MONTREAL, CANADA--(Marketwire - August 11, 2009) - Paladin Labs Inc. (TSX: PLB), a leading Canadian specialty pharmaceutical company, today reported its 2009 second quarter financial results.
Second Quarter Highlights
- Revenues reached $26.2 million, an increase of 27% versus last year.
- EBITDA(1) reached $8.4 million, a 20% increase over the same period last year.
- Entered into a strategic partnership with Isotechnika Inc. for the development and commercialization of voclosporin, Isotechnika's next-generation calcineurin inhibitor, in Canada, Mexico, Central & South America, Israel and South Africa ("Territory").
- Closed a bought deal offering of 3,450,000 common shares issued at a price of $17.00 per common share for total gross proceeds of approximately $58.7 million.
- Announced the launch of Gelicious™ and GELMEG3™, the first and only Omega 3 supplements in a tasty gel format.
- Announced the Canadian launch of Twinject® Twinpack™ for Anaphylaxis in a package that includes two Twinject®epinephrine auto-injectors.
- Entered into an agreement with Sylphar N.V. to develop and market an oral dissolving teeth whitening film strip in Europe.
- Entered into an agreement with Wyeth to acquire a bundle of products currently marketed in Canada that includes Anacin® (acetylsalicylic acid) and Anbesol® (benzocaine).
- Announced that its biotechnology division, ViRexx, had received a contribution from the National Research Council of Canada Industrial Research Assistance Program (NRC-IRAP) for its Chimigen® Platform.
"The business continues to perform well. Our promoted products and recent product acquisitions together delivered strong revenues growth and EBITDA margins in the quarter. Our recently completed $58 million financing coupled with no debt positions us well in this market for continued expansion through acquisitions. We are on track to achieve more than $100 million in revenues for 2009, which will mark our 14th consecutive year of record revenues." said Jonathan Ross Goodman, President and CEO of Paladin Labs.
Financial Results
Revenues for the second quarter of 2009 increased 27% or $5.5 million to $26.2 million, compared to $20.7 million in the second quarter of 2008. This increase is due to the solid performance from the Company's key promoted products, including Tridural®, Twinject®, Plan B®, Pennsaid®, Metadol®, Trelstar®, and Testim® which combined increased by 10% in the first half of 2009 compared to the corresponding period a year ago.
Second quarter 2009 earnings before interest expense, taxes, amortization, and unusual items (EBITDA(1)) increased 20% to $8.4 million, compared to EBITDAv of $7.0 million in the second quarter of 2008. For the six months ended June 30, 2009, EBITDA increased 56.5% to 19.4 million from $12.4 million.
Net income before extraordinary gain for the quarter was $1.7 million or $0.11 per fully diluted share, compared to $2.6 million or $0.17 per fully diluted share in the second quarter a year ago. Net income before extraordinary gain for the six months ended June 30, 2009 was $4.8 million or $0.30 per fully diluted share compared to net income before extraordinary gain of $4.1 million or $0.27 per fully diluted share for the same period last year. Net income for the three months and six months ended June 30, 2009 was $27.7 million or $1.71 per fully diluted share and $30.8 million or $1.89 per fully diluted share, respectively.
Selling and marketing expense for the second quarter of 2009 increased 24% to $6.9 million from $5.6 million in the second quarter of 2008. For the six months ended June 30, 2009, selling and marketing expenses were $12.4 million, an increase of 12% from $11.1 million for the same period last year. The promotional activities driving selling and marketing expenses primarily relate to Paladin's continued promotional activities for Tridural®, Trelstar®, Twinject®, Plan B®, Metadol® and Testim®.
At June 30, 2009, Paladin's cash, cash equivalents and investments in marketable securities totalled $91.3 million. From this strong cash position, Paladin continues to pursue product acquisition and development opportunities.
Product Developments
During the quarter, Paladin launched GELICIOUS™ and GELMEG3™, the first and only Omega 3 supplements in a tasty gel format, specifically designed for those who do not like to and/or cannot swallow pills. Both GELICIOUS™ for kids and GELMEG3™ for adults contain Health Canada approved key levels of DHA (docosahexanoic acid) and EPA (eicosapentaenoic acid) that previously could have proved difficult for non-fish eaters to ensure they consume as part of their normal daily nutritional intake.
Also during the quarter, Paladin launched Twinject® Twinpack™ for anaphylaxis, making it more convenient for people to manage this potentially life threatening condition. Twinject® Twinpack™ includes two Twinject® epinephrine auto-injectors, allowing patients to store an auto-injector in multiple key locations such as home or work, while carrying another device with them at all times. The Twinpack™ also includes a Twinject® demonstrator that helps patients and family members practice using the auto-injector so they feel more confident in an emergency anaphylactic situation.
In addition, Paladin acquired a bundle of products currently marketed in Canada by Wyeth that includes Anacin® (acetylsalicylic acid) and Anbesol® (benzocaine). Canadian net sales of the portfolio of products amounted to approximately $4 million for calendar 2008. The acquired products complement Paladin's growing OTC portfolio.
Corporate Developments
During the quarter, Paladin entered into a strategic partnership with Isotechnika Inc. for the commercialization of voclosporin, Isotechnika's next-generation calcineurin inhibitor, in Canada, Mexico, Central & South America, Israel and South Africa ("Territory"). Under this partnership, Paladin paid $7 million in cash and provided committed R&D funding of $4.35 million to further develop voclosporin. In addition, Paladin owns 19% of a new company called Isotechnika Pharma Inc. (TSX: ISA), a public company that will continue the development of voclosporin. Isotechnika Pharma will be entitled to royalties on Paladin's sales in the Territory, and Paladin will receive royalties on the sales of voclosporin in other markets.
Also during the quarter, Paladin closed a bought deal share offering of 3,450,000 common shares which includes 450,000 common shares issued by way of the underwriters' over-allotment option. The common shares were issued at a price of $17.00 per common share for total gross proceeds to Paladin of approximately $58.7 million. The syndicate of underwriters for the offering was co-led by Cormark Securities Inc. and GMP Securities L.P. and included Desjardins Securities Inc. and TD Securities Inc.
In addition, Paladin entered into an agreement with Sylphar N.V to develop and market an oral dissolving teeth whitening film strip in Europe. This partnership agreement gives Paladin the opportunity to lead the way in bringing an oral dissolving teeth whitening film strip technology to Europe. Paladin also announced that its biotechnology division, ViRexx, had received a contribution from the National Research Council of Canada Industrial Research Assistance Program (NRC-IRAP) for its ChimigenR Platform. This 14-month project will focus on the development of bio-nanoparticle-based siRNA therapeutic vaccines using Chimigen® Vaccine Platform for Hepatitis B (HBV) and Hepatitis C (HCV) infections.
(1)EBITDA (earnings before interest, taxes, depreciation and amortization) does not have any standardized meaning under Canadian Generally Accepted Accounting Principles ("GAAP") and therefore may not be comparable to similar measures presented by other companies. The Company defines EBITDA as earnings before interest expense, taxes, amortization, and unusual items; such as write-downs and gains (losses) on intellectual property and investments. EBITDA is calculated and presented consistently from period to period and agrees, on a consolidated basis, with the amount disclosed as "Earnings before under noted items" on the consolidated statement of income. The Company believes EBITDA to be an important measurement that allows it to assess the operating performance of its ongoing business on a consistent basis without the impact of amortization expenses. The Company excludes amortization expenses because their level depends substantially on non-operating factors such as the historical cost of intangible and capital assets. The Company's method for calculating EBITDA may differ from that used by other issuers and, accordingly, this measure may not be comparable to EBITDA used by other issuers.
Conference Call Notice
Paladin will host a conference call to discuss its second quarter results on Tuesday, August 11, 2009 at 10:00 a.m. EST. The dial-in number for the conference call is 1-800-731-6941or 416-644-3417. The call will be audio-cast live and archived for 30 days at www.paladinlabs.com.
About Paladin Labs
Paladin Labs Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing innovative pharmaceutical products. With this strategy, a focused national sales team and proven marketing expertise, Paladin has evolved into one of Canada's leading specialty pharmaceutical companies. For more information, please visit the Company's web site at www.paladinlabs.com
This news release contains forward-looking statements and predictions. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The Companies consider the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared, but caution that these assumptions regarding the future events, many of which are beyond the control of the Companies and their subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations, are discussed in the annual reports, as well as in the Companies' Annual Information Forms for the year ended December 31, 2008. The Companies disclaim any intention or obligation to update or revise any forward-looking statements whether a result of new information, future events, or except as required by law. For additional information on risks and uncertainties relating to these forward-looking statements, investors should consult the Companies' ongoing quarterly filings, annual reports and Annual Information Forms and other filings found on SEDAR at www.sedar.com.
CONSOLIDATED BALANCE SHEETS
(In thousands of Canadian dollars)
June 30 December 31
2009 2008
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(unaudited) (audited(1))
ASSETS
Current
Cash and cash equivalents 31,354 4,646
Marketable securities 48,722 14,753
Accounts receivable 17,696 17,889
Inventory 12,335 8,643
Other current assets 2,836 2,531
Income taxes receivable 4,376 4,209
Investment tax credits receivable 58 36
Investment tax credits recoverable - 43
Future income tax asset 5,122 9,120
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Total current assets 122,499 61,870
Long-term marketable securities 11,203 1,943
Capital assets 579 594
Pharmaceutical product licences and rights 51,566 58,152
Investments 420 4,792
Future income tax assets 32,941 4,789
Investment tax credits recoverable 11,938 -
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Total assets 231,146 132,140
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 21,835 16,464
Accounts payable to related parties 1,439 1,384
Deferred revenue - 1,693
Income taxes payable 4,622 6,391
Balance of sale payable 11,050 10,429
Future income tax liabilities 362 90
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Total current liabilities 39,308 36,451
Long-term
Future income tax liabilities - 341
Balance of sale payable 5,525 -
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Total liabilities 44,833 36,792
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Shareholders' equity
Capital stock 118,684 60,664
Other paid-in capital 3,794 3,155
Accumulated other comprehensive income (loss) 104 (1,420)
Retained earnings 63,731 32,949
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Total shareholders' equity 186,313 95,348
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Total liabilities and shareholders' equity 231,146 132,140
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(1) Derived from the audited annual financial statements filed on SEDAR
at www.sedar.com
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of Canadian dollars except for share and per share amounts)
(unaudited)
Three-month period Six-month period
ended June 30 ended June 30
2009 2008 2009 2008
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Revenues 26,225 20,668 52,040 37,502
Cost of sales 7,353 5,452 13,723 9,396
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Gross profit 18,872 15,216 38,317 28,106
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Expenses (income)
Selling and marketing 6,884 5,569 12,396 11,102
General and
administrative 2,413 1,924 4,331 3,366
Research and
development 1,258 1,079 2,521 2,122
Interest income, net (93) (384) (292) (903)
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Earnings before
under-noted items 8,410 7,028 19,361 12,419
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Amortization of
pharmaceutical
product licenses,
rights and
deferred charges 5,972 3,123 12,064 6,060
Unrealized gain on
derivative
financial
instruments - (66) (358) (64)
Net gain on
investments (485) - (134) -
Foreign exchange
(gain) loss (18) 31 4 3
Other income (110) (127) (110) (130)
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Income before income
taxes 3,051 4,067 7,895 6,550
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Provision for income
taxes
Current (2,228) 1,444 (2,034) 2,293
Future 3,508 35 5,106 192
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1,280 1,479 3,072 2,485
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Net income before
extraordinary gain 1,771 2,588 4,823 4,065
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Extraordinary gain
(net of $nil taxes) 25,959 - 25,959 -
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Net income for the
period 27,730 2,588 30,782 4,065
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Earnings per share
before extraordinary
gain
Basic 0.11 0.17 0.31 0.27
Diluted 0.11 0.17 0.30 0.27
Earnings per share
Basic 1.77 0.17 1.96 0.27
Diluted 1.71 0.17 1.89 0.27
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Weighted average
number of shares
outstanding
Basic 15,706,245 14,829,218 15,320,105 14,829,889
Diluted 16,251,887 15,066,153 15,741,757 15,075,385
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of Canadian dollars)
(unaudited)
Three-month period Six-month period
ended June 30 ended June 30
2009 2008 2009 2008
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Operating activities
Net income 27,730 2,588 30,782 4,065
Add items not
affecting cash
Extraordinary gain (25,959) - (25,959) -
Amortization 6,038 3,147 12,187 6,106
Future income
taxes 3,508 35 5,106 192
Stock based
compensation
expense 687 466 1,089 709
Unrealized gain
on derivative
instruments - (66) (359) (64)
Net gain on
investments (485) - (134) -
Net accreted
interest 24 (20) (1) (38)
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11,543 6,150 22,711 10,970
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Net change in non-cash
balances relating to
operations (263) (2,108) (3,165) 446
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Cash flows from
operating activities 11,280 4,042 19,546 11,416
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Investing activities
Additions to
pharmaceutical product
licenses and rights,
and deferred charges (5,476) - (5,476) (8,867)
Investments in
portfolio company (130) (1,000) (130) (1,000)
Acquisition of
property, plant and
equipment (80) (55) (109) (310)
Purchases of short-
term marketable
securities (32,988) (13,363) (43,350) (25,128)
Maturities of short-
term marketable
securities 2,333 11,649 11,298 26,171
Purchases of long-
term marketable
securities (9,235) - (11,204) -
Proceeds from the
disposal of
investments 4,244 - 6,979 -
Business acquisition (7,594) - (7,594) -
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Cash flows used in
investing activities (48,926) (2,769) (49,586) (9,134)
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Financing activities
Net proceeds on
issuance of common
shares 56,561 304 56,749 774
Repurchase of shares - - - (1,806)
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Cash flows from
(used in) financing
activities 56,561 304 56,749 (1,032)
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Net change in cash
and cash equivalents
during the period 18,915 1,577 26,709 1,250
Cash and cash
equivalents,
beginning of period 12,439 5,747 4,645 6,074
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Cash and cash
equivalents, end of
period 31,354 7,324 31,354 7,324
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Cash and cash
equivalents 31,354 7,324
Short-term marketable
securities 48,722 29,222
Long-term marketable
securities 11,203 -
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91,279 36,546
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Contacts:
Paladin Labs Inc.
Samira Sakhia, Chief Financial Officer
514-669-5367
514-344-4675 (FAX)
info@paladinlabs.com
www.paladinlabs.com
