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Atrix Laboratories, Inc. (ATRX) Reports 2004 Third Quarter Financial Results


10/19/2005 5:12:00 PM

FORT COLLINS, Colo., Nov. 9 /PRNewswire-FirstCall/ -- Atrix Laboratories, Inc. today announced consolidated financial results for the third quarter and nine months ended September 30, 2004.

Total revenue increased 18% to $16.1 million in the third quarter of 2004 compared to $13.6 million for the third quarter of 2003. The revenue increase was due primarily to $7.8 million in sales and royalty revenue earned from sales of the Eligard(R) (leuprolide acetate for injectable suspension) prostate cancer products. This represents a 75% increase in Eligard(R) sales and royalty revenue compared to the third quarter of 2003.

Operating expenses increased to $14.3 million in the third quarter of 2004 compared to $14.0 million for the third quarter of 2003. Included in the operating expenses for the quarter ended September 30, 2004, was $0.5 million of non-recurring legal and financial expense related to the transaction with QLT, Inc. Excluding non-recurring expenses related to the transaction with QLT, Inc., operating expenses decreased by 1% in the third quarter 2004 compared to the same quarter in the prior year.

Net income applicable to common stock was $1.84 million, or $0.08 income per fully diluted share, for the quarter ended September 30, 2004 compared to a net loss applicable to common stock of $47,000, or $0.00 loss per fully diluted share, for the quarter ended September 30, 2003.

Net of non-recurring expenses related to the QLT transaction, net income applicable to common stock was $2.3 million or $0.10 income per fully diluted share.

"We are pleased to have recorded our fourth consecutive profitable quarter, particularly in light of the expenses associated with the QLT transaction," said David R. Bethune, chairman and chief executive officer at Atrix. "We are also pleased to have met another major milestone this quarter with our filing for ACZONE(TM) for the treatment of acne vulgaris with the FDA."

For the nine months ended September 30, 2004, total revenue increased 42% to $50.2 million compared to total revenue of $35.4 million for the nine months ended September 30, 2003. Net income for the nine months ended September 30, 2004 increased to $5.0 million or $0.22 per share applicable to common stock compared to a net loss for the nine months ended September 30, 2003 of $3.8 million or $0.19 loss per share applicable to common stock. Net of non-recurring expenses related to the QLT transaction, net income would be $6.9 million or $0.31 income per share fully diluted.

Atrix Laboratories, Inc. is an emerging specialty pharmaceutical company focused on advanced drug delivery. With unique patented sustained release and topical technologies, Atrix is currently developing a diverse portfolio of proprietary products, including oncology and dermatology products. The company also partners with large pharmaceutical and biotechnology companies to apply its proprietary technologies to new chemical entities or to extend the patent life of existing products. Additional information is available on the Atrix Laboratories, Inc. website at http://www.atrixlabs.com/.

Atrix management will host a conference call on November 9, 2004 at 11:00 a.m., EST. The conference will be available by telephone at 800-540-0559 with the ID: ATRIX. A replay of the call will be available for one week after the event at 800-283-4605. The conference call will also be simultaneously webcast over the Internet. The link for the webcast can be found at Atrix's homepage at http://www.atrixlabs.com/.

Additional Information

In connection with QLT's proposed merger with Atrix Laboratories, Inc., QLT has filed with the SEC a registration statement on Form S-4, containing a joint proxy statement/prospectus and other relevant materials. INVESTORS AND SECURITY HOLDERS OF QLT AND ATRIX ARE URGED TO READ THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION AS WELL AS OTHER RELEVANT MATERIALS BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT QLT, ATRIX AND THE TRANSACTION. The definitive joint proxy statement/prospectus on file with the SEC and any other documents filed by QLT or Atrix with the SEC, may be obtained free of charge at the SEC's web site at http://www.sec.gov/. The definitive joint proxy statement/prospectus and other relevant materials have been mailed to stockholders of QLT and Atrix in advance of the special meetings to consider the transaction scheduled for November 19, 2004. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by QLT by directing a request to: QLT Inc., Attn: Investor Relations, 887 Great Northern Way, Vancouver, BC, Canada, V5T 4T5. Investors and security holders may obtain free copies of the documents filed with the SEC by Atrix by contacting Atrix Laboratories, Inc., Attn: Investor Relations, 2579 Midpoint Drive, Fort Collins, CO, 80525.

QLT, Atrix and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of QLT and Atrix in favor of the transaction. Information about the executive officers and directors of QLT and their ownership of QLT common shares is set forth in the proxy statement for QLT's 2004 Annual Meeting of Shareholders, which was filed with the SEC as Exhibit 99.1 to Form 10-K/A on April 28, 2004. Information about the executive officers and directors of Atrix and their ownership of Atrix common stock is set forth in the proxy statement for Atrix's 2004 Annual Meeting of Stockholders, which was filed with the SEC on April 5, 2004. Investors and security holders may obtain more detailed information regarding the direct and indirect interests of QLT, Atrix and their respective executive officers and directors in the transaction by reading the definitive joint proxy statement/prospectus regarding the transaction.

Safe Harbor Statement Under The Private Securities Litigation Reform Act of 1995:

Statements made in this press release may contain statements that qualify as "forward-looking" statements under the Private Securities Litigation Reform Act of 1995, including statements about the following topic: the anticipated growth of Eligard(R). The company is subject to certain risk factors that may cause actual results to differ materially from anticipated results. Those risks include, but are not limited to the following: risks associated with product demand, pricing, market acceptance of its current and proposed products, risks relating to the proposed merger with QLT, changing economic conditions, risks in product and technology development, the risk that the FDA may not approve the NDAs for Eligard(R) 45-mg or dapsone (ACZONE(TM)), and competition from other products and treatments. For additional information about risk factors, please see the reports filed by the company with the SEC, including the company's Annual Report on Form 10-K for the year ended December 31, 2003, and the company's Quarterly Report on Form 10-Q for the period ended September 30, 2004. All forward-looking statements in this press release are made as of the date hereof, based on information available to the company as of the date hereof, and the company assumes no obligation to update or revise any of its forward-looking statements even if experience or future changes show that the indicated results or events will not be realized.

ATRIX LABORATORIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (Unaudited) Three Three Nine Nine Months Months Months Months Ended Ended Ended Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2004 2003 2004 2003 REVENUES: Net sales $5,090 $2,685 $16,945 $7,488 Net Royalties 4,905 2,657 13,110 5,637 Contract research and development 3,885 5,773 13,684 15,772 Licensing, marketing rights and milestone 2,235 2,524 6,472 6,546 Total revenues 16,115 13,639 50,211 35,443 OPERATING EXPENSES: Cost of sales 3,436 2,901 13,236 6,191 Research and development 8,376 8,738 24,999 26,707 Administrative and marketing 2,502 2,387 8,284 7,901 Total operating expenses 14,314 14,026 46,519 40,799 INCOME (LOSS) FROM OPERATIONS 1,801 (387) 3,692 (5,356) OTHER INCOME (EXPENSE): Equity in loss of joint venture -- (6) -- (83) Investment income, net 702 638 2,008 2,059 Gain on sale of marketable securities, net 167 139 687 567 Gain on exchange rates -- -- 348 -- Other (3) (7) (39) (23) Net other income 866 764 3,004 2,520 NET INCOME (LOSS) 2,667 377 6,696 (2,836) Accretion of dividends and beneficial conversion feature charge on preferred stock (727) (424) (1,459) (918) Allocation of undistributed earnings to participating preferred stock (105) -- (259) -- NET INCOME (LOSS) APPLICABLE TO COMMON STOCK $1,835 $(47) $4,978 $(3,754) Net income (loss) applicable to common stock per common share: Basic $0.09 $0.00 $0.24 $(0.19) Diluted $0.08 $0.00 $0.22 $(0.19) Weighted average common shares outstanding: Basic 21,270,487 20,257,238 21,008,992 19,925,896 Diluted 22,602,624 20,257,238 22,303,240 19,925,896 ATRIX LABORATORIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (IN THOUSANDS) (Unaudited) Sept. 30, Dec. 31, 2004 2003 ASSETS Current Assets: Cash and Cash Equivalents $30,187 $19,074 Marketable Securities available-for-sale, at fair value 80,124 80,688 Accounts Receivable, net of allowance for doubtful accounts of $31 and $1,109 10,857 10,235 Interest Receivable 904 834 Inventories, net 14,673 11,516 Prepaid Expenses and Deposits 2,182 2,488 Total Current Assets 138,927 124,835 Property, Plant & Equipment, net 22,315 21,855 Other Assets: Goodwill 379 379 Intangible & Other Assets, net 3,282 2,789 Other Assets 3,661 3,168 Total Assets $164,903 $149,858 LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities: Accounts Payable -- Trade $3,790 $2,488 Accrued Expenses and Other 1,689 1,644 Deferred Revenue 8,500 9,923 Total Current Liabilities 13,979 14,055 Deferred Revenue and Other 32,046 32,415 Commitments and Contingencies Shareholders' Equity: Series A Convertible Preferred Stock, $0.001 par value, 20,000 shares authorized; 15,824 and 14,770 shares issued and outstanding. Liquidation preference $15,958 and $15,240 -- -- Preferred Stock, $0.001 par value; 5,000,000 shares authorized Series A preferred stock, $0.001 par value, 200,000 shares authorized, none issued or outstanding -- -- Common Stock, $0.001 par value; 45,000,000 shares authorized; 21,345,009 and 21,567,801 shares issued; 21,345,009 and 20,701,001 shares outstanding 21 22 Additional Paid-In Capital 271,807 270,157 Treasury Stock, 0 and 866,800 shares, at cost --- (13,616) Accumulated Other Comprehensive (Loss)/Income (509) 1,035 Accumulated Deficit (152,441) (154,210) Total Shareholders' Equity 118,878 103,388 Total Liabilities & Shareholders' Equity $164,903 $149,858

Atrix Laboratories, Inc.

CONTACT: Investor Relations, Jennifer Geraci of Atrix Laboratories,Inc., +1-970-482-5868, Jgeraci@atrixlabs.com


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