: PDP) is pleased to announce the filing of its second quarter unaudited financial results ended September 30, 2015. All dollar amounts are expressed in Canadian currency and results are reported in accordance with IFRS accounting principles.

Highlights for the three-month period ended September 30, 2015:

The Company's total revenue increased by 58% vs the same period in 2014, including an increase of 73% from sales of Pediapharm branded products (vs revenue from commissions). When comparing to the three-month period ended June 30, 2015, total revenue has increased by 143%.

NYDA's sales performance continued to be very solid. For the three-month period ended September 30, 2015, NYDA's revenue, which reached over $1,400,000, more than tripled compared with the three-month period ended June 30, 2015 ($464,222). Compared to the three-month period ended September 30, 2014, NYDA's revenue increased by 58%. This performance confirms once again the excellent growth momentum obtained by NYDA since it was launched in Canada and as mentioned previously, reflects the seasonality of NYDA. Management estimates that NYDA has the potential to reach $3.2 million in its current fiscal year.

The Company has entered in discussion with numerous potential partners for Naproxen Suspension in the United States. The objective is to finalize an agreement by the end of the 2015.

On July 24^th 2015, the Company has submitted to the Canadian Health Authorities its regulatory dossier of rupatadine, a novel generation of antihistamine to treat the symptoms of allergy and urticarial in both adults and children. Rupatadine has a unique dual activity by blocking both histamine H₁ and platelet-activating factor (PAF) receptors; thus, providing additional anti-allergic benefits to patients. It comes in a once-daily formulation and is also available in the form of suspension (liquid) for children. The Canadian second-generation anti-histamine market is estimated to be $105 million; of which $17 million from products with a prescription (Rx) status, which are growing at a rate of approximately 15%. The entire antihistamine market was approximately $120 Million in 2013 (IMS Data-2013).

Recent highlights

On November 16, 2015, the Company has submitted to the Canadian Health Authorities its regulatory dossier of Otixal; a novel patented formulation of Ciprofloxacin 0.3% otic solution and Fluocinolone Acetonide 0.025% otic solution. for the treatment of both acute otitis media in patients with tympanostomy tubes ("AOMT") and acute otitis external (swimmer's ear).

On November 20, 2015, the Company attended a meeting with scientific advisors as part of the request for reconsideration process for the Notice of Deficiency - Withdrawal Letter issued by Health Canada in May 2015 regarding the new drug submission for Easyhaler Budesonide. Pursuant to the rules governing the request for reconsideration, representatives from Pediapharm and Health Canada presented their respective arguments to the external committee. Further information on the request for reconsideration process can be found on Health Canada's website at www.hc-sc.gc.ca.

"The overall sales performance in our second quarter, led by our signature product NYDA, demonstrated once again our continued commercial success with our own branded products." stated Sylvain Chretien, President and Chief Executive Officer of Pediapharm. He added: "At the same time, we have made a lot of progress regarding the execution of the 5 agreements signed during our last fiscal year and as such, are in a position whereby most of the regulatory and filing investments have been done. We have also continued to assess potential product acquisitions that would generate short-term cash flow and are remaining very focused and disciplined in making sure there are synergies with our existing infrastructure." Mr. Chretien concluded with the following: "The next 12 to 15 months will be very busy for us with the potential launches of 4 new innovative products and the announcements of potential upcoming transactions. I remain very confident in our ability to keep executing our plan, especially with our demonstrated commercial know-how, as well as our solid infrastructure and management team."

The Company's focus remains to execute its commercial plan with existing products, such as NYDA®, a revolutionary treatment indicated for eradication of head lice and its eggs. NYDA® reached over $2,000,000 in revenue in fiscal 2015, is expected to reach $3,200,000 in fiscal 2016 and has the potential to achieve annual peak revenues of $6,000,000 to $8,000,000 by fiscal 2018 (IMS data and Management's estimate).

Pediapharm has a product pipeline of secured exclusive agreements which management believes will enable the Company to obtain its corporate annual revenue goal of reaching between $35,000,000 and $40,000,000 within the next 5-6 years. This projected peak sales forecast is based in using IMS data and the Management's estimate in the market share to be captured for each of the product. As described below, projected annual peak sales to be generated from existing licenses/products that have not yet been launched and/or require Health Canada approval are estimated at $35,000,000 (IMS data and Management's estimate). The Company intends on filing 1 additional product over the next few months for estimated Health Canada approvals before December 2016.

The chart below contains information on the secured exclusive agreements that are expected to be launched in the next 14 months. This chart has been updated since the last MD&A dated August 27, 2015 to reflect some of the most recent activity.

Pediapharm product Pipeline

PRODUCT	PARTNER- COUNTRY		INDICATION		MARKET SIZE (CDN $)		EST. ANNUAL PEAK SALES (CDN $) (3) (9)	EST. LAUNCH (Calendar Year) (10)
Pediapharm Naproxen Suspension USA (1)	Acquired from Roche- USA		Juvenile Rheumatoid Arthritis & Other Medical Pain Conditions		Suspension / Liquid: 50-80M (4)		Cumulative 5M based on milestone payments and royalties	Q-1 2016
Easyhaler-Budesonide (2)	Orion- Finland		Asthma		195M (5)		15M	Q-1 2016
Cuvposa (2)	Merz Pharma-USA		Severe Drooling - Cerebral Palsy		25M (6)		5M	Q-4 2016
Cetraxal-Plus (Otixal) (2)	Salvat Laboratories-Spain		Ear Infection, Swimmer's Ear		25M (7)		4M	Q-4 2016
Rupatadine (2)	Uriach-Spain		Antihistamine (RX indication)		120M (8)		6M	Q-4 2016
TOTAL					365M+		35M

(1)	US Product to be commercialized by US commercial partner (to be determined)
(2)	Canadian License which requires Health Canada Approval
(3)	Estimated Annual Peak sales is usually achieved within approximately 5 to 7 years of a product launch
(4)	Management's estimate based on discussions with potential US partners. Includes OTC products only.
(5)	IMS Data - June 2012
(6)	Based on prevalence of Cerebral Palsy patients from the Public Health Agency of Canada
(7)	IMS Data - December 2014
(8)	IMS Data - December 2013
(9)	Based on Market Data (see above footnotes) and Management's estimates
(10)	Based on Health Canada's timelines regarding approval of submitted files

Now that Pediapharm has positioned itself with a strong pipeline as shown above, the Company's core strategy regarding business development has recently evolved to focus more on acquisitions of products with existing sales and on co-promotion for products already approved in Canada. The key objective is to generate profitability in a timely fashion while pursuing the regulatory process of the agreements signed in 2014. In parallel, Pediapharm will still assess exclusive licensing agreements (commonly known as "in-licensing").

Furthermore, before the end of 2015, the Company intends to complete a transaction with a US commercial partner for the selling and marketing of its first product acquisition in the US; namely the Pediapharm Naproxen Suspension. Pediapharm believes that with this transaction, the Company will reach profitability more rapidly.

With the excellent sales momentum of its current marketed products portfolio, including NYDA®, the Company continues to make positive steps towards generating positive cash flow. The recent launch of Pediapharm Naproxen Suspension in Canada, the expected transaction of the Pediapharm Naproxen Suspension in the US through a partner, as well as the potential launch of Easyhaler-budesonide in 2016 assuming Health Canada's approval, will positively impact revenue and profitability for years to come. In parallel, the Company is in the process of assessing potential product acquisitions, and strives to add more products to its portfolio within this fiscal year. Pediapharm is a growth company in the high-margin specialty pharmaceutical industry, and when opportunities arise to feed that growth, it may raise incremental capital to provide for necessary funding and flexibility. Review of operating results for the period ended September 30, 2015

For the three months ended September 30, 2015, revenue reached $1,471,734 compared with revenue of $928,257 in the three months ended September 30, 2014, which represents a 58% increase. Revenue from sales of Pediapharm branded products increased by $618,452 due to the very strong revenue growth from NYDA®, while revenue from commissions decreased by $74,975.

For the three months ended September 30, 2015, selling and administrative expenses were $1,688,949 (2014 - $1,789,763). General administration expenses have decreased by $54,780 while business development and regulatory affairs expenses have increased by $17,647. The main reasons for this increase are the additional efforts associated with the 5 agreements signed in fiscal 2015.

The operating loss for the three months ended September 30, 2015 was $760,755 compared to $1,193,712 in the three months ended September 30, 2014. The 58% increase in revenue is the main reason for the decrease in operating loss.

The loss and comprehensive loss for the three months ended September 30, 2015 was $954,011 compared to $1,186,937 in the three months ended September 30, 2014. The three months ended September 30, 2015 was negatively impacted by $211,931 in finance costs as a result of the March 31, 2015 private placement of secured, convertible debentures of the Company and share purchase warrants of the Company for aggregate gross proceeds of $5,500,000

	September 30, 2015 (3 months)		September 30, 2014 (3 months)		September 30, 2015 (6 months)		September 30, 2014 (6 months)
Revenue from Products	1,455,459		837,007		1,997,628		1,261,992
Revenue from Commissions	16,275		91,250		79,748		545,000
TOTAL Revenue	1,471,734		928,257		2,077,376		1,806,992
Gross Profit	954,480		612,128		1,348,208		1,330,886
Selling and administrative expenses	1,688,949		1,789,763		3,452,043		3,326,228
Operating loss	(760,755	)	(1,193,712	)	(2,155,004	)	(2,024,638	)
Net loss	(954,011	)	(1,186,937	)	(2,548,657	)	(1,999,643	)
Cash flow from (used in) operating activities	(1,133,694	)	(821,947	)	(2,470,352	)	(2,392,428	)
Cash flow from (used in) investing activities	(284,129	)	(111,145	)	(287,968	)	(290,903	)
Cash flow from (used in) financing activities	(1,064	)	-		69,902		-

About Pediapharm Inc.

Pediapharm is the only Canadian specialty pharmaceutical company dedicated to serving the needs of the pediatric community. Its mission is to bring to the Canadian market the latest innovative pediatric products with the objective to improve the health and the well-being of children in Canada. Since its debut in 2008, Pediapharm has entered into numerous commercial agreements with partners from Canada and other countries around the world. The company's innovative product portfolio includes NYDA®; a breakthrough treatment for head lice; EpiCeram® a non-steroid emulsion for eczema; KoolEffect™ which reduces the symptoms of fever; and VapoLyptus™; a soothing vapour patch of Eucalyptus and Camphor.

FORWARD LOOKING STATEMENTS

This news release contains forward-looking statements and other statements that are not historical. Such forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that could cause actual results to vary materially from target results and the results or events predicted in these forward-looking statements. As a result, investors are cautioned not to place undue reliance on these forward-looking statements.

The forward-looking statements contained in this news release are made as of the date of this release. Except as required by applicable law, the Corporation disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking information reflects the current expectations or belief of the Corporation based on information currently available and such information is subject to a number of assumptions, risks and uncertainties described in details at pp. 35 to 41 of the Management Information Circular of Chelsea Acquisition Corporation dated November 12, 2013 available on SEDAR at www.sedar.com and other risks associated with being a specialty pharmaceutical company.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.