NOVELION THERAPEUTICS INC 
By QLT SEPARATELY ANNOUNCES SHARE REPURCHASE PROGRAM
"Our recently announced accomplishments mark a significant turning point for the Company, as we have fulfilled our vision of becoming a company focused solely in the ocular therapeutic area and will soon have a commercial presence in the U.S.," said
2009 THIRD QUARTER FINANCIAL RESULTS
Financial Reporting
For the third quarter and nine months ended
Worldwide Product Sales
Worldwide Visudyne(R) sales for the third quarter were
QLT Revenues
Revenue is now comprised solely of revenue from Visudyne. For the third quarter, revenue of
QLT Expenses
For the third quarter of 2009, Research and Development (R&D) expense was
Operating Income/Loss
Operating loss for the third quarter was
Earnings Per Share (EPS)/Loss Per Share
EPS of
Cash and Short-Term Investments
The Company's consolidated cash and cash equivalents balance at
2009 Guidance Update
- As previously announced, under the terms of our sale of QLT USA, we
expect to be paid up to an additional $200 million in quarterly
payments equal to 80% of the royalties paid to QLT USA under the
Sanofi and Medigene agreements. As a result of this transaction:
- In the fourth quarter we expect to record a gain of over $100
million within income from discontinued operations related to the
accounting gain on the sale, which represents the excess of the
estimated present value of all consideration expected to be
received under the deal compared to the net book value of the net
assets that were sold.
- We will have an asset on the balance sheet called Contingent
Consideration, which represents the estimated present value of the
expected remaining payments due from the $200 million of quarterly
payments mentioned above.
- Cash collected each quarter will not be recorded as revenue,
rather it will draw down the Contingent Consideration asset on the
balance sheet. In the fourth quarter we expect to collect
Contingent Consideration of approximately $8.4 million.
- Each period we will have to assess the fair value of the
Contingent Consideration and any changes will flow through the P&L
as gains or losses within Other Income and Expense.
- Guidance for Eligard sales was increased in our last earnings update
to $240-255 million. Given that we will no longer be reporting any
revenue from Eligard sales on our statements of operations, we are
discontinuing our guidance for end-user Eligard sales. However,
Eligard sales through the nine months ended September 30, 2009 of
$191.1 million were in line with the previous guidance.
- Guidance for R&D expense is $30-33 million and for SG&A expense is
$18-21 million, unchanged from previous guidance, although we do
expect that both line items will be near the bottom end of the
guidance ranges.
- Guidance for adjusted EBITDA (defined as operating income plus stock
compensation and depreciation expense and adjusted for other one-time
and non-cash items) was increased in our last earnings call to $15-20
million. As above, given that we will no longer be reporting revenue
from Eligard, we are discontinuing guidance for adjusted EBITDA.
However, through the nine months ended September 30, 2009 adjusted
EBITDA (including EBITDA associated with our discontinued operations)
was $18.3 million.
- The amendment to the Visudyne agreement does not take effect until
January 1, 2010, and therefore there is not expected to be any
material impact to our 2009 operating results. Beginning in 2010,
QLT's revenue from Visudyne will comprise: (i) end-user net sales of
Visudyne in the U.S., (ii) royalties in the amount of 20% of net
sales of Visudyne outside of the U.S., (iii) product revenue from
selling unlabelled Visudyne product to Novartis for its sale of the
product outside of the U.S., and (iv) reimbursement from Novartis for
the existing third party royalties we currently pay to University of
British Columbia and Massachusetts General Hospital for sales of
Visudyne outside the U.S. (no reimbursement will be received for the
ongoing damages paid to MEEI in the amount of 3.01% of Visudyne
sales).
In 2010, we will provide guidance on adjusted EBITDA plus the quarterly payments due for the sale of QLT USA (calculated as 80% of the Eligard royalty payments referenced above), because we believe this to be a more reflective measure of our cash-flow for the next several years.
RECENT COMPANY ANNOUNCEMENTS
- Announced the receipt of an income tax refund of Cdn$45.3 million
from the Canada Revenue Agency. The income tax refund resulted
primarily from a request to carryback losses the Company incurred in
2007 in connection with the judgment of the United States District
Court for the District of Massachusetts in favor of Massachusetts Eye
and Ear Infirmary.
- Announced the sale of all of the shares of QLT's wholly-owned U.S.
subsidiary, QLT USA, Inc. ("QLT USA"), to TOLMAR Holding, Inc.
("TOLMAR") for up to an aggregate US$230 million pursuant to a Stock
Purchase Agreement dated October 1, 2009. QLT USA's principal
operating asset is the Eligard line of products for the treatment of
prostate cancer. The Eligard line of products is currently
manufactured by TOLMAR, Inc., a wholly-owned subsidiary of TOLMAR.
- Announced that QLT has restructured its agreement with Novartis
Pharma AG to simplify the relationship, under which, effective
January 1, 2010, it will, among other things, receive exclusive U.S.
rights to the Visudyne patents to sell and market Visudyne in the
U.S.
About QLT
QLT Inc. is a global biopharmaceutical company dedicated to the discovery, development and commercialization of innovative ocular therapies. We utilize two unique technology platforms, photodynamic therapy (used in the Visudyne product) and punctal plugs which are currently under development for future product opportunities. For more information, visit our web site at www.qltinc.com.
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 by Novartis under its agreement with QLT.
QLT Inc.-Financial Highlights
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(In thousands of United Three months ended Nine months ended
States dollars, except September 30, September 30,
per share information) 2009 2008 2009 2008
-------------------------------------------------------------------------
(Unaudited)
Revenues
Net product revenue $ 8,785 $ 10,868 $ 31,296 $ 36,462
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Costs and expenses
Cost of sales(1) 2,202 2,989 12,693 10,663
Research and development 7,375 6,887 20,486 23,049
Selling, general and
administrative 4,500 4,422 12,484 15,519
Depreciation 370 464 1,061 2,566
Litigation 316 - 650 864
Gain on sale of
long-lived assets - (21,289) - (21,289)
Restructuring 3 349 (144) 9,439
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14,766 (6,178) 47,230 40,811
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Operating (loss) income (5,981) 17,046 (15,934) (4,349)
Investment and other
income (expense)
Net foreign exchange
gains (losses) 7,517 (296) 14,292 (58)
Interest income 1,853 1,853 3,818 5,789
Interest expense - (2,743) (1,848) (8,811)
Other (9) 26 16 288
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9,361 (1,160) 16,278 (2,792)
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Income (loss) from
continuing operations
before income taxes 3,380 15,886 344 (7,141)
Provision for income taxes (1,144) (3,749) (472) (144)
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Income (loss) from continuing
operations 2,236 12,137 (128) (7,285)
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Income from discontinued
operations, net of
income taxes 6,685 134,789 18,980 136,302
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Net income $ 8,921 $ 146,926 $ 18,852 $ 129,017
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Basic net income per
common share
Continuing operations $ 0.04 $ 0.16 $ (0.00) $ (0.10)
Discontinued operations 0.12 1.81 0.33 1.83
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Net income $ 0.16 $ 1.97 $ 0.33 $ 1.73
Diluted net income per
common share
Continuing operations $ 0.04 $ 0.16 $ (0.00) $ (0.10)
Discontinued operations 0.12 1.81 0.33 1.83
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Net income $ 0.16 $ 1.97 $ 0.33 $ 1.73
Weighted average number of
common shares outstanding
(in thousands)
Basic 54,624 74,620 56,844 74,620
Diluted 54,765 74,620 56,844 74,620
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(1) Includes amount accrued on Visudyne sales pursuant to judgment
rendered in the MEEI litigation.
QLT Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(In accordance with United States generally accepted accounting
principles)
September 30, December 31,
(In thousands of United States dollars) 2009 2008
-------------------------------------------------------------------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 194,039 $ 165,395
Restricted cash - 124,578
Accounts receivable 8,209 11,151
Income taxes receivable 407 41,801
Inventories 3,922 3,163
Current portion of deferred income tax assets 1,279 403
Mortgage receivable 11,221 -
Assets held for sale 58,543 72,763
Other 7,240 10,474
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284,860 429,728
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Property, plant and equipment 2,345 3,113
Deferred income tax assets 6,772 5,139
Goodwill 23,145 23,145
Mortgage receivable - 9,834
Long-term inventories and other assets 18,304 20,799
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$ 335,426 $ 491,758
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LIABILITIES
Current liabilities
Accounts payable $ 4,676 $ 4,865
Accrued restructuring charge 123 314
Accrued liabilities 4,097 129,473
Liabilities held for sale 7,316 8,906
Deferred revenue 4,306 4,204
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20,518 147,762
Uncertain tax position liabilities 1,447 766
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21,965 148,528
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SHAREHOLDERS' EQUITY
Common shares 514,056 702,221
Additional paid-in capital 269,035 123,367
Accumulated deficit (560,712) (579,564)
Accumulated other comprehensive income 91,082 97,206
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313,461 343,230
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$ 335,426 $ 491,758
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As at September 30, 2009, there were 54,630,692 issued and outstanding
common shares and 5,908,273 outstanding stock options.
QLT Inc.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
----------------------------------------------
2009 Third Quarter Reconciliation of GAAP Earnings to
Adjusted Non-GAAP Earnings Exhibit 1
-------------------------------------------------------------------------
Three months Three months
ended ended
(In millions of United September 30, September 30,
States dollars, except 2009 2009
per share information) GAAP Adjustments Non-GAAP(1)
-------------------------------------------------------------------------
(Unaudited)
Revenues
Net product revenue $ 8.8 $ - $ 8.8
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Cost and expenses
Cost of sales (2.2) 0.0 (a) (2.2)
Research and development (7.4) 0.2 (a) (7.2)
Selling, general and
administrative (4.5) 0.9 (a)(b) (3.6)
Depreciation (0.4) - (0.4)
Litigation (0.3) 0.3 (c) -
Restructuring (0.0) 0.0 (d) -
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(14.8) 1.4 (13.3)
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Operating loss (6.0) 1.4 (4.6)
Investment and other
income (expense)
Net foreign exchange
gains (losses) 7.5 (8.0) (e) (0.5)
Interest income 1.9 (1.6) (f) 0.2
Other (0.0) - (0.0)
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9.4 (9.7) (0.3)
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Income(loss) from continuing
operations before income taxes
3.4 (8.3) (4.9)
Provision for income taxes (1.1) 1.6 (g) 0.5
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Income (loss) from continuing
operations 2.2 (6.7) (4.4)
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Income from discontinued
operations, net of income taxes 6.7 (6.7) (h) -
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Net income (loss) $ 8.9 $ (13.3) $ (4.4)
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Basic net income (loss) per
common share:
Continuing operations $ 0.04 $ (0.08)
Discontinued operations 0.12 0.00
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Net income (loss) $ 0.16 $ (0.08)
Diluted net income (loss)
per common share:
Continuing operations $ 0.04 $ (0.08)
Discontinued operations 0.12 0.00
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Net income (loss) $ 0.16 $ (0.08)
Weighted average number of
common shares outstanding
(in millions):
Basic 54.6 54.6
Diluted 54.8 54.8
Adjustments:
-----------
(a) Remove stock-based compensation.
(b) Remove capital tax.
(c) Remove litigation expense.
(d) Remove restructuring expense.
(e) Remove foreign exchange gains related to intercompany debt.
(f) Remove interest income related to income tax refunds.
(g) Remove income tax impact of the above adjustments.
(h) Remove income from discontinued operations, net of income tax.
(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 Company's operating performance before
items that are considered by management to be outside of the
Company's core operating results.
QLT Inc.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
----------------------------------------------
2009 Third Quarter Reconciliation of GAAP Earnings to
Adjusted Non-GAAP Earnings Exhibit 2
-------------------------------------------------------------------------
Nine months Nine months
ended ended
(In millions of United September 30, September 30,
States dollars, except 2009 2009
per share information) GAAP Adjustments Non-GAAP(1)
-------------------------------------------------------------------------
(Unaudited)
Revenues
Net product revenue $ 31.3 $ - $ 31.3
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Cost and expenses
Cost of sales (12.7) 4.7 (a)(b) (8.0)
Research and development (20.5) 0.7 (b) (19.8)
Selling, general and
administrative (12.5) 1.4 (b)(c) (11.0)
Depreciation (1.1) - (1.1)
Litigation (0.7) 0.7 (d) -
Restructuring 0.1 (0.1) (e) -
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(47.2) 7.3 (39.9)
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Operating loss (15.9) 7.3 (8.6)
Investment and other
income (expense)
Net foreign exchange gains
(losses) 14.3 (16.0) (f) (1.7)
Interest income 3.8 (2.7) (g) 1.1
Interest expense (1.8) - (1.8)
Other 0.0 - 0.0
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16.3 (18.7) (2.4)
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Income (loss) from continuing
operations before income taxes 0.3 (11.3) (11.0)
Provision for income taxes (0.5) 2.0 (h) 1.5
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Loss from continuing operations (0.1) (9.3) (9.5)
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Income from discontinued
operations, net of income taxes 19.0 (19.0) (i) -
-------------------------------------------------------------------------
Net income (loss) $ 18.9 $ (28.4) $ (9.5)
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Basic net income (loss)
per common share:
Continuing operations $ (0.00) $ (0.17)
Discontinued operations 0.33 0.00
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Net income (loss) $ 0.33 $ (0.17)
Diluted net income (loss)
per common share:
Continuing operations $ (0.00) $ (0.17)
Discontinued operations 0.33 0.00
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Net income (loss) $ 0.33 $ (0.17)
Weighted average number of
common shares outstanding
(in millions):
Basic 56.8 56.8
Diluted 56.8 56.8
Adjustments:
-----------
(a) Remove inventory write-down.
(b) Remove stock-based compensation.
(c) Remove capital tax.
(d) Remove litigation expense.
(e) Remove restructuring credit.
(f) Remove foreign exchange gains related to intercompany debt.
(g) Remove interest income related to income tax refunds.
(h) Remove income tax impact of the above adjustments.
(i) Remove income from discontinued operations, net of income tax.
(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 Company's operating performance
before items that are considered by management to be outside of the
Company's core operating results.
Conference call information
QLT Inc. will hold an investor conference call to discuss third quarter 2009 results on
QLT Plug Delivery, Inc. is a wholly-owned subsidiary of QLT Inc.
Eligard is a registered trademark of Sanofi-aventis.
Visudyne is a registered trademark of Novartis AG.
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."
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 expectations stated in our guidance for 2009 R&D expense and SG&A expense; our expectations for the accounting treatment of the sale of QLT USA; our expectations for fourth quarter contingent consideration from the sale of QLT USA; our expectations relating to receiving quarterly contingent consideration on the sale of QLT USA up to
SOURCE QLT Inc.
