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8-K - FORM 8-K - NOVELION THERAPEUTICS INC. | c16555e8vk.htm |
Exhibit 99.1
news release
QLT ANNOUNCES FIRST QUARTER RESULTS FOR 2011
Provides Pipeline Update
For Immediate Release | May 5, 2011 |
VANCOUVER, CANADAQLT Inc. (NASDAQ: QLTI; TSX: QLT) (QLT or the Company) today reported
financial results for the first quarter ended March 31, 2011. Unless specified otherwise, all
amounts are in U.S. dollars and in accordance with U.S. GAAP.
We were very pleased to report on Tuesday preliminary results from the 12 Leber Congenital
Amaurosis patients in our Phase 1b trial of QLT091001, said Bob Butchofsky, President and Chief
Executive Officer of QLT. We are excited about the impact we have seen this compound have on
patients with this debilitating orphan indication, and we look forward to continuing the Phase 1b
study in patients with Retinitis Pigmentosa.
2011 FIRST QUARTER FINANCIAL RESULTS
Worldwide Visudyne® Product Sales
Visudyne sales for the first quarter were $21.8 million, an increase of 2.4% from the first quarter
of 2010. Sales in the U.S. were $5.2 million, up 3.9% from the prior-year first quarter, while
sales outside the U.S. were $16.5 million, up 2.0% from the prior year.
QLT Revenues
For the first quarter, total revenue of $8.9 million was down 35.1% from the first quarter of 2010.
This decrease occurred primarily because, following the amendment of our Visudyne PDT Product
Development, Manufacturing and Distribution Agreement (Amended PDT Agreement) with Novartis,
revenue in the first quarter of 2010 benefited from the recognition of approximately $5.0 million
of previously deferred revenue for inventory shipped to, and paid for by, Novartis prior to 2010.
Excluding this impact, revenue in the first quarter of 2011 would have been up slightly from
revenue in the first quarter of 2010.
QLT Expenses / Other Income
For the first quarter, Cost of Sales was $1.3 million, down from $6.6 million in the prior year,
primarily because Cost of Sales in the prior-year quarter included $4.3 million of expense
associated with the recognition of the previously deferred revenue related to the Amended PDT
Agreement.
Research and Development (R&D) expense in the first quarter was $9.7 million, up 32.5% from $7.3
million in the same period of 2010. The increase occurred primarily because increased activity and
associated spend on QLT091001 was only partially offset by reduced spending on punctal plugs and
QLT091568.
For the first quarter, Selling, General and Administrative (SG&A) expense was $7.1 million, up from
$4.9 million in 2010. The increase was primarily due to separation costs related to the
previously-announced departure of the Companys Chief Medical Officer, and higher U.S. Visudyne
sales and marketing spend.
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Investment and Other Income of $2.8 million in the first quarter included a $2.3 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. In the first quarter, the gain in the Fair Value Change in Contingent Consideration was
negatively impacted by an increase in the discount rate used to estimate the present value of the
expected future payments, though this was largely offset by an increase in the Eligard sales
forecast.
Operating Loss
The operating loss for the first quarter was $9.6 million, compared to $5.3 million in the
prior-year first quarter. The loss increased relative to the prior-year quarter as higher R&D and
SG&A expenses were only partially offset by a small improvement in Visudyne gross profit.
Provision for Income Taxes
The provision for income taxes in the first quarter was $1.7 million, compared to a recovery of
$5.2 million in the prior-year first quarter. The decline occurred primarily because the prior-year
figure included a $5.6 million non-cash income tax recovery related to the Amended PDT Agreement.
Loss Per Share / Earnings Per Share (EPS), Adjusted EBITDA
The GAAP loss per share was $0.17 in the first quarter compared to GAAP EPS of $0.06 in the
prior-year quarter. The decline occurred primarily because the 2010 first quarter results included
the income tax recovery related to the Amended PDT agreement, and because R&D and SG&A expenses
were higher in the first quarter of 2011.
In the first quarter, the non-GAAP loss per share was $0.00. The items that were excluded in the
determination of the non-GAAP loss per share were: (i) stock compensation expense, (ii) separation
costs related to the departure of the Companys Chief Medical Officer and (iii) the Fair Value
Change in Contingent Consideration. We also added back (within Income from Discontinued Operations)
$9.0 million of Contingent Consideration earned based on Eligard sales during the first quarter.
Adjusted EBITDA plus Contingent Consideration earned for the first quarter was $1.2 million, as
follows:
Three months ended | ||||
March 31, | ||||
(In millions of United States dollars) | 2011 | |||
GAAP operating loss |
$ | (9.6 | ) | |
+ Separation costs |
0.8 | |||
+ Stock-based compensation |
0.6 | |||
+ Depreciation |
0.3 | |||
+ Contingent Consideration earned |
9.0 | |||
Adjusted EBITDA plus Contingent Consideration earned |
$ | 1.2 | ||
The full reconciliation of GAAP to non-GAAP financial measures for the first quarter ended March
31, 2011 is provided in Exhibit 1. 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. 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.
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Cash and Short-Term Investments
The Companys consolidated cash balance at March 31, 2011 was $205.9 million, down from the
consolidated balance at the end of 2010 of $209.5 million primarily due to activity in our share
repurchase program.
Share Repurchase Program Update
During the first quarter, the Company repurchased approximately 534 thousand shares under its
normal course issuer bid program at an average price of $6.84 per share, for a total cost of
approximately $3.6 million. In total, since this program commenced on December 16, 2010, the
Company has repurchased approximately 556 thousand shares at an average price of $6.84 per share,
for a total cost of $3.8 million. In aggregate since the Company began repurchasing shares in
2005, it has repurchased 44.3 million shares for a cost of $235.7 million.
Pipeline Update
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). 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 two patients in this
cohort for a total of up to 14 RP patients. Our goal is to complete enrollment of all 28 patients
by year end.
The Companys Phase II clinical trial examining the safety and efficacy of the latanoprost punctal
plug drug delivery system (L-PPDS) in glaucoma patients is ongoing. 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.
Passive Foreign Investment Company
The Company believes that it qualified as a Passive Foreign Investment Company (PFIC) for 2009 and
2010, and that it may qualify as a PFIC in 2011, 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 the preliminary results from QLTs Phase 1b proof-of-concept clinical trial of
QLT091001 for the treatment of Leber Congenital Amaurosis (LCA). Analysis of data from 12
subjects with LCA who were treated with QLT091001 for seven days has been conducted to
determine improvements in two distinct measures of visual function: visual acuity and visual
fields. The study demonstrated that treatment with QLT091001 resulted in clinically meaningful
improvement in either or both visual acuity and visual fields in 8 of the 12 subjects.
Statistically significant and clinically meaningful changes in visual fields from baseline
values were also noted in a conservative analysis subset of 7 subjects across this
heterogeneous low vision population. |
Page 3 of 8
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 | ||||||||
(In thousands of United States dollars, except per share information) | March 31, | |||||||
(Unaudited) | 2011 | 2010 | ||||||
Revenues |
||||||||
Net product revenue |
$ | 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 |
(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 |
Page 4 of 8
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)
(In thousands of United States dollars) | March 31, | December 31, | ||||||
(Unaudited) | 2011 | 2010 | ||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 205,869 | $ | 209,478 | ||||
Accounts receivable |
9,606 | 10,659 | ||||||
Current portion of contingent consideration |
38,762 | 36,520 | ||||||
Inventories |
5,080 | 3,324 | ||||||
Current portion of deferred income tax assets |
3,563 | 3,704 | ||||||
Current portion of mortgage receivable |
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 |
6,183 | 6,013 | ||||||
Long-term inventories and other assets |
12,192 | 13,319 | ||||||
Contingent consideration |
82,937 | 94,069 | ||||||
$ | 373,433 | $ | 387,783 | |||||
LIABILITIES |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | 4,833 | $ | 6,031 | ||||
Income taxes payable |
| 716 | ||||||
Accrued liabilities |
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 |
||||||||
Common shares |
475,994 | 479,998 | ||||||
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 | |||||
As at March 31, 2011, there were 50,759,775 issued and outstanding common shares and 5,409,301 outstanding stock
options.
Page 5 of 8
Exhibit 1
QLT Inc. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Reconciliation of GAAP Earnings to Adjusted Non-GAAP Earnings for the Three Months Ended March 31, 2011 |
Three months ended | Three months ended | |||||||||||
(In millions of United States dollars, except per share information) | March 31, 2011 | March 31, 2011 | ||||||||||
(Unaudited) | GAAP | Adjustments | Non-GAAP(1) | |||||||||
Revenues |
||||||||||||
Net product revenue |
$ | 5.6 | $ | | $ | 5.6 | ||||||
Royalties |
3.3 | | 3.3 | |||||||||
8.9 | | 8.9 | ||||||||||
Cost and expenses |
||||||||||||
Cost of sales |
(1.3 | ) | 0.0 | (a) | (1.3 | ) | ||||||
Research and development |
(9.7 | ) | 0.3 | (a) | (9.4 | ) | ||||||
Selling, general and administrative |
(7.1 | ) | 1.1 | (a)(b) | (6.0 | ) | ||||||
Depreciation |
(0.3 | ) | | (0.3 | ) | |||||||
(18.5 | ) | 1.4 | (17.1 | ) | ||||||||
Operating loss |
(9.6 | ) | 1.4 | (8.2 | ) | |||||||
Investment and other income |
||||||||||||
Net foreign exchange gains |
0.3 | | 0.3 | |||||||||
Interest income |
0.2 | | 0.2 | |||||||||
Fair value change in contingent consideration |
2.3 | (2.3 | )(c) | | ||||||||
2.8 | (2.3 | ) | 0.5 | |||||||||
Loss from continuing operations before income taxes |
(6.8 | ) | (0.8 | ) | (7.7 | ) | ||||||
Provision for income taxes |
(1.7 | ) | 0.3 | (d) | (1.4 | ) | ||||||
Loss from continuing operations |
(8.5 | ) | (0.5 | ) | (9.1 | ) | ||||||
Income from discontinued operations, net of income taxes |
| 9.0 | (e) | 9.0 | ||||||||
Net loss |
$ | (8.5 | ) | $ | 8.5 | $ | (0.0 | ) | ||||
Basic and diluted net loss per common share: |
||||||||||||
Continuing operations |
$ | (0.17 | ) | $ | (0.18 | ) | ||||||
Discontinued operations |
| 0.18 | ||||||||||
Net loss |
$ | (0.17 | ) | $ | (0.00 | ) | ||||||
Weighted average number of common shares outstanding (in millions): |
||||||||||||
Basic |
51.0 | 51.0 | ||||||||||
Diluted |
51.0 | 51.0 |
Adjustments:
(a) | Remove stock-based compensation. |
|
(b) | Remove separation costs related to the departure of our former Chief Medical Officer. |
|
(c) | Remove fair value change in contingent consideration. |
|
(d) | Remove income tax impact of the above adjustments. |
|
(e) | Add contingent consideration earned based on first 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 6 of 8
Conference Call Information
QLT Inc. will hold an investor conference call to discuss first quarter 2011 results on Thursday,
May 5, 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
cyang@troutgroup.com
Boston, Massachusetts, USA
Tricia Swanson
Telephone: 646-378-2953
tswanson@troutgroup.com
or
New York, USA
Christine Yang
Telephone: 646-378-2929
cyang@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.
Eligard® is a registered trademark of Sanofi-aventis Corp.
Xalatan® is a registered trademark of Pfizer Health AB.
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 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); expected benefits our programs, progression of
clinical trials and programs and timing to receive data; and statements
Page 7 of 8
which contain language such
as: assuming, prospects, future, projects, believes, expects and outlook. 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 may also contain 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.
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