LAVAL, QC, Feb. 16 /PRNewswire-FirstCall/ - Labopharm Inc. today reported its results for the fourth quarter of fiscal 2005, ended December 31, 2005.
“The fourth quarter was the culmination of a year of tremendous accomplishment for our Company, including the commercial launch of our once- daily tramadol product in Europe and generation of our first revenue from product sales, the submission of our NDA to the FDA and the securing of a strong partner for our product in the United States,” said James R. Howard- Tripp, President and Chief Executive Officer, Labopharm Inc. “We are very pleased with the initial reception of our product in the German marketplace by physicians and patients and our partner, HEXAL, is actively promoting and selling the product. For 2006, we are focused on extending the launch of our product throughout Europe. In the U.S., we are working with our marketing partner, Purdue Pharma Products L.P., to prepare for the U.S. launch of our product as rapidly as possible should our product receive regulatory approval. In addition, Labopharm will continue to pursue regulatory approval and marketing partnerships in other key markets around the world to capitalize fully on this significant global opportunity.”
Key Developments for the Fourth Quarter - Launched Once-Daily Tramadol Product in Europe - Labopharm’s marketing partner for Germany, HEXAL AG, launched the Company’s once-daily tramadol product in that country under the brand name Tramadolor einmal taeglich(R). - Submitted NDA for Once-Daily Tramadol in U.S. - Labopharm submitted a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) for its once-daily formulation of tramadol. Subsequent to quarter end, the NDA was accepted for review and filed by the FDA, with a PDUFA date of September 28, 2006. - Partnered with Recordati to Commercialize Once-Daily Tramadol in the UK - Labopharm completed a licensing and distribution agreement for its once-daily tramadol product for the United Kingdom with Recordati. - Finalized Licensing and Distribution Agreement for France - Labopharm finalized its licensing and distribution agreement with sanofi- aventis for its once-daily tramadol product for France. - Received Regulatory Approval for Once-Daily Tramadol in Mexico - Labopharm’s once-daily tramadol product received regulatory approval from the national regulatory authority in Mexico. The product was approved as a once-daily product for the treatment of moderate to severe pain, including both acute and chronic conditions. The Company is continuing active discussions with potential marketing partners for Mexico. - Partnered with GlaxoSmithKline to Commercialize Once-Daily Tramadol in Latin America -Labopharm completed a licensing and distribution agreement for its once-daily tramadol product for 20 Latin American and Caribbean countries with GlaxoSmithKline (GSK), bringing the number of countries for which the Company has secured marketing partners for its product to 43. Developments Subsequent to Quarter End - Added Second Marketing Partnership for Once-Daily Tramadol for France - Labopharm added a second marketing partnership for its once-daily tramadol product for France, signing a licensing and distribution agreement with Grunenthal GmbH. Combined, Labopharm’s partners for France are responsible for almost 90% of existing tramadol product sales in that country. Financial Results
During fiscal 2005, Labopharm generated $1.3 million in revenue from product sales and $30.0 million in cash related to up front and milestone payments associated with licensing and distribution agreements for its once- daily tramadol product. In accordance with Canadian Generally Accepted Accounting Principles (GAAP), the Company was only able to recognize $1.9 million of the cash payments from the licensing and distribution agreements as licensing revenue, with the remainder recorded as deferred revenue. The deferred revenue, as well as additional future milestone payments, will be recognized as revenue over the term for which Labopharm maintains substantive contractual obligations.
Cash, cash equivalents and investments (including accrued interest) as at December 31, 2005 were $36.2 million compared with $25.1 million as at December 31, 2004. The increase is primarily the result of the $23.1 million (US$20 million) up-front licensing fee from Purdue Pharma Products L.P., licensing payments from HEXAL AG, sanofi-aventis and Recordati totalling $6.9 million, and cash proceeds of $12.3 million from the debt financing in June 2005.
Revenue for the fourth quarter of fiscal 2005 was $2.4 million, compared with $1.0 million for the fourth quarter of fiscal 2004. The increase was the result of higher licensing revenue, primarily related to the Company’s agreement with Purdue Pharma Products L.P., as well as the contribution from Company’s first sales of once-daily tramadol to HEXAL AG, which totaled $1.3 million.
Research and development expenses (net of tax credits) for the fourth quarter of fiscal 2005 were $7.1 million compared with $4.9 million for the fourth quarter of fiscal 2004. The increase was primarily the result of costs related to the ongoing U.S. Phase III clinical trial for once-daily tramadol. Selling, general and administrative expenses for the fourth quarter of fiscal 2005 were $4.1 million compared with $2.3 million for the fourth quarter of fiscal 2004. The increase was attributable to higher variable compensation expenses and to the additional resources required to support the successful commercialization of the Company’s once-daily tramadol product in Europe. Financial expenses for the fourth quarter of fiscal 2005 were $0.8 million, compared with $0.2 million for the fourth quarter of fiscal 2004. The increase was primarily attributable to interest expenses related to the term loan agreement that the Company entered into in June 2005.
Net loss for the fourth quarter of fiscal 2005 was $11.1 million, or $0.26 per share compared with $6.6 million, or $0.16 per share, for the fourth quarter of fiscal 2004.
For fiscal 2005, revenue was $3.2 million compared with $1.4 million for fiscal 2004. The increase was primarily the result of higher licensing revenue for fiscal 2005, which included recognition of $1.9 million in payments received from Purdue Pharma Products L.P., HEXAL AG, Gruppo Angelini and Esteve S.A. under the Company’s licensing and distribution agreements for once- daily tramadol. The increase is also the result of the Company’s first sales of once-daily tramadol to HEXAL AG, which totaled $1.3 million.
Research and development expenses (net of tax credits) for fiscal 2005 were $19.7 million compared with $15.2 million for fiscal 2004. The increase was primarily the result of higher costs related to the ongoing U.S. Phase III clinical trial for once-daily tramadol, costs related to the submission of the NDA for once-daily tramadol, and costs associated with manufacturing process optimization.
Selling, general and administrative expenses for fiscal 2005 were $12.2 million compared with $9.9 million for fiscal 2004. The increase was primarily the result of additional human resources to support the successful commercialization of once-daily tramadol globally, including launch in Europe, as well as other compensation expenses, and higher professional and consulting fees.
Net loss for fiscal 2005 was $33.3 million, or $0.78 per share, compared with $27.2 million, or $0.68 per share, for fiscal 2004.
Conference Call
Labopharm will host a conference call today (Thursday, February 16, 2006 at 8:30 a.m. ET) to discuss its fourth quarter fiscal 2005 results. To access the conference call by telephone, dial 416-644-3428 or 1-800-814-4941. Please connect approximately five minutes prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Thursday, February 23, 2006 at midnight. To access the archived conference call, dial 416-640-1917 or 1-877-289-8525 and enter the reservation number 21173669 followed by the number sign. A live audio webcast of the conference call will be available at www.labopharm.com and www.financialdisclosure.ca. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above websites for 30 days.
A live audio webcast of the conference call will be available at www.labopharm.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above website for 90 days.
About Labopharm Inc.
Labopharm Inc. is an international, specialty pharmaceutical company focused on the development of drugs incorporating Contramid(R), the Company’s proprietary advanced controlled-release technology. Labopharm’s lead in-house product, a once-daily formulation of the analgesic tramadol, is marketed in Germany and has received regulatory approval in 21 other European countries. In the U.S., the Company’s NDA for once-daily tramadol is under review at the FDA and the Company has secured a licensing and distribution agreement with Purdue Pharma Products L.P., the premier marketer of long- acting pain medications in that country. The Company’s pipeline includes a combination of in-house and partnered programs with products both in clinical trials and in preclinical development. For more information, please visit www.labopharm.com.
This press release contains forward-looking statements, which reflect the Corporation’s current expectations regarding future events. The forward- looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors, including the successful and timely completion of clinical studies, the uncertainties related to the regulatory process and the commercialization of the drug thereafter. Investors should consult the Corporation’s ongoing quarterly filings and annual reports for additional information on risks and uncertainties relating to these forward-looking statements. The reader is cautioned not to rely on these forward-looking statements. The Corporation disclaims any obligation to update these forward-looking statements.
CONSOLIDATED STATEMENTS OF OPERATIONS For periods of : Three months ended Twelve months ended (Thousands of dollars, Dec. 31, Dec. 31, Dec. 31, Dec. 31, except share and per 2005 2004 2005 2004 share amounts) $ $ $ $ ------------------------------------------------------------------------- REVENUE Product sales 1,269 - 1,269 - Cost of goods sold 758 - 758 - ------------------------------------------------------------------------- Gross profit on product sales 511 - 511 - Other revenue Licensing 1,146 70 1,908 106 Research and development contracts - 900 61 1,288 ------------------------------------------------------------------------- 1,657 970 2,480 1,394 ------------------------------------------------------------------------- EXPENSES Research and development expenses 8,193 5,113 22,451 16,037 Government assistance (1,130) (256) (2,713) (823) ------------------------------------------------------------------------- 7,063 4,857 19,738 15,214 Selling, general and administrative expenses 4,055 2,329 12,188 9,878 Financial expenses 769 238 1,937 864 Depreciation and amortization 429 439 1,664 1,662 Interest income (210) (157) (557) (538) Foreign exchange gain (322) (105) (355) (57) Expenses related to an incomplete financing initiative - - - 1,509 ------------------------------------------------------------------------- 11,784 7,601 34,615 28,532 ------------------------------------------------------------------------- LOSS BEFORE INCOME TAXES (10,127) (6,631) (32,135) (27,138) Income taxes : Current 940 - 1,199 41 ------------------------------------------------------------------------- NET LOSS FOR THE PERIOD (11,067) (6,631) (33,334) (27,179) ------------------------------------------------------------------------- ------------------------------------------------------------------------- NET LOSS PER SHARE - BASIC AND DILUTED (0.26) (0.16) (0.78) (0.68) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of common shares outstanding 43,273,531 42,494,254 42,922,741 39,954,488 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS For periods of : Three months ended Twelve months ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2005 2004 2005 2004 (Thousands of dollars) $ $ $ $ ------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss for the period (11,067) (6,631) (33,334) (27,179) Items not affecting cash : Depreciation of property, plant and equipment 393 401 1,524 1,520 Amortization of intangible assets 36 38 140 142 Financial expenses 137 - 271 - Amortization of deferred financing costs 70 - 110 - Unrealized foreign exchange gain (282) - (232) - Stock-based compensation 954 282 1,754 1,775 ------------------------------------------------------------------------- (9,759) (5,910) (29,767) (23,742) Net change in non-cash operating items 27,416 2,720 28,727 660 ------------------------------------------------------------------------- 17,657 (3,190) (1,040) (23,082) ------------------------------------------------------------------------- INVESTING ACTIVITIES Acquisition of investments (12,051) (8,603) (20,440) (43,547) Disposals of investments - 12 958 4,353 Maturities of investments 2,031 13,032 25,685 37,106 Acquisition of property, plant and equipment (94) (180) (843) (1,000) Acquisition of intangible assets (46) (113) (173) (187) ------------------------------------------------------------------------- (10,160) 4,148 5,187 (3,275) ------------------------------------------------------------------------- FINANCING ACTIVITIES Repayment of capital lease obligations (20) (44) (134) (171) Proceeds from issuance of capital stock 903 36 2,093 30,813 Issuance costs of capital stock - - - (2,196) Proceeds from issuance of long term debt - - 11,586 - Proceeds from issuance of warrants - - 731 - Deferred financing costs - - (474) - ------------------------------------------------------------------------- 883 (8) 13,802 28,446 ------------------------------------------------------------------------- Foreign exchange gain (loss) on cash held in foreign currencies 244 - (476) - INCREASE IN CASH AND CASH EQUIVALENTS DURING THE PERIOD 8,624 950 17,473 2,089 Cash and cash equivalents, beginning of period 11,658 1,859 2,809 720 ------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD 20,282 2,809 20,282 2,809 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash flows include the following items: Interest paid 557 234 1,434 863 Income taxes paid (received) 426 36 427 (18) ------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS As at As at Dec. 31, Dec. 31, 2005 2004 (Thousands of dollars) $ $ ------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents 20,282 2,809 Short-term investments 14,611 20,814 Accounts receivable 532 967 Research and development tax credits receivable 875 800 Income tax receivable 426 - Inventories 2,188 - Prepaids and other assets 452 247 ------------------------------------------------------------------------- Total current assets 39,366 25,637 ------------------------------------------------------------------------- Restricted long-term investments 1,271 1,282 Property, plant and equipment 10,280 10,961 Intangible assets 3,231 2,036 Deferred financing costs 364 - ------------------------------------------------------------------------- 54,512 39,916 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES Current Accounts payable and accrued liabilities 10,090 5,930 Current portion of deferred revenue 9,067 266 Current portion of obligations under capital leases 83 134 Current portion of long term debt 3,383 - ------------------------------------------------------------------------- 22,623 6,330 Deferred revenue 20,834 1,510 Obligations under capital leases 5,840 5,923 Long term debt 7,818 - ------------------------------------------------------------------------- 57,115 13,763 SHAREHOLDERS’ EQUITY (DEFICIENCY) Capital stock 135,631 132,658 Contributed surplus 6,350 4,745 Deficit (144,584) (111,250) ------------------------------------------------------------------------- Total shareholders’ equity (deficiency) (2,603) 26,153 ------------------------------------------------------------------------- 54,512 39,916 ------------------------------------------------------------------------- -------------------------------------------------------------------------
Labopharm Inc.
CONTACT: At Labopharm, Warren Whitehead, Chief Financial Officer, Tel:(450) 680-2423; At The Equicom Group, Jason Hogan - Toronto, InvestorRelations, Tel: (416) 815-0700, jhogan@equicomgroup.com; At Feinstein KeanHealthcare, Harriet Ullman - United States, Media and Investor Relations,Tel: (617) 577-8110, hullman@fkhealth.com
