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Readers are referred to the cautionary notes regarding Forward-looking
Information and non-GAAP and non-IFRS Financial Measures at the end of this release
Listed TSX, Symbol: CNJ
Cangene Corporation today reports financial results for the quarter ended January 31, 2011, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Prior periods have also been restated to reflect the adoption of IFRS with effect from August 1, 2009 (the “Transition date”), which includes the transition to reporting in U.S. dollars as the functional currency.
Revenues for the second quarter of 2011 were US$40.2 million, 3% higher than the US$39.0 million recorded during the same period last year. Two deliveries on U.S. government biodefence contracts during the current quarter contributed to the strong revenue. Decreased royalty revenues received from the Apotex Group during the current quarter reflect the reduced royalty rate in fiscal 2011, the last year of the royalty agreement. Royalty revenues are being phased out in accordance with the terms of the Company’s agreement with Apotex. Higher R&D services revenue in the quarter partially offset this decrease.
“Strong revenues highlighted the second quarter of 2011 and marked a return to profitability after two weaker quarters,” said Michael Graham, Cangene’s acting president and CEO. “In conjunction with the ongoing CEO search, other initiatives are being developed to position Cangene for improved financial results in future quarters.
Net income in the current quarter was US$2.4 million or US$0.04 per share, compared with US$5.7 million or US$0.08 per share in the same quarter last year. The drop in net income resulted from higher cost of sales, and increased amortization and selling, general and administrative (“SG&A”) expenses in the current-year quarter. Gross profit decreased in the quarter due to unabsorbed manufacturing overhead costs, under absorbed overhead due to plasma centre start up costs, additional inventory provisions and lower prices on international sales of commercial products. The higher SG&A expense in the current-year quarter includes an increase of $1.0 million related to the new sales and marketing staff at Cangene bioPharma, Inc., compared to the same quarter of the prior year, and higher compensation and legal costs. Independent R&D expense decreased in the quarter while efforts on the IGIV project slowed while our plant was changed over to commence production scale engineering runs. The current quarter included a foreign exchange loss of $0.5 million, compared to foreign exchange gain of $0.1 million in the same quarter of the prior year.
The Company had US$21.9 million in cash at January 31, 2011, compared with US$40.4 million at July 31, 2010. The three main factors contributing to the decrease in cash were increases in net non-cash working capital of US$14.0 million, US$5.6 million in capital expenditures and US$2.5 million in share repurchases. At January 31, 2011, 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 Friday, March 18, 2011 at 11:00 a.m. Eastern. To access the conference call by telephone, dial 1-888-231-8191 or 647-427-7450. The conference call will be archived for replay until Friday, March 25, 2011, at midnight. To access the archived conference call, dial 1-800-642-1687 or 416-849-0833 and enter the reservation number 51457545 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 800 employees in six locations across North America and its products are sold worldwide. It operates manufacturing facilities in Winnipeg, Manitoba and 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 (http://www.cangeneplasma.com/). 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 four FDA and/or Health Canada-approved hyperimmune 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 (investigational product), anthrax immune globulin (investigational product) and a vaccinia immune globulin, a product that may be 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 the resources of Baltimore, Maryland-based Cangene bioPharma, Inc. (a wholly owned subsidiary; formerly Chesapeake Biological Laboratories, Inc.; http://www.cangenebiopharma.com/). Cangene’s website, http://www.cangene.com/, includes product and investor information, including past news releases.
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/.
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”, “anticipates”, “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.
Cautionary Note Regarding Non-GAAP and non-IFRS Financial Measures
This news release may contain non-GAAP and non-IFRS financial measures. Terms by which non-GAAP and non-IFRS financial measures are identified include but are not limited to “net cash”, “total assets”, “sales” and other similar expressions. Non-GAAP and non-IFRS financial measures are used to provide management and investors with additional measures of performance. However, non-GAAP and non-IFRS financial measures do not have standard meanings prescribed by GAAP and/or IFRS and are not directly comparable to similar measures used by other companies. Please refer to the appropriate reconciliations of these non-GAAP and non-IFRS financial measures to measures prescribed by GAAP and/or IFRS.
“Cangene” is a trademark belonging to Cangene Corporation.
For further information:
about Cangene Corporation, please contact Michael Graham at (204) 275-4040 or by email at [email protected]