LAB International Reports Results for Fourth Quarter and Fiscal 2006
MONTREAL, March 26 /PRNewswire-FirstCall/ - LAB International Inc. ("LAB"), a drug development company focused on developing therapies for the inhalation and pain markets, today announced financial results for the three and twelve month period ended December 31, 2006.
LAB consolidated revenues were $1.5 million for the fourth quarter and $29.4 million for the year. Included in the year-to-date consolidated revenues are $26.3 million relating to LAB Research. LAB Research activities were no longer controlled by LAB as of August 3, 2006, date of the IPO, as a result of the disposal of a majority interest on this date.
"2006 was a pivotal year and major step forward in the evolution of LAB as we completed our transition into a focused integrated product development organization for pain and CNS medicaments. We first divested from of our Contract Research Organization (LAB Research) which had reached critical mass. Secondly, we acquired PharmaForm, a strategic acquisition adding highly complementary IP and technological platforms clearly showing our commitment of becoming an integrated product development organization with a substantial US presence. " said Dr Halvor Jaeger, Chief Executive Officer of LAB International. "Going forward, we believe we now have in place all the required elements to realize LAB's tremendous potential.
Other Financial Highlights - LAB Pharma contributed revenues of $1.1 million during the fourth quarter of 2006, which included $0.8 million recognized from the sale of formulation dossiers previously accounted for as deferred revenue and $0.3 million from Grupo Ferrer as full and final settlement of amounts owed due to the Fentanyl development agreement termination. LAB Pharma contributed revenues of $2.5 million for 2006 - Consolidated net loss for the fourth quarter of 2006 was $0.8 million or ($0.01) per share, compared with a net loss of $3.3 million or $(0.06) per share in the fourth quarter of 2005. The consolidated net loss for the year was $0.2 million or ($0.00) per share compared with a consolidated net loss of $13.1 million or $(0.24) per share for the same 2005 period. 2006 Operational Highlights - LAB announced the licensing of its lead product Fentanyl TAIFUN(R) to Teikoku Seiyaku Co. Ltd for the Japanese market. - LAB announced the final and complete safety, tolerability and pharmacokinetics results of its Phase I CGRP clinical trial. CGRP was demonstrated to be safe with no serious events reported at all doses tested. - LAB announced positive Phase IIa results for its lead product Fentanyl TAIFUN(R). The results supported clinical efficacy at the lowest dose of 100 (micro)g and a trend of dose response relationship with no serious adverse side effects at higher doses. - LAB announced the closing of LAB Research Inc. Initial Public Offering for gross proceeds of $25 million. - LAB announced positive LAB CGRP Phase IIa results. The results demonstrated statistically significant broncho-protective effects compared to placebo and a similar safety profile. - LAB announced the exercise of the over-allotment option for gross proceeds of $6.0 million. - LAB announced a Letter of Intent to acquire PharmaForm L.L.C. - LAB sold its residual ownership position in LAB Research Inc. for gross proceeds of $25.9 million. - LAB announced the closing of the acquisition of PharmaForm - LAB announced positive results from the open-label part of its Fentanyl TAIFUN(R) Phase IIb clinical trial. The results demonstrating successful titration resulting in effective control of breakthrough cancer pain episodes. Financial Results
The decrease in the revenues generated by LAB Pharma during 2006 is attributable to the termination of the co-development and licensing agreement for Fentanyl TAIFUN(R) between LAB and Grupo Ferrer Internacional.
Consolidated SG&A expenses totaled $2.5 million for the fourth quarter of 2006, and $15.1 million for the year.
R&D costs for the fourth quarter of 2006 were $4.4 million compared with $2.7 million in the fourth quarter of 2005. 2006 R&D costs were $13.0 million compared to $9.4 million for the same 2005 period The increase in spending is primarily attributable to the costs associated with the advancement and finalization of the Fentanyl TAIFUN(R) Phase II and the LAB CGRP Phase II clinical trial programs.
The consolidated net loss for the fourth quarter of 2006 was $0.8 million, or ($0.01) per share, compared with a consolidated net loss for the fourth quarter of 2005 of $3.3 million, or $(0.06) per share. The consolidated net loss for 2006 was $0.2 million, or ($0.00) per share compared with a consolidated net loss of $13.1 million, or $(0.24) per share for 2005. The Company recognized a gain of $21.3 million in the third quarter of 2006 and $12.4 million in the fourth quarter from the disposal of its ownership in LAB Research Inc.
The Company had cash and cash equivalents as of December 31, 2006 of $41.1 million. This compares with $25.1 million as of September 30, 2006 and $16.9 million as of December 31, 2005.
About LAB International
LAB International is an integrated drug development company focused on the growing multi-billion dollar inhalation market. Its lead product, for the treatment of breakthrough cancer pain, is a fast-acting Fentanyl formulation delivered using the Company's TAIFUN(R) dry powder inhaler platform. Its pipeline also includes therapeutics for asthma, COPD, and growth hormone deficiencies.
LAB's common shares trade on The Toronto Stock Exchange ("TSX") under the symbol "LAB", on the Frankfurt Regulated Unofficial Market under the symbol "LD9.F" and on XETRA under the symbol "LD9.DE" with 82.3 million shares outstanding.
THIS NEWS RELEASE CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT REFLECT THE CURRENT VIEWS AND/OR EXPECTATIONS OF LAB INTERNATIONAL INC. WITH RESPECT TO ITS PERFORMANCE, BUSINESS AND FUTURE EVENTS. SUCH STATEMENTS ARE SUBJECT TO A NUMBER OF RISKS, UNCERTAINTIES AND ASSUMPTIONS. ACTUAL RESULTS AND EVENTS MAY VARY SIGNIFICANTLY.
Selected financial information to follow LAB INTERNATIONAL INC. Consolidated Balance Sheets December 31, 2006 and 2005 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- 2006 2005 ------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 41,144 $ 16,269 Cash held in escrow - 541 Accounts receivable 1,569 8,469 Work in progress - 2,314 Research tax credits receivable - 1,333 Prepaid expenses 830 1,262 ------------------------------------------------------------------------- 43,543 30,188 Property and equipment 462 22,748 Intangible assets 9,340 11,831 Other assets 965 2,222 Future income taxes - 6,957 ------------------------------------------------------------------------- $ 54,310 $ 73,946 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities: Bank loan $ - $ 432 Accounts payable and accrued liabilities 5,372 11,046 Income taxes payable 323 - Deferred revenue 1,872 6,059 Current portion of long-term debt 1,697 2,328 Due to Scantox selling shareholders - 541 Current portion of convertible debentures - 1,509 Deferred gain on sale of property - 68 Future income taxes 185 688 ------------------------------------------------------------------------ 9,449 22,671 Long-term debt 4,951 12,496 Deferred rent liability - 37 Deferred gain on sale of property - 1,603 Debt component of convertible debenture - 2,510 Future income taxes 1,216 4,021 Shareholders' equity: Share capital 63,046 54,380 Warrants 556 794 Holder conversion options - 1,099 Additional paid-in capital 9,232 8,083 Cumulative translation adjustment (199) (1,662) Deficit (33,941) (32,086) ------------------------------------------------------------------------ 38,694 30,608 Commitments and contingencies Subsequent event ------------------------------------------------------------------------- $ 54,310 $ 73,946 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LAB INTERNATIONAL INC. Consolidated Statements of Operations Years ended December 31, 2006 and 2005 (in thousands of Canadian dollars, except per share data) ------------------------------------------------------------------------- ------------------------------------------------------------------------- 2006 2005 ------------------------------------------------------------------------- Revenues $ 29,448 $ 46,490 Operating expenses: Direct costs 15,977 26,123 Selling, general and administrative 15,087 18,201 Research and development 13,066 9,373 Stock-based compensation 1,005 802 Amortization of property and equipment 2,349 2,968 Amortization of intangible assets 1,453 1,663 Interest on long-term debt and loss on convertible debentures 1,629 1,816 Foreign exchange 1,130 (426) ------------------------------------------------------------------------ 51,696 60,520 ------------------------------------------------------------------------- Loss before undernoted items (22,248) (14,030) Other: Gain on disposal of Lab Research Inc. 34,149 - Share in net income of a company subject to significant influence 300 - Restructuring (4,376) - ------------------------------------------------------------------------- 30,073 - ------------------------------------------------------------------------- Earnings (loss) before income taxes 7,825 (14,030) (Provision for) recovery of income taxes : Current (2,857) (2,137) Future (5,195) 3,092 ------------------------------------------------------------------------- (8,052) 955 Net loss $ (227) $ (13,075) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net loss per share: Basic $ 0.00 $ (0.24) Diluted 0.00 (0.24) ------------------------------------------------------------------------- ------------------------------------------------------------------------- LAB INTERNATIONAL INC. Consolidated Statements of Deficit Years ended December 31, 2006 and 2005 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- 2006 2005 ------------------------------------------------------------------------- Deficit, beginning of year $ (32,086) $ (17,572) Net loss (227) (13,075) Settlement of convertible debentures (1,672) - Share issue costs 44 (1,439) ------------------------------------------------------------------------- Deficit, end of year $ (33,941) $ (32,086) ------------------------------------------------------------------------- ------------------------------------------------------------------------- LAB INTERNATIONAL INC. Consolidated Statements of Cash Flow Years ended December 31, 2006 and 2005 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- 2006 2005 ------------------------------------------------------------------------- Cash flows from operating activities: Net loss $ (227) $ (13,075) Adjustments for: Amortization and write-off of property and equipment 2,349 3,032 Amortization of intangible assets 1,453 1,663 Amortization of other assets 490 72 Accretion expense on convertible debentures 178 915 Stock-based compensation 1,005 802 Restructuring 3,996 - Gain on disposal of Lab Research Inc. (34,149) - Share in net income of a company subject to significant influence (300) - Gain on disposal of long-term investment (146) - Services rendered in exchange of shares 27 - Loss on settlement of convertible debenture 746 - Unrealized foreign exchange loss (gain) 1,120 (605) Amortization of deferred gain on sale of property (64) (12) Deferred rent liability (125) - Future income taxes 5,195 (3,092) Net changes in operating assets and liabilities (111) 2,232 ------------------------------------------------------------------------- (18,563) (8,068) Cash flows from financing activities: Proceeds from exercise of stock options and warrants 331 - Proceeds from private placements - 14,683 Proceeds from issue of convertible debentures - 6,243 Repayment of convertible debentures (519) (1,079) Share issue costs 44 (1,430) Proceeds from issuance of long-term debt 1,614 2,606 Repayment of long-term debt (1,485) (5,332) Repayment of capital leases - (311) Proceeds from bank loan 223 432 Repayments under bank credit facilities (432) (53) ------------------------------------------------------------------------- (224) 15,759 Cash flows from investing activities: Proceeds from disposal of Lab Research Inc. 56,891 - Fees on sale of Lab Research Inc. (8,680) - Deferred corporate transaction costs (965) - Business acquisition, net of cash acquired - (6,171) Cash balance transferred to Lab Research Inc. upon sale (961) - Payment of holdback payable - (65) Additions to property and equipment (2,075) (2,847) Deferred financing fees (10) (317) Additions to intangible assets (443) (327) Proceeds from sale lease-back transaction - 6,250 Fees on sale lease-back transaction - (303) Other assets (170) (1,484) ------------------------------------------------------------------------ 43,587 (5,264) ------------------------------------------------------------------------- Net increase in cash and cash equivalents 24,800 2,427 Cash and cash equivalents, beginning of year 16,269 12,049 Effect of exchange rate changes 75 1,793 ------------------------------------------------------------------------- Cash and cash equivalents, end of year $ 41,144 $ 16,269 ------------------------------------------------------------------------- -------------------------------------------------------------------------
LAB INTERNATIONAL INC.CONTACT: visit LAB's website at www.labinc.ca, or contact: FredericDumais, Vice-President, Investor Relations, (514) 315-3330 ext. 106, Fax:(514) 315-3325, dumaisf@labinc.ca