Cipher Pharmaceuticals: Strong Q3 2025 Earnings Call

Cipher Pharmaceuticals Inc ((TSE:CPH)) has held its Q3 earnings call. Read on for the main highlights of the call.

Cipher Pharmaceuticals Inc. recently held its Q3 2025 earnings call, where the sentiment was generally positive. The company reported strong revenue growth and significant debt reduction, largely driven by the robust performance of its Natroba business. However, challenges persist in licensing revenue and the Absorica portfolio, alongside increased SG&A costs. Despite these hurdles, the positive developments slightly outweigh the negatives.

Strong Performance of Natroba Business

The Natroba business was a standout performer for Cipher Pharmaceuticals in Q3 2025. Sales from Natroba and its authorized generic, Spinosad, reached $8.1 million, marking a 4% sequential increase. The business achieved a gross margin of 86%, contributing to an adjusted EBITDA of $5 million, showcasing strong profitability.

Significant Debt Repayment

Cipher Pharmaceuticals made substantial progress in reducing its debt, repaying $17 million on its revolving credit facility. This repayment reduced the balance to $8 million from an initial $40 million, highlighting the company’s strong cash flow and effective financial management.

Revenue Growth

The company reported a 24% year-over-year increase in net revenue for Q3 2025. For the 9-month period, revenue rose by 78% compared to the same period in 2024, driven primarily by the addition of the U.S.-based Natroba business.

Strong Adjusted EBITDA Growth

Adjusted EBITDA saw significant growth, increasing by 79% for Q3 2025 and 97% for the 9-month period compared to the same periods in 2024. This growth underscores the company’s operational efficiency and profitability.

Net Income Growth

Net income for Q3 2025 was $5.5 million, a substantial increase from $0.3 million in the same quarter of the previous year. For the 9-month period, net income rose to $14 million, up from $8.2 million year-over-year, reflecting the company’s strong financial performance.

Decline in Licensing Revenue

Despite the overall positive financial results, Cipher Pharmaceuticals faced a 28% year-over-year decline in licensing revenue for Q3 2025. For the 9-month period, licensing revenue dropped by 44%, primarily due to lower royalties from the Absorica portfolio.

Challenges with Absorica Portfolio

The Absorica portfolio faced challenges, with market share decreasing to 2.9% from 5.6% the previous year. This decline was attributed to increased generic competition and reduced royalty rates, impacting overall revenue.

Increased SG&A Expenses

Cipher Pharmaceuticals reported a $3.5 million increase in SG&A expenses for the 9-month period compared to the prior year. This rise was due to ongoing legal costs and the full-year inclusion of Natroba business expenses.

Forward-Looking Guidance

Looking ahead, Cipher Pharmaceuticals is focusing on growth and shareholder value. The company plans to launch a direct-to-consumer sales model in early 2023 to expand the Natroba business, pursue complementary products for commercialization, and explore global out-licensing opportunities. With a strong financial position, including $8.4 million in cash and $13 million in outstanding debt, Cipher is well-positioned for future growth.

In summary, Cipher Pharmaceuticals’ Q3 2025 earnings call reflected a generally positive sentiment, driven by strong revenue growth and significant debt reduction. While challenges remain in licensing revenue and the Absorica portfolio, the company’s strategic focus on the Natroba business and financial management positions it well for continued success.