ProMetic Life Sciences Inc. Reports its Third Quarter 2010 Financial Results
Published: Nov 16, 2010
MONTREAL, QUEBEC, CANADA--(Marketwire - November 15, 2010) - ProMetic Life Sciences Inc. (TSX: PLI) ("ProMetic") today reports its financial results for the third quarter of 2010. All amounts are in Canadian Dollars unless otherwise indicated.
The following information should be read in conjunction with the financial statements for the third quarter ending September 30, 2010, as well as the Management's Discussion and Analysis for the same period.
"During the third quarter, Management was involved in a significant amount of Corporate and business development activities, setting the stage for a pipeline of transformational strategic agreements to impact positively the Company" stated Mr. Pierre Laurin, ProMetic's President and Chief Executive Officer. Mr. Laurin continued: "This includes the first deal involving PBI-4419, one of the recently discovered follow-on analogues of PBI-1402. ProMetic's development program has created potent new drugs targeting significant opportunities for unmet medical needs in the fibrosis market."
Specifically, through this agreement Allist is to fund and accelerate the development programs for PBI-1402 and PBI-4419, in return for exclusive commercial rights for the Chinese market. ProMetic retains rights to the data for other markets, representing savings of over US $10M in future development costs. In relation to the clinical programs, PBI-1402 clinical development will be further advanced for chemotherapy-induced anemia and cancer related anemia indications and PBI-4419 will be developed for fibrotic disease indications. The agreement includes US$ 59 M in milestone payments to ProMetic as well as royalties on sales in China.
Mr. Bruce Pritchard, the Company's Chief Financial Officer commented: "The third quarter of 2010 was a busy one for the business, with much effort going into the business development activities on all fronts. The results for the Year-to-date, when compared to the adjusted results for Year-to-date 2009 which remove the extraordinary gains, show a significant improvement in the business' performance. However, regulatory delays for Octapharma, one of our key customers, have meant that they have delayed their originally anticipated orders for the second half of this year into 2011. This will impact ProMetic's revenue forecast for the second half." Mr. Pritchard stated: "In light of this, efforts continue with cost control so that the cash runway can be stretched."
Mr. Laurin went on to add: "All other business units of ProMetic are engaged in a number of discussions regarding potential strategic agreements that we expect will confirm value and provide cash to the group."
Third Quarter 2010
The third quarter of 2010 was characterized by lower than expected revenues associated with the bioseparations business. Revenues from one of ProMetic's key customers, Octapharma AG ("Octapharma"), were delayed as a result of certain issues on their side, with these issues impacting ProMetic's revenue for the third & fourth quarters of 2010 compared to forecast.
Adjusting the 2009 Year-to-date results to remove the impact of the extra-ordinary gains relating to foreign exchange and the acquisition of the majority share in PRDT demonstrates more clearly the improvement in business performance for the Year-to-date 2010, as summarized in the table below.
2010 2009 Improvement YTD Revenue 10,317 9,300 11% YTD Net Loss "Adjusted" 4,847 7,740 60% Net Loss % 47% 83% (i) in thousands of dollarsOctapharma has informed ProMetic that it is close to finalizing the approval process for its OctaplasLG® product in additional EU countries. OctaplasLG® is Octapharma's prion-depleted, solvent/detergent treated and pharmaceutically licensed plasma. The product is already approved for use in Germany and Switzerland, as well as in Australia. The UK's regulator (Medicines and Healthcare products Regulatory Agency "MHRA"), which is acting as rapporteur under the mutual recognition process for the approval in other EU member states, will resume their approval process in November 2010 after an additional requested study has been successfully completed by the Octapharma researchers and submitted.
This delay has a number of impacts for ProMetic, stemming from Octapharma not yet ordering its originally estimated volumes of prion reduction resin in the latter part of this financial year. In particular, this will impact second half revenues by around GBP 2.6 Million (approximately CAD $4 Million). In addition to the reduction in revenues, the expected offset of the advance from Octapharma, which sits on the balance sheet of ProMetic, will be diminished. This advance is repayable against ongoing resin orders. As a result, the overall balance will remain higher than anticipated, however, due to profile of sales, the majority of the balance will appear as a long-term rather than a short-term creditor.
Octapharma remains positive regarding the ultimate regulatory approval of its OctaplasLG® product by the MHRA and its ultimate approval in additional key EU countries, we therefore expect orders for resin to recommence in 2011. Furthermore, Octapharma also announced recently that it is seeking regulatory approval for a prion-depleted version of its UniplasLG® product, which will also rely on ProMetic's prion reduction technology.
Offsetting this, continued development of plasma-derived therapeutics products for customers, such as Abraxis BioScience, delivered revenues to the top-line. As a result of all this, revenues for the quarter amounted to $2.1 Million compared to $3.1 Million for the same period in 2009.
Operating costs for the quarter were up to $4.5 Million from $3.5 Million in the same quarter of the previous year. This increase was attributable to exchange rate movements. In general, all other operating costs were in line with those incurred in the third quarter of 2009.
The debt on the balance sheet consists of loans from long-term shareholders and strategic business partners. Discussions are already advancing with these lenders to reschedule the repayment of these loans, to assist further with minimizing the cash requirements for 2011.
Revision to Financial Guidance and impact on cash runway
At the Annual General Meeting in May 2010, guidance was provided indicating EBITDA and Net Loss of approximately $(3) Million and $(6) Million respectively, which was used as a benchmark for cash requirement.
In light of the confirmation from Octapharma, regarding the delay to their predicted resin orders for the latter part of 2010, the Company is revising its financial guidance for 2010. As outlined, the impact of the delay to the Octapharma order is approximately $4 Million to the top line. As a result, revenue guidance is being reduced. This will have an impact on both EBITDA and Net loss which are now expected to be approximately $(6) Million and $(8) Million respectively.
This reduction in forecast revenue is outside the control of ProMetic, and has been confirmed by Octapharma as a delay and not a cancellation in the order. With this in mind, the Company is confident that these revenues will occur in 2011.
Throughout the year, Management has emphasized in the MD&A the importance of its actions to modulate costs, enabling it as far as possible to maintain its EBITDA guidance, and as a result has been able to lessen the impact of this revenue reduction on its cash runway.
Nevertheless, the increase in the net loss attributable to 2010 has had an inevitable impact on the cash reserves. At this stage, the Company is still confident that it can manage its cash runway into the first quarter of 2011, and is actively working on business development activities and additional non-dilutive financing projects.
Conference call / webcast details
The Company will be holding a conference call / webcast on Tuesday, November 16, 2010, at 10:00 (EST).
The numbers to access the conference call are (416) 620-5690 (international) and 1 (888) 633-8497 (North America toll free). A live audio webcast of the conference call will be available through ProMetic's website at http://www.prometic.com/en/news-events/events.php.
An audio replay of the call will be available for a period of seven days as of Tuesday, November 16, 2010, at 13:00 (EST). The numbers to access the audio replay are (416) 626-4100 (international) and 1 (800) 558-5253 (North America toll free) using access code 21484723. The replay of the web cast may be downloaded directly from ProMetic's web site.
About ProMetic Life Sciences Inc.
ProMetic Life Sciences Inc. ("ProMetic") (www.prometic.com) is a biopharmaceutical company specialized in the research, development, manufacture and marketing of a variety of commercial applications derived from its proprietary Mimetic Ligand™ technology. This technology is used in large-scale purification of biologics and the elimination of pathogens. ProMetic is also active in therapeutic drug development with the mission to bring to market effective, innovative, lower cost, less toxic products for the treatment of hematology and cancer. Its drug discovery platform is focused on replacing complex, expensive proteins with synthetic "drug-like" protein mimetics. Headquartered in Montreal (Canada), ProMetic has R&D facilities in the U.K., the U.S. and Canada, manufacturing facilities in the U.K. and business development activities in the US, Europe, Asia and in the Middle-East.
Forward Looking Statements
This press release contains forward-looking statements about ProMetic's objectives, strategies and businesses that involve risks and uncertainties. These statements are "forward-looking" because they are based on our current expectations about the markets we operate in and on various estimates and assumptions. Actual events or results may differ materially from those anticipated in these forward-looking statements if known or unknown risks affect our business, or if our estimates or assumptions turn out to be inaccurate. Such risks and assumptions include, but are not limited to, ProMetic's ability to develop, manufacture, and successfully commercialize value-added pharmaceutical products, the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of ProMetic to take advantage of business opportunities in the pharmaceutical industry, uncertainties related to the regulatory process and general changes in economic conditions. You will find a more detailed assessment of the risks that could cause actual events or results to materially differ from our current expectations on page 24 of ProMetic's Annual Information Form for the year ended December 31, 2009, under the heading "Risk and Uncertainties related to ProMetic's business". As a result, we cannot guarantee that any forward-looking statement will materialize. We assume no obligation to update any forward-looking statement even if new information becomes available, as a result of future events or for any other reason, unless required by applicable securities laws and regulations. All amounts are in Canadian dollars unless indicated otherwise.
ProMetic Life Sciences Inc.
President and CEO
ProMetic Life Sciences Inc.
Manager, Investor Relations & Communications