(All figures are presented in U.S. Dollars)

• Adjusted EBITDA² in Q1 2025 was $6.2 million, an increase of 73% over Q1 2024
• Canadian product portfolio sales volumes grew 46% in the quarter compared to Q1 2024
• Natroba^TM sales were $6.7 million during the quarter, a sequential increase of 3% over Q4 2024
• Continued strong track record of cash generation with $4.2 million cash from operations in Q1 2025
• $22.0 million cash balance at the end of Q1 2025
• $15.0 million debt repayment subsequent to Q1 2025

MISSISSAUGA, ON, May 8, 2025 /CNW/ - Cipher Pharmaceuticals Inc. (TSX: CPH) (OTCQX: CPHRF) ("Cipher" or the "Company") today announced its financial and operating results for the three months ended March 31, 2025.

First Quarter 2025 Financial Highlights

(All figures in U.S. dollars, compared to Q1 2024, unless otherwise noted)

• Total revenue was $12.0 million in Q1 2025, an increase of 105%
• Canadian product portfolio revenue increased by 41% to $4.6 million in Q1 2025, compared to $3.3 million in Q1 2024
• Natroba^TM provided $6.7 million of incremental product revenue in Q1 2025
• Licensing revenue was $0.7 million in Q1 2025, a decrease of $1.9 million, due to lower product shipments to licensing partners, combined with lower partner sales volumes and royalty rates
• Total gross profit from operations increased by 90% to $9.1 million in Q1 2025
• Adjusted EBITDA² increased 73% to $6.2 million in Q1 2025

Management Commentary

Craig Mull, Interim CEO, commented: "Our Canadian product portfolio continued to demonstrate strong performance in Q1 2025, with consecutive quarter revenue growth of 15% and 41% revenue growth compared to the same quarter in the prior year. Our Canadian product portfolio continues to be a reliable source of revenue for Cipher.

Natroba™ has performed consistent with our expectations from when we acquired the product this past July, and we believe the product's revenue in Q1 2025 has positioned the business well to start 2025, given the seasonality for the product results in generally lower demand during the colder months of the calendar year, and higher demand for the product in the upcoming warmer months of the year."

Ryan Mailling, CFO, commented: "In Q1 2025, our base business in Canada, combined with the Natroba^TM business in the US, continued to generate free cash flow for Cipher, with $4.2 million of cash generated from operations during the quarter, and an ending cash balance of $22.0 million. As we have demonstrated previously, we will continue to be smart in our approach to allocating capital, with the ability to return capital to shareholders through our recently approved Normal Course Issuer Bid ("NCIB"); by further de-levering the Company's current low leverage position through repayments on our revolving credit facility; and by continuing to be selective in our approach to executing on acquisition opportunities."

Corporate Highlights

• On April 29, 2025, Cipher announced its product Natroba^TM received preferred step-through status on Medicaid in the state of Illinois, whereby its main product competitor Permethrin 5% was downgraded to non-preferred on the state's preferred drug listing. This move by Illinois Medicaid will require all prescriptions for Permethrin 5% to first 'step-though' Natroba^TM representing the treatment of choice in the state.
• On May 1, 2025, Cipher announced that the Toronto Stock Exchange (the "TSX") has approved the Company's Notice of Intention to Make a Normal Course Issuer Bid under which the Company may purchase for cancellation, from time to time up to May 4, 2026, up to an aggregate of 1,485,260 of its issued and outstanding common shares, being 10% of its public float of 14,852,604 common shares as of April 22, 2025. In accordance with TSX rules, any daily repurchases on the TSX under the NCIB are limited to a maximum of 10,427 common shares, which represents 25% of the average daily trading volume on the TSX of 41,708 for the six months ended March 31, 2025. To facilitate larger repurchases, the Company is entitled to make one weekly block purchase on the TSX that may exceed the daily repurchase restrictions, and the Company intends to exercise this entitlement.
• On May 8, 2025, the Company repaid $15.0 million of the outstanding balance on its revolving credit facility. As a result of the repayment, the outstanding balance on the Company's revolving credit facility has been reduced to $25.0 million as of May 8, 2025. Due to the revolving nature of the credit facility, an additional $40.0 million remains available to the Company to draw upon, should financing be required.

Q1 2025 Financial Review

(All figures in U.S. dollars, compared to Q1 2024, unless otherwise noted)

• Total revenue was $12.0 million in Q1 2025, compared to $5.9 million in Q1 2024, an increase of 105%
• In constant currency, Canadian product portfolio revenue increased by 50%
• Product revenue from the Canadian product portfolio was $4.6 million in Q1 2025, an increase from $3.3 million in Q1 2024
• Product revenue from Natroba^TM in the U.S. was $6.7 million, up from $6.5 million sequentially from Q4 2024 whereby the product was acquired on July 29, 2024
• Licensing revenue decreased 72% to $0.7 million in Q1 2025 compared to $2.6 million in Q1 2024, impacted by reduced product shipments to licensing partners; lower net sales realized by Cipher's partners on which the Company earns a royalty; and contractual royalty rate reductions
• Total gross profit was $9.1 million in Q1 2025, compared to $4.8 million in Q1 2024, an increase of 90%
• Gross margin decreased by 6% to 76% in Q1 2025 from 82% in Q1 2024 due to a lower proportion of royalty licensing revenue during the quarter, and the impact of non-cash fair value adjustments on acquired Natroba™ inventory which had carried over into Q1 2025 as the inventory was sold
• Gross margin as a percentage of product revenue increased by 6% to 74% in Q1 2025 from 68% in Q1 2024
• Net income and earnings per common share were $2.6 million and $0.10, respectively, in Q1 2025, compared to $4.9 million and $0.21 in Q1 2024, with the decrease primarily attributable to the amount of non-cash deferred tax losses recognized in Q1 2024 compared to Q1 2025
• EBITDA² in Q1 2025 was $4.2 million, compared to $2.7 million in Q1 2024, an increase of 55%
• Adjusted EBITDA² in Q1 2025 was $6.2 million, compared to $3.6 million in Q1 2024, an increase of $2.6 million or 73%

Business Strategy & Outlook

Cipher expects to continue to execute on its business strategy, remains focused on profitability and delivering shareholder value. Key areas of focus include:

• Driving market share growth of Natroba™ in the anti-parasitic market in the U.S. where its current market share is approximately 23%³, in a market where market leader "Permethrin" is no longer an effective treatment but still holds 75%³ market share.
• Out-licensing Natroba™ globally where there is high unmet need, such as warm climate regions.
• Acquiring complementary dermatology products to add to our North American platform to enhance the profitability, size and scale of the business.

Financial Statements and MD&A

Cipher's Financial Statements for the three months ended March 31, 2025, and Management's Discussion and Analysis (the "MD&A") for the three months ended March 31, 2025, are available on the Company's website at www.cipherpharma.com in the "Investors" section under "Financial Reports" and on SEDAR+ at www.sedarplus.ca.

Notice of Conference Call

Cipher will hold a conference call on May 9, 2025 at 8:30 a.m. (ET) to discuss its financial results and other corporate developments.

• To access the conference call by telephone, dial (416) 945-7677 or (888) 699-1199
• A live audio webcast will be available at https://app.webinar.net/9dwb3Zn3Qap
• An archived replay of the webcast will be available until May 16, 2025 and can be accessed by dialing (289) 819-1450 or (888) 660-6345 and entering conference replay code 69080#

About Cipher Pharmaceuticals Inc.

Cipher Pharmaceuticals (TSX: CPH) (OTCQX: CPHRF) is a specialty pharmaceutical company with a robust and diversified portfolio of commercial and early to late-stage products, mainly in dermatology. Cipher acquires products that fulfill unmet medical needs, manages the required clinical development and regulatory approval process, and currently markets those products in Canada, the U.S., and South America. For more information, visit www.cipherpharma.com.

Forward-Looking Statements and Non-IFRS Measures

This document includes forward-looking statements within the meaning of applicable securities laws. These forward-looking statements include, among others, expectations for future growth, objectives and goals and strategies to achieve those objectives and goals, the potential purchases to be made under the NCIB, as well as statements with respect to our beliefs, plans, expectations, anticipations, estimates and intentions.  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. By their nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. 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. We caution readers not to place undue reliance on these statements as a number of important factors, many of which are beyond our control, could cause our actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, our ability to enter into development, manufacturing and marketing and distribution agreements with other pharmaceutical companies and keep such agreements in effect; our dependency on a limited number of products; our dependency on protection from patents that will expire; the extent and impact of health pandemic outbreaks on our business; integration difficulties and other risks if we acquire or in-license technologies or product candidates; reliance on third parties for the marketing of certain products; the product approval process by regulators which can be highly unpredictable; the timing of completion of clinical trials, regulatory submissions and regulatory approvals; reliance on third parties to manufacture our products and events outside of our control that could adversely impact the ability of our manufacturing partners to supply products to meet our demands; we may be subject to future product liability claims; unexpected product safety or efficacy concerns may arise; we generate license revenue from a limited number of distribution and supply agreements; the Company's performance depends, in part, on the performance of its distributors and suppliers; the pharmaceutical industry is highly competitive with new competing product entrants; requirements for additional capital to fund future operations; products may be subject to pricing regulation; dependence on key managerial personnel and external collaborators; the ability to receive regulatory approvals for products in development or future products; certain of our products are subject to regulation as controlled substances; limitations on reimbursement in the healthcare industry; the ability to convince public payors and hospitals to include our products on the approved formulary lists; ability to receive timely payment from certain customers; application of various laws pertaining to health care fraud and abuse; the Company's 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 healthcare industry generally; we may be unsuccessful in evaluating material risks involved in completed and future acquisitions; we may be unable to identify, acquire or integrate acquisition targets successfully; success in applying tax loss carry forwards; inability to meet covenants under our long-term debt arrangement; compliance with privacy and security regulation; our policies regarding product returns, allowances and chargebacks may reduce revenues; additional regulatory burden and controls over financial reporting; application of regulations that could restrict our activities and abilities to generate revenues as planned; reliance on third parties to perform distribution, logistics, invoicing, regulatory and sales services; general commercial litigation, class actions, other litigation claims and regulatory actions; the difficulty for shareholders to realize in the United States upon judgments of U.S. courts predicated upon civil liability of the Company and its directors and officers who are not residents of the United States; increases in tariffs, trade restrictions or taxes on our products; 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 laws; inability to protect our trademarks from infringement; shareholders may be further diluted if we issue securities to raise capital; volatility of our share price; the fact that we have a significant shareholder; our operating results may fluctuate significantly; and our debt obligations will have priority over the common shares of the Company in the event of a liquidation, dissolution or winding up.  We caution that the foregoing list of important factors that may affect future results is not exhaustive. When reviewing our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward-looking statements, may be found in the "Risk Factors" section of our MD&A for the year ended December 31, 2024 and the Company's Annual Information Form, and elsewhere in our filings with Canadian securities regulators. Except as required by Canadian securities law, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf; such statements speak only as of the date made. The forward-looking statements included herein are expressly qualified in their entirety by this cautionary language.

1. At the March 31, 2025 exchange rate – 1.4376
   
   
2. EBITDA and adjusted EBITDA are non-IFRS financial measures.  These non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are unlikely to be comparable to similar measures presented by other companies. Management uses non-IFRS measures such as Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Adjusted EBITDA to provide investors with supplemental measures of the Company's operating performance and thus highlight trends in the Company's core business that may not otherwise be apparent when relying solely on IFRS financial measures.  The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation of property and equipment, amortization of intangible assets, non-cash share-based compensation, changes in fair value of derivative financial instruments, costs and provisions for legal matters, costs associated with arbitration, loss on disposal of assets and loss on extinguishment of lease, impairment of intangible assets, acquisition costs, restructuring costs, fair value adjustments to acquired inventory and unrealized foreign exchange gains and losses.
   
   
3. IQVIA market data as at March 31, 2025.

The following is a summary of how EBITDA and Adjusted EBITDA are calculated:

Consolidated statements of income and comprehensive income

Consolidated statements of financial position