VANCOUVER, Oct. 26 /PRNewswire-FirstCall/ - QLT Inc. (NASDAQ: QLTI - News; TSX: QLT - News) today reported financial results for the third quarter ended September 30, 2006 and reiterated its strategic plan to focus the Company on its ocular business and to reduce expenses. Unless specified otherwise, all amounts are in U.S. dollars and in accordance with U.S. GAAP.
2006 Q3 Results
Sales
Visudyne® worldwide sales for the third quarter were $75.1 million, a decrease of 39.3% over the third quarter of 2005. Visudyne sales in the U.S. for the quarter were $11.0 million, down 78.5% over the same period last year. Visudyne sales in the rest of the world were $64.2 million, a decrease of 11.8% over the same period last year.
Eligard® worldwide sales for the third quarter were $34.0 million, up 60.6% from the third quarter of 2005. Eligard sales in the U.S. for the quarter were $17.2 million, up 43.6% over the same period last year. Eligard sales in the rest of the world were $16.8 million, an increase of 83.0% over last year.
Earnings Per Share (EPS) / Loss Per Share
QLT reported a loss per share of $0.04 in the third quarter, compared to earnings per share of $0.14 a year ago. The decline was primarily due to a write-down to reduce assets to be divested to fair market value, the reduction in Visudyne sales, and higher legal expenses in connection with QLT USA’s ongoing patent litigation in the U.S.
Non-GAAP EPS, which excludes the write-down on assets to be divested, stock option expense, restructuring charge/recovery, and an income tax refund received in the quarter, was $0.06. Exhibit 1 provides the detailed reconciliation between GAAP and non-GAAP EPS.
QLT Revenues
The Company’s revenues were $38.2 million in the third quarter, down 37.4% from revenues in the same period last year.
Revenue from Visudyne was $25.8 million in the third quarter, down 48.4% from the third quarter last year. QLT’s share of profit from Visudyne sales was 24.8% in the third quarter, down from 33.7% in the same period last year, and year-to-date our share of profits is now at 28.8%. The decline in profitability occurred as the reductions in spending by the partnership have not yet caught up to the decline in sales.
Research and Development (R&D) Expense
R&D expense in the third quarter was $13.6 million, down $2.1 million from R&D expense in the third quarter last year.
Selling, General and Administrative (SG&A) Expense
For the third quarter of 2006, SG&A expense was $10.0 million, up $2.0 million from prior year third quarter expense. SG&A expense includes $4.6 million in legal and related expenses associated with the ongoing TAP litigation.
Cash and Short-term Investments
The Company’s cash and short-term investments decreased from $450 million to $355 million during the third quarter of 2006. In the third quarter, we repurchased 13 million shares of QLT stock at a total cost of $104 million under the Company’s Dutch tender offer. Cumulative share repurchases since May 2005 are 19.3 million shares at a total cost of $155.1 million.
2006 Revised Guidance
Based on recent events and current trends in Visudyne sales, QLT previously revised its Visudyne sales range from $370 million to $385 million to a new expected range of $340 million to $355 million. QLT is increasing its annual sales guidance for Eligard from its original projection of $100 million to $115 million to a new expected range of $110 million to $120 million. GAAP EPS guidance is now projected to range from $0.00 to $0.08. Non-GAAP EPS, which excludes all charges related to the sale of assets to be divested, restructuring charges, stock option expense, portions of other income, and an income tax refund, is now projected to be in the range of $0.25 to $0.33.
The Company also announced today that in an effort to respond to the decline in top line sales for Visudyne it is reducing its overall cost basis going forward through headcount and other expense reductions. R&D expenses for 2007, excluding up-front licensing fees, are expected to be between $45 million and $50 million. The cost control efforts include a reduction in headcount of approximately 80 people. QLT will provide its employees affected by the workforce reduction with severance and human resource support to assist with outplacement. We expect there will be an associated restructuring charge of approximately $5 million.
About QLT
QLT Inc. is a global biopharmaceutical company specializing in developing treatments for eye diseases as well as dermatological and urological conditions. Together with our subsidiaries, we have combined our expertise in the discovery, development and commercialization of innovative drug therapies with our two unique technology platforms, photodynamic therapy and Atrigel®, to create products such as Visudyne® and Eligard®. For more information, visit our web site at www.qltinc.com.
