LAVAL, Canada, Nov. 8 /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 third quarter ended September 30, 2005.
For the third quarter of 2005, consolidated revenues were $12.7 million, compared with $7.5 million reported in the third quarter of 2004, an increase of 70%. Year-to-date consolidated revenues were $35.2 million, an 87% increase over 2004. LAB Research revenues were $11.6 million and $33.2 million for the third quarter of 2005 and year-to-date periods, representing increases of 62% and 86% respectively. Scantox, the Company’s new Danish subsidiary, has generated revenues of $13.8 million since its acquisition on February 9, 2005.
“These strong quarterly results confirm the pace of our solid revenue growth. LAB Research’s increasing revenues have for the thirteenth successive quarter exceeded previous year quarterly results. LAB International is already benefiting from the rapid and successful integration of its recent Scantox acquisition,” said Mr. Andrew Reiter, Chief Financial Officer of LAB International.
Other Third Quarter Financial Highlights - LAB Research’s third quarter EBITDA reached $2.8 million, compared with $2.4 million for the previous quarter, a 20% increase, with year-to-date EBITDA totaling $7.6 million as of September 30, 2005. - LAB Pharma contributed revenues of $1.0 million during the third quarter of 2005 and $2.0 million year-to-date, compared with $0.3 million and $1.0 million for the comparable periods in 2004. - Consolidated net loss for the third quarter of 2005 was $2.7 million, compared with $2.0 million in 2004. The net loss per share remains at $0.05 on a comparative quarterly basis. Consolidated 2005 year-to- date net loss was $9.7 million or $0.18 per share compared with $6.3 million or $0.17 per share for the same period in 2004. - LAB Research continued its strong performance, with year-to-date sales increasing 86% over the same period in 2004, despite an 11% negative impact of the strong Canadian dollar versus the euro, which accounts for more than 70% of its revenues. On a consolidated basis, the Company continues to be naturally hedged due to its R&D spending taking place in Europe. Third Quarter Operational Highlights - LAB Pharma initiated and completed patient enrollment in a Phase I clinical trial for its novel asthma product, LAB CGRP. Positive results were disclosed on September 22, 2005 - On July 5, 2005, LAB Pharma initiated patient enrollment in a first Phase II clinical trial for its Growth Hormone Releasing Hormone, LAB GHRH. - The advancement of Fentanyl TAIFUN(R) clinical trials including the successful completion of a favorable Phase I comparing the commercially available Actiq(R) lozenge. The preparation of a Phase IIb comparing Fentanyl TAIFUN(R) to Actiq(R) and the addition of new centers and the pursuit of patient’s enrollment in the Phase IIa which should be completed in Q1 2006. Financial Results
The 70% increase in LAB’s consolidated revenues for the third quarter was primarily attributable to a $4.6 million contribution from Scantox. With $1.9 million in revenues, the Hungarian operations have exceeded 2004 third quarter and 2005 second quarter revenues by 36% and 5%, respectively, while revenues from the Canadian operations for the third quarter of 2005 decreased 14% to $4.8 million, compared with the same period in 2004. This decrease was primarily attributable to an unusually high percentage of large animal studies in the third quarter of 2004. LAB Pharma generated revenues of $1.0 million during the third quarter of 2005, consisting of co-development revenues.
Consolidated SG&A expenses totaled $4.4 million for the third quarter of 2005, a 61% increase over the third quarter of 2004. This increase was largely related to the Scantox acquisition. In addition, LAB’s organic growth and latest acquisitions have necessitated an increase in managerial resources to integrate and leverage its operating units.
R&D costs for the third quarter of 2005 increased by 19% to $2.0 million from $1.7 million for the third quarter of 2004. The increase is primarily attributable to the costs associated with advancing Fentanyl TAIFUN(R) and LAB’s other products into more advanced clinical trials.
The consolidated net loss for the third quarter of 2005 was $2.7 million, or $0.05 per share, compared with a consolidated net loss for the third quarter of 2004 of $2.0 million, or $0.05 per share. The overall increase in net loss is due to the higher rate of product development spending, since LAB’s three lead products are currently in advanced clinical trials, and SG&A expenses necessary to support LAB’s overall growth.
The Company had cash and cash equivalents as of September 30, 2005 of $5.4 million including $0.5 million being held to satisfy certain financial targets related to the Scantox acquisition. This compares with $4.8 million as of September 30, 2004 and $9.9 million as of June 30, 2005. These amounts exclude net proceeds of $2.7 million secured from the sale-leaseback transaction that took place in October, as well as the recent $2.2 million contribution from TEKES, the National Technology Agency of Finland, forecasted for 2006 for product development.
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 56.0 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 (Unaudited) September 30, 2005 and December 31, 2004 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- September 30, December 31, 2005 2004 ------------------------------------------------------------------------- (Audited) Assets Current assets: Cash and cash equivalents $ 4,871 $ 12,049 Cash held in escrow 541 - Accounts receivable 9,276 6,025 Work in progress 2,520 1,381 Research tax credits receivable 739 830 Prepaid expenses 901 370 Property held for sale 5,802 - ----------------------------------------------------------------------- 24,650 20,655 Property and equipment 22,596 19,487 Intangible assets 12,626 9,024 Other assets 693 788 Future income taxes 3,381 4,213 ------------------------------------------------------------------------- $ 63,946 $ 54,167 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders’ Equity Current liabilities: Accounts payable and accrued liabilities $ 9,988 $ 6,922 Deferred revenue 4,751 3,339 Due to Scantox selling shareholders 541 - Holdback payable - 65 Current portion of long-term debt 2,115 1,200 Debt related to property held for sale 3,908 - Current portion of convertible debenture 1,445 - Future income taxes 102 181 ----------------------------------------------------------------------- 22,850 11,707 Long-term debt 11,621 11,433 Debt component of the convertible debenture 2,911 - Future income taxes 4,214 2,801 Shareholders’ equity: Share capital 42,064 35,280 Share capital issuable - 254 Convertible debentures - 2,720 Warrants 2,526 1,986 Holder conversion option 1,155 - Additional paid-in capital 6,014 5,427 Cumulative translation adjustment (1,672) 131 Deficit (27,737) (17,572) ----------------------------------------------------------------------- 22,350 28,226 Subsequent events ------------------------------------------------------------------------- $ 63,946 $ 54,167 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LAB INTERNATIONAL INC. Consolidated Statements of Operations (Unaudited) Periods ended September 30, 2005 and 2004 (in thousands of Canadian dollars, except per share data) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, ----------------------- ----------------------- 2005 2004 2005 2004 ------------------------------------------------------------------------- Revenues $ 12,681 $ 7,453 $ 35,179 $ 18,808 Expenses: Direct costs 6,532 3,568 19,252 9,562 Selling, general and administrative 4,396 2,727 12,791 7,890 Research and development 1,966 1,656 6,696 4,356 Stock-based compensation 240 249 587 666 Amortization of property and equipment 753 428 2,252 1,173 Amortization of intangible assets 457 102 1,195 313 Interest on long-term debt 887 118 1,405 392 Foreign exchange (363) 34 (471) (71) ----------------------------------------------------------------------- 14,868 8,882 43,707 24,281 ------------------------------------------------------------------------- Loss before income taxes (2,187) (1,429) (8,528) (5,473) (Provision for) recovery of income taxes: Current (752) (901) (2,072) (1,431) Future 239 354 864 637 ----------------------------------------------------------------------- (513) (547) (1,208) (794) ------------------------------------------------------------------------- Net loss $ (2,700) $ (1,976) $ (9,736) $ (6,267) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Loss per share Basic $ (0.05) $ (0.05) $ (0.18) $ (0.17) Diluted (0.05) (0.05) (0.18) (0.17) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of shares outstanding: Basic 55,985,581 38,055,952 54,171,173 36,693,199 Effect of convertible debentures 5,882,353 2,085,938 3,503,460 1,376,719 Effect of dilutive options and warrants - 31,818 - 374,867 ------------------------------------------------------------------------- Diluted 61,867,934 40,173,708 57,674,633 38,444,785 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LAB INTERNATIONAL INC. Consolidated Statements of Deficit (Unaudited) Periods ended September 30, 2005 and 2004 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, ----------------------- ----------------------- 2005 2004 2005 2004 ------------------------------------------------------------------------- Deficit, beginning of period: As previously reported $(25,037) $(11,051) $(17,572) $ (5,124) Adjustment to reflect change in accounting policy for employee stock options - - - (1,636) ------------------------------------------------------------------------- Deficit restated (25,037) (11,051) (17,572) (6,760) Net loss (2,700) (1,976) (9,736) (6,267) Share issue costs - - (429) - ------------------------------------------------------------------------- Deficit, end of period $(27,737) $(13,027) $(27,737) $(13,027) ------------------------------------------------------------------------- ------------------------------------------------------------------------- LAB INTERNATIONAL INC. Consolidated Statements of Cash Flows (Unaudited) Periods ended September 30, 2005 and 2004 (in thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, ----------------------- ----------------------- 2005 2004 2005 2004 ------------------------------------------------------------------------- Cash flows from operating activities: Net loss $ (2,700) $ (1,976) $ (9,736) $ (6,267) Adjustments for: Amortization and write-off of property and equipment 777 428 2,338 1,173 Amortization of intangible assets 457 102 1,195 313 Amortization of deferred financing fees 15 1 32 3 Stock-based compensation 240 249 587 666 Future income taxes (239) (354) (864) (637) Unrealized foreign exchange loss 55 - 55 - Net changes in operating assets and liabilities (1,933) (1,644) 207 (1,844) ------------------------------------------------------------------------- (3,328) (3,194) (6,186) (6,593) Cash flows from financing activities: Proceeds from issuance of shares - - 2,366 13 Proceeds from convertible debentures - - 6,242 3,523 Repayment of convertible debentures (188) - (188) - Share issue costs - - (419) - Repayment of bank credit facilities - - (15) - Proceeds from issuance of long-term debt 720 3,683 1,198 4,555 Addition to deferred financing fees - - (280) - Repayment of long-term debt (503) (174) (1,140) (571) ----------------------------------------------------------------------- 29 3,509 7,764 7,520 Cash flows from investing activities: Business acquisition, net of cash (10) - (6,201) 802 Payment to TRC shareholders - - - (500) Payment of holdback payable - - (65) - Acquisition of property and equipment (691) (774) (1,701) (1,899) Addition to license and patents (125) (182) (227) (216) Other advances and investments 3 (191) (16) 89 ----------------------------------------------------------------------- (823) (1,147) (8,210) (1,724) ------------------------------------------------------------------------- Net decrease in cash and cash equivalents (4,122) (832) (6,632) (797) Cash and cash equivalents, beginning of period 9,391 5,718 12,049 5,656 Effect of exchange rate changes (398) (74) (546) (47) ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 4,871 $ 4,812 $ 4,871 $ 4,812 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash and cash equivalents are comprised of: Cash balances with banks $ 3,344 $ 3,536 Term deposit, bearing interest at 1.65% maturing in October 2005 644 - Money market fund, short-term investments 883 1,276 ------------------------------------------------------------------------- $ 4,871 $ 4,812 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >>
LAB INTERNATIONAL INC.
CONTACT: visit LAB’s website at www.labinc.ca, or contact: Luc Mainville,Chief Operating Officer, (450) 973-2240 ext. 1206, Fax: (450) 973-2259,mainvillel@labinc.ca; Frederic Dumais, Director, Communication and InvestorRelations, (450) 973-2240 ext. 1207, Fax: (450) 973-2259,dumaisf@labinc.ca; Kim Sutton Golodetz, Investor Relations, (212) 838-3777,Fax: (212) 838-4568, kgolodetz@lhai.com
