Attached files
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EX-32.2 - EXHIBIT 32.2 - NOVELION THERAPEUTICS INC. | c16377exv32w2.htm |
EX-31.1 - EXHIBIT 31.1 - NOVELION THERAPEUTICS INC. | c16377exv31w1.htm |
EX-31.2 - EXHIBIT 31.2 - NOVELION THERAPEUTICS INC. | c16377exv31w2.htm |
EX-32.1 - EXHIBIT 32.1 - NOVELION THERAPEUTICS INC. | c16377exv32w1.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended March 31, 2011
OR
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File No. 0-17082
QLT INC.
(Exact name of registrant as specified in its charter)
British Columbia, Canada | N/A | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
101 887 Great Northern Way, Vancouver, B.C., Canada | V5T 4T5 | |
(Address of principal executive offices) | (Zip code) |
Registrants telephone number, including area code: (604) 707-7000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes o
No o
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of
large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes o No þ
As of May 3, 2011, the registrant had 50,867,275 outstanding shares of common stock.
QLT INC.
QUARTERLY REPORT ON FORM 10-Q
March 31, 2011
March 31, 2011
TABLE OF CONTENTS
ITEM | PAGE | |||||||
1 | ||||||||
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2 | ||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
12 | ||||||||
20 | ||||||||
20 | ||||||||
21 | ||||||||
21 | ||||||||
22 | ||||||||
23 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 |
Table of Contents
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
QLT Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands of U.S. dollars) | March 31, 2011 | December 31, 2010 | ||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 205,869 | $ | 209,478 | ||||
Accounts receivable |
9,606 | 10,659 | ||||||
Current portion of contingent consideration (Note 9) |
38,762 | 36,520 | ||||||
Inventories (Note 2) |
5,080 | 3,324 | ||||||
Current portion of deferred income tax assets |
3,563 | 3,704 | ||||||
Current portion of mortgage receivable (Note 3) |
1,031 | 2,004 | ||||||
Other |
2,261 | 2,958 | ||||||
266,172 | 268,647 | |||||||
Property, plant and equipment |
3,550 | 3,035 | ||||||
Deferred income tax assets |
2,399 | 2,700 | ||||||
Mortgage receivable (Note 3) |
6,183 | 6,013 | ||||||
Long-term inventories and other assets (Note 4) |
12,192 | 13,319 | ||||||
Contingent consideration (Note 9) |
82,937 | 94,069 | ||||||
$ | 373,433 | $ | 387,783 | |||||
LIABILITIES |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | 4,833 | $ | 6,031 | ||||
Income taxes payable |
| 716 | ||||||
Accrued liabilities (Note 5) |
4,372 | 6,323 | ||||||
Deferred income tax liability |
82 | 82 | ||||||
9,287 | 13,152 | |||||||
Uncertain tax position liabilities |
1,757 | 1,687 | ||||||
11,044 | 14,839 | |||||||
SHAREHOLDERS EQUITY |
||||||||
Share capital (Note 7) |
||||||||
Authorized |
||||||||
500,000,000 common shares without par value
|
||||||||
5,000,000 first preference shares without par value,
issuable
in series
|
||||||||
Issued and outstanding |
||||||||
Common shares |
475,994 | 479,998 | ||||||
March 31, 2011 50,759,775 shares |
||||||||
December 31, 2010 51,154,392 shares |
||||||||
Additional paid-in capital |
289,644 | 287,646 | ||||||
Accumulated deficit |
(506,218 | ) | (497,669 | ) | ||||
Accumulated other comprehensive income |
102,969 | 102,969 | ||||||
362,389 | 372,944 | |||||||
$ | 373,433 | $ | 387,783 | |||||
See the accompanying Notes to the Unaudited Condensed Consolidated Financial
Statements.
1
Table of Contents
QLT Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended | ||||||||
March 31, | ||||||||
(In thousands of U.S. dollars except share and per share information) | 2011 | 2010 | ||||||
Revenues |
||||||||
Net product revenue (Note 8) |
$ | 5,590 | $ | 10,470 | ||||
Royalties |
3,310 | 3,246 | ||||||
8,900 | 13,716 | |||||||
Costs and expenses |
||||||||
Cost of sales |
1,338 | 6,552 | ||||||
Research and development |
9,734 | 7,347 | ||||||
Selling, general and administrative |
7,096 | 4,851 | ||||||
Depreciation |
342 | 311 | ||||||
18,510 | 19,061 | |||||||
Operating loss |
(9,610 | ) | (5,345 | ) | ||||
Investment and other income |
||||||||
Net foreign exchange gains |
279 | 641 | ||||||
Interest income |
210 | 482 | ||||||
Fair value change in contingent consideration |
2,282 | 2,443 | ||||||
2,771 | 3,566 | |||||||
Loss before income taxes |
(6,839 | ) | (1,779 | ) | ||||
(Provision for) recovery of income taxes (Note 10) |
(1,710 | ) | 5,182 | |||||
Net (loss) income |
$ | (8,549 | ) | $ | 3,403 | |||
Basic and diluted net (loss) income per common share |
$ | (0.17 | ) | $ | 0.06 | |||
Weighted average number of common shares outstanding (thousands) |
||||||||
Basic |
51,023 | 53,717 | ||||||
Diluted |
51,023 | 54,370 |
See the accompanying Notes to the Unaudited Condensed Consolidated Financial
Statements.
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Table of Contents
QLT Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended | ||||||||
March 31, | ||||||||
(In thousands of U.S. dollars) | 2011 | 2010 | ||||||
Cash used in operating activities |
||||||||
Net (loss) income |
$ | (8,549 | ) | $ | 3,403 | |||
Adjustments to reconcile net (loss) income to net cash
used in operating activities |
||||||||
Depreciation |
342 | 311 | ||||||
Share-based compensation |
929 | 681 | ||||||
Unrealized foreign exchange gains |
(168 | ) | (705 | ) | ||||
Interest earned on note receivable |
| (244 | ) | |||||
Deferred income taxes |
602 | (8,086 | ) | |||||
Changes in non-cash operating assets and liabilities |
||||||||
Long-term deposits and other assets |
686 | 4,281 | ||||||
Accounts receivable |
1,423 | 345 | ||||||
Inventories |
(588 | ) | (583 | ) | ||||
Accounts payable |
(956 | ) | (215 | ) | ||||
Income taxes receivable / payable |
(787 | ) | 2,747 | |||||
Other accrued liabilities |
(2,143 | ) | (2,035 | ) | ||||
Deferred revenue |
| (4,244 | ) | |||||
(9,209 | ) | (4,344 | ) | |||||
Cash provided by investing activities |
||||||||
Purchase of property, plant and equipment |
(1,188 | ) | (549 | ) | ||||
Proceeds from mortgage receivable |
1,049 | | ||||||
Proceeds from contingent consideration(1) |
8,889 | 7,844 | ||||||
8,750 | 7,295 | |||||||
Cash used in financing activities |
||||||||
Common shares repurchased, including fees |
(3,675 | ) | (1,177 | ) | ||||
Issuance of common shares |
348 | 43 | ||||||
(3,327 | ) | (1,134 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents |
177 | 154 | ||||||
Net (decrease) increase in cash and cash equivalents |
(3,609 | ) | 1,971 | |||||
Cash and cash equivalents, beginning of period |
209,478 | 188,114 | ||||||
Cash and cash equivalents, end of period |
$ | 205,869 | $ | 190,085 | ||||
Supplementary cash flow information: |
||||||||
Interest paid |
$ | | $ | | ||||
Income taxes paid |
829 | 10 |
(1) | On October 1, 2009, all of the shares of QLT USA, Inc. (QLT USA) were sold to TOLMAR
Holding, Inc. (Tolmar) for up to an aggregate $230.0 million, plus cash on hand of $118.3
million. The purchase price included contingent consideration of $200.0 million which had a
fair value of $156.2 million on October 1, 2009, representing a non-cash investing activity. |
|
During the three months ended March 31, 2011, proceeds received on collection of the contingent
consideration totalled $11.2 million (2010 $10.3 million). Approximately $8.9 million (2010 -
$7.8 million) of the proceeds were included within cash provided by investing activities. The
remaining $2.3 million (2010 $2.4 million) of the proceeds were recorded in the Statement of
Operations as the fair value change in contingent consideration and were therefore reflected in
the net (loss) income line item within cash provided by operating activities. |
See the accompanying Notes to the Unaudited Condensed Consolidated Financial
Statements.
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Table of Contents
QLT Inc.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
(Unaudited)
Accumulated | ||||||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||||||
Common Shares | Paid-in | Comprehensive | Accumulated | Comprehensive | Shareholders | |||||||||||||||||||||||
Shares | Amount | Capital | Income | Deficit | Loss | Equity | ||||||||||||||||||||||
(All amounts except share and per share information are expressed in thousands of U.S. dollars) | ||||||||||||||||||||||||||||
Balance at January 1, 2010 |
53,789,289 | $ | 506,023 | $ | 275,592 | $ | 102,969 | $ | (480,130 | ) | $ | | $ | 404,454 | ||||||||||||||
Exercise of stock
options, for cash, at
prices ranging from CAD
$2.44 to CAD $6.27 per
share |
265,585 | 1,243 | (333 | ) | | | | 910 | ||||||||||||||||||||
Stock-based compensation |
| | 2,365 | | | | 2,365 | |||||||||||||||||||||
Common share repurchase |
(2,900,482 | ) | (27,268 | ) | 10,022 | | | | (17,246 | ) | ||||||||||||||||||
Net loss |
| | | | (17,539 | ) | (17,539 | ) | (17,539 | ) | ||||||||||||||||||
Comprehensive loss |
| | | | | (17,539 | ) | | ||||||||||||||||||||
Balance at December 31,
2010 |
51,154,392 | $ | 479,998 | $ | 287,646 | $ | 102,969 | $ | (497,669 | ) | $ | | $ | 372,944 | ||||||||||||||
Exercise of stock
options, for cash, at
prices ranging from CAD
$2.44 to CAD $6.27 per
share |
138,883 | 1,002 | (288 | ) | | | | 714 | ||||||||||||||||||||
Stock-based compensation |
| | 955 | | | | 955 | |||||||||||||||||||||
Common share repurchase |
(533,500 | ) | (5,006 | ) | 1,331 | | | | (3,675 | ) | ||||||||||||||||||
Net loss |
| | | | (8,549 | ) | (8,549 | ) | (8,549 | ) | ||||||||||||||||||
Comprehensive loss |
| | | | | (8,549 | ) | | ||||||||||||||||||||
Balance at March 31, 2011 |
50,759,775 | $ | 475,994 | $ | 289,644 | $ | 102,969 | (1) | $ | (506,218 | ) | $ | | $ | 362,389 | |||||||||||||
(1) | At March 31, 2011 our accumulated other comprehensive income is entirely related to
historical cumulative translation adjustments from the application of U.S. dollar reporting when
the functional currency of QLT Inc. was the Canadian dollar. |
See the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
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Table of Contents
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Throughout this Quarterly Report on Form 10-Q (this Report), the words we, us, our, the
Company and QLT refer to QLT Inc. and its wholly owned subsidiaries, QLT Plug Delivery, Inc.,
QLT Therapeutics, Inc., and QLT Ophthalmics, Inc., unless stated otherwise.
1. CONDENSED SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
We are a biotechnology company dedicated to the development and commercialization of innovative therapies for the eye. We are currently focused on our commercial product, Visudyne®, for the treatment of wet age related macular degeneration (wet AMD) and developing our ophthalmic product candidates.
We are a biotechnology company dedicated to the development and commercialization of innovative therapies for the eye. We are currently focused on our commercial product, Visudyne®, for the treatment of wet age related macular degeneration (wet AMD) and developing our ophthalmic product candidates.
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States and pursuant to the rules and
regulations of the United States Securities and Exchange Commission (the SEC) for the
presentation of interim financial information. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in accordance with United States
generally accepted accounting principles have been condensed, or omitted, pursuant to such rules
and regulations. These financial statements do not include all disclosures required for annual
financial statements and should be read in conjunction with our audited consolidated financial
statements and notes thereto included as part of our Annual Report on Form 10-K for the year ended
December 31, 2010 (our Annual Report). All amounts are expressed in United States dollars unless
otherwise noted.
In the opinion of management, the condensed consolidated financial statements reflect all
adjustments (including reclassifications and normal recurring adjustments) necessary to present
fairly the financial position, results of operations and cash flows at March 31, 2011, and for all
periods presented. The interim results presented are not necessarily indicative of results that
can be expected for a full year.
Principles of Consolidation
These consolidated financial statements include the accounts of QLT and its subsidiaries, all of
which are wholly owned. The principal subsidiaries included in our consolidated financial
statements are QLT Plug Delivery, Inc., QLT Therapeutics, Inc. and QLT Ophthalmics, Inc., each of
which is incorporated in the State of Delaware in the United States of America. All intercompany
transactions have been eliminated.
Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the reporting periods
presented. Significant estimates are used for, but not limited to, provisions for non-completion
of inventory, provision for obsolete inventory, assessment of the recoverability of long-lived
assets, the fair value of the mortgage receivable, the fair value of contingent consideration,
allocation of costs to manufacturing under a standard costing system, allocation of overhead
expenses to research and development, sales rebates and return accruals, determination of fair
value of assets and liabilities acquired in net asset acquisitions or purchase business
combinations, stock-based compensation, provisions for taxes, tax assets and liabilities. Actual
results may differ from estimates made by management.
Segment Information
We operate in one industry segment, which is the business of developing, manufacturing, and
commercializing opportunities in ophthamology. Our chief operating decision maker reviews our
operating results on an aggregate basis and manages our operations as a single operating segment.
Revenue Recognition
Net Product Revenue
Net product revenue is derived from sales of Visudyne to distributors in the U.S. and to Novartis
Pharma AG (Novartis) outside the U.S., plus reimbursement of certain costs from Novartis. We
recognize revenue from the sale of Visudyne when persuasive evidence of an arrangement exists,
delivery has occurred, the end selling price of Visudyne is fixed or determinable, and
collectibility is reasonably assured. For U.S. Visudyne sales, provisions for certain vendor
charge-backs, discounts, Medicaid rebates, distributor fees and product returns are accounted for
as a reduction of revenue in the same period the related revenue is recorded. Rebates, vendor
charge-backs, and discounts
are estimated based on contractual terms, historical experience, and projected market conditions.
Product returns are estimated based on historical experience and business trends. We recognize
revenue upon delivery, when title and risk of loss passes to Novartis and other distributors.
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Table of Contents
Royalties
We recognize royalties when product is sold by Novartis to end customers based on royalty rates
specified in the Amended and Restated PDT Product Development, Manufacturing and Distribution
Agreement (Amended PDT Agreement) with Novartis. Royalties are based on net product sales (gross
sales less discounts, allowances and other items) and calculated based on information supplied to
us by Novartis.
Income Taxes
Income taxes are reported using the asset and liability method, whereby deferred tax assets and
liabilities are recognized for the future tax consequences attributable to: (i) differences between
the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases, and (ii) operating loss and tax credit carry forwards using applicable enacted tax
rates. An increase or decrease in these tax rates will increase or decrease the carrying value of
future net tax assets resulting in an increase or decrease to net income. Income tax credits, such
as investment tax credits, are included as part of the provision for income taxes. The realization
of our deferred tax assets is primarily dependent on generating sufficient taxable income prior to
expiration of any loss carry forward balance. A valuation allowance is provided when it is more
likely than not that a deferred tax asset may not be realized. Changes in valuation allowances are
included in our tax provision in the period of change.
Contingent Consideration
Contingent consideration arising from the sale of all of the shares of our then wholly-owned
subsidiary QLT USA on October 1, 2009 is measured at fair value. The contingent consideration is
revalued at each reporting period and changes are included in continuing operations.
Net (Loss) Income Per Common Share
Basic net (loss) income per common share is computed using the weighted average number of common
shares outstanding during the period. Diluted net (loss) income per common share is computed in
accordance with the treasury stock method, which uses the weighted average number of common shares
outstanding during the period and also includes the dilutive effect of potentially issuable common
stock from outstanding stock options.
The following table sets out the computation of basic and diluted net (loss) income per common
share:
Three months ended | ||||||||
March 31, | ||||||||
(In thousands of U.S. dollars, except share and per share data) | 2011 | 2010 | ||||||
Numerator: |
||||||||
Net (loss) income |
$ | (8,549 | ) | $ | 3,403 | |||
Denominator: (thousands) |
||||||||
Weighted average common shares outstanding |
51,023 | 53,717 | ||||||
Effect of dilutive securities: |
||||||||
Stock options |
| 653 | ||||||
Diluted weighted average common shares outstanding |
51,023 | 54,370 | ||||||
Basic and diluted net (loss) income per common share |
$ | (0.17 | ) | $ | 0.06 |
Excluded from the calculation of diluted net income per common share for the three months ended
March 31, 2011 and 2010 were 5,409,301 and 2,524,339 shares, respectively, related to stock options
because their effect was anti-dilutive.
Fair Value of Financial Assets and Liabilities
The carrying values of cash and cash equivalents, trade receivables and payables, contingent
consideration and the mortgage receivable approximate fair value. We estimate the fair value of our
financial instruments using the market approach. The fair values of our financial instruments
reflect the amounts that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date (exit price).
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Recently Adopted Accounting Standards
In October 2009, the FASB issued EITF 08-01, Revenue Arrangements with Multiple Deliverables
(currently within the scope of FASB Accounting Standards Codification (ASC) Subtopic 605-25). This
statement provides principles
for allocation of consideration among its multiple-elements, allowing more flexibility in
identifying and accounting for separate deliverables under an arrangement. The EITF introduces an
estimated selling price method for valuing the elements of a bundled arrangement if vendor-specific
objective evidence or third-party evidence of selling price is not available, and significantly
expands related disclosure requirements. This standard is effective on a prospective basis for
revenue arrangements entered into or materially modified in fiscal years beginning on or after June
15, 2010. Alternatively, adoption may be on a retrospective basis, and early application is
permitted. The prospective adoption of this standard on January 1, 2011, did not have a material
impact on our financial condition, results of operations or cash flows.
In March 2010, the FASB ratified the EITF final consensus on Issue ASC 2010-17, Milestone Method of
Revenue Recognition. The guidance in this consensus allows the milestone method as an acceptable
revenue recognition methodology when an arrangement includes substantive milestones. The guidance
provides a definition of a substantive milestone and should be applied regardless of whether the
arrangement includes single or multiple deliverables or units of accounting. The scope of this
consensus is limited to transactions involving milestones relating to research and development
deliverables. The guidance includes enhanced disclosure requirements about each arrangement,
individual milestones and related contingent consideration, information about substantive
milestones and factors considered in the determination. The consensus is effective prospectively to
milestones achieved in fiscal years, and interim periods within those years, after June 15, 2010.
Early application and retrospective application are permitted. The prospective adoption of this
standard on January 1, 2011, did not have a material impact on our financial condition, results of
operations or cash flows.
2. INVENTORIES
(In thousands of U.S. dollars) | March 31, 2011 | December 31, 2010 | ||||||
Raw materials and supplies |
$ | 29 | $ | 74 | ||||
Work-in-process |
28,086 | 28,045 | ||||||
Finished goods |
895 | 274 | ||||||
Provision for excess inventory |
(11,075 | ) | (11,077 | ) | ||||
Provision for non-completion of inventory |
(2,185 | ) | (2,185 | ) | ||||
$ | 15,750 | $ | 15,131 | |||||
Long-term inventory, net of provisions |
(10,670 | ) | (11,807 | ) | ||||
Current inventory |
$ | 5,080 | $ | 3,324 | ||||
We review our inventory quantities against our forecast of future demand and market conditions and,
if necessary, provide a reserve for potential excess or obsolete inventory. Our provision for
excess inventory of $11.1 million as of March 31, 2011, which was substantially applied against our
long-term inventory, has been determined based on our forecast of future Visudyne demand.
We record a provision for non-completion of inventory to provide for the potential failure of
inventory batches in production to pass quality inspection. During the quarter ended March 31,
2011, there were no charges against the provision for non-completion of product inventory.
We classify inventories that we do not expect to convert or consume in the next year as non-current
based upon an analysis of market conditions such as sales trends, sales forecasts, sales price, and
other factors. See Note 4 Long-Term Inventories and Other Assets.
3. MORTGAGE RECEIVABLE
Under the terms of the original mortgage agreement, our mortgage receivable was due on August 29,
2010 and comprised a two-year, 6.5% interest-only, second mortgage in the amount of CAD $12.0
million related to the sale of our land and building to Discovery Parks Holdings Ltd., an affiliate
of Discovery Parks Trust (Discovery Parks) in 2008. Effective August 29, 2010, we entered into
an amended mortgage agreement with Discovery Parks, pursuant to which we received payment of CAD
$4.0 million on August 30, 2010. The remaining mortgage receivable of CAD $8.0 million comprised a
7.5% interest-only second mortgage, of which CAD $2.0 million was due on or before May 1, 2011, and
CAD $6.0 million is due on August 29, 2012. Of the CAD $2.0 million due on or before May 1, 2011,
we had received CAD $1.0 million as of March 31, 2011, leaving CAD $1.0 million remaining as the
current portion of mortgage receivable (which was subsequently collected in April 2011).
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4. LONG-TERM INVENTORIES AND OTHER ASSETS
(In thousands of U.S. dollars) | March 31, 2011 | December 31, 2010 | ||||||
Inventory, net of provisions |
$ | 10,670 | $ | 11,807 | ||||
Other |
1,521 | 1,512 | ||||||
$ | 12,191 | $ | 13,319 | |||||
5. ACCRUED LIABILITIES
(In thousands of U.S. dollars) | March 31, 2011 | December 31, 2010 | ||||||
Royalties |
$ | 1,092 | $ | 1,225 | ||||
Compensation |
1,875 | 3,698 | ||||||
DDSU compensation |
1,405 | 1,400 | ||||||
$ | 4,372 | $ | 6,323 | |||||
6. FOREIGN EXCHANGE FACILITY
We have a foreign exchange facility for the sole purpose of entering into foreign exchange
contracts. As of March 31, 2011, the facility allowed us to enter into a maximum of $300.0 million
in forward foreign exchange contracts for terms up to 15 months, or in the case of spot foreign
exchange transactions, a maximum of $70.0 million. The facility requires security in the form of
cash or money market instruments based on the contingent credit exposure for any outstanding
foreign exchange transactions. At March 31, 2011, there was no collateral pledged as security for
this facility, as we had no outstanding foreign exchange transactions. In April 2011, we amended
the facility to reduce the forward foreign exchange limit from $300.0 million to $100.0 million.
There were no other changes in the terms and conditions governing the facility.
7. SHARE CAPITAL
(a) Share Buy-Back Programs
On December 8, 2010, we announced that our Board of Directors authorized the repurchase of up to
3,615,285 of our issued and outstanding common shares, being 10% of our public float as of December
9, 2010, over a 12-month period commencing December 16, 2010 under a normal course issuer bid. All
purchases are to be effected in the open market through the facilities of the TSX or NASDAQ, and in
accordance with regulatory requirements. The actual number of common shares which are purchased and
the timing of such purchases will be determined by management, subject to compliance with
applicable law. All common shares repurchased will be cancelled. Cumulative purchases under this
program through March 31, 2011, were 555,800 shares at an average price of $6.84, for a total cost
of $3.8 million.
On October 27, 2009, we announced that our Board of Directors authorized the repurchase of up to
2,731,534 of our common shares, being 5% of our issued and outstanding common shares, over a
12-month period commencing November 3, 2009 under a normal course issuer bid. In May 2010, the
normal course issuer bid was increased to repurchase up to 4,700,060 shares, representing 10% of
our public float. All purchases under the bid were effected in the open market through the
facilities of the NASDAQ, and in accordance with all regulatory requirements. Cumulative purchases
under this program were 3,744,972 shares at an average price of $5.59 per share, for a total cost
of $20.9 million.
8
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(b) Stock Options
We use the Black-Scholes option pricing model to estimate the value of the options at each grant
date, using the following weighted average assumptions (no dividends are assumed):
Three months ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Annualized volatility |
55.4 | % | 55.1 | % | ||||
Risk-free interest rate |
2.4 | % | 2.5 | % | ||||
Expected life (years) |
3.7 | 3.6 |
The Black-Scholes option pricing model was developed for use in estimating the value of traded
options that have no vesting restrictions and are fully transferable. In addition, option pricing
models require the input of highly subjective assumptions including the expected stock price
volatility. We project expected volatility and expected life of our stock options based upon
historical and other economic data trended into future years. The risk-free interest rate
assumption is based upon observed interest rates appropriate for the terms of our stock options.
The weighted average grant date fair value of stock options granted during the three months ended
March 31, 2011 and 2010 was CAD $2.97 and CAD $2.12, respectively.
The impact on our results of operations of recording stock-based compensation for the three-month
periods ended March 31, 2011 and 2010 was as follows:
Three months ended | ||||||||
March 31, | ||||||||
(In thousands of U.S. dollars) | 2011 | 2010 | ||||||
Cost of sales |
$ | 5 | $ | 120 | ||||
Research and development |
328 | 309 | ||||||
Selling, general and administrative |
596 | 253 | ||||||
Stock-based compensation expense before income
taxes |
929 | 682 | ||||||
Related income tax benefits |
(29 | ) | (8 | ) | ||||
Stock-based compensation, net of income taxes |
$ | 900 | $ | 674 | ||||
At March 31, 2011, total unrecognized estimated compensation cost related to non-vested stock
options was $2.7 million, which is expected to be recognized over 36 months with a weighted-average
period of 1.7 years. The intrinsic value of stock options exercised during the three months ended
March 31, 2011 was CAD$0.3 million and cash received from the exercise of the stock options was
CAD$0.7 million. During the three months ended March 31, 2010, the intrinsic value of stock options
exercised and cash received from the exercise of the stock options was negligible. There was a
negligible amount of share-based compensation capitalized as part of inventory during the three
months ended March 31, 2011 and there was no amount capitalized as part of inventory for the same
period in 2010. We recorded a negligible amount for related tax benefits during the three months
ended March 31, 2011 and March 31, 2010, respectively.
8. NET PRODUCT REVENUE
Under the terms of the Amended PDT Agreement with Novartis, on January 1, 2010, we received from
Novartis the exclusive U.S. rights to the Visudyne patents to sell and market Visudyne in the U.S.
In the three months ended March 31, 2010, deferred revenue of $5.0 million related to inventory
previously shipped to Novartis for sales outside the U.S. was recognized as revenue. Details of our
revenue recognition accounting policy are described in Note 1 Condensed Summary of Significant
Accounting Policies.
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Net product revenue for the three-month periods ended March 31, 2011 and 2010, was determined as
follows:
Three months ended | ||||||||
March 31, | ||||||||
(In thousands of U.S. dollars) | 2011 | 2010 | ||||||
U.S. Visudyne sales by QLT |
$ | 5,242 | $ | 5,045 | ||||
Visudyne sales to Novartis |
| 4,989 | ||||||
Add: Royalties reimbursed to QLT |
332 | 327 | ||||||
Add: Other costs reimbursed to QLT |
16 | 109 | ||||||
Net product revenue from Visudyne sales |
$ | 5,590 | $ | 10,470 | ||||
The tables below summarize end-user Visudyne sales for the three-month periods ended March 31, 2011
and 2010. Under the Amended PDT Agreement with Novartis, Visudyne is sold by QLT in the U.S., and
by Novartis outside the U.S. (for which we earn a 20% royalty on net sales). See Note 1 Condensed
Summary of Significant Accounting Policies.
Three months ended | ||||||||
March 31, | ||||||||
(In thousands of U.S. dollars) | 2011 | 2010 | ||||||
U.S. |
$ | 5,242 | $ | 5,045 | ||||
Europe |
6,947 | 7,207 | ||||||
Rest of World |
9,602 | 9,025 | ||||||
Worldwide |
$ | 21,791 | $ | 21,277 | ||||
Three months ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
U.S. |
24 | % | 24 | % | ||||
Europe |
32 | % | 34 | % | ||||
Rest of World |
44 | % | 42 | % | ||||
Worldwide |
100 | % | 100 | % | ||||
9. CONTINGENT CONSIDERATION
On October 1, 2009, we divested the Eligard® product line as part of the sale of all of
the shares of our U.S. subsidiary, QLT USA, to Tolmar for up to an aggregate $230.0 million plus
cash on hand of $118.3 million. Pursuant to the stock purchase agreement, we received $20.0 million
on closing and $10.0 million on October 1, 2010 and expect to receive up to an additional $200.0
million payable on a quarterly basis in amounts equal to 80% of the royalties paid under the
license agreement with Sanofi Synthelabo Inc. (Sanofi) for the commercial marketing of Eligard in
the U.S. and Canada, and the license agreement with MediGene Aktiengesellschaft (MediGene) which,
effective March 1, 2011, has been assigned to Astellas Pharma Europe Ltd. (Astellas) for the
commercial marketing of Eligard in Europe. The estimated fair value of these expected future
quarterly payments is reflected as Contingent Consideration on our Condensed Consolidated Balance
Sheet. We are entitled to these payments until the earlier of our receipt of the additional $200.0
million or October 1, 2024. As of March 31, 2011, we had received an aggregate $56.6 million of
contingent consideration. We expect to receive the remaining $143.4 million on a quarterly basis,
over the next three to five years. The contingent consideration payments are not generated from a
migration or continuation of activities and therefore are not direct cash flows of the divested
business. We have not had any continuing involvement with this business following its sale. See
Note 11 Financial Instruments and Concentration of Credit Risk.
10. INCOME TAXES
The change in the effective tax rate was primarily due to changes in the overall mix of income
(loss) in the jurisdictions in which we operate, including changes in our valuation allowance in
such jurisdictions. In 2010, the company completed an intra-entity transfer of intellectual property
and, as a result, shifted certain related future development expenditures to the acquiring entity.
As insufficient evidence exists to support current or future realization of the tax benefits
associated with such development expenditures as well certain other current period expenditures,
the benefit of certain tax assets has not been recognized in the current period. The tax recovery
for the period ended March 31, 2010 reflected a benefit of $5.6 million which was
recorded as a result of the amendment of our agreement with Novartis.
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11. FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
We have various financial instruments that must be measured under the fair value standard including
cash and cash equivalents, the mortgage receivable and, from time to time, forward currency
contracts. The mortgage owed to us is recorded as a receivable and is carried at amortized cost.
Based on market information, the book value of our mortgage receivable approximates fair value. Our
financial assets and liabilities are measured using inputs from the three levels of the fair value
hierarchy.
The following table provides information about our assets and liabilities that are measured at fair
value on a recurring basis as of March 31, 2011 and indicates the fair value hierarchy of the
valuation techniques we utilized to determine such fair value:
Carrying Value | Fair Value Measurements at March 31, 2011 | |||||||||||||||
(In thousands of U.S. dollars) | March 31, 2011 | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: |
||||||||||||||||
Cash and cash equivalents |
$ | 205,869 | $ | 205,869 | $ | | $ | | ||||||||
Contingent consideration(1) |
121,699 | | | 121,699 | ||||||||||||
Total |
$ | 327,568 | $ | 205,869 | $ | | $ | 121,699 | ||||||||
(1) | To estimate the fair value of contingent consideration at March 31, 2011, we used a
discounted cash flow model based on estimated timing and amount of future cash flows,
discounted using a cost of capital of 10% determined by management after considering
available market and industry information. Future cash flows were estimated by utilizing
external market research to estimate market size, to which we applied market share,
pricing, and foreign exchange assumptions based on historical sales data, expected future
competition and current exchange rates. If the discount rate were to increase by 1%, the
contingent consideration would decrease by $1.8 million, from $121.7 million to $119.9
million. If estimated future revenues were to decrease by 10%, the contingent
consideration would decrease by $2.0 million, from $121.7 million to $119.7 million. |
|
The following table represents a reconciliation of our asset (contingent consideration)
measured and recorded at fair value on a recurring basis, using significant unobservable
inputs (Level 3): |
(In thousands of U.S. dollars) | Level 3 | |||
Balance at January 1, 2010 |
$ | 151,078 | ||
Transfers to Level 3 |
| |||
Settlements |
(36,982 | ) | ||
Fair value change in contingent consideration |
16,493 | |||
Balance at December 31, 2010 |
$ | 130,589 | ||
Transfers to Level 3 |
| |||
Settlements |
(11,172 | ) | ||
Fair value change in contingent consideration |
2,282 | |||
Balance at March 31, 2011 |
$ | 121,699 | ||
We purchase goods and services primarily in U.S. dollars and Canadian dollars, and earn most of our
revenues in U.S. dollars. As at each of March 31, 2011 and 2010, we had no outstanding forward
foreign currency contracts.
Other financial instruments that potentially subject us to concentration of credit risk include our
cash, cash equivalents, accounts receivable, contingent consideration, and mortgage receivable. To
limit our credit exposure in regards to cash and cash equivalents, we deposit our cash with high
quality financial institutions and the primary goals of our treasury policy are capital
preservation and liquidity. Our treasury policy limits investments to certain money market
securities issued by governments, financial institutions and corporations with investment-grade
credit ratings, and places restrictions on maturities and concentration by issuer.
Our accounts receivable, as at March 31, 2011 and December 31, 2010, comprised amounts primarily
owing from Novartis, ASD Specialty Healthcare, Inc. d/b/a Besse Medical (our principal U.S.
wholesale distributor of Visudyne) and Priority Healthcare Distribution, Inc. d/b/a CuraScript SD
Specialty Distribution.
11
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ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following information should be read in conjunction with the accompanying unaudited interim
condensed consolidated financial statements and notes thereto, which are prepared in accordance
with generally accepted accounting principles (GAAP) in the United States (U.S.) and our
audited consolidated financial statements and notes thereto included as part of our Annual Report
on Form 10-K for the year ended December 31, 2010 (our 2010 Annual Report).
All of the following amounts are expressed in U.S. dollars unless otherwise indicated.
Note regarding Trademarks
The following words used in this Report are trademarks:
| Avastin® is a registered trademark of Genentech, Inc. |
| Eligard® is a registered trademark of Sanofi-Aventis Corp. |
| Lucentis® is a registered trademark of Genentech, Inc. |
| Visudyne® is a registered trademark of Novartis AG. |
Any words used in this Report that are trademarks but are not referred to above are the property of
their respective owners.
OVERVIEW
QLT is a biotechnology company dedicated to the development and commercialization of innovative
therapies for the eye. We are currently focused on our commercial product, Visudyne®,
for the treatment of wet age related macular degeneration (wet AMD), and developing our
ophthalmic product candidates.
Products, Revenues and Other Sources of Funds
We have one commercial product, Visudyne, which utilizes light-activated photodynamic therapy
(PDT) to treat the eye disease known as wet AMD, the leading cause of blindness in people over
the age of 50 in North America and Europe. Visudyne is also used for the treatment of subfoveal
choroidal neovascularization secondary to pathologic myopia, or severe near-sightedness, and
presumed ocular histoplasmosis. Visudyne was co-developed by QLT and Novartis Pharma AG
(Novartis) of Switzerland and is marketed and sold in over 80 countries worldwide.
On January 1, 2010 we received from Novartis the exclusive U.S. rights to the Visudyne patents to
sell and market Visudyne in the U.S. As a result, we have established a commercial presence in the
U.S., operating a direct marketing and sales force through our U.S. subsidiary, QLT Ophthalmics,
Inc., and have rights to all end-user revenue derived from Visudyne sales in the U.S. Novartis
continues to market and sell Visudyne for ophthalmic use outside the U.S. and pays us a royalty on
net sales of the product.
On October 1, 2009, we divested the Eligard® line of products as part of the sale of all
of the shares of our U.S. subsidiary, QLT USA, Inc. (QLT USA). Pursuant to the stock purchase
agreement, we are entitled to future consideration payable quarterly in amounts equal to 80% of the
royalties paid under the license agreement with Sanofi Synthelabo Inc. (Sanofi) for the
commercial marketing of Eligard in the U.S. and Canada, and the license agreement with MediGene
Aktiengesellschaft (MediGene), which, effective March 1, 2011, has been assigned to Astellas
Pharma Europe Ltd. (Astellas) for the commercial marketing of Eligard in Europe. The estimated
fair value of the expected future quarterly payments is reflected as Contingent Consideration on
our Condensed Consolidated Balance Sheet. We are entitled to these quarterly payments until the
earlier of our receipt of $200.0 million or October 1, 2024. As of March 31, 2011, we had
received an aggregate $56.6 million of contingent consideration.
12
Table of Contents
Research and Development
As a result of our strategic corporate restructuring in 2008 and 2009, we narrowed our research and
development focus to the field of ophthalmology. Our current research and development efforts are
focused on:
QLT091001 for the treatment of Leber Congenital Amaurosis and Retinitis Pigmentosa. We are
currently conducting a Phase Ib clinical proof-of-concept study of QLT091001, a synthetic retinoid
replacement therapy for 11-cis-retinal, a key biochemical component of the visual retinoid cycle, in patients with Leber
Congenital Amaurosis (LCA) and Retinitis Pigmentosa (RP). Preliminary results from 12 patients
in the LCA cohort were presented at the Association for Research in Vision and Ophthalmology (ARVO)
Annual Meeting on May 3, 2011. The Company is recruiting two additional LCA patients for a total
of 14 patients in the LCA cohort and will continue to monitor and analyze LCA patient follow up.
Enrollment of patients in the RP cohort is ongoing and the Company is planning on recruiting an
additional 2 patients in this cohort for a total of up to 14 RP patients. QLT091001 has received
orphan drug designations for the treatment of the LRAT and RPE65 genetic mutations in both LCA and
RP by the U.S. Food and Drug Administration (FDA). QLT091001 has also received positive opinions
for orphan drug designations for the treatment of LCA and RP by the European Medicines Agency
Committee for Orphan Medicinal Products. Our goal is to complete enrollment of all 28 patients by year end.
Punctal Plug Drug Delivery System for the treatment of Glaucoma and Allergic Conjunctivitis.
The majority of our research and development spending for the past three years has been directed
towards our proprietary punctal plug technology, which is a minimally invasive drug delivery system
that we are developing with the goal of delivering a variety of drugs topically to the eye through
controlled sustained release to the tear film. We are targeting the treatment of glaucoma and
ocular hypertension and are presently conducting a Phase II study in the latanoprost punctal plug
drug delivery program (L-PPDS). This trial features simultaneous placement of latanoprost
eluting 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. The trial design was recently amended to
remove the active control arm and to remove an initial 4 week placebo plug period from the
randomized 8 week L-PPDS treatment arm. These changes simplify the trial design and will provide
earlier access to active treatment in the study, which is expected to reduce the rate of patient
discontinuation in the trial. The effectiveness of the L-PPDS in reducing intraocular pressure in
patients will be assessed based on 4 weeks of treatment with L-PPDS vs. baseline values.
Approximately 70 patients are expected to complete the active arm of the trial and be included in
the analysis and results, which continue to be expected in the second or third quarter of 2011.
In February 2011, we announced the results of a Phase II proof-of-principle study for the treatment
of allergic conjunctivitis through the sustained release of olopatadine in our punctal plug drug
delivery system (O-PPDS). The 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
improvements. The equivocal results support the notion that the EEC model, as utilized in the
conduct of the trial, was not sufficiently sensitive to adequately demonstrate the potential
benefit of the O-PPDS in patients suffering from allergic conjunctivitis. We plan to continue to
evaluate alternative study designs for the O-PPDS, however, further clinical trials of the O-PPDS
are pending the outcome of the ongoing L-PPDS study.
We believe this platform technology may be suited for delivery of other types of molecules to the
tear film of the eye in order to treat anterior segment diseases of the eye. This could include
other medications for glaucoma, or other diseases or conditions of the eye including allergy, dry
eye, and ocular inflammation.
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RESULTS OF OPERATIONS
For the three months ended March 31, 2011, we recorded a net loss of $8.5 million, or $0.17 net
loss per common share. These results compare with a net income of $3.4 million, or $0.06 net
income per common share, for the three months ended March 31, 2010. Detailed discussion and
analysis of our results of operations are as follows:
Revenues
Net product revenue for the three months ended March 31, 2011 and 2010 was determined as follows:
Three months ended | ||||||||
March 31, | ||||||||
(In thousands of U.S. dollars) | 2011 | 2010 | ||||||
U.S. Visudyne sales by QLT |
$ | 5,242 | $ | 5,045 | ||||
Visudyne sales to Novartis |
| 4,989 | ||||||
Add: Royalties reimbursed to QLT(1) |
332 | 327 | ||||||
Add: Other costs reimbursed to
QLT(2) |
16 | 109 | ||||||
Net product revenue from Visudyne sales |
$ | 5,590 | $ | 10,470 | ||||
Under the terms of the Amended and Restated PDT Product Development, Manufacturing and Distribution
Agreement (Amended PDT Agreement) with Novartis, on January 1, 2010, we received from Novartis
the exclusive U.S. rights to the Visudyne patents to sell and market Visudyne in the U.S. We
utilize contract manufacturers for Visudyne production and are responsible for product supply to
Novartis and other distributors. Details of our revenue recognition accounting policy are described
in Note 1 Condensed Summary of Significant Accounting Policies in the Notes to the Unaudited
Condensed Consolidated Financial Statements.
(1) | Royalties reimbursed to QLT |
|
This represents amounts we receive from Novartis in reimbursement for actual royalty expenses
we incur with third party licensors for sales of Visudyne outside of the U.S. |
||
(2) | Other costs reimbursed to QLT |
|
This represents certain administrative expenses we incur on behalf of Novartis under the
Amended PDT Agreement. |
For the three months ended March 31, 2011, net product revenue from Visudyne decreased by $4.9
million, or 47%, to $5.6 million compared to $10.5 million for the three months ended March 31,
2010. The decrease was primarily due to the recognition of $5.0 million of revenue in the
prior period, following the commencement of the Amended PDT Agreement on January 1, 2010. The
deferred revenue related to inventory previously shipped to Novartis for sales outside the U.S.
The tables below summarize end-user Visudyne sales for the three months ended March 31, 2011 and
2010. Under the Amended PDT Agreement with Novartis, Visudyne is sold by QLT in the U.S., and by
Novartis outside the U.S. (for which we earn a 20% royalty on net sales). See Note 1 Condensed
Summary of Significant Accounting Policies in the Notes to the Unaudited Condensed Consolidated
Financial Statements.
Three months ended | ||||||||
March 31, | ||||||||
(In thousands of U.S. dollars) | 2011 | 2010 | ||||||
U.S. |
$ | 5,242 | $ | 5,045 | ||||
Europe |
6,947 | 7,207 | ||||||
Rest of World |
9,602 | 9,025 | ||||||
Worldwide |
$ | 21,791 | $ | 21,277 | ||||
Three months ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
U.S. |
24 | % | 24 | % | ||||
Europe |
32 | % | 34 | % | ||||
Rest of World |
44 | % | 42 | % | ||||
Worldwide |
100 | % | 100 | % | ||||
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The worldwide sale of Visudyne and related royalties are our only sources of revenue. While we
have sought to protect our proprietary Visudyne technology by, among other things, obtaining and
licensing patents in the U.S., Europe, Japan, and other jurisdictions, because Visudyne is a mature
pharmaceutical product, some of the key U.S. patents protecting it have expired or will expire in
the near future. For example, one of the U.S. patents (U.S. Patent
No. 5,214,036) covering lipid-based formulations of the compound verteporfin (the active ingredient
in Visudyne) expired on May 25, 2010, and the U.S. patent (U.S. Patent No. 5,095,030) covering the
compound verteporfin has an expiry date of September 9, 2011. See Item 1. Business Patents,
Trademarks and Proprietary Rights in our 2010 Annual Report for a more detailed discussion of our
Visudyne patent portfolio. Generally, once all patent protection expires, market exclusivity is
lost. As is inherent in the biopharmaceutical industry, the loss of market exclusivity can result
in significant competition from market entry of generic versions of products, which can have a
significant adverse effect on product revenues. However, the effect of the expiration of one or
more patents covering a biopharmaceutical product will depend upon a number of factors, such as the
extent to which the product is protected by other patents in a relevant jurisdiction, the nature of
the market and the position of the product in it, the growth or decline of the market and the
complexities and economics of the process for manufacture of the product. Based upon our
consideration of these and other factors as they relate specifically to Visudyne, we believe that
the expiration of the U.S. patent covering lipid-based formulations of verteporfin in 2010 and the
expiration of the U.S. patent covering the compound verteporfin in 2011 are unlikely to have a
material adverse effect on our revenues over the next several years since, among other things:
| we own and license additional U.S. patents covering lipid-based formulations of verteporfin
and approved uses of Visudyne that provide additional patent protection for Visudyne and do
not expire until, at the latest, 2015 and 2016, respectively; |
| in Europe and Japan, the basic patents covering the verteporfin compound do not expire
until 2014 and additional patents and patent applications relating to lipid-based formulations
of verteporfin and approved uses of Visudyne do not expire until, at the latest, 2016 and
2017, respectively; and |
| relative to the sale of many other biopharmaceutical products, Visudyne does not generate
significant revenue and the manufacturing process is complex, which may make Visudyne a less
desirable generic target. |
Royalties
Under the Amended PDT Agreement, Novartis continues to market and sell Visudyne outside the U.S.
and pays us a 20% royalty on net sales of the product outside the U.S. For the three months ended
March 31, 2011, royalty revenues were essentially flat compared to the same period in 2010, in line
with the change in Visudyne sales outside the U.S.
Costs and Expenses
Cost of Sales
For the three months ended March 31, 2011, cost of sales of $1.3 million decreased $5.2 million, or
80%, compared to $6.6 million for the same period in 2010. The decrease was primarily due to
inclusion in the prior period of $4.3 million of cost of sales associated with the recognition of revenue that related to inventory previously shipped to Novartis for sales outside the
U.S.
Research and Development
Research and development, or R&D, expenditures increased 33% to $9.7 million for the three months
ended March 31, 2011 compared to $7.3 million in the same period in 2010. The increase was due to
higher spending on our synthetic retinoid program, partially offset by lower spending on the
punctal plug program and QLT091568.
The magnitude of future R&D expenses is highly variable. Numerous events can happen to an R&D
project prior to it reaching any particular milestone that can significantly affect future spending
and activities related to the project. These events include:
| inability to design devices to function as expected; |
| delays or inability to formulate an active ingredient in an appropriate concentration to
deliver effective doses of a drug; |
|
| changes in the regulatory environment; |
|
| introduction of competing technologies and treatments; |
|
| unexpected safety issues; |
|
| patent application, maintenance and enforcement issues; |
|
| inability to operate without infringing the proprietary rights of others; |
|
| changes in the commercial marketplace; |
|
| difficulty enrolling patients in, or keeping them in, our clinical studies; |
15
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| trial design is inadequate for demonstration of safety and/or efficacy; |
|
| delays in study progression, including study site, Institutional Review Board and
regulatory delays; |
|
| positive trial results that may result in increased spending; |
|
| failure to meet favorable study endpoints; |
|
| inability to develop cost effective manufacturing methods that comply with regulatory
standards; |
|
| inability to attract personnel or retain personnel with appropriate expertise; |
|
| inability to manufacture sterile supplies necessary for composition of products; |
|
| uncertainties related to collaborative arrangements; |
|
| environmental risks; and |
|
| other factors referenced under Part II, Item 1A, Risk Factors. |
We may also undertake new R&D projects that may significantly affect our future spending and
activities.
R&D expenditures by therapeutic area were as follows:
Three months ended | ||||||||
March 31, | ||||||||
(In thousands of U.S. dollars) | 2011 | 2010 | ||||||
Ocular |
$ | 9,734 | $ | 7,165 | ||||
Other |
| 182 | ||||||
$ | 9,734 | $ | 7,347 | |||||
Selling, General and Administrative Expenses
For the three months ended March 31, 2011, selling, general and administrative, or SG&A, expenses
increased 46% to $7.1 million compared to $4.9 million for the three months ended March 31, 2010.
The increase was primarily due to separation costs related to the departure of our former Chief
Medical Officer, and increased spending on commercial operations.
Investment and Other Income
Net Foreign Exchange Gains
For the three months ended March 31, 2011 and 2010, net foreign exchange gains comprise gains from
the impact of foreign exchange fluctuations on our monetary assets and liabilities that are
denominated in currencies other than the U.S. dollar (principally the Canadian dollar). See the
section entitled Liquidity and Capital Resources Interest and Foreign Exchange Rates below.
Interest Income
For the three months ended March 31, 2011, interest income decreased 56% to $0.2 million compared
to $0.5 million for the same period in 2010. The decrease was primarily due to the prior period
including $0.2 million of interest earned on the note receivable from TOLMAR Holdings, Inc.
(Tolmar) which was collected on October 1, 2010.
Fair Value Change in Contingent Consideration
As part of the sale of all of the shares of QLT USA to Tolmar, we are entitled to receive up to
$200.0 million in consideration payable on a quarterly basis in amounts equal to 80% of the
royalties paid under the license agreements with each of Sanofi and Astellas (formerly with
MediGene) for the commercial marketing of Eligard in the U.S., Canada, and Europe. At March 31,
2011, there was $143.4 million remaining to be paid to us by Tolmar. The fair value of this amount,
$121.7 million, is reported as Contingent Consideration on our Condensed Consolidated Balance
Sheet, and is estimated using a discounted cash flow model. Contingent consideration is revalued at
each reporting period and is positively impacted each period by the passage of time, since all
remaining expected cash flows move closer to collection, thereby increasing their present value.
The fair value change in contingent consideration is also impacted by the projected amount and
timing of expected future cash flows and by the cost of capital used to discount these cash flows.
16
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For the three months ended March 31, 2011, fair value change in contingent consideration
decreased to $2.3 million compared to $2.4 million for the same period in 2010. The slight decrease
is primarily the result of an increase in the cost of capital used to discount these cash flows, largely offset by an increase in the Eligard forecast.
Income Taxes
The change in the effective tax rate was primarily due to changes in the overall mix of income
(loss) in the jurisdictions in which we operate including changes in our valuation allowance in
such jurisdictions. In 2010, the company completed an intra-entity transfer of intellectual property and, as a result, shifted certain
related future development expenditures to the acquiring entity. As insufficient evidence exists to
support current or future realization of the tax benefits associated with such development
expenditures as well certain other current period expenditures, the benefit of certain tax assets
has not been recognized in the current period. The tax recovery for the period ended March 31, 2010 reflected a benefit of
$5.6 million which was recorded as a result of the restructuring of our agreement with Novartis.
LIQUIDITY AND CAPITAL RESOURCES
General
In 2011 and future periods, we expect our cash resources and working capital, cash flow from
operations, cash from the collection of the contingent consideration, and other available financing
resources to be sufficient to fund current product research and development, operating
requirements, liability requirements, acquisition and licensing activities, milestone payments, and
repurchases of our common shares.
If adequate capital is not available, our business could be materially and adversely affected.
Factors that may affect our future capital requirements include: the status of competitors and
their intellectual property rights; levels of future sales of Eligard and our receipt of contingent
consideration under the QLT USA stock purchase agreement with Tolmar; levels of future sales of
Visudyne; the progress of our R&D programs, including preclinical and clinical testing; future
share repurchases; fluctuating or increasing manufacturing requirements; the timing and cost of
obtaining regulatory approvals; the levels of resources that we devote to the development of
manufacturing, and other support capabilities; technological advances; the cost of filing,
prosecuting and enforcing our patent claims and other intellectual property rights; the expiration
of our Visudyne patents and potential loss of market exclusivity for Visudyne; pre-launch costs
related to commercializing one of our products in development; acquisition and licensing
activities; milestone payments; and our ability to establish collaborative arrangements with other
organizations.
Sources and Uses of Cash
We finance operations, product development and capital expenditures primarily through existing
cash, proceeds from our commercial operations, sales of assets and interest income.
For the three month period ended March 31, 2011, we used $9.2 million of cash in operations as
compared to $4.3 million for the same period in 2010. The $4.9 million negative cash flow variance
is primarily attributable to:
| A negative operating cash flow variance from higher operating and inventory related
expenditures of $4.8 million; |
| A negative operating cash flow variance from higher tax instalments of $0.8 million; |
| A negative operating cash flow variance from lower investment and other income of $0.3
million; |
| A positive operating cash flow variance from higher foreign exchange gains of $0.5
million; and |
| A positive operating cash flow variance from higher cash receipts from product sales and
royalties of $0.5 million. |
During the three month period ended March 31, 2011, cash flows provided by investing activities
consisted of proceeds on collection of the contingent consideration of $8.9 million, and proceeds
from the collection of the mortgage receivable of $1.0 million, offset by capital expenditures of
$1.2 million.
For the three month period ended March 31, 2011, cash flows used in financing activities consisted
primarily of common shares repurchased for $3.7 million, including share repurchase costs, offset
by $0.3 million received for the issuance of common shares related to the exercise of stock
options.
In April 2011, we received the remaining CAD $1.0 million related to the CAD $2.0 million portion
of our interest only second mortgage due on or before May 1, 2011. The CAD $6.0 million balance of
the mortgage receivable is due on August 29, 2012.
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Interest and Foreign Exchange Rates
We are exposed to market risk related to changes in interest and foreign currency exchange rates,
each of which could adversely affect the value of our current assets and liabilities. At March 31,
2011, we had $205.9 million in cash and cash equivalents and our cash equivalents had an average
remaining maturity of 53 days. If market interest rates were to increase immediately and uniformly
by one hundred basis points from levels at March 31, 2011, the fair value of the cash equivalents
would decline by an immaterial amount due to the short remaining maturity period.
The functional currency of QLT Inc. and its U.S. subsidiaries is the U.S. dollar, therefore our
U.S. dollar-denominated cash and cash equivalents holdings do not result in foreign currency gains
or losses in operations. Since QLT Inc. holds a portion of its monetary assets and liabilities in
Canadian dollars, we are subject to translation gains and losses. These translation gains and
losses are included in operations for the period.
At March 31, 2011, we had no outstanding forward foreign currency contracts.
Contractual Obligations
Our material contractual obligations as of March 31, 2011 comprised our supply agreements with
contract manufacturers, and clinical and development agreements. We also have operating lease
commitments for office space, office equipment and vehicles. Details of these contractual
obligations are described in our 2010 Annual Report.
Off-Balance Sheet Arrangements
In connection with the sale of assets and businesses, we provide indemnities with respect to
certain matters, including product liability, patent infringement, and contractual breaches and
misrepresentations, and we provide other indemnities to parties under the clinical trial, license,
service, manufacturing, supply, distribution and other agreements that we enter into in the normal
course of our business. If the indemnified party were to make a successful claim pursuant to the
terms of the indemnification, we would be required to reimburse the loss. These indemnities are
generally subject to threshold amounts, specified claims periods and other restrictions and
limitations.
Except as described above and the contractual arrangements described in the Contractual Obligations
section above, we do not have any off-balance sheet arrangements that have, or are reasonably
likely to have, a current or future material effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity, capital expenditures
or capital resources that is material to investors.
Recently Issued and Recently Adopted Accounting Standards
Refer to Note 1 Summary of Significant Accounting Policies in the Notes to Unaudited Condensed
Consolidated Financial Statements for a discussion of recently issued and adopted accounting
standards.
Outstanding Share Data
As of May 3, 2011, there were 50,867,275
common shares issued and outstanding for a total of $477.0 million in share capital. As of
May 3, 2011, we had 5,299,711 stock options outstanding under the
QLT 2000 Incentive Stock Option Plan (of which 3,961,958 were exercisable) at a weighted average
exercise price of CAD $5.22 per share. Each stock option is exercisable for one common share.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the reporting periods
presented. Significant estimates are used for, but not limited to, provisions for non-completion
of inventory, provision for obsolete inventory, assessment of the recoverability of long-lived
assets, allocation of goodwill to divested businesses, the fair value of the mortgage receivable,
the fair value of contingent consideration, allocation of costs to manufacturing under a standard
costing system, allocation of overhead expenses to research and development, sales rebates and
return accruals, determination of fair value of assets and liabilities acquired in net asset
acquisitions or purchase business combinations, stock-based compensation, and provisions for taxes,
tax assets and tax liabilities. Actual results may differ from estimates made by management.
Please refer to our Critical Accounting Policies and Estimates included as part of our 2010 Annual
Report.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Report contains forward-looking statements within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and forward looking information within the meaning of
the Canadian securities legislation which are based on our current expectations and projections.
Words such as anticipate, project, believe, expect, forecast, outlook, plan,
intend, estimate, should, may, assume, continue and variations of such words or similar
expressions are intended to identify our forward-looking statements and forward-looking
information. Such statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of QLT to be materially different
from the results of operations or plans expressed or implied by such forward-looking statements and
forward-looking information. Many such risks, uncertainties and other factors are taken into
account as part of our assumptions underlying the forward-looking statements and forward-looking
information.
The following factors, among others, including those described under Item 1A. Risk Factors in this
Report and Item 1A. Risk Factors in our Annual Report, could cause our future results to differ
materially from those expressed in the forward-looking statements and forward-looking information:
| levels of future sales of Visudyne, including the impact of competition, loss of patent
protection and limited commercial supply and technical support for laser devices required
for Visudyne therapy; |
| our ability to effectively market and sell Visudyne in the U.S.; |
| the ability of Novartis to effectively market and sell Visudyne in countries outside the
U.S.; |
| our continued ability to supply Visudyne to our customers; |
| our expectations regarding Visudyne label changes and reimbursement; |
| receipt of all or part of the contingent consideration pursuant to the stock purchase
agreement entered into with Tolmar, which is based on anticipated levels of future sales of
Eligard; |
| unanticipated future operating results; |
| our reliance on contract manufacturers and suppliers to manufacture Visudyne at
competitive prices and in accordance with the U.S. Food and Drug Administration and other
local and foreign regulatory requirements as well as our product specifications; |
| our reliance on our specialty wholesale distributors to distribute Visudyne in
accordance with regulatory requirements and the terms of our agreements; |
| our expectations regarding future tax liabilities as a result of our recent
restructuring transactions, changes in estimates of prior years tax items and results of
tax audits by tax authorities; |
| the scope, validity and enforceability of our and third party intellectual property
rights; |
| our ability to successfully develop our programs, including our punctal plug drug
delivery system and synthetic retinoid compound; |
| the anticipated timing, cost and progress of the development of our technology and
clinical trials; |
| the anticipated timing of regulatory submissions for products and product candidates; |
| the anticipated timing for receipt of, and our ability to maintain, regulatory approvals
for products and product candidates; |
| the anticipated timing for receipt of, and our ability to maintain, reimbursement
approvals for our products and product candidates, including reimbursement under U.S.
governmental and private insurance programs; and |
| existing governmental laws and regulations and changes in, or the failure to comply
with, governmental laws and regulations. |
Although we believe that the assumptions underlying the forward-looking statements and
forward-looking information contained herein are reasonable, any of the assumptions could be
inaccurate, and therefore such statements and information included in this Report may not prove to
be accurate. In light of the significant uncertainties inherent in the forward-looking statements
and forward-looking information included herein, the inclusion of such statements and information
should not be regarded as a representation by us or any other person that the results or conditions
described in such statements and information or our objectives and plans will be achieved. Any
forward-looking statement and forward-looking information speaks only as of the date on which it is
made. Except to fulfill our obligations under the applicable securities laws, we undertake no
obligation to update any such statement or information to reflect events or circumstances occurring
after the date on which it is made.
Financial guidance is contained in our earnings press release issued on March 1, 2011 which can be
found on SEDAR at www.sedar.com and EDGAR at www.sec.gov. Information contained in the earnings
press release and related Material Change Report and Current Report on Form 8-K filed therewith
shall not be deemed filed for purposes of Section 18 of the Exchange Act, and is not incorporated
by reference herein.
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ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
See Managements Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources in the Notes to Unaudited Condensed Consolidated Financial
Statements of this Report as well as Item 7A. Quantitative and Qualitative Disclosures about
Market Risk of our Annual Report.
ITEM 4. | CONTROLS AND PROCEDURES |
Disclosure Controls and Procedures
We maintain a set of disclosure controls and procedures designed to ensure that information
required to be disclosed in filings made pursuant to the Exchange Act is recorded, processed,
summarized and reported within the time periods specified and in accordance with the SECs rules
and forms and is accumulated and communicated to management, including the Chief Executive Officer
and Chief Financial Officer. Our principal executive and financial officers have evaluated our
disclosure controls and procedures as of the end of the period covered by this Report and concluded
that our disclosure controls and procedures were effective in timely alerting them to material
information required to be included in our periodic SEC reports.
It should be noted that the design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance that any design
will succeed in achieving its stated goals under all potential future conditions, regardless of how
remote. However, our Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures are effective under circumstances where our disclosure controls
and procedures should reasonably be expected to operate effectively.
Changes in Internal Control over Financial Reporting
Our internal control over financial reporting is designed with the objective of providing
reasonable assurance regarding the reliability of our financial reporting and preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles.
No change was made to our internal controls over financial reporting during the fiscal quarter
ended March 31, 2011 that has materially affected, or is reasonably likely to materially affect,
such internal controls over financial reporting.
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PART II OTHER INFORMATION
ITEM 1. | LEGAL PROCEEDINGS |
There are currently no material pending legal proceedings. For information regarding litigation and
other risks, uncertainties and other factors that may materially and adversely affect our business,
products, financial condition and operating results, refer to Item 1A. Risk Factors in this Report
and Item 1A. Risk Factors in our Annual Report.
ITEM 1A. | RISK FACTORS |
In addition to the risk factors set forth below and other information set forth in this Report, you
should carefully consider the factors discussed in Part 1A. Risk Factors of our Annual Report,
which could materially affect our business, products, financial condition and operating results.
The risks described in our Annual Report are not the only risks facing us. Additional risks and
uncertainties not currently known to us or that we currently deem not to be material also may
materially adversely affect our business, products, financial condition and operating results.
Visudyne is currently our only commercial product. Accordingly, any decrease in sales of Visudyne
would harm our business.
Visudyne is our only commercial product and, accordingly, any decrease in Visudyne product sales
would harm our business and cause our financial results to be below expectations. In 2009,
worldwide sales of Visudyne decreased 25.5% from the prior year, primarily due to the approval and
reimbursement in Europe of alternative therapeutics for AMD. In 2010, worldwide sales of Visudyne
decreased 14.2% from 2009. We cannot assure you that Visudyne product sales will not continue to
decrease. Visudyne may be rendered obsolete or uneconomical by competitive changes, including
generic competition. Visudyne sales could also be adversely affected by other factors, including:
| product manufacturing or supply interruptions or recalls; |
| the development of competitive products by other companies; |
| developing and maintaining effective sales and marketing capabilities; |
| marketing or pricing actions by our competitors or regulatory authorities; |
| changes in the reimbursement by third-party payors; |
| changes in or withdrawal of regulatory approval for or the labelling of Visudyne; |
| the majority of the laser devices used in Visudyne therapy have reached, or are nearing,
the end of their lifecycle; |
| declining commercial supply and technical support for laser devices used in Visudyne
therapy; |
| disputes relating to patents or other intellectual property rights; |
| disputes with our licensees; |
| changes in laws and regulations that adversely affect our ability to market Visudyne;
and |
| potential disruptions to our distribution channel and decreases in demand for Visudyne
in Japan due to the 2011 earthquake, tsunami and resultant business conditions and economic
uncertainty. |
We face intense competition, which may limit our commercial opportunities and our ability to
generate revenues.
The biopharmaceutical industry is highly competitive and is characterized by rapidly evolving
technology. Competition in our industry occurs on many fronts, including developing and bringing
new products to market before others, developing new technologies to improve existing products,
developing new products to provide the same benefits as existing products at less cost, developing
new products to provide benefits superior to those of existing products, and acquiring or licensing
complementary or novel technologies from other pharmaceutical companies or individuals.
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We face intense competition against Visudyne, as well as our technology under clinical development.
We may be unable to contend successfully with current or future competitors. Our competitors
include major pharmaceutical and biopharmaceutical companies, many of which are large,
well-established companies with access to financial, technical and marketing resources
significantly greater than ours and substantially greater experience in developing and
manufacturing products, conducting preclinical and clinical testing and obtaining regulatory
approvals. Our competitors may develop or acquire new or improved products to treat the same
conditions that our products treat, or may make technological advances that reduce their cost of
production so that they may engage in price competition through aggressive pricing policies to
secure a greater market share to our detriment. Our commercial opportunities will be reduced or
eliminated if our competitors develop or acquire and market products that are more effective, have
fewer or less severe adverse side effects, or are less expensive than our products. Competitors
also may develop or acquire products that make our current or future products obsolete.
In connection with Visudyne, we face significant competition from Lucentis®, an
anti-VEGF antibody approved for the treatment of neovascular wet AMD, and diluted Avastin®
(bevacizumab), which is also used off-label extensively by physicians to treat wet AMD. In
addition, we are aware of other competitive therapies for wet AMD under development. For instance,
in April 2011, the FDA granted priority review for Regeneron Pharmaceuticals, Inc.s Biologics
License Application (BLA) for VEGF Trap-Eye for the treatment of neovascular wet AMD. The FDA
review deadline for this product is August 20, 2011, which means that, if approved, the VEGF
Trap-Eye could launch as early as the third quarter of 2011. In addition, EpiRad90, a
product under development by NeoVista Inc., has been CE marked in the EU for marketing and is in
Phase III clinical trials in the U.S. for the treatment of wet AMD. Further, some of our Visudyne
competitors are also our collaborators. For example, Novartis, which, pursuant to the Amended PDT
Agreement, has the marketing and sales rights to our Visudyne product outside of the U.S., also has
rights to market Lucentis® outside of the U.S.
In connection with our technology under clinical development, including our punctal plug drug
delivery technology and synthetic retinoid, our competitors may develop or obtain patent protection
for products earlier than us, design around patented technology developed by us, obtain regulatory
approval for such products before us, or develop more effective or less expensive products than us.
Any of these competitive products or events could have a significant negative impact on our
business and financial results, including reductions in our market share, revenues and gross
margins.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
On December 8, 2010, we announced that our Board of Directors authorized the repurchase of up to
3.6 million of our issued and outstanding common shares, being 10% of our public float as of
December 9, 2010, over a 12 month period commencing December 16, 2010 under a normal course issuer
bid. All purchases are to be effected in the open market through the facilities of the TSX or
NASDAQ, and in accordance with regulatory requirements. The actual number of common shares which
are purchased and the timing of such purchases are determined by management, subject to compliance
with applicable law. All common shares repurchased will be cancelled. In accordance with TSX
rules, daily purchases made by us on the TSX will not exceed 3,604 common shares (25% of our
average daily trading volume of 14,414 common shares on the TSX for the six completed calendar
months prior to TSX approval of the normal course issue bid) subject to certain prescribed
exemptions. Rule 10b-18 of the U.S. Securities Exchange Act of 1934, as amended, contains similar
restrictions on daily purchases that may be made by us on the NASDAQ based on 25% of the average
daily trading volume of our common shares on NASDAQ for the most recently completed four calendar
weeks on a rolling basis, subject to certain exemptions for block purchases. The price that we
will pay for any such shares will be the market price on the TSX or the NASDAQ, as the case may be,
at the time of acquisition. Since initiating this normal course issuer bid, to May 5, 2011, we
have repurchased through the facilities of the NASDAQ, and immediately cancelled, an aggregate
555,800 common shares at an average price of $6.84 per share, for a total cost of $3.8 million.
Shareholders may obtain a copy of our TSX Form 12 Notice of Intention to Make a Normal Course
Issuer Bid, without charge, by request directed to the attention of our Secretary, at our offices
located at 887 Great Northern Way, Suite 101, Vancouver, B.C., Canada V5T 4T5.
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The following table sets forth information regarding our purchases of common shares on a monthly
basis during the three months ended March 31, 2011:
Issuer Purchases of Equity Securities | ||||||||||||||||
Total Number of | Maximum Number | |||||||||||||||
Total | Shares Purchased as | of Shares that May | ||||||||||||||
Number of | Average | Part of Publicly | Yet Be Purchased | |||||||||||||
Shares | Price Paid | Announced Plans or | Under the Plans or | |||||||||||||
Period | Purchased | per Share | Programs | Programs | ||||||||||||
January 1, 2011
through January 31,
2011 |
| | | 3,592,985 | ||||||||||||
February 1, 2011
through February
28, 2011 |
| | | 3,592,985 | ||||||||||||
March 1, 2011
through March 31,
2011 |
533,500 | $ | 6.84 | 533,500 | 3,059,485 | |||||||||||
Total |
533,500 | $ | 6.84 | 533,500 | 3,059,485 | |||||||||||
ITEM 6. | EXHIBITS |
The exhibits filed or furnished with this Report are set forth in the Exhibit Index.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this Report to be signed on its behalf by the undersigned thereunto duly authorized.
QLT Inc. (Registrant) |
||||
Date: May 5, 2011 | By: | /s/ Robert L. Butchofsky | ||
Robert L. Butchofsky | ||||
President and Chief Executive Officer (Principal Executive Officer) |
||||
Date: May 5, 2011 | By: | /s/ Cameron R. Nelson | ||
Cameron R. Nelson | ||||
Vice President, Finance and Chief Financial
Officer (Principal Financial and Accounting Officer) |
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EXHIBIT INDEX
Exhibit | ||||
Number | Description | |||
31.1 | Rule 13a-14(a) Certification of the Chief Executive Officer. |
|||
31.2 | Rule 13a-14(a) Certification of the Chief Financial Officer. |
|||
32.1 | Section 1350 Certification of the Chief Executive Officer. |
|||
32.2 | Section 1350 Certification of the Chief Financial Officer. |
25