The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from Marketwire

Paladin Reports Sixteenth Consecutive Year of Record Revenues

Ninth Consecutive Year of Record EBITDA

Thursday, February 16, 2012

Paladin Reports Sixteenth Consecutive Year of Record Revenues07:30 EST Thursday, February 16, 2012MONTREAL, CANADA--(Marketwire - Feb. 16, 2012) - Paladin Labs Inc. (TSX:PLB), a leading Canadian specialty pharmaceutical company, today reported its financial results for the fourth quarter and year ended December 31, 2011. The Company has achieved its 16th consecutive year of record revenues and its 9th consecutive year of record EBITDA (1) . 2011 Highlights FinancialRevenues for 2011 totalled a record $141.5 million an increase of 11% over 2010 EBITDA(1) for 2011 increased 20% to a record $67.6 million compared to $56.4 million in 2010 Sales of promoted products: Tridural®, Trelstar®, Testim®, Metadol®, Plan B® and Abstral® grew 14% in 2011 compared to 2010 Product DevelopmentObtained approval from Health Canada for and subsequently launched DigiFab®Acquired the Tempra® line of products in Canada Launched Seasonique®, a next generation extended-cycle oral contraceptive for the prevention of pregnancy Out-licensed the exclusive right to develop and commercialize fomepizole to Takeda Pharmaceutical Company Limited (TSE: 4502)("Takeda") Acquired the exclusive Canadian rights to market and sell a controlled release hydrocodone product for the treatment of moderate to severe pain from an affiliate of Elan Corporation, plc. Filed a new drug submission for Oralair™ with Health Canada. Entered into an exclusive collaboration with Somaxon Pharmaceuticals, Inc. (NASDAQ:SOMX) to commercialize Silenor®Obtained approval from Health Canada and subsequently launched Abstral®Entered into a distribution agreement with Common Sense Limited for two diagnostic products: AL-SENSE OTC and VS-SENSE OTC for Canada, Latin America and Sub-Saharan Africa Entered into a licensing and distribution agreement with Immuron Limited (ASX:IMC) for Travelan® for Canada, Latin America and Sub-Saharan Africa Corporate DevelopmentAccelerated the purchase of Pharmaplan (pty) Ltd. ("Pharmaplan") shares leading to the acquisition of a total of 10% interest of Pharmaplan in 2011 Amended its existing agreements with Isotechnika Pharma Inc. ("IsoPharma") to transfer to IsoPharma certain ownership and rights and sold 12,500,000 common shares of IsoPharma to ILJIN Life Science Co., Ltd ("ILJIN") Closed a bought deal agreement offering of 1,150,000 common shares, including 150,000 common shares issued pursuant to the exercise by the underwriters of their over-allotment option Received repayment of its secured debt facility from Prostrakan Group plc ("ProStrakan") and recorded an early termination gain of $8.4 million in connection with the acquisition of ProStrakan by Kyowa Hakko Kirin Co., Ltd. ("KHK") Recorded a gain of $5.0 million in connection with its bid to acquire the outstanding shares of Afexa Life Sciences Acquired all of the issued and outstanding shares of Labopharm Inc. ("Labopharm") "This year was unprecedented in terms of the size and scope of our business development activity. With a growing commercial platform, a rich pipeline of products and over $239 million in cash to fund new licenses and acquisitions, Paladin remains well positioned to continue to grow, both domestically and internationally" said Mark Beaudet, Interim President and CEO of Paladin Labs.Jonathan Goodman UpdateOn August 18, 2011, the Company announced that its President and CEO, Mr. Jonathan Ross Goodman, was involved in an accident and was hospitalized with serious injuries. As Mr. Goodman was unable to perform his duties as President and CEO, the Board of Directors of Paladin asked Mr. Mark Beaudet, Co-Founder, Director and Vice President Marketing and Sales of Paladin, to assume such duties on an interim basis. Mr. Goodman continues his recovery and rehabilitation program. As a result, Mr. Goodman will remain absent from the Company for an indeterminate period of time. The Company will provide further updates on Mr. Goodman's condition only when a change in circumstance warrants same.Financial ResultsFor the quarter ended December 31, 2011, Paladin recorded revenues of $37.1 million compared to $32.4 million in the fourth quarter of 2010, a 15% year over year increase. Revenues increased $13.5 million or 11% to a record $141.5 million in 2011 from $128.0 million in 2010. The increase in revenues for the quarter and for the year ended December 31, 2011 is attributable to the sales growth of certain significant promoted products, including Tridural®, Trelstar®, Testim®, Metadol® and Plan B®, which combined increased by 10% for the quarter and 14% for the year. In addition, revenues increased as a result of incremental revenues from products acquired and/or launched, and corporate acquisitions since 2010, including the acquisition of Labopharm. EBITDA for the year ended December 31, 2011 increased 20% to a record $67.5 million compared to $56.4 million in 2010. EBITDA for the fourth quarter of 2011 decreased 10% to $13.9 million compared to EBITDA of $15.5 million in the fourth quarter 2010, primarily as a result of incremental research and development expenses due to license and submission fees for new products and overhead costs related to the integration of Labopharm, which is expected to be completed in the second quarter of 2012. Net income for the fourth quarter increased 14% to $15.8 million or $0.76 per fully diluted share compared to net income of 13.9 million or $0.71 per fully diluted share for the same period in 2010. Net income for the year ended December 31, 2011 increased $20.3 million or 68% to $50.2 million from $29.9 million.Selling, general and administrative expense for 2011 increased to $32.1 million compared to $30.5 million in 2010 but decreased as a percentage of revenues to 23% for 2011 compared to 24% for 2010.. Selling, general and administrative expense for the fourth quarter of 2011 increased to $9.1 million compared to $7.3 million in the fourth quarter of 2010 and increased as a percentage of revenues to 24% from 22% for the quarter The increase in selling, general and administrative expenses for the year and the quarter ended December 31, 2011 is primarily the result of business development costs in relation to corporate development activities as well as overhead costs related to the integration of Labopharm and promotion expenses for newly launched products.Amortization expense for the fourth quarter 2011 increased to $6.2 million from $5.4 million in the corresponding period a year ago. The increase in amortization for the period is primarily the result of amortization taken on newly acquired pharmaceutical product licenses and rights, including assets acquired as a result of the Labopharm acquisition, partially offset by certain pharmaceutical product licenses and rights having reached full amortization during the quarter. For 2011, amortization expense decreased to $22.0 million from $22.8 million in 2010. The decrease in amortization expense is the result of certain pharmaceutical product licenses and rights being fully amortized during the year partially offset by the amortization taken on newly acquired pharmaceutical product licenses and rights including assets acquired as a result of the Labopharm acquisition. As at December 31 2011, Paladin's cash, cash equivalents and investments in marketable securities totaled a record $239 million. From this strong cash position, Paladin continues to pursue acquisition opportunities. Product DevelopmentsDuring the year Paladin launched three new products for the Canadian market. Paladin obtained regulatory approval and launched Abstral®, a novel, rapidly-disintegrating, sublingual formulation of fentanyl, a well-established opioid used for the management of episodes of breakthrough pain experienced by cancer patients who are already receiving and tolerant to opioid analgesics for chronic pain. Also during 2011, Paladin launched Seasonique®, a new approach in oral contraceptives and DigiFab® which is indicated for the treatment of patients with life-threatening or potentially life-threatening digoxin toxicity or overdose. The year was also marked by the acquisition of the Tempra® line of products in Canada from Bristol Myers Squibb. Paladin has been selling Tempra® in the Canadian market since February 2011.Paladin also in-licensed two new prescription products which are not yet approved for sale in Canada: Elan's hydrocodone product, indicated for the treatment of moderate to severe pain; and, Silenor®, which is indicated for the treatment of insomnia characterized by difficulty with sleep maintenance. Paladin holds the rights for Silenor® in Canada, South America and Africa and intends to submit for regulatory approval in the first half of 2012. In addition, Paladin in-licensed three over the counter products for Canada, Latin America and Sub-Saharan Africa: AL-SENSE and VS-SENSE OTC, novel diagnostic tests for the detection of detect amniotic fluid leakage during pregnancy and the detection of bacterial vaginosis or trichomonas infection respectively; and, Travelan® which is indicated for the prevention of Travellers' Diarrhea.During 2011, Paladin entered into an out-licensing and distribution agreement under which Paladin granted Takeda an exclusive right to develop and commercialize fomepizole (marketed and distributed by Paladin under the trademark Antizol® in Canada and the United States) for the treatment of ethylene glycol and methanol poisonings in Japan.In May 2011, Paladin submitted Oralair™ for regulatory approval. Oralair™ is a sublingual grass pollen immunotherapy tablet for the treatment of grass pollen rhinitis with or without conjunctivitis for patients uncontrolled with current symptomatic medications. Paladin expects to obtain regulatory approval in the second half of 2012. Corporate DevelopmentsIn January 2011, Paladin closed its agreement with ProStrakan Group plc whereby Paladin was granted an exclusive license to ProStrakan's products for certain emerging territories and acquired, by way of assignment, ProStrakan's existing secured debt facility of $77.2 million (£50 million) with the addition of certain conversion rights. On May 17, 2011, Paladin received repayment of its secured debt facility including the receipt of a payment equivalent to the balance of interest payable for the first year together with a break free of $3 million (£2 million) in connection with the acquisition of ProStrakan Group plc by Kyowa Hakko Kirin Co., Ltd. A total of $88.4 million representing $77.2 million to reimburse the original debt facility, $2.8 million in earned interest and $8.4 million related to the early termination of the agreement was received. Also in February, Paladin accelerated its investment in Pharmaplan by increasing its planned investment from 5%, as stipulated in the original agreement, to 10%. This increased Paladin's ownership from 34.99% to 44.99% effective March 1, 2011. Paladin remains confident in Pharmaplan's ability to grow and generate profits and ultimately, generate value for Paladin's shareholders.On February 24, 2011, Paladin closed its bought deal offering of 1,150,000 common shares which includes 150,000 common shares issued pursuant to the exercise by the underwriters of their over-allotment option. The common shares were issued at a price of $35.00 per common share for total gross proceeds to Paladin of approximately $40.3 million. Also in August, 2011, the Company entered into a definitive agreement pursuant to which the Company would acquire all of the issued and outstanding common shares of Labopharm at a price of $0.2857 per share in cash, representing a 57.4% premium over the volume-weighted average price of Labopharm's shares of $0.1815 for the 30 trading days prior to the August 17, 2011 announcement. On October 7, 2011, following Labopharm shareholder and court approval, Paladin completed the acquisition of Labopharm.Paladin received regulatory approval from the Toronto Stock Exchange to carry out a normal course issuer bid to purchase up to 935,367 of its common shares effective May 30, 2011. To date Paladin has purchased 16,704 shares under this normal course issuer bid.Financial OutlookFor fiscal 2012, Paladin expects to generate at least $140 million in revenue. This forecast excludes the impact of acquisitions and of product launches resulting from new regulatory approvals that may be made by the Company between now and the end of 2012.(1) EBITDA - Non-IFRS Financial Measures The term EBITDA (earnings before interest, taxes, depreciation and amortization) does not have any standardized meaning under International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similar measures presented by other companies. The Company defines EBITDA as earnings before interest expense, other finance (income) expense, taxes, amortization, foreign exchange gains (losses), share of net income in an associate and unusual items; such as write-downs and gains (losses) on intellectual property and investments. EBITDA is calculated and presented consistently from period to period and agrees, on a consolidated basis, with the amount disclosed as "Earnings before under-noted items" on the consolidated statements of income. The Company believes EBITDA to be an important measurement that allows it to assess the operating performance of its ongoing business on a consistent basis without the impact of amortization expenses. The Company excludes amortization expenses because their level depends substantially on non-operating factors such as the historical cost of intangible assets. The Company's method for calculating EBITDA may differ from that used by other issuers and, accordingly, this measure may not be comparable to EBITDA used by other issuers.Conference Call Notice Paladin will host a conference call to discuss its fourth quarter results today at 10:00 a.m. EST. The dial-in number for the conference call is 1-800-704-8781 or 416-352-0528. The call will be audio-cast live and archived for 30 days at www.paladinlabs.com. About Paladin Labs Inc.Paladin Labs Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing innovative pharmaceutical products for the Canadian and select international markets. With this strategy, a focused Canadian national sales team and proven marketing expertise, Paladin has evolved into one of Canada's leading specialty pharmaceutical companies. For more information, please visit the Company's web site at www.paladinlabs.com.This press release may contain forward-looking statements and predictions. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The Company considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared, but cautions that these assumptions regarding the future events, many of which are beyond the control of the Company and its subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations, are discussed in the annual report as well as in the Company's Annual Information Form for the year ended December 31, 2010. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information or future events and except as required by law. For additional information on risks and uncertainties relating to these forward-looking statements, investors should consult the Company's ongoing quarterly filings, annual report and Annual Information Form and other fillings found on SEDAR at www.sedar.com.CONSOLIDATED BALANCE SHEETS(In thousands of Canadian dollars)December 31, 2011December 31, 2010ASSETS(unaudited)(restated(1))CurrentCash and cash equivalents72,11596,295Marketable securities166,89443,094Trade and other receivables20,20821,912Inventories13,32713,877Investment tax credits recoverable--Income tax receivable71817Other current assets1,4764,717Total current assets274,738179,912Investment in an associate20,85015,739Financial assets9,31122,835Investment tax credits recoverable24,67414,736Deferred income tax assets40,61326,586Property, plant and equipment162221Pharmaceutical product licenses and rights27,56520,594Total assets397,913280,623LIABILITIES AND SHAREHOLDERS' EQUITYCurrentPayables, accruals and provisions38,84936,901Finance lease liability984-Deferred revenue2,9991,939Income tax payable22,20511,254Balances of sale payable1,8091,145Total current liabilities66,84651,239Finance lease liability5,745-Deferred revenue2,099-Balances of sale payable497539Total liabilities75,18751,778Shareholders' equityShare capital166,681123,136Other paid-in capital5,1444,892Other capital reserves553175Retained earnings150,348100,642Total shareholders' equity322,726228,845Total liabilities and shareholders' equity397,913280,623(1)Effective January 1, 2010, Paladin transitioned to IFRS. As a result the comparative statements have been restated in accordance with International Financial Reporting StandardsCONSOLIDATED STATEMENT OF INCOME(In thousands of Canadian dollars except for share and per share amounts)Three-month periods ended December 31Twelve-month periods ended December 312011201120112010(unaudited)(restated1)(unaudited)(restated1)Revenues37,08332,434141,466127,989Cost of sales11,5438,38139,29434,127Gross income25,54024,053102,17293,862Expenses (income)Selling, general and administrative9,0677,29432,11930,525Research and development3,6282,2249,7739,118Interest income(1,071)(916)(7,278)(2,222)Earnings before under-noted items13,91615,45167,55856,441Amortization of pharmaceutical product licenses and rights6,1685,35722,02822,844Other finance income(70)(6,360)(8,687)(6,496)Other income-(499)(97)(540)Foreign exchange loss2851748059Share of net income of an associate(660)(43)(1,756)(800)Income before income tax and under-noted items8,19316,82255,99041,374Net purchase gain on business combination(8,275)-(8,275)-Income before income tax16,46816,82264,26541,374Provision for income taxes6962,93014,11411,518Net income for the year15,77213,89250,15129,856Attributable to shareholdersBasic earnings per share0.780.742.511.60Diluted earnings per share0.760.712.431.54Weighted average number of shares outstandingBasic20,232,94718,790,70419,970,65818,700,808Diluted20,849,40819,509,23020,659,27619,362,892CONSOLIDATED STATEMENTS OF CASH FLOWS [In thousands of Canadian dollars]Three-month periods ended December 31, Twelve-month periods ended December 31,2011201020112010(unaudited)(restated1)(unaudited)(restated1)Operating activitiesNet income for the year15,77213,89250,15129,856Adjustments reconciling net income to operating cash flowsAmortization of pharmaceutical product licenses and rights6,1685,35722,02822,844Deferred tax(1,144)2,6192,5776,585Share-based compensation expense4383731,9461,715Other finance income(69)(6,360)(8,687)(6,496)Unrealized foreign exchange (gain) loss825274(7)135Depreciation of property, plant and equipment2279187563Share of net income of an associate(660)(43)(1,756)(800)Net purchase gain on business combination(13,124)-(13,124)-8,22816,19153,31554,402Net change in non-cash balances relating to operations3,9135,15714,79813,838Cash inflow from operating activities12,14121,34868,11368,240Investing activitiesPurchase of financial assets(1,000)(7,690)(89,873)(17,003)Purchases of marketable securities(50,561)(6,108)(201,618)(133,670)Purchase of pharmaceutical product licenses and rights--(7,617)-Investment in an associate-(2,879)(2,936)(18,861)Acquisition of subsidiary, net of cash acquired(1,109)-(1,109)-Repayment of balances of sale payable--(250)(1,650)Purchase of property, plant and equipment(9)(26)(78)(93)Proceeds from disposal of financial assets13,109364102,119391Disposal and maturities of marketable securities27,02073,59378,373164,698Dividends from an associate1,9807922,871792Net cash outflow from investing activities(10,570)58,046(120,118)(5,396)Financing activitiesCommon shares issued for cash88023641,9182,259Repayment of debt(13,241)-(13,241)-Repurchase of shares(259)-(580)-Repayment of obligation under finance lease(167)-(167)-Net cash inflow from financing activities(12,787)23627,9302,259Foreign exchange loss on cash and cash equivalents(75)(105)(35)(Decrease) increase in cash and cash equivalents during the period(11,216)79,555(24,180)65,068Cash and cash equivalents, beginning of period83,33116,74096,29531,227Cash and cash equivalents, end of period72,11596,29572,11596,295Cash and cash equivalents72,11596,29572,11596,295Marketable securities166,89443,094166,89443,094239,009139,389239,009139,389FOR FURTHER INFORMATION PLEASE CONTACT: Chief Financial OfficerSamira SakhiaPaladin Labs Inc.Tel: 514-669-5367514-344-4675 (FAX)Email: info@paladinlabs.comWebsite: www.paladinlabs.com