LAVAL, QC, Nov. 14 /PRNewswire-FirstCall/ - LAB International Inc. (“LAB”), an integrated drug development company focused on developing therapies for the inhalation market, today announced financial results for the third quarter ended September 30, 2006.
LAB consolidated revenues for the third quarter of 2006 were $4.8 million and $27.9 million for the first nine month of 2006. Included in the financial results are one month of activity of LAB Research in the three month period ended September 30, 2006 and seven months of activity of LAB Research year-to- date. LAB Research activities were no longer controlled by LAB as of August 3, 2006 as a result of the disposal of a majority interest on this date.
“With the recent sale of our residual ownership position in our former subsidiary LAB Research and with more than $45 million in liquidity currently at our disposal, we are now well financed and positioned to ensure the timely advancement of our later stage clinical trial programs.” said Dr Halvor Jaeger, Chief Executive Officer of LAB International.
Other Financial Highlights - LAB Pharma contributed revenues of $0.95 million during the third quarter of 2006 compared to $0.99 million for the third quarter of 2005 and $1.4 million for the first nine months of 2006 compared to $1.95 million for the first nine months of 2005. - Consolidated net income for the third quarter of 2006 was $11.0 million or $0.15 per share, compared with a net loss of $2.7 million or $(0.05) per share in the third quarter of 2005. Year-to-date consolidated net income was $0.62 million or $0.01 per share compared with a consolidated net loss of $9.7 million or $(0.18) per share for the same 2005 period. Third Quarter Operational Highlights - LAB announced positive Fentanyl TAIFUN(R) Phase IIa results. The results supported clinical efficacy at the lowest dose of 100 (micro)g 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. Financial Results
The decrease in the revenues generated by LAB Pharma during the first nine months of 2006 is attributable to the intention of both LAB and Grupo Ferrer Internacional to set aside the co-development and licensing agreement for Fentanyl TAIFUN(R).
Consolidated SG&A expenses totaled $3.3 million for the third quarter of 2006, a 26 % decrease compared with the $4.4 million of the third quarter of 2005. Consolidated year-to-date SG&A expenses were $12.5 million, a 2.2% decrease compared to $12.8 million for the same period of 2005.
R&D costs for the third quarter of 2006 were $3.1 million compared with $1.9 million in the third quarter of 2005. Year-to-date R&D costs were $8.7 million compared to $6.7 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 income for the third quarter of 2006 was $11.0 million, or $0.15 per share, compared with a consolidated net loss for the third quarter of 2005 of $2.7 million, or $(0.05) per share. The consolidated net income for the first nine months of 2006 was $0.6 million, or $0.01 per share compared with a consolidated net loss of $9.7 million, or $(0.18) per share for the same 2005 period. The net income generated for the 2006 third quarter and year-to-date period reflect the gain on disposal of LAB Research Inc. less a higher rate of R&D spending, increased Corporate SG&A expenses and the long-term interest expense from the Laurus convertible debt.
The Company had cash and cash equivalents as of September 30, 2006 of $25.1 million. This compares with $4.3 million as of June 30, 2006 and $5.4 million as of September 30, 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 74.5 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.
LAB INTERNATIONAL INC. Consolidated Balance Sheets (Unaudited) September 30, 2006 and December 31, 2005 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- September 30, December 31, 2006 2005 ------------------------------------------------------------------------- (Audited) Assets Current assets: Cash and cash equivalents $ 25,067 $ 16,269 Cash held in escrow - 541 Accounts receivable 1,471 8,469 Work in progress - 2,314 Research tax credits receivable 331 1,333 Prepaid expenses 615 1,262 ----------------------------------------------------------------------- 27,484 30,188 Investment in a company subject to significant influence, at equity 9,747 - Property and equipment 4,363 22,748 Intangible assets 8,471 11,831 Other assets 1,764 2,222 Future income taxes 1,002 6,957 ------------------------------------------------------------------------- $ 52,831 $ 73,946 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders’ Equity Current liabilities: Bank loan $ - $ 432 Accounts payable and accrued liabilities 5,438 11,046 Accounts payable - company subject to significant influence 922 - Deferred revenue 1,786 6,059 Due to Scantox selling shareholders - 541 Current portion of long-term debt - 2,328 Current portion of debenture 350 1,509 Deferred gain on sale of property - 68 Future income taxes - 688 ----------------------------------------------------------------------- 8,496 22,671 Deferred rent liability - 37 Deferred gain on sale of property - 1,603 Long-term debt 5,502 12,496 Debt component of convertible debenture 1,097 2,510 Future income taxes 1,335 4,021 Shareholders’ equity: Share capital 59,575 54,380 Warrants 765 794 Holder conversion options 453 1,099 Additional paid-in capital 8,827 8,083 Cumulative translation adjustment (662) (1,662) Deficit (32,557) (32,086) ----------------------------------------------------------------------- 36,401 30,608 Subsequent events ------------------------------------------------------------------------- $ 52,831 $ 73,946 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LAB INTERNATIONAL INC. Consolidated Statements of Operations (Unaudited) Periods ended September 30, 2006 and 2005 (in thousands of Canadian dollars, except per share data) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, ------------------------- -------------------------- 2006 2005 2006 2005 ------------------------------------------------------------------------- Revenues $ 4,783 $ 12,681 $ 27,944 $ 35,179 Operating expenses: Direct costs 2,209 6,532 15,976 19,252 Selling, general and administrative 3,264 4,396 12,515 12,791 Research and development 3,151 1,966 8,663 6,696 Stock-based compensation 214 240 668 587 Amortization of property and equipment 380 753 2,021 2,252 Amortization of intangible assets 342 457 1,144 1,195 Interest on long-term debt and loss on settlement of convertible debenture 178 887 1,834 1,405 Foreign exchange 108 (363) 499 (471) ----------------------------------------------------------------------- 9,846 14,868 43,320 43,707 Net loss before under noted items (5,063) (2,187) (15,376) (8,528) Other: Gain on disposal of interest in LAB Research 21,102 - 21,102 - Share in net income of a company subject to significant influence 140 - 140 - ------------------------------------------------------------------------- Net earnings (loss) before income taxes 16,179 (2,187) 5,866 (8,528) Provision for (recovery of) income taxes: Current 410 752 1,619 2,072 Future 4,714 (239) 3,631 (864) ----------------------------------------------------------------------- 5,124 513 5,250 1,208 ------------------------------------------------------------------------- Net earnings (loss) $ 11,055 $ (2,700) $ 616 $ (9,736) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net earnings (loss) per share Basic $ 0.15 $ (0.05) $ 0.01 $ (0.18) Diluted 0.15 (0.05) 0.01 (0.18) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of shares outstanding: Basic 73,198,018 55,985,581 71,399,143 54,171,173 Effect of convertible debentures 76,339 5,882,353 1,438,129 3,503,460 Effect of dilutive options and warrants - - 2,138,833 - ------------------------------------------------------------------------- Diluted 73,274,357 $61,867,934 74,976,105 57,674,633 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LAB INTERNATIONAL INC. Consolidated Statements of Deficit (Unaudited) Periods ended September 30, 2006 and 2005 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30 ------------------------- -------------------------- 2006 2005 2006 2005 ------------------------------------------------------------------------- Deficit, beginning of period $ (43,656) $ (25,037) $ (32,086) $ (17,572) Net earnings (loss) 11,055 (2,700) 616 (9,736) Settlement of convertible debenture - - (1,131) - Share issue costs 44 - 44 (429) ------------------------------------------------------------------------- Deficit, end of period $ (32,557) $ (27,737) $ (32,557) $ (27,737) ------------------------------------------------------------------------- ------------------------------------------------------------------------- LAB INTERNATIONAL INC. Consolidated Statements of Cash Flows (Unaudited) Periods ended September 30, 2006 and 2005 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, ------------------------- --------------------------- 2006 2005 2006 2005 ------------------------------------------------------------------------- Cash flows from operating activities: Net earnings (loss) $ 11,055 $ (2,700) $ 616 $ (9,736) Adjustments for: Amortization and write-off of property and equipment 385 777 2,028 2,338 Amortization of intangible assets 342 457 1,144 1,195 Amortization of deferred financing fees 26 15 98 32 Stock-based compensation 214 240 668 587 Loss on settlement of convertible debenture 20 - 473 - Accretion expense on convertible debenture 21 - 624 - Unrealized foreign exchange loss (58) 55 332 55 Amortization of deferred gain of property 9 - 64 - Deferred rent liability 18 - 125 - Services rendered for shares - - 27 - Future income taxes 4,714 (239) 3,631 (864) Gain on disposal of interest in LAB Research (21,102) - (21,102) - Share in net income of a company subject to significant influence (140) - (140) - Net changes in operating assets and liabilities 639 (1,933) 224 207 ------------------------------------------------------------------------- (3,857) (3,328) (11,188) (6,186) Cash flows from financing activities: Proceeds from issuance of shares - - 302 2,366 Proceeds from convertible debentures - - - 6,242 Repayment of convertible debentures - (188) (519) (188) Share issue costs 44 - 44 (419) Proceeds from bank credit facilities - - - (15) Proceeds from issuance of long-term debt 223 720 938 1,198 Addition to deferred financing fees (10) - (10) (280) Repayment of long-term debt (157) (503) (1,425) (1,140) Repayment of bank loan (223) - (432) - --------------------------------------------------------------------- (123) 29 (1,102) 7,764 Cash flows from investing activities: Business acquisition, net of cash - (10) - (6,201) Payment of holdback payable - - - (65) Acquisition of property and equipment (553) (691) (1,828) (1,701) Addition to license and patents (109) (125) (463) (227) Other advances and investments 1,350 3 (749) (16) Cash balance transferred to LAB Research (738) - (738) - Proceeds on disposal of LAB Research 31,000 - 31,000 - Transaction costs (6,489) - (6,489) - --------------------------------------------------------------------- 24,461 (823) 20,733 (8,210) ------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 20,481 (4,122) 8,443 (6,632) Cash and cash equivalents, beginning of period 4,256 9,391 16,269 12,049 Effect of exchange rate changes 330 (398) 355 (546) ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 25,067 $ 4,871 $ 25,067 $ 4,871 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash and cash equivalents are comprised of: Cash $ 25,067 $ 3,344 $ 25,067 $ 3,344 Term deposit - 644 - 644 Money market fund, short-term investments - 883 - 883 ------------------------------------------------------------------------- $ 25,067 $ 4,871 $ 25,067 $ 4,871 ------------------------------------------------------------------------- -------------------------------------------------------------------------
LAB INTERNATIONAL INC.
CONTACT: Frederic Dumais, Vice-President, Investor Relations, (514)315-3330, ext. 106, Fax: (514) 315-3325, dumaisf@labinc.ca; www.labinc.ca
