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Press release from CNW Group

Cangene Reports Third Quarter 2012 Results

Tuesday, June 12, 2012

Cangene Reports Third Quarter 2012 Results18:31 EDT Tuesday, June 12, 2012Readers are referred to the cautionary notes regarding Forward-looking Information and non-IFRS Financial Measures at the end of this release. Unless noted otherwise, all dollar amounts are in U.S. dollars. TSX: CNJWINNIPEG, June 12, 2012 /CNW/ - Cangene Corporation today reports financial results for the third quarter of 2012, ended on April 30, 2012.Revenues for the quarter were $27.5 million, compared with $34.2 million in the same quarter last year. The decrease in revenue is largely attributable to lower bulk sales of non-specialty plasma in the biopharmaceutical-operations segment. The Company also recognized lower product-services revenue on its anthrax immune globulin ("AIG") contract, compared with the same quarter last year, which included a delivery of AIG product. Deliveries on the AIG contract were completed in 2011. These decreases in revenue were partially offset by activity in the contract-services segment in the current-year quarter, which included plasma deliveries on the botulism antitoxin ("BAT") contract and higher contract-manufacturing revenue at Cangene's Baltimore-based subsidiary, Cangene bioPharma, Inc., compared with the same quarter last year.Net loss for the current quarter of $4.6 million, compares with a net loss of $1.4 million in the same quarter last year. The greater net loss in the current quarter results largely from lower revenues and gross margins on biopharmaceutical product sales and a smaller tax benefit, but was partially offset by a reduction in selling, general and administrative expenses and a smaller foreign-exchange loss. A loss per share for the current quarter of $0.07 compares with a loss per share of $0.02 in the same quarter last year."The 2012 fiscal year has been one of great transition for Cangene, and we have made many positive changes in the organization," says John Sedor, President and CEO of Cangene. "As we work towards redefining our corporate priorities, we believe that we will be well positioned to generate added value for our stakeholders," adds Mr. Sedor.As at April 30, 2012, Cangene had a cash balance of $43.4 million and no debt. Cash used in operations, excluding changes in working capital, was $3.0 million for the current quarter, compared with cash flow of $0.1 million in the same quarter last year. The net change in non-cash working capital for the quarter was a decrease of $12.7 million, primarily due to lower accounts receivable and taxes recoverable, with the result that cash provided by operations in the quarter was $9.7 million.Certain comparative figures in the following financial statements have been reclassified to conform to the current year's presentation.Incorporated under the laws of OntarioCangene CorporationCONDENSED CONSOLIDATED INTERIM BALANCE SHEETS (unaudited)in thousands of U.S. dollarsAt April 30, 2012At July 31, 2011     ASSETS    Current    Cash$43,436 $45,176Accounts receivable 18,995  20,083Inventories and contracts in progress 64,861  67,177Taxes recoverable 5,520  12,220Prepaid expenses and deposits 1,744  2,334Total current assets 134,556  146,990Property, plant and equipment, net 68,951  74,175Taxes recoverable 16,589  16,288Deferred tax 17,048  16,338Intangible assets, net 9,986  12,305 $247,130 $266,096     LIABILITIES AND EQUITY    Current    Accounts payable and accrued liabilities$15,894 $18,219Derivative financial instruments 1,022  1,775Provision for chargebacks 3,473  3,664Incentive plan liability 1,113  —Taxes payable 30  92Current portion of deferred income 3,732  3,207Total current liabilities 25,264  26,957Deferred income 5,713  6,716Royalty provision 2,277  3,316Incentive plan liability 1,283  2,844Deferred share unit liability 473  222Deferred tax 1,456  2,841Total liabilities 36,466  42,896     Equity    Share capital 50,860  50,860Contributed surplus 353  —Retained earnings 159,451  172,340Total equity 210,664  223,200 $247,130 $266,096Cangene CorporationCONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (unaudited)in thousands of U.S. dollars except share-related dataThree monthsendedApril 30,2012Three months    endedApril 30, 2011Nine months  endedApril 30, 2012Nine months  ended  April 30, 2011         Revenues        Product sales$10,473 $17,019 $35,100 $39,366Product services 12,386  11,594  34,144  42,991R&D services 4,665  4,775  13,333  12,642Royalties —  847  —  2,478  27,524  34,235  82,577  97,477         Cost of sales        Product sales 9,406  13,620  27,346  26,831Product services 8,609  6,817  22,968  30,008R&D services 3,415  3,321  9,716  9,335  21,430  23,758  60,030  66,174         Gross profit 6,094  10,477  22,547  31,303         Expenses        Independent R&D 4,454  4,579  18,085  10,086Selling, general and administrative 6,455  7,570  21,272  22,855Impairment of property, plant and equipment —  —  5  —Impairment of intangible assets —  —  636  —Loss (gain) on sale of assets 36  (125)  127  (87)  10,945  12,024  40,125  32,854Operating loss (4,851)  (1,547)  (17,578)  (1,551)Short-term interest income 25  17  39  43Foreign-exchange gain (loss) (842)  (3,633)  2,877  (5,592)         Loss before taxes (5,668)  (5,163)  (14,662)  (7,100)         Tax expense (benefit)         Current 457  (2,034)  322  (3,603) Deferred (1,542)  (1,737)  (2,095)  (543)  (1,085)  (3,771)  (1,773)  (4,146)Net loss and comprehensive loss for the period$(4,583) $(1,392) $(12,889) $(2,954)         Loss per share         Basic and diluted$(0.07) $(0.02) $(0.19) $(0.04)Cangene CorporationCONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (unaudited)in thousands of U.S. dollarsStated share  capitalRetainedearningsContributedsurplusTotalBalance at July 31, 2010$51,696 $173,295 $— $224,991 Net income for the year ended July 31, 2011 —  1,509  —  1,509 Common shares purchased and cancelled under NCIB (836) (2,464) —  (3,300)Balance at July 31, 2011 50,860  172,340  —  223,200          Net loss for the nine-month period ended April 30, 2012 —  (12,889) —  (12,889)Stock option expense —  —  353  353 Balance at April 30, 2012$50,860 $159,451 $353 $210,664          Balance at July 31, 2010$51,696 $173,295 $— $224,991 Net loss for the nine-month period ended April 30, 2011 —  (2,954) —  (2,954)Common shares purchased and cancelled under NCIB (766) (2,325) —  (3,091)Balance at April 30, 2011$50,930 $168,016 $— $218,946 Cangene CorporationCONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (unaudited)in thousands of U.S. dollarsThree months  ended  April 30, 2012Three months  ended  April 30, 2011Nine months  ended  April 30, 2012Nine months  ended  April 30, 2011         OPERATING ACTIVITIES        Net loss for the period$(4,583)$(1,392)$(12,889)$(2,954)Add (deduct) items not involving cash:         Depreciation of property, plant and equipment 2,145  2,478  6,459  7,599  Amortization of intangible assets 631  681  1,957  2,047  Deferred income (961) (911) (478) (1,886) Incentive plan liability 7  (217) (448) 299  Deferred share unit liability 92  35  251  110  Amortization of royalty provision (193) (228) (642) (848) Revaluation of royalty provision 558  (156) (397) (1,736) Deferred tax benefit (1,542) (1,737) (2,095) (543) Change in value of derivative financial instruments 704  1,686  (753) 2,649  Loss (gain) on disposal of assets 36  (125) 127  (87) Impairment of intangible assets —  —  636  —  Impairment of property, plant and equipment —  —  5  —  Stock option expense 89  —  353  — Net change in non-cash working capital balances related to operations 12,744  10,544  7,815  (4,229)Cash provided by (used in) operating activities 9,727  10,658  (99) 421          INVESTING ACTIVITIES        Purchase of property, plant and equipment, net (263) (1,235) (1,401) (6,857)Acquisition of intangible assets (49) (106) (240) (219)Proceeds on disposal of assets —  140  —  140 Cash used in investing activities (312) (1,201) (1,641) (6,936)         FINANCING ACTIVITIES        Shares repurchased for cancellation —  (550) —  (3,091)Cash used in financing activities —  (550) —  (3,091)Net increase (decrease) in cash during the period 9,415  8,907  (1,740) (9,606)Cash, beginning of period 34,021  21,853  45,176  40,366 Cash, end of period$43,436 $30,760 $43,436 $30,760          Interest paid1$9 $6 $15 $13 Taxes paid2$(10,411)$(3,373)$(10,352)$(3,347)Amounts paid and received for interest were reflected as operating cash flows in the consolidated statements of cash flows.Amounts paid and received for income taxes were reflected as either operating or investing cash flows in the consolidated statements of cash flows, depending upon the nature of the underlying transaction.About Cangene CorporationCangene Corporation (TSX: CNJ), headquartered in Winnipeg, Canada, is one of the nation's oldest and largest biopharmaceutical companies and it is focused on the development and commercialization of hospital-based therapeutics. Cangene's products are sold worldwide and include products that have been accepted into the U.S. Strategic National Stockpile. Cangene has approximately 580 employees in six locations across North America. It operates manufacturing facilities in Winnipeg, Manitoba, and Baltimore, Maryland (through its wholly-owned subsidiary Cangene bioPharma, Inc.), where it produces its own products and undertakes contract manufacturing for a number of customers. Cangene operates three U.S. and one Canadian plasma-collection facilities operating under the name Cangene Plasma Resources. For more information about Cangene, go to the Company's website at: www.cangene.com.Cautionary note regarding Forward-looking InformationThis document contains forward-looking statements about the Corporation, including its business operations, strategy, and expected financial performance and condition. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "intends", "plans", "will", "believes", "estimates", or negative versions thereof, and similar expressions. In addition, any statement that may be made concerning future financial performance (including revenues, earnings or growth rates); ongoing business strategies or prospects; future use, safety and efficacy of unapproved products or unapproved uses of products; and possible future action by the Corporation are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Corporation, economic factors and the biopharmaceutical industry generally. They are not guarantees of future performance. Actual events and results could differ materially from those expressed or implied by forward-looking statements made by the Corporation due to, but not limited to, important factors such as sales levels; fluctuations in operating results; the Corporation's reliance on a small number of customers including government organizations; the demand for new products and the impact of competitive products, service and pricing; the availability and cost of raw materials, and in particular, the cost, availability and antibody concentration in plasma; progress and cost of clinical trials; costs and possible development delays resulting from use of legal, regulatory or legislative strategies by the Corporation's competitors; uncertainty related to intellectual property protection and potential costs associated with its defence as well as general economic, political and market factors in North America and internationally; interest and foreign-exchange rates; business competition; technological change; changes in government action, policies or regulations; changes in accounting policies and the effect of applying future accounting policy changes required under IFRS; unexpected judicial or regulatory proceedings; catastrophic events; the Corporation's ability to complete strategic transactions; and other factors beyond the control of management.The reader is cautioned that the foregoing list of important factors is not exhaustive and there may be other factors listed in other filings with securities regulators, including factors set out under "Risk and Uncertainties" in the Corporation's Management Discussion and Analysis, which, along with other filings, is available for review at www.sedar.com. The reader is also cautioned to consider these and other factors carefully and not to place undue reliance on forward-looking statements. Other than as specifically required by applicable law, the Corporation has no intention to update any forward-looking statements, whether as a result of new information, future events or otherwise.Cautionary Note Regarding Non-IFRS Financial MeasuresThis news release may contain non-IFRS financial measures. Terms by which non-IFRS financial measures are identified include but are not limited to "net cash", "total assets", "sales" and other similar expressions. Non-IFRS financial measures are used to provide management and investors with additional measures of performance. However, non-IFRS financial measures do not have standard meanings prescribed by IFRS and are not directly comparable to similar measures used by other companies. Please refer to the appropriate reconciliations of these non-IFRS financial measures to measures prescribed by IFRS. For further information: Contact Information John A. Sedor President and Chief Executive Officer Ph:  (204) 275-4201 Email: jsedor@cangene.com