Contract deliveries remain on target and the company is now increasing its focus on the U.S. commercial market
Readers are referred to the cautionary notes regarding Forward-looking Information and non-GAAP Financial Measures at the end of this release
Listed TSX, Symbol: CNJ
Cangene Corporation today reports financial results for the first quarter ended October 31, 2009.
Revenues for the first quarter of 2010 were $42.0 million, 20% lower than the $52.2 million recorded during the same period last year. The lower revenue in the current quarter reflects the fact that there was reduced R&D-services revenue due to reduced R&D activity on the U.S. government stockpiling contracts and the conclusion of joint R&D projects with Apotex during fiscal 2009. In total, R&D-services revenues have declined from $15.6 million in the prior-year quarter to $7.8 million in the current quarter. Consistent with the first quarter of the prior year, the current quarter included one product delivery on the U.S. government stockpiling contracts as per the current delivery schedule. Overall, $21.2 million in revenue was recognized on these stockpiling contracts in the current quarter, compared with $25.6 million in the first quarter of 2009. In addition, biopharmaceutical product sales have declined by $3.7 million relative to the first quarter of 2009, primarily due to the receipt of a non-recurring US$3.0-million milestone payment in the first quarter of 2009 under the terms of the WinRho(R) SDF distribution agreement with Baxter Healthcare Corporation. When the impact of that milestone payment is excluded, WinRho(R) SDF revenues in the U.S. market have increased in the current quarter.
“The financial results for the quarter continue to reflect our delivery on the biodefence contracts in accordance with established schedules,” said Dr. John Langstaff, Cangene’s president and CEO. “We have also begun to focus more directly on the U.S. commercial markets, beginning with our acquisition of the U.S. commercialization rights for HepaGam B(R) from Apotex, effective November 1, 2009. We believe this is a growing market, which is why we made the decision to build a small U.S. sales force. In concert with this, we are changing the name of our Baltimore-based subsidiary, Chesapeake Biological Laboratories, Inc., to Cangene bioPharma, Inc., to better align it with the strong Cangene brand,” he said.
Net income for the quarter was $5.3 million or $0.08 per share, compared with $21.1 million or $0.30 per share in the same quarter last year. The drop in net income resulted largely from two factors: (a) the current quarter contained a small foreign-exchange loss, compared with a $10.2-million foreign-exchange gain in the first quarter of the prior year, and (b) revenues were reduced in the current quarter as discussed above. Other less significant factors in the current quarter that contributed to lower net income were higher independent R&D expenditures and amortization.
An increase in net non-cash working capital and other asset balances related to operations of $22.0 million from the balance at July 31, 2009 resulted from increased inventories and contracts in progress, increased accounts receivable, and increased income and other taxes recoverable, combined with decreased accounts payable and accrued liabilities, and decreased income and other taxes payable. In addition, a significant increase in other assets resulted from the payment to Apotex of a US$7.0-million deposit related to the acquisition of the U.S. commercialization rights to HepaGam B(R) mentioned earlier.
The Company had $35.2 million in cash at October 31, 2009, compared with $56.1 million at July 31, 2009. At October 31, 2009, Cangene had no debt.
Readers are referred to the cautionary notes regarding Forward-looking Information and non-GAAP Financial Measures at the end of this release. Certain comparative figures in the following financial statements have been reclassified to conform to the current year’s presentation.
Cangene will host a conference call to discuss these financial results on Tuesday, December 15, 2009 at 11:00 a.m. Eastern. To access the conference call by telephone, dial 416-644-3426 or 1-800-731-5319. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Tuesday, December 22, 2009, at midnight. To access the archived conference call, dial 416-640-1917 or 1-877-289-8525 and enter the reservation number 4192381 followed by the number sign.
A live audio webcast of the conference call will be available at http://www.cangene.com/ and http://www.newswire.ca/. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above web sites for 90 days.
About Cangene Corporation
Cangene is one of Canada’s largest and earliest biopharmaceutical companies. It was founded in 1984 and is headquartered in Winnipeg, Manitoba. Cangene has approximately 700 employees in eight locations across North America and its products are sold worldwide. It operates three large manufacturing facilities-two in Winnipeg, Manitoba and one in Baltimore, Maryland-where it produces its own products and undertakes contract manufacturing for a number of companies. Cangene operates three U.S. and one Canadian plasma-collection facilities branded as Cangene Plasma Resources. In addition, it has a regulatory affairs, sales and corporate communications office in Toronto, Ontario.
Cangene is focused on developing therapeutics for infectious diseases, and the Company uses patented manufacturing processes to produce plasma-derived and recombinant therapeutic proteins. Cangene has five FDA and/or Health Canada-approved products. In addition, the Company has several more products in development at various stages. Three of Cangene’s products have been accepted into the U.S. Strategic National Stockpile-botulism antitoxin, anthrax immune globulin and vaccinia immune globulin, a product used to counteract certain complications that may arise from smallpox vaccination.
Capitalizing on its drug manufacturing expertise, Cangene also operates a significant contract research and manufacturing business using its Winnipeg facilities and the resources of Baltimore, Maryland-based Cangene bioPharma, Inc. (a wholly owned subsidiary; formerly Chesapeake Biological Laboratories, Inc.). Cangene’s website, http://www.cangene.com/, includes product and investor information, including past news releases.
“Cangene”, “HepaGam B”, “WinRho” and “WinRho SDF” are trademarks belonging to Cangene Corporation.
Forward-looking and risk information
The reader should be aware that Cangene’s businesses are subject to risks and uncertainties that cannot be predicted or quantified; consequently, actual results may differ materially from past results and those expressed or implied by any forward-looking statements. Factors that could cause or contribute to such risks or uncertainties include, but are not limited to: the regulatory environment including the difficulty of predicting regulatory outcomes; changes in the value of the Canadian dollar; the Company’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; availability and cost of raw materials, especially the cost, availability and antibody concentration in plasma; fluctuations in operating results; government policies or actions; progress and cost of clinical trials; reliance on key strategic relationships; costs and possible development delays resulting from use of legal, regulatory or legislative strategies by the Company’s competitors; uncertainty related to intellectual property protection and potential costs associated with its defence; the Company’s exposure to lawsuits; and other matters beyond control of management. Risks and uncertainties are discussed more extensively in the MD&A section of the Company’s most recent annual report and annual information form, which are available on the Company’s website or on SEDAR at http://www.sedar.com/.
Cautionary Note Regarding Non-GAAP Financial Measures
This news release may contain non-GAAP financial measures. Terms by which non-GAAP financial measures are identified include but are not limited to “net cash”, “total assets”, “sales” and other similar expressions. Non-GAAP financial measures are used to provide management and investors with additional measures of performance. However, non-GAAP financial measures do not have standard meanings prescribed by GAAP and are not directly comparable to similar measures used by other companies. Please refer to the appropriate reconciliations of these non-GAAP financial measures to measures prescribed by GAAP.
The preceding cautionary statements should be considered in connection with all written or oral statements, especially forward-looking statements, that are made by the Company or by persons acting on its behalf and in conjunction with its periodic filings with Securities Commissions, including those contained in the Company’s news releases and most recently filed annual information form. Forward-looking statements can be identified by the use of words such as “expects”, “plans”, “will”, “believes”, “estimates”, “intends”, “may”, “bodes” and other words of similar meaning (including negative and grammatical variations). Should known or unknown risks or uncertainties materialize, or should management’s assumptions prove inaccurate, actual results could vary materially from those anticipated. The Company undertakes no obligation to publicly make or update any forward-looking statements, except as required by applicable law.
For further information: about Cangene Corporation, please contact Michael Graham, at (204) 275-4040, or by email at [email protected]