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8-K - FORM 8-K - NOVELION THERAPEUTICS INC. | c13401e8vk.htm |
Exhibit 99.1
news release
QLT ANNOUNCES FOURTH QUARTER AND YEAR END 2010 RESULTS
Provides Guidance for 2011 and Pipeline Update
For Immediate Release | March 1, 2011 |
VANCOUVER, CANADAQLT Inc. (NASDAQ: QLTI; TSX: QLT) (QLT or the Company) today reported
financial results for the fourth quarter ended December 31, 2010 and full year 2010 as well as
issued its guidance for 2011. Unless specified otherwise, all amounts are in U.S. dollars and in
accordance with U.S. GAAP.
We were very pleased in the fourth quarter to have reported positive adjusted EBITDA even while we
ramped up R&D activity related to our synthetic retinoid program and our punctal plug drug delivery
system, said Bob Butchofsky, President and Chief Executive Officer of QLT. We were also pleased
to see the improvement in worldwide Visudyne® sales in the fourth quarter, particularly
in the U.S. where end user demand increased 13% from an average of 65 vials per day in the third
quarter to 73 vials per day in the fourth quarter, marking the first sequential increase since
2008.
2010 FINANCIAL RESULTS
Worldwide Visudyne® Product Sales
Visudyne sales for the fourth quarter of 2010 were $24.5 million, a decrease of 3.7% from the
fourth quarter of 2009. Sales in the U.S. were $5.9 million, down 19.1% from the prior-year fourth
quarter, while sales outside the U.S. were $18.6 million, up 2.6% from the prior year. For the full
year 2010, worldwide Visudyne sales were $90.6 million, 14.2% lower than in 2009, as U.S. sales
declined 26.7% and non-U.S. sales declined 9.1%.
QLT Revenues
For the fourth quarter, total revenue of $10.0 million was down 7.3% from the fourth quarter of
2009. This decrease exceeded the percentage decline in Visudyne product sales primarily because the
fourth quarter of 2009 included $1.3 million for recognition of revenue related to Novartis
write-off of finished product in that period. For the full year 2010, total revenue of $44.7
million was up 6.2% over 2009, in part because under the amended Visudyne agreement with Novartis,
QLT books higher revenue per dollar of product sales than under the previous arrangement.
Additionally, following the amendment of our Visudyne PDT Product Development, Manufacturing and
Distribution Agreement (Amended PDT Agreement) with Novartis, revenue in 2010 benefited from the
recognition of approximately $5.0 million of deferred revenue in the first quarter for inventory
shipped to, and paid for by, Novartis in prior years.
QLT Expenses / Other Income
For the fourth quarter, Cost of Sales was $3.4 million, down from $7.5 million in the prior year,
primarily due to obsolescence charges taken by QLT and Novartis in the fourth quarter of 2009
totaling approximately $4.8 million. For the full year 2010, Cost of Sales expense was $15.2
million, compared to
Page 1 of 11
$20.2 million in 2009. The decrease was primarily due to inventory obsolescence charges in 2009 of
approximately $9.5 million, partially offset by $4.0 million of expense in 2010 associated with the
recognition of deferred revenue described above.
For the fourth quarter of 2010, Research and Development (R&D) expense was $10.7 million, up 32.1%
from $8.1 million in the same period of 2009. The increase occurred primarily because higher
spending on QLT091001 and punctal plugs was only partially offset by reduced spending on Visudyne.
For the full year, expenditures for R&D were $33.5 million in 2010, up 17.1% from $28.6 million in
2009, as increased spending on QLT091001 and QLT091568 (before that program was stopped in the
fourth quarter) was partially offset by reduced spending on Visudyne and punctal plugs.
For the fourth quarter of 2010, Selling, General and Administrative (SG&A) expense was $5.6
million, down from $5.9 million in 2009. The decrease occurred despite increased year-over-year
spending related to U.S. Visudyne sales and marketing, as the 2009 fourth quarter included
significant legal and other expenses related to the settlement with the General Hospital
Corporation, doing business as Massachusetts General Hospital (MGH), the Amended PDT Agreement
with Novartis, and the divestment of QLT USA, Inc. (QLT USA), all of which occurred in that
quarter. For the full year, SG&A expenditures of $20.8 million were up from the $18.3 million
reported in 2009 primarily due to infrastructure and promotional spending associated with U.S.
Visudyne sales and a negative foreign exchange impact caused by the stronger Canadian dollar in
2010 compared to 2009.
Investment and Other Income of $7.1 million in the fourth quarter of 2010 included a $6.3 million
gain for the Fair Value Change in Contingent Consideration. This gain occurred primarily because
the Contingent Consideration asset is recorded as the present value of expected future payments,
and therefore as each quarter elapses, even if no changes are made to the underlying Eligard®
forecast, we will book a gain related to the time value of money as we move one quarter
closer to realizing the full face value of the asset. Also in the fourth quarter, there was
additional gain in the Fair Value Change in Contingent Consideration due to a reduction in the
discount rate used to estimate the present value of the expected future payments and an improvement
in the underlying Eligard sales forecast. For the full year 2010, Investment and Other Income
totaled $19.4 million, including $16.5 million in gains related to the Fair Value Change in
Contingent Consideration.
Operating Loss
The operating loss for the fourth quarter was $9.9 million, compared to a loss of $38.4 million in
the prior-year fourth quarter, while the full year operating loss for 2010 was $26.0 million,
compared to an operating loss in 2009 of $54.3 million. In both cases, the 2009 operating loss was
negatively impacted by the $20.0 million Litigation charge related to the MGH settlement, the $7.5
million charge for the Purchase of In-Process Research and Development related to the acquisition
of QLT091568, and charges for Visudyne inventory obsolescence within Cost of Sales.
Provision for Income Taxes
The provision for income taxes in the fourth quarter of 2010 was $16.4 million, compared to a
recovery of $5.8 million in the prior-year fourth quarter. For the full year, we reported a
provision of $10.9 million compared to a $5.3 million recovery in 2009. The provision reported in
2010 was primarily due to the application of a valuation allowance on certain of our deferred
income tax assets, which negatively impacted the provision in the fourth quarter and for the full
year. In the fourth quarter of 2010, the Company completed an intra-entity transaction in which the
punctal plug intellectual property was transferred from the U.S. to Canada, with the result that
ongoing R&D expense for the punctal plug program is now recorded by the Canadian parent company. A
valuation allowance must be provided when it is more-likely-than-not that a deferred tax asset will
not be realized. In determining the necessity for a valuation allowance, we considered the
likelihood that ongoing expenditures will result in our Canadian entity incurring annual operating
losses in the future. For the full year 2010, the provision of $10.9 million was partially offset
by a non-cash income tax recovery in the first quarter related to the Amended
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PDT Agreement. This income tax recovery as well as the application of the valuation allowance were
both removed in the determination of non-GAAP earnings as they were non-cash items.
Earnings Per Share (EPS) / Loss Per Share, Adjusted EBITDA
The GAAP loss per share was $0.38 in the fourth quarter compared to GAAP EPS of $1.49 in the
prior-year quarter. The decline occurred primarily because the 2009 fourth quarter results included
$116.7 million of Income from Discontinued Operations, representing the accounting gain on the sale
of QLT USA on October 1, 2009, while the current year fourth quarter had no Income from
Discontinued Operations. For the full year, GAAP loss per share of $0.33 in 2010 was down from
$1.77 of earnings per share in 2009, as the 2009 earnings were driven by the gain on the sale of
QLT USA.
In the fourth quarter, non-GAAP EPS was $0.06. The items that were excluded in the determination of
non-GAAP EPS were: (i) stock compensation expense, (ii) the Fair Value Change in Contingent
Consideration, (iii) Other Income related to a tax grant received under the U.S. Therapeutic
Discovery Project Program, and (iv) the non-cash tax provision related to the valuation allowance
recorded against certain tax assets. We also added back (within Income from Discontinued
Operations) $11.2 million of Contingent Consideration earned based on Eligard sales during the
fourth quarter. For the full year 2010, non-GAAP EPS was $0.35. In addition to the adjustments
previously listed, the full-year non-GAAP EPS figure also excluded: (i) interest income related to
the Note Receivable from the QLT USA divestment, (ii) other income recorded in the second quarter
related to the divestment of non-core assets, and (iii) the income tax recovery recorded in the
first quarter that arose from the Amended PDT Agreement with Novartis.
Adjusted EBITDA plus Contingent Consideration earned was $2.1 million for the fourth quarter and
$15.6 million for the full year 2010, as follows:
Three months ended | Year ended | |||||||
December 31, | December 31, | |||||||
(In millions of United States dollars) | 2010 | 2010 | ||||||
GAAP operating loss |
$ | (9.9 | ) | $ | (26.0 | ) | ||
+ Stock based compensation |
0.6 | 2.5 | ||||||
+ Depreciation |
0.3 | 1.2 | ||||||
+ Contingent Consideration |
11.2 | 37.9 | ||||||
Adjusted EBITDA plus Contingent Consideration |
$ | 2.1 | $ | 15.6 | ||||
The full reconciliations of GAAP to non-GAAP financial measures for the fourth quarter and year
ended December 31, 2010 are provided as Exhibits 1 and 2. The adjusted non-GAAP financial measures
have no standardized meaning under GAAP and therefore may not be comparable to similar measures
presented by other companies. We believe that the adjusted non-GAAP financial measures may be
useful to investors to analyze the results of our business. We use these non-GAAP measures
internally to evaluate our financial results and to establish operational goals. Certain items are
excluded from non-GAAP financial measures because we consider such items to be outside of our core
operating results or because they represent non-cash expenses or gains.
Cash and Short-Term Investments
The Companys consolidated cash balance at December 31, 2010 was $209.5 million, up from the
consolidated balance at the end of 2009 of $188.1 million. The year-over-year increase primarily
occurred due to positive Adjusted EBITDA plus Contingent Consideration, collection of the $10.0
million Note Receivable from TOLMAR Holding, Inc. related to the sale of QLT USA and its Eligard
product line in the fourth quarter of 2009, collection of income taxes receivable, and collection
of a portion of our Mortgage Receivable. These increases were partially offset by $17.1 million
used by the Company to repurchase shares during the year under its share repurchase programs.
Page 3 of 11
Share Repurchase Program Update
During the fourth quarter, the Company announced that its board of directors authorized the
repurchase of up to approximately 3.6 million of its issued and outstanding common shares, being
10% of its public float, over a 12-month period on the NASDAQ Stock Market and/or the Toronto Stock
Exchange (TSX). The TSX accepted the notice of QLTs intention to make a normal course issuer bid
in the open market commencing December 16, 2010 and ending December 15, 2011. During the fourth
quarter of 2010, the Company repurchased 22,000 shares for approximately $0.2 million, at an
average price of $6.78 per share. Throughout 2010, including the prior normal course issuer bid
program that expired on November 2, 2010, the Company repurchased approximately 2.9 million shares
at an average price of $5.90 per share, for a total cost of $17.1 million. Since the Company began
repurchasing shares in 2005, it has repurchased 43.8 million shares for a total cost of $232.0
million.
2011 GUIDANCE
The scope of the Companys R&D efforts in 2011 will depend, in large part, on data that it expects
to generate in the second and third quarter of 2011 from certain studies of its proprietary punctal
plug technology and QLT091001 synthetic retinoid programs. These near-term data points may result
in a highly variable level of R&D spend and, as such, the Company is not issuing full year guidance
at this time for 2011 R&D expense or Adjusted EBITDA. However, we do expect that R&D spend will be
in the range of $10 million to $12 million in each of the first and second quarters of 2011, in
line with R&D expense in the fourth quarter of 2010.
| QLT is projecting that Visudyne sales will range from $85 million to $90 million in 2011,
with approximately $23 million to $26 million occurring in the United States. |
| Product revenue for product shipped to Novartis is expected to be approximately $2 million
to $4 million for the year. |
| Total revenue is projected to be approximately $40 million to $44 million. |
| Cost of Sales is expected to be approximately $8 million to $10 million. |
| SG&A expense is expected to be $24 million to $27 million. |
| The provision for income tax for 2011 is projected to be $2 million to $4 million, although
we do not expect to have any material net cash tax payments. |
| Payments to be earned during the year for the sale of QLT USA, representing 80% of the
royalties earned by QLT USA (now Tolmar Therapeutics, Inc.) on Eligard sales occurring in
2011, are projected to be approximately $36 million to $39 million. |
| Each period we will assess the fair value of the contingent consideration and any changes
will flow through the Statements of Operations within Other Income and Expense. |
Pipeline Update
QLT is conducting a masked, randomized, active-controlled Phase II clinical trial examining the
safety and efficacy of the latanoprost punctal plug drug delivery system (L-PPDS) in glaucoma
patients. This trial features simultaneous placement of punctal plugs in both the upper and lower
puncta in order to deliver an approximate bioavailable daily drug load approaching that of daily
administered Xalatan® eye drops. The objective of the study is to enable a go/no-go
decision with respect to ongoing development of this molecule in our punctal plug drug delivery
system. While a positive outcome of this study could suggest a degree of L-PPDS safety and
efficacy, it is not expected to support movement into a later stage trial without further clinical
evaluation. The trial is ongoing; however, progression of enrollment to date has been slower than
anticipated. Analysis and results from the trial are now expected in the second or third quarter of
2011.
The Company recently announced the results of its masked, randomized, active-controlled Phase II
proof-of-principle study examining the safety and efficacy of the olopatadine punctal plug drug
delivery system (O-PPDS) in patients suffering from allergic conjunctivitis. Data from the study
demonstrated that there were no significant differences noted between the O-PPDS and placebo-PPDS
subjects with respect to reduction in the signs and symptoms of allergic conjunctivitis, with both
cohorts showing similar
Page 4 of 11
improvements. Internal study controls of the olopatadine (Patanol®) versus placebo eye
drop comparison also failed to show a difference. The O-PPDS was generally safe and well-tolerated.
The incidence of adverse events considered associated with treatment was 35.0% during O-PPDS
exposure (originally reported as 33.3%) and 41.7% during placebo-PPDS exposure (originally reported
as 38.3%). We plan to continue to evaluate study designs for the O-PPDS, however, further clinical
trials of the O-PPDS are pending the outcome of the ongoing L-PPDS study described above.
The Company continues its Phase 1b clinical proof-of-concept study of QLT091001, an orally
administered synthetic retinoid replacement therapy for 11-cis-retinal, which is a key biochemical
component of the visual retinoid cycle, in patients with Leber Congenital Amaurosis (LCA) and
Retinitis Pigmentosa (RP). The study is ongoing and continues to enroll patients. Results from
patients in the LCA cohort are expected in the second quarter of 2011.
Passive Foreign Investment Company
The Company believes that it qualified as a Passive Foreign Investment Company (PFIC) for 2010,
which could have adverse tax consequences for U.S. shareholders. Please refer to our Annual Report
on Form 10-K for additional information.
RECENT CORPORATE ANNOUNCEMENTS
| Announced that the Companys wholly-owned U.S. subsidiary, QLT Ophthalmics, Inc., and
Quantel Medical and its distributor, Quantel USA, Inc., entered into a co-promotion agreement
for the sale of Activis PDT Lasers used to activate Visudyne® during photodynamic
therapy of primarily classic lesions in wet age-related macular degeneration. |
| Announced that QLT091001, the Companys oral synthetic retinoid, was granted two distinct
orphan drug designations by the U.S. Food and Drug Administration for both the treatment of
Retinitis Pigmentosa (RP) and the treatment of Leber Congenital Amaurosis (LCA) due to
inherited mutations in LRAT and RPE65. |
| Announced the results of its Phase II proof-of-concept clinical trial for the olopatadine
punctal plug delivery system (O-PPDS) in patients suffering from allergic conjunctivitis. |
| Announced that QLT091001 received positive opinions for two distinct orphan drug
designations for the treatment of LCA and RP from the European Medicines Agency Committee for
Orphan Medicinal Products. |
| Announced the departure of Dipak Panigrahi, MD, Senior Vice President, R&D and Chief
Medical Officer. |
Page 5 of 11
QLT Inc.Financial Highlights
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In accordance with United States generally accepted accounting principles)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In accordance with United States generally accepted accounting principles)
Three months ended | Year ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
(In thousands of United States dollars, except per share information) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
(Unaudited) | ||||||||||||||||
Revenues |
||||||||||||||||
Net product revenue |
$ | 6,307 | $ | 10,810 | $ | 31,093 | $ | 42,106 | ||||||||
Royalties |
3,713 | | 13,604 | | ||||||||||||
10,020 | 10,810 | 44,697 | 42,106 | |||||||||||||
Costs and expenses |
||||||||||||||||
Cost of sales |
3,391 | 7,505 | 15,204 | 20,198 | ||||||||||||
Research and development |
10,709 | 8,105 | 33,485 | 28,590 | ||||||||||||
Selling, general and administrative |
5,570 | 5,853 | 20,808 | 18,337 | ||||||||||||
Depreciation |
280 | 341 | 1,202 | 1,403 | ||||||||||||
Litigation |
| 20,012 | | 20,662 | ||||||||||||
Purchase of in-process research and development |
| 7,517 | | 7,517 | ||||||||||||
Restructuring (recovery) |
| (119 | ) | | (263 | ) | ||||||||||
19,950 | 49,214 | 70,699 | 96,444 | |||||||||||||
Operating loss |
(9,930 | ) | (38,404 | ) | (26,002 | ) | (54,338 | ) | ||||||||
Investment and other income (expense) |
||||||||||||||||
Net foreign exchange gains (losses) |
285 | (7,289 | ) | 363 | 7,003 | |||||||||||
Interest income |
234 | 521 | 1,834 | 4,339 | ||||||||||||
Interest expense |
| | | (1,848 | ) | |||||||||||
Fair value change in contingent consideration |
6,325 | 3,279 | 16,493 | 3,279 | ||||||||||||
Other gains |
284 | 12 | 674 | 28 | ||||||||||||
7,128 | (3,477 | ) | 19,364 | 12,801 | ||||||||||||
Loss from continuing operations before income taxes |
(2,802 | ) | (41,881 | ) | (6,638 | ) | (41,537 | ) | ||||||||
(Provision for) recovery of income taxes |
(16,428 | ) | 5,790 | (10,901 | ) | 5,317 | ||||||||||
Loss from continuing operations |
(19,230 | ) | (36,091 | ) | (17,539 | ) | (36,220 | ) | ||||||||
Income from discontinued operations, net of income taxes |
| 116,673 | | 135,654 | ||||||||||||
Net (loss) income |
$ | (19,230 | ) | $ | 80,582 | $ | (17,539 | ) | $ | 99,434 | ||||||
Basic and diluted net (loss) income per common share |
||||||||||||||||
Continuing operations |
$ | (0.38 | ) | $ | (0.67 | ) | $ | (0.33 | ) | $ | (0.64 | ) | ||||
Discontinued operations |
| 2.15 | | 2.41 | ||||||||||||
Net (loss) income |
$ | (0.38 | ) | $ | 1.49 | $ | (0.33 | ) | $ | 1.77 | ||||||
Weighted average number of common shares outstanding (in thousands) |
||||||||||||||||
Basic |
51,148 | 54,243 | 52,382 | 56,194 | ||||||||||||
Diluted |
51,148 | 54,243 | 52,382 | 56,194 | ||||||||||||
Page 6 of 11
QLT Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In accordance with United States generally accepted accounting principles)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In accordance with United States generally accepted accounting principles)
December 31, | December 31, | |||||||
(In thousands of United States dollars) | 2010 | 2009 | ||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 209,478 | $ | 188,114 | ||||
Accounts receivable |
10,659 | 9,465 | ||||||
Note receivable |
| 9,259 | ||||||
Current portion of contingent consideration |
36,520 | 33,587 | ||||||
Income taxes receivable |
61 | 4,879 | ||||||
Inventories |
3,324 | 2,874 | ||||||
Current portion of deferred income tax assets |
3,643 | 5,608 | ||||||
Current portion of mortgage receivable |
2,004 | 11,466 | ||||||
Other |
2,958 | 6,052 | ||||||
268,647 | 271,304 | |||||||
Property, plant and equipment |
3,035 | 2,597 | ||||||
Deferred income tax assets |
2,700 | 13,320 | ||||||
Mortgage receivable |
6,013 | | ||||||
Long-term inventories and other assets |
13,319 | 14,925 | ||||||
Contingent consideration |
94,069 | 117,491 | ||||||
$ | 387,783 | $ | 419,637 | |||||
LIABILITIES |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | 6,031 | $ | 3,876 | ||||
Income taxes payable |
716 | | ||||||
Accrued liabilities |
6,323 | 5,574 | ||||||
Deferred income tax liability |
82 | | ||||||
Deferred revenue |
| 4,244 | ||||||
13,152 | 13,694 | |||||||
Uncertain tax position liabilities |
1,687 | 1,489 | ||||||
14,839 | 15,183 | |||||||
SHAREHOLDERS EQUITY |
||||||||
Common shares |
479,998 | 506,023 | ||||||
Additional paid-in capital |
287,646 | 275,592 | ||||||
Accumulated deficit |
(497,669 | ) | (480,130 | ) | ||||
Accumulated other comprehensive income |
102,969 | 102,969 | ||||||
372,944 | 404,454 | |||||||
$ | 387,783 | $ | 419,637 | |||||
As at December 31, 2010, there were 51,154,392 issued and outstanding common shares and 6,100,101
outstanding stock options.
Page 7 of 11
QLT Inc.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Reconciliation of GAAP Earnings to Adjusted Non-GAAP Earnings for the Three Months Ended
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Reconciliation of GAAP Earnings to Adjusted Non-GAAP Earnings for the Three Months Ended
December 31, 2010 | Exhibit 1 |
Three months ended | Three months ended | |||||||||||
December 31, 2010 | December 31, 2010 | |||||||||||
(In millions of United States dollars, except per share information) | GAAP | Adjustments | Non-GAAP(1) | |||||||||
(Unaudited) | ||||||||||||
Revenues |
||||||||||||
Net product revenue |
$ | 6.3 | $ | | $ | 6.3 | ||||||
Royalties |
3.7 | | 3.7 | |||||||||
10.0 | | 10.0 | ||||||||||
Cost and expenses |
||||||||||||
Cost of sales |
(3.4 | ) | 0.0 | (a) | (3.4 | ) | ||||||
Research and development |
(10.7 | ) | 0.4 | (a) | (10.4 | ) | ||||||
Selling, general and administrative |
(5.6 | ) | 0.3 | (a) | (5.3 | ) | ||||||
Depreciation |
(0.3 | ) | | (0.3 | ) | |||||||
(20.0 | ) | 0.6 | (19.3 | ) | ||||||||
Operating loss |
(9.9 | ) | 0.6 | (9.3 | ) | |||||||
Investment and other income (expense) |
||||||||||||
Net foreign exchange gains |
0.3 | | 0.3 | |||||||||
Interest income |
0.2 | | 0.2 | |||||||||
Fair value change in contingent consideration |
6.3 | (6.3) | (b) | | ||||||||
Other |
0.3 | (0.2) | (c) | 0.0 | ||||||||
7.1 | (6.6 | ) | 0.6 | |||||||||
Loss from continuing operations before income taxes |
(2.8 | ) | (5.9 | ) | (8.7 | ) | ||||||
(Provision for) recovery of income taxes |
(16.4 | ) | 17.2 | (d) | 0.8 | |||||||
Loss from continuing operations |
(19.2 | ) | 11.3 | (7.9 | ) | |||||||
Income from discontinued operations, net of income taxes |
| 11.2 | (e) | 11.2 | ||||||||
Net (loss) income |
$ | (19.2 | ) | $ | 22.5 | $ | 3.2 | |||||
Basic and diluted net (loss) income per common share: |
||||||||||||
Continuing operations |
$ | (0.38 | ) | $ | (0.16 | ) | ||||||
Discontinued operations |
| 0.22 | ||||||||||
Net (loss) income |
$ | (0.38 | ) | $ | 0.06 | |||||||
Weighted average number of common shares outstanding (in millions): |
||||||||||||
Basic |
51.1 | 51.1 | ||||||||||
Diluted |
51.1 | 51.1 |
Adjustments:
(a) | Remove stock-based compensation. |
|
(b) | Remove fair value change in contingent consideration. |
|
(c) | Remove income related to a U.S. tax grant. |
|
(d) | Remove net increase in valuation allowance due to an intra-entity transfer of intellectual property and remove income tax impact of the
above adjustments. |
|
(e) | Add back contingent consideration earned based on fourth quarter Eligard royalties. |
|
(1) | The adjusted non-GAAP financial measures have no standardized meaning under GAAP and are not comparable between companies. Management believes that the
adjusted non-GAAP financial measures are useful for the purpose of financial analysis. Management uses these measures internally to evaluate the Companys
operating performance before items that are considered by management to be outside of the Companys core operating results. |
Page 8 of 11
QLT Inc.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Reconciliation of GAAP Earnings to Adjusted Non-GAAP Earnings for the Year Ended
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Reconciliation of GAAP Earnings to Adjusted Non-GAAP Earnings for the Year Ended
December 31, 2010 | Exhibit 2 |
Year ended | Year ended | |||||||||||
December 31, 2010 | December 31, 2010 | |||||||||||
(In millions of United States dollars, except per share information) | GAAP | Adjustments | Non-GAAP(1) | |||||||||
(Unaudited) |
||||||||||||
Revenues |
||||||||||||
Net product revenue |
$ | 31.1 | $ | | $ | 31.1 | ||||||
Royalties |
13.6 | | 13.6 | |||||||||
44.7 | | 44.7 | ||||||||||
Cost and expenses |
||||||||||||
Cost of sales |
(15.2 | ) | 0.2 | (a) | (15.0 | ) | ||||||
Research and development |
(33.5 | ) | 1.3 | (a) | (32.2 | ) | ||||||
Selling, general and administrative |
(20.8 | ) | 1.0 | (a) | (19.8 | ) | ||||||
Depreciation |
(1.2 | ) | | (1.2 | ) | |||||||
(70.7 | ) | 2.5 | (68.2 | ) | ||||||||
Operating loss |
(26.0 | ) | 2.5 | (23.5 | ) | |||||||
Investment and other income (expense) |
||||||||||||
Net foreign exchange gains |
0.4 | | 0.4 | |||||||||
Interest income |
1.8 | (0.7) | (b) | 1.1 | ||||||||
Fair value change in contingent consideration |
16.5 | (16.5) | (c) | | ||||||||
Other |
0.7 | (0.6) | (d) | 0.1 | ||||||||
19.4 | (17.8 | ) | 1.6 | |||||||||
Loss from continuing operations before income taxes |
(6.6 | ) | (15.3 | ) | (21.9 | ) | ||||||
(Provision for) recovery of income taxes |
(10.9 | ) | 13.3 | (e) | 2.4 | |||||||
Loss from continuing operations |
(17.5 | ) | (2.0 | ) | (19.6 | ) | ||||||
Income from discontinued operations, net of income taxes |
| 37.9 | (f) | 37.9 | ||||||||
Net (loss) income |
$ | (17.5 | ) | $ | 35.8 | $ | 18.3 | |||||
Basic and diluted net income per common share: |
||||||||||||
Continuing operations |
$ | (0.33 | ) | $ | (0.37 | ) | ||||||
Discontinued operations |
| 0.72 | ||||||||||
Net (loss) income |
$ | (0.33 | ) | $ | 0.35 | |||||||
Weighted average number of common shares outstanding (in millions): |
||||||||||||
Basic |
52.4 | 52.4 | ||||||||||
Diluted |
52.4 | 52.4 |
Adjustments:
(a) | Remove stock-based compensation. |
|
(b) | Remove interest income related to note receivable. |
|
(c) | Remove fair value change in contingent consideration. |
|
(d) | Remove gain on license and sale of certain dermatology assets and remove income related to a U.S. tax grant. |
|
(e) | Remove net increase in valuation allowance due to an intra-entity transfer of intellectual property and remove income tax impact of the other above adjustments. |
|
(f) | Add back contingent consideration earned based on annual Eligard royalties. |
|
(1) | The adjusted non-GAAP financial measures have no standardized meaning under GAAP and are not comparable between companies. Management believes that the adjusted non-GAAP financial
measures are useful for the purpose of financial analysis. Management uses these measures internally to evaluate the Companys operating performance before items that are considered
by management to be outside of the Companys core operating results. |
Page 9 of 11
Conference Call Information
QLT Inc. will hold an investor conference call to discuss 2010 results on Tuesday, March 1, 2011 at
8:30 a.m. ET (5:30 a.m. PT). The call will be broadcast live via the Internet at
www.qltinc.com. To participate on the call, please dial 1-800-319-4610 (North America) or
604-638-5340 (International) before 8:30 a.m. ET. A replay of the call will be available via the
Internet and also via telephone at 1-800-319-6413 (North America) or 604-638-9010 (International),
access code 7157, followed by the # sign.
About QLT
QLT Inc. is a biotechnology company dedicated to the development and commercialization of
innovative therapies for the eye. We are focused on our commercial product Visudyneâ
for the treatment of wet-AMD, developing drugs to be delivered in our proprietary punctal
plug delivery system, as well as developing our synthetic retinoid program for the treatment of
certain inherited retinal diseases. For more information, visit our website at www.qltinc.com.
- 30 -
QLT Inc. Media Contact:
Vancouver, Canada
Karen Peterson
Telephone: 604-707-7000 or 1-800-663-5486
kpeterson@qltinc.com
Vancouver, Canada
Karen Peterson
Telephone: 604-707-7000 or 1-800-663-5486
kpeterson@qltinc.com
The Trout Group Investor Relations Contact:
Boston, Massachusetts, USA
Tricia Swanson
Telephone: 646-378-2953
tswanson@troutgroup.com
or
New York, USA
Christine Yang
Telephone: 646-378-2929
mnanus@troutgroup.com
Boston, Massachusetts, USA
Tricia Swanson
Telephone: 646-378-2953
tswanson@troutgroup.com
or
New York, USA
Christine Yang
Telephone: 646-378-2929
mnanus@troutgroup.com
Visudyne® is a registered trademark of Novartis AG.
Eligard® is a registered trademark of Sanofi-aventis Corp.
Xalatan® is a registered trademark of Pfizer Health AB.
Patanol® is a registered trademark of Alcon Research, Ltd.
Eligard® is a registered trademark of Sanofi-aventis Corp.
Xalatan® is a registered trademark of Pfizer Health AB.
Patanol® is a registered trademark of Alcon Research, Ltd.
QLT Inc. is listed on The NASDAQ Stock Market under the trading symbol QLTI and on The Toronto
Stock Exchange under the trading symbol QLT.
A full explanation of how QLT determines and recognizes revenue resulting from Visudyne sales is
contained in the financial statements contained in the periodic reports on Forms 10-Q and 10-K,
under the heading Significant Accounting Policies Revenue Recognition. Visudyne sales are
product sales in the U.S. by our wholly-owned U.S. subsidiary, QLT Ophthalmics, Inc., and product
sales outside the U.S. by Novartis under its agreement with QLT.
Certain statements in this press release constitute forward-looking statements of QLT within the
meaning of the Private Securities Litigation Reform Act of 1995 and constitute forward-looking
information within the meaning of applicable Canadian securities laws. Forward-looking statements
include, but are not limited to: our sales and other financial guidance; anticipated Contingent
Consideration earned from the sale of Eligard; our PFIC status; statements concerning our clinical
development programs and future plans, including our QLT091001 Phase 1b trial and our Phase II
L-PPDS punctal plug clinical trial (latanoprost for glaucoma); statements concerning development of
our O-PPDS; expected progression of these clinical trials and programs and timing to receive data;
and statements which contain language such as: assuming, prospects, future, projects,
believes, expects and outlook.
Page 10 of 11
Forward-looking statements are predictions only which involve known and unknown risks,
uncertainties and other factors that may cause actual results to be materially different from those
expressed in such statements. Many such risks, uncertainties and other factors are taken into
account as part of our assumptions underlying these forward-looking statements and include, among
others, the following: the Companys future operating results are uncertain and likely to
fluctuate; currency fluctuations; the risk that sales of Visudyne or Eligard may be less than
expected (including due to competitive products and pricing); uncertainties relating to the timing
and results of the clinical development and commercialization of our products and technologies
(including, but not limited to, Visudyne, our punctal plug technology and synthetic retinoid
program); assumptions related to continued enrollment trends, efforts and success, and the
associated costs of these programs; outcomes for our clinical trials (including our punctal plug
technology and our synthetic retinoid program) may not be favorable or may be less favorable than
interim results and/or previous trials; there may be varying interpretations of data produced by
one or more of our clinical trials; the timing, expense and uncertainty associated with the
regulatory approval process for products; risks and uncertainties associated with the safety and
effectiveness of our technology; risks and uncertainties related to the scope, validity, and
enforceability of our intellectual property rights and the impact of patents and other intellectual
property of third parties; and general economic conditions and other factors described in detail in
QLTs Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other filings with the U.S.
Securities and Exchange Commission and Canadian securities regulatory authorities.
Forward-looking statements are based on the current expectations of QLT and QLT does not assume any
obligation to update such information to reflect later events or developments except as required by
law.
This press release also contains forward-looking information that constitutes financial
outlooks within the meaning of applicable Canadian securities laws. This information is provided
to give investors general guidance on managements current expectations of certain factors
affecting our business, including our financial results. Given the uncertainties, assumptions and
risk factors associated with this type of information, including those described above, investors
are cautioned that the information may not be appropriate for other purposes.
Page 11 of 11