MONTREAL, QUEBEC--(Marketwire - November 11, 2009) - Paladin Labs Inc. (TSX: PLB), a leading Canadian specialty pharmaceutical company, today reported its third quarter 2009 financial results.
Third Quarter Highlights
- Revenues reached a record $28.4 million, an increase of 28% versus last year.
- EBITDA(1) reached $10.2 million, an increase of 12% over the same period last year.
- Announced sale of the T-ACT™ platform to IMBiotechnologies Ltd. and the AIT® antibody platform to Quest Pharmatech.
- Obtained regulatory approval for GlucaGen® from the Biologics and Genetic Therapies Directorate.
Subsequent to Third Quarter
- Amended the terms of the Estring® Agreement with Pfizer to assume more marketing responsibilities.
- Received a grant of US$100,000 from the Bill & Melinda Gates Foundation to initiate development of an anti-malaria vaccine using our proprietary Chimigen® platform technology.
"This was a strong quarter for Paladin reflecting growth from both promoted brands and new acquisitions. Our diverse and highly profitable product portfolio, combined with our strong balance sheet, provides us the strength to continue to execute our business strategy," said Jonathan Ross Goodman, President and CEO of Paladin Labs.
Financial Results
Revenues for the third quarter of 2009 increased 28% or $6.2 million to a record $28.4 million, compared to $22.2 million in the third quarter of 2008. This increase is due to newly acquired products such as Dexedrine® and the strong performance from the Company's key promoted products, including Tridural®, Twinject®, Plan B®, Pennsaid®, Metadol®, Trelstar®, and Testim® which increased by 10% in the third quarter of 2009 compared to the corresponding period a year ago. For the nine-month period ended September 30, 2009, revenues reached $80.4 million, an increase of 35% from $59.7 million for the same period last year.
Paladin's 2009 third quarter earnings before interest expense, taxes, depreciation, amortization, and unusual items (EBITDA(1)) increased 12% to $10.2 million, compared to EBITDA(1) of $9.1 million in the third quarter of 2008. For the nine months of 2009, EBITDA(1) increased 37% to $29.5 million from $21.5 million.
Net income for the third quarter was $2.6 million or $0.13 per fully diluted share, compared to net income of $3.6 million or $0.24 per fully diluted share for the same period last year. For the first 9 months of 2009 net income was $33.3 million or $1.98 per fully diluted share, compared to the net income of $7.7 million or $0.51 per fully diluted share for the same period last year. Net income before extraordinary gain for the nine months ended September 30, 2009 was $7.4 million or $0.44 per fully diluted share compared to $7.7 million or $0.51 per fully diluted share for the same period last year.
Selling and marketing expense for the third quarter of 2009 increased 19% to 6.5 million compared to 5.4 million the third quarter of 2008. For the nine months of 2009, selling and marketing expenses were $18.9 million an increase of 14% from $16.5 million for the same period last year. The promotional activities driving selling and marketing expenses primarily relate to Paladin's continued promotional activities for Tridural®, Trelstar®, Twinject®, Plan B®, Pennsaid®, Metadol® and Testim®.
At September 30, 2009, Paladin's cash, cash equivalents and investments in marketable securities totaled $97.6 million or $5.12 per fully diluted share. From this strong cash position, Paladin continues to pursue product acquisition and development opportunities.
Product Developments
During the quarter, Paladin announced that the Biologics and Genetic Therapies Directorate of Health Canada had approved GlucaGen® (recombinant glucagon for injection). GlucaGen® is indicated for the treatment of severe hypoglycemia in diabetic patients being treated with insulin, and is the market leader in Europe. GlucaGen® is manufactured by Novo Nordisk A/S (NYSE: NVO), a healthcare company and a world leader in diabetes care. GlucaGen® will be an important player in the $8.8 million Canadian glucagon market. We look forward to bringing this product to Canadian patients in the first half of 2010.
Subsequent to the third quarter, Paladin announced an amendment of the Canadian Estring® agreement upon the close of Pfizer Inc.'s (NYSE: PFE) acquisition of Wyeth. Under the terms of the amended agreement, Paladin will take over all commercial responsibilities for the selling, marketing and distribution of Estring® in Canada.
Corporate Developments
During the quarter, Paladin announced the sale of T-ACT™ technology platform to IMBiotechnologies Ltd., a private biotechnology company based in Edmonton, Canada. Later in the quarter, Paladin also announced the sale of a portfolio of immunotherapeutic antibodies, related intellectual property, and other assets (the AIT® technology) to Quest PharmaTech (TSX VENTURE: QPT), an Edmonton-based biotechnology company that is developing new pharmaceutical products for oncology and other indications.
Subsequent to the third quarter, Paladin Biosciences division received a US$100,000 Grand Challenges Explorations grant from the Bill & Melinda Gates Foundation. The grant will support an innovative global health research project conducted by Dr. Rajan George, the Chief Technology Officer of Paladin Biosciences, titled "Dendritic cell receptor-targeted malaria vaccines". Paladin Biosciences will use its proprietary Chimigen® Platform Technology to produce a malaria vaccine that targets the parasite at various stages of the infection, and test the vaccine in the laboratory for immunogenicity. Paladin Biosciences continues to develop its Chimigen® Platform Technology for Hepatitis B, Hepatitis C and other indications.
(1) EBITDA (earnings before interest, taxes, depreciation and amortization) does not have any standardized meaning under Canadian Generally Accepted Accounting Principles ("GAAP") and therefore may not be comparable to similar measures presented by other companies. The Company defines EBITDA as earnings before interest expense, taxes, amortization, foreign exchange gains (losses), and unusual items; such as write-downs and gains (losses) on intellectual property and investments. EBITDA is calculated and presented consistently from period to period and agrees, on a consolidated basis, with the amount disclosed as "Earnings before under noted items" on the consolidated statement of income. The Company believes EBITDA to be an important measurement that allows it to assess the operating performance of its ongoing business on a consistent basis without the impact of amortization expenses. The Company excludes amortization expenses because their level depends substantially on non-operating factors such as the historical cost of intangible and capital assets. The Company's method for calculating EBITDA may differ from that used by other issuers and, accordingly, this measure may not be comparable to EBITDA used by other issuers.
Conference Call Notice
Paladin will host a conference call to discuss its third quarter results on Wednesday, November 11, 2009, at 10:00 a.m. EST. The dial-in number for the conference call is 1-800-263-9158 or 416-641-6670. The call will be audio-cast live and archived for 30 days at www.paladinlabs.com.
About Paladin Labs
Paladin Labs Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing innovative pharmaceutical products. With this strategy, a focused national sales team and proven marketing expertise, Paladin has evolved into one of Canada's leading specialty pharmaceutical companies. For more information, please visit the Company's web site at www.paladinlabs.com
This news release contains forward-looking statements and predictions. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The Companies consider the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared, but caution that these assumptions regarding the future events, many of which are beyond the control of the Companies and their subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations, are discussed in the annual reports, as well as in the Companies' Annual Information Forms for the year ended December 31, 2008. The Companies disclaim any intention or obligation to update or revise any forward-looking statements whether a result of new information, future events, or except as required by law. For additional information on risks and uncertainties relating to these forward-looking statements, investors should consult the Companies' ongoing quarterly filings, annual reports and Annual Information Forms and other filings found on SEDAR at www.sedar.com.
CONSOLIDATED BALANCE SHEETS
(In thousands of Canadian dollars)
September 30 December 31
2009 2008
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(unaudited) (audited(1))
ASSETS
Current
Cash and cash equivalents 20,525 4,646
Marketable securities 65,450 14,753
Accounts receivable 20,492 17,889
Inventories 11,352 8,643
Other current assets 2,350 2,531
Income taxes receivable 4,410 4,209
Investment tax credits receivable 56 36
Investment tax credits recoverable - 43
Future income tax assets 8,115 9,120
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Total current assets 132,750 61,870
Long-term marketable securities 11,656 1,943
Property, plant and equipment 606 594
Pharmaceutical product licences and rights 46,056 58,152
Investments 540 4,792
Investment tax credits recoverable 15,721 -
Future income tax assets 29,842 4,789
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Total assets 237,171 132,140
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 19,382 16,464
Accounts payable to related parties 1,535 1,384
Deferred revenue - 1,693
Income taxes payable 6,193 6,391
Balance of sale payable 11,576 10,429
Future income tax liabilities - 90
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Total current liabilities 38,686 36,451
Long-term
Future income tax liabilities 4,259 341
Balance of sale payable 4,837 -
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Total liabilities 47,782 36,792
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Shareholders' equity
Capital stock 119,009 60,664
Other paid-in capital 4,179 3,155
Accumulated other comprehensive (loss) income (51) (1,420)
Retained earnings 66,252 32,949
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Total shareholders' equity 189,389 95,348
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Total liabilities and shareholders' equity 237,171 131,799
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(1) Derived from the audited annual financial statements filed on SEDAR at
www.sedar.com
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of Canadian dollars except for share and per share amounts)
(unaudited)
Three-month period Nine-month period
ended September 30 ended September 30
2009 2008 2009 2008
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Revenues 28,374 22,191 80,414 59,693
Cost of sales 7,676 5,442 21,399 14,839
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Gross profit 20,698 16,749 59,015 44,854
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Expenses (income)
Selling and marketing 6,455 5,443 18,851 16,545
General and
administrative 1,904 1,814 6,235 5,180
Research and
development 2,348 828 4,869 2,949
Interest income, net (170) (406) (462) (1,310)
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Earnings before
under-noted items 10,161 9,070 29,522 21,490
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Amortization of
pharmaceutical
product licenses,
rights and deferred
charges 6,389 3,171 18,453 9,231
Unrealized net
(gain) loss on
derivative financial
instruments - 59 (358) (4)
Net (gain) loss
on investments (11) 184 (145) 184
Foreign exchange
net loss (gain) 128 (119) 132 (116)
Other income (557) (200) (667) (330)
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Income before
income taxes 4,212 5,975 12,107 12,525
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Provision for income
taxes
Current 1,572 1,450 (462) 3,743
Future 76 908 5,182 1,100
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1,648 2,358 4,720 4,843
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Net income before
extraordinary gain 2,564 3,617 7,387 7,682
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Extraordinary gain
(net of $nil taxes) - - 25,959 -
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Net income for the
period 2,564 3,617 33,346 7,682
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Earnings per share
before extraordinary
gain
Basic 0.14 0.24 0.45 0.52
Diluted 0.13 0.24 0.44 0.51
Earnings per share
Basic 0.14 0.24 2.03 0.52
Diluted 0.13 0.24 1.98 0.51
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Weighted average
number of shares
outstanding
Basic 18,501,987 14,857,150 16,392,384 14,839,187
Diluted 19,059,385 15,065,359 16,866,256 15,072,712
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of Canadian dollars)
(unaudited)
Three-month period Nine-month period
ended September 30 ended September 30
2009 2008 2009 2008
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Operating activities
Net income 2,564 3,617 33,346 7,682
Add items not
affecting cash
Extraordinary gain - - (25,959) -
Amortization 6,476 3,261 18,663 9,367
Future income taxes 76 908 5,182 1,100
Stock based
compensation
expense 483 340 1,572 1,049
Unrealized net
(gain) loss on
derivative financial
instruments - 59 (359) (4)
Net (gain) loss on
investments (11) 184 (145) 184
Gain on disposal of
pharmaceutical
product licenses
and rights (557) 200 (557) 200
Net accreted interest 98 (82) 97 (119)
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9,129 8,087 31,840 19,059
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Net change in
non-cash balances
relating to
operations (3,051) (4,787) (6,216) (4,341)
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Cash flows from
operating activities 6,078 3,300 25,624 14,718
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Investing activities
Additions to
pharmaceutical product
licenses and rights,
and deferred charges - (10,468) (5,476) (19,335)
Investments in
portfolio company - (2,000) (130) (3,000)
Acquisition of
property, plant and
equipment (115) (86) (224) (397)
Purchases of
short-term
marketable
securities (28,624) (3,895) (71,974) (29,023)
Maturities of
short-term
marketable
securities 13,781 9,546 25,079 35,717
Purchases of
long-term
marketable
securities (2,567) (1,895) (13,771) (1,895)
Proceeds from the
disposal of
investments - 500 6,979 500
Proceeds from
the disposal of
pharmaceutical
product licenses
and rights 442 200 442 200
Business acquisition - - (7,594) -
Balance of sale
payable - (531) - (531)
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Cash flows used
in investing
activities (17,083) (8,629) (66,669) (17,764)
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Financing
activities
Net proceeds on
issuance of common
shares 248 181 56,997 955
Repurchase of
shares (72) (463) (72) (2,270)
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Cash flows from
(used in)
financing
activities 176 (282) 56,925 (1,315)
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Net change in cash
and cash
equivalents during
the period (10,829) (5,611) 15,880 (4,361)
Cash and cash
equivalents,
beginning of
period 31,354 7,324 4,645 6,074
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Cash and cash
equivalents, end
of period 20,525 1,713 20,525 1,713
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Cash and cash
equivalents 20,525 1,713
Short-term
marketable
securities 65,450 23,569
Long-term
marketable
securities 11,656 1,895
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97,631 27,177
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Contacts:
Paladin Labs Inc.
Samira Sakhia
Chief Financial Officer
514-669-5367
514-344-4675 (FAX)
info@paladinlabs.com
www.paladinlabs.com
