LAVAL, QC, Aug. 8 /PRNewswire-FirstCall/ - Labopharm Inc. today reported its results for the second quarter of fiscal 2006, ended June 30, 2006. All figures are in Canadian dollars unless otherwise stated.
“In the United States, we submitted the positive results from clinical trial MDT3-005 for once-daily tramadol during the quarter. Our file is in active review and, with a PDUFA date of September 28th, 2006, we continue to work closely with our marketing partner, Purdue Pharma, in preparation for launch as rapidly as possible should our product receive approval. In Europe, we are working diligently with our partners towards additional launches of our product during the second half of this year,” said James R. Howard-Tripp, President and Chief Executive Officer, Labopharm Inc.
Key Developments for the Quarter - Submitted Positive Results for Phase III Clinical Trial on Once-Daily Tramadol - As planned, Labopharm submitted the positive results of its Phase III clinical trial on its once-daily formulation of tramadol, MDT3-005 conducted under an S.P.A., to the U.S. Food and Drug Administration (FDA). The results were added to the Company’s New Drug Application (NDA), which was submitted to the FDA in November 2005. The PDUFA date remains September 28, 2006. - Received Marketing Authorization for Additional Countries - In addition to Germany, Labopharm has received marketing authorization for its once-daily tramadol product in 16 countries, including the United Kingdom and Spain. - Secured Grunenthal as Marketing Partner for Belgium - Labopharm signed a licensing and distribution agreement for its once-daily tramadol product for Belgium with Grunenthal GmbH, the largest marketer of tramadol products in that country. The agreement brings the number of European countries for which Labopharm has established marketing partnerships to 22, which, combined, account for more than 90% of tramadol sales in Europe. - Secured GSK as Marketing Partner for Once-Daily Tramadol for Mexico - Labopharm expanded its licensing and distribution agreement with Glaxo Group Limited (GSK) for 20 Latin American and Caribbean countries to included Mexico. - Completed Cross-Border Offering and Listing on NASDAQ - Labopharm completed a cross-border public offering of shares that generated net proceeds to the Company in excess of CDN$100 million. Concurrently with the offering, the Company’s shares were listed on NASDAQ. Key Developments Subsequent to Quarter End - Launched Once-Daily Tramadol Product in the Czech Republic and Slovakia - Following receipt of national marketing authorizations, Labopharm’s once-daily tramadol product was commercially launched in the Czech Republic and Slovakia by the Company’s marketing partner for these countries, CSC Pharmaceuticals. These launches are the first in a series of launches by CSC in Austria and 14 Eastern European countries. Financial Results
Revenue for the second quarter of 2006 was $3.1 million compared with $11,000 for the second quarter of fiscal 2005. Product sales were $0.9 million and consisted of sales of the Company’s once-daily tramadol product to HEXAL AG for distribution in Germany and to CSC Pharmaceuticals for distribution in the Czech Republic and Slovakia, where the Company’s product was launched subsequent to quarter end. The Company did not have product sales in the second quarter of fiscal 2005. Licensing revenue for the second quarter was $2.2 million, representing a portion of previously received up-front and milestone payments from the Company’s licensing and distribution partners for the U.S. and Europe, which are being recognized over the term of the Company’s obligations under those arrangements. Licensing revenue for the second quarter of fiscal 2005 was $11,000.
Research and development expenses before tax credits for the second quarter of fiscal 2006 decreased to $4.5 million from $5.6 million for the second quarter of fiscal 2005. The decrease was primarily due to the incurrence of costs related to the Company’s clinical trial program for once-daily tramadol and for the validation of commercial manufacturing process for once-daily tramadol at a second manufacturer in the corresponding period of last year. The decrease was partially offset by a general increase in the Company’s research and development capacity. Tax credits for the second quarter of fiscal 2006 increased to $0.3 million from $0.2 million for the corresponding quarter of fiscal 2005 due to the recognition of previously unrecorded Canadian Federal research and development tax credits.
Selling, general and administrative costs for the second quarter of fiscal 2006 increased to $4.0 million from $2.8 million for the second quarter of fiscal 2005. The increase was attributable to personnel recruitment, development of a communications and marketing platform for the Company’s once-daily tramadol product, costs related to the Company’s shares becoming listed on NASDAQ and higher non-cash stock-based compensation expense. Financial expenses for the quarter were $0.7 million compared with $0.2 million for the second quarter of fiscal 2005. The increase was the result of interest on the term loan agreement that the Company entered into in June 2005. Income tax expense for the quarter was $0.1 million compared to $1,000 for the second quarter of fiscal 2005.
Net loss for the second quarter of fiscal 2006 decreased to $5.5 million, or $0.11 per share, from $8.8 million, or $0.21 per share, for the second quarter of fiscal 2005.
Cash, cash equivalents and short-term investments as at June 30, 2006 were $118.8 million, compared with $34.9 million as at December 31, 2005. The increase was primarily the result of the generation of net proceeds of $103.5 million from the cross-border equity financing completed in May 2006.
For the six-month period ended June 30, 2006, revenue was $7.4 million compared with $0.8 million for the corresponding period of fiscal 2005. Product sales were $2.9 million and licensing revenue for the same sixth-month period was $4.4 million, representing a portion of previously received up-front and milestone payments from the Company’s licensing and distribution partners for the U.S. and Europe. Licensing revenue for the corresponding period of fiscal 2005 was $0.8 million.
Research and development expenses before tax credits for the first half of fiscal 2006 increased to $10.9 million from $9.9 million for the first half of fiscal 2005. The increase was primarily due to increased clinical trial activity during the first half of 2006, as well as a general increase in the Company’s research and development capacity. Selling, general and administrative costs for the first half of fiscal 2006 increased to $7.0 million from $5.2 million for the first half of fiscal 2005. The increase was attributable to personnel recruitment, development of a communications and marketing platform for the Company’s once-daily tramadol product, costs and fees related to the NASDAQ listing, as well as higher non-cash stock-based compensation expense. Financial expenses for the first half of the year were $1.4 million compared with $0.4 million for the first half of last year. Income tax expense for the first half of the year was $0.6 million compared to $1,000 for the first half of last year.
Net loss for the first six months of fiscal 2006 decreased to $12.3 million, or $0.26 per share, from $14.7 million, or $0.34 per share, for the corresponding period of fiscal 2005.
About Labopharm Inc.
Labopharm Inc. is an international, specialty pharmaceutical company focused on the development of drugs incorporating Contramid(R), the Company’s proprietary advanced controlled-release technology. Labopharm’s lead in-house product, a once-daily formulation of the analgesic tramadol, has received regulatory approval in 22 European countries and commercial launch of the product across Europe is underway. In the U.S., the Company’s NDA for once-daily tramadol is under review at the FDA and the Company has secured a licensing and distribution agreement with Purdue Pharma. The Company’s pipeline includes a combination of in-house and partnered programs with products both in clinical trials and in preclinical development. For more information, please visit www.labopharm.com.
This press release contains forward-looking statements, which reflect the Corporation’s current expectations regarding future events. The forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors, including the successful and timely completion of clinical studies, the uncertainties related to the regulatory process and the commercialization of the drug thereafter. Investors should consult the Corporation’s ongoing quarterly filings and annual reports for additional information on risks and uncertainties relating to these forward-looking statements. The reader is cautioned not to rely on these forward-looking statements. The Corporation disclaims any obligation to update these forward-looking statements.
Balance Sheet, Statement of Operations, Statement of Cash Flow to follow. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the: Three months ended Six months ended June 30, June 30, June 30, June 30, 2006 2005 2006 2005 (Thousands of Canadian $ $ $ $ dollars, except share and per share amounts) ------------------------------------------------------------------------- REVENUE Product sales 902 - 2,947 - Cost of goods sold, including depreciation expense of $9 and $16 for the three months and the six months ended June 30, 2006 respectively (nil in 2005) 564 - 1,592 - ------------------------------------------------------------------------- Gross profit on product sales 338 - 1,355 - OTHER REVENUE Licensing 2,217 11 4,443 751 ------------------------------------------------------------------------- 2,555 11 5,798 751 EXPENSES AND OTHER INCOME Research and development expenses 4,501 5,606 10,896 9,862 Government assistance (321) (206) (1,041) (746) ------------------------------------------------------------------------- 4,180 5,400 9,855 9,116 Selling, general and administrative expenses 3,965 2,786 6,991 5,172 Financial expenses 683 204 1,412 410 Depreciation and amortization 409 414 830 819 Interest income (798) (102) (1,006) (237) Foreign exchange (gain) loss (411) 97 (593) 188 ------------------------------------------------------------------------- 8,028 8,799 17,489 15,468 ------------------------------------------------------------------------- LOSS BEFORE INCOME TAXES (5,473) (8,788) (11,691) (14,717) Income taxes : Current 105 1 684 1 Future (36) - (36) - ------------------------------------------------------------------------- NET LOSS FOR THE PERIOD (5,542) (8,789) (12,339) (14,718) ------------------------------------------------------------------------- ------------------------------------------------------------------------- NET LOSS PER SHARE - BASIC AND DILUTED (0.11) (0.21) (0.26) (0.34) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of shares outstanding 48,304,129 42,800,835 46,729,289 42,710,427 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the: Three months ended Six months ended June 30, June 30, June 30, June 30, (Thousands of Canadian 2006 2005 2006 2005 dollars) $ $ $ $ ------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss for the period (5,542) (8,789) (12,339) (14,718) Items not affecting cash: Depreciation of property, plant and equipment 363 380 730 750 Amortization of intangible assets 55 34 116 69 Amortization of deferred financing costs 54 - 111 - Unrealized foreign exchange (gain) loss (374) 73 (473) 181 Future income taxes (36) - (36) - Stock-based compensation 824 521 1,365 647 ------------------------------------------------------------------------- (4,656) (7,781) (10,526) (13,071) Net change in non-cash operating items (4,781) (1,065) (9,667) 371 ------------------------------------------------------------------------- (9,437) (8,846) (20,193) (12,700) ------------------------------------------------------------------------- INVESTING ACTIVITIES Acquisition of short-term investments (22,064) (2,407) (25,397) (3,798) Disposals of short-term investments - - - 958 Maturities of short-term investments 11,337 8,257 15,914 17,203 Acquisition of property, plant and equipment (370) (210) (581) (358) Acquisition of intangible assets (602) (39) (665) (86) ------------------------------------------------------------------------- (11,699) 5,601 (10,729) 13,919 ------------------------------------------------------------------------- FINANCING ACTIVITIES Repayment of capital lease obligations (20) (44) (40) (90) Proceeds from issuance of capital stock 113,794 241 114,544 860 Issuance costs of capital stock (7,784) - (7,784) - Repayment of long-term debt (867) - (1,404) - Proceeds from issuance of long-term debt - 11,586 - 11,586 Proceeds from issuance of warrants - 731 - 731 Deferred financing costs - (154) - (154) ------------------------------------------------------------------------- 105,123 12,360 105,316 12,933 ------------------------------------------------------------------------- Effect of exchange rates changes on cash and cash equivalents held in foreign currencies (75) (136) 3 (250) Increase in cash and cash equivalents 83,912 8,979 74,397 13,902 Cash and cash equivalents, beginning of period 10,767 7,732 20,282 2,809 ------------------------------------------------------------------------- Cash and cash equivalents, end of period 94,679 16,711 94,679 16,711 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash flows include the following items: Interest paid 515 204 1,059 410 Income taxes paid 62 1 114 1 ------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS (Unaudited) As at As at June 30, Dec. 31, 2006 2005 (Thousands of Canadian dollars) $ $ ------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 94,679 20,282 Short-term investments 24,094 14,611 Accounts receivable 2,565 532 Research and development tax credits receivable 1,346 875 Income tax receivable 434 426 Inventories 3,914 2,188 Prepaids and other assets 787 452 ------------------------------------------------------------------------- Total current assets 127,819 39,366 ------------------------------------------------------------------------- Restricted long-term investments 1,272 1,271 Property, plant and equipment 10,131 10,280 Intangible assets 3,225 3,231 Deferred financing costs 253 364 Future tax assets 36 - ------------------------------------------------------------------------- 142,736 54,512 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIENCY) Current Accounts payable and accrued liabilities 9,482 10,090 Current portion of deferred revenue 9,177 9,067 Current portion of obligations under capital leases 89 83 Current portion of long-term debt 3,875 3,383 ------------------------------------------------------------------------- 22,623 22,623 Deferred revenue 17,051 20,834 Obligations under capital leases 5,794 5,840 Long-term debt 5,485 7,818 ------------------------------------------------------------------------- 50,953 57,115 Shareholders’ equity (deficiency) Common shares, no par value, unlimited shares authorized, 56,727,963 and 43,673,863 issued and outstanding as at June 30, 2006 and as at December 31, 2005, respectively 241,524 135,631 Contributed surplus 7,182 6,350 Deficit (156,923) (144,584) ------------------------------------------------------------------------- Total shareholders’ equity (deficiency) 91,783 (2,603) ------------------------------------------------------------------------- 142,736 54,512 ------------------------------------------------------------------------- -------------------------------------------------------------------------
Labopharm Inc.
CONTACT: At Labopharm: Warren Whitehead, Chief Financial Officer, Tel:(450) 680-2423, ir@labopharm.com; At The Equicom Group: Jason Hogan -Toronto, Media and Investor Relations, Tel: (416) 815-0700,jhogan@equicomgroup.com
