LAVAL, May 12 /PRNewswire-FirstCall/ - LAB International Inc. ("LAB"), an integrated drug development company with subsidiaries focused on developing therapies for the inhalation market and on providing contract research services, today announced financial results for the first quarter ended March 31, 2006.
LAB International consolidated revenues for the first quarter of 2006 were $11.2 million, a 20% increase over the first quarter of the previous year. LAB Research generated revenues of $11.0 million in the first quarter of 2006, 22% more than the first quarter of 2005 and 8% higher than the fourth quarter of 2005, despite a high level of inter-company contracts.
"LAB Research has once again produced solid quarterly financial results despite the high level of inter-company work on Pharma contracts and the strong Canadian dollar. The revenue level consistently generated and the steady advancement of our clinical trial programs motivates our intentions to confidently move forward with our plan to monetize the value of our contract research services business unit." said Dr Halvor Jaeger, Chief Executive Officer of LAB International.
Other Financial Highlights - After elimination of $0.36 million of EBITDA related to LAB Pharma contracts, LAB Research's EBITDA was $2.3 million for the first quarter of 2006 compared to $2.4 million in the first quarter of the previous year and $2.0 million for the fourth quarter of the previous year. - LAB Pharma contributed revenues of $0.2 million during the first quarter of 2006 compared to $0.27 million for the first quarter of 2005. - Consolidated net loss for the first quarter of 2006 was $5.0 million or $0.07 per share, compared with $3.2 million or $0.06 per share in the first quarter of 2005. First Quarter Operational Highlights - LAB announced that its common shares now qualified as eligible shares for coverage purposes pursuant to the Quebec SME Growth Stock Plan. - LAB Pharma and Teikoku Seiyaku Co. Ltd. have entered into a licensing and development agreement for Fentanyl TAIFUN(R) for the Japanese market. - LAB released the final and complete safety, tolerability and pharmacokinetic results from a phase I trial for its novel asthma product, LAB CGRP (Calcitonin Gene Related Peptide) which, demonstrated to be safe with no serious adverse events reported at all doses tested. - LAB announced its intention to monetize the value of its LAB Research business unit through an out right sale or initial public offering. Financial Results
The 22% increase in LAB Research revenues for the first quarter of 2006 was primarily attributable to a $5.2 million contribution from LAB Denmark (formerly Scantox) compared to $3.6 million for the first quarter of 2005 (acquired on February 9, 2005) and $4.4 million in the fourth quarter of 2005. The Hungarian operations have generated $1.1 million in revenues for the first quarter of 2006 compared to $1.2 million for the first quarter of 2005 and $1.7 million for the fourth quarter of 2005. This decrease is directly related to the use of LAB Hungary's inhalation toxicology capacity by LAB Pharma for a total of $0.8 million. LAB Canada revenues for the first quarter were $4.2 million compared $4.0 million for the first quarter of 2005 and $3.5 million for the fourth quarter of 2005. The nominal increase is primarily attributable to a higher mix of long-term studies, the significantly higher Canadian dollar and the continued capacity limitations currently being addressed. The expansion of the Laval facility is expected to be completed by the end of October 2006. The decrease in the revenues generated by LAB Pharma during the first quarter 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 $4.2 million for the first quarter of 2006, a 9% increase over the $3.9 million of the first quarter of 2005 and a 22% decrease compared to $5.4 million for the fourth quarter of 2005 which included a reserve of approximately $2.2 million against the $2.4 million in receivables due from Grupo Ferrer.
R&D costs for the first quarter of 2006 were $2.7 million compared with $2.1 million in the first quarter of 2005. The 28% increase in spending is primarily attributable to the costs associated with the advancement of the Fentanyl TAIFUN(R) clinical trial program.
The consolidated net loss for the first quarter of 2006 was $5.0 million, or $0.07 per share, compared with a consolidated net loss for the first quarter of 2005 of $3.2 million, or $0.06 per share. The overall increase in net loss is due to the higher rate of product development spending, SG&A expenses necessary to support LAB's overall growth, long term interest expense and early settlement charges relating to the convertible debenture.
The Company had cash and cash equivalents as of March 31, 2006 of $11.3 million. This compares with $16.9 million as of December 31, 2005 and $5.2 million as of March 31, 2005.
About LAB International
LAB International (LAB Pharma and LAB Research) is an integrated drug development company. LAB Pharma is 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 Research is a profitable and growing contract research services division supporting its clients base from state-of-the-art facilities in Canada, the US, Denmark and Hungary.
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 71.9 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 Periods ended March 31, 2006 and 2005 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- March 31, December 31, 2006 2005 ------------------------------------------------------------------------- (Audited) Assets Current assets: Cash and cash equivalents $ 11,293 $ 16,914 Cash held in escrow - 541 Accounts receivable 10,106 8,469 Work in progress 1,944 2,314 Research tax credits receivable 358 1,333 Prepaid expenses 2,535 1,262 ------------------------------------------------------------------------- 26,236 30,833 Property and equipment 23,092 22,748 Intangible assets 11,592 11,831 Other assets 1,570 1,577 Future income taxes 7,052 6,957 ------------------------------------------------------------------------- $ 69,542 $ 73,946 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities: Bank loan $ - $ 432 Accounts payable and accrued liabilities 10,803 11,046 Deferred revenue 7,060 6,059 Due to Scantox selling shareholders - 541 Current portion of long-term debt 2,065 2,328 Current portion of debenture 1,130 1,509 Deferred gain on sale of property 68 68 Future income taxes 819 688 ------------------------------------------------------------------------- 21,945 22,671 Deferred rent liability 90 37 Deferred gain on sale of property 1,580 1,603 Long-term debt 13,212 12,496 Debt component of convertible debenture 2,096 2,510 Future income taxes 3,910 4,021 Shareholders' equity: Share capital 55,389 54,380 Warrants 794 794 Holder conversion options 943 1,099 Additional paid-in capital 8,384 8,083 Cumulative translation adjustment (1,553) (1,662) Deficit (37,248) (32,086) ------------------------------------------------------------------------- 26,709 30,608 ------------------------------------------------------------------------- $ 69,542 $ 73,946 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Approved on behalf of the Board of Directors: ______________________ Director ______________________ Director LAB INTERNATIONAL INC. Consolidated Statements of Operations Periods ended March 31, 2006 and 2005 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended March 31, -------------------------- 2006 2005 ------------------------------------------------------------------------- Revenues $ 11,216 $ 9,328 Expenses: Direct costs 6,633 4,908 Selling, general and administrative 4,216 3,877 Research and development 2,698 2,109 Stock-based compensation 225 183 Amortization of property and equipment 792 664 Amortization of intangible assets 393 342 Interest on long-term debt and loss on settlement of convertible debenture 717 229 Foreign exchange 370 (204) ------------------------------------------------------------------------- 16,044 12,108 ------------------------------------------------------------------------- Loss before income taxes (4,828) (2,780) (Provision for) recovery of income taxes: Current (386) (775) Future 173 331 ------------------------------------------------------------------------- (213) (444) ------------------------------------------------------------------------- Net loss $ (5,041) $ (3,224) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Loss per share Basic $ (0.07) $ (0.06) Diluted (0.07) (0.06) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of shares outstanding: Basic 70,100,391 53,277,242 Effect of convertible debentures 4,840,441 - Effect of dilutive options and warrants 1,469,956 32,377 ------------------------------------------------------------------------- Diluted 76,410,788 53,309,619 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LAB INTERNATIONAL INC. Consolidated Statements of Deficit Periods ended March 31, 2006 and 2005 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended March 31, -------------------------- 2006 2005 ------------------------------------------------------------------------- Deficit, beginning of period $ (32,086) $ (17,572) Net loss (5,041) (3,224) Settlement of convertible debentures (121) - Share issue costs - (207) ------------------------------------------------------------------------- Deficit, end of period $ (37,248) $ (21,003) ------------------------------------------------------------------------- ------------------------------------------------------------------------- LAB INTERNATIONAL INC. Consolidated Statements of Cash Flows Periods ended March 31, 2006 and 2005 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended March 31, 2006 2005 ------------------------------------------------------------------------- Cash flows from operating activities: Net loss $ (5,041) $ (3,224) Adjustments for: Amortization and write-off of property and equipment 792 664 Amortization of intangible assets 393 342 Amortization of deferred financing fees 35 2 Stock-based compensation 225 183 Loss on settlement of convertible debenture 294 - Accretion expense on convertible debenture 310 - Unrealized foreign exchange loss 293 - Amortization of deferred gain of property (23) - Deferred rent liability 53 - Future income taxes (173) (331) Net changes in operating assets and liabilities (807) (446) ------------------------------------------------------------------------- (3,649) (2,810) Cash flows from financing activities: Proceeds from private placements - 2,366 Repayment of convertible debenture (585) - Share issue costs - (198) Proceeds from bank credit facilities - 112 Proceeds from issuance of long-term debt 702 465 Repayment of long-term debt (698) (236) Repayment of bank loan (432) - ------------------------------------------------------------------------- (1,013) 2,509 Cash flows from investing activities: Business acquisition - (6,137) Payment of holdback payable - (65) Acquisition of property and equipment (757) (461) Addition to license and patents (85) (2) Other advances and investments (28) 6 ------------------------------------------------------------------------- (870) (6,659) ------------------------------------------------------------------------- Net decrease in cash and cash equivalents (5,532) (6,960) Cash and cash equivalents, beginning of period 16,914 12,049 Effect of exchange rate changes (89) 75 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 11,293 $ 5,164 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash and cash equivalents are comprised of: Cash $ 2,293 $ 3,876 Term deposit, bearing interest at 2%, matured in April 2005 - 1,288 Money market fund 9,000 - ------------------------------------------------------------------------- $ 11,293 $ 5,164 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >>
LAB INTERNATIONAL INC.CONTACT: Luc Mainville, Chief Operating Officer, (450) 973-2240 ext. 1206,Fax: (450) 973-2259, mainvillel@labinc.ca; Frederic Dumais, Vice-President,Investor Relations, (450) 973-2240 ext. 1207, Fax: (450) 973-2259,dumaisf@labinc.ca
