Cangene Reports Third Quarter 2013 Results
Readers 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: CNJ
WINNIPEG, June 5, 2013 /CNW/ - Cangene Corporation ("Cangene") today reports its financial results for the third quarter of 2013, which ended on April 30, 2013.
Total revenue for the quarter was $40.2 million, compared with $27.5 million in the same quarter last year. The increase primarily resulted from revenue from an $18.6-million holdback payment from the U.S. government that was triggered by Cangene achieving U.S. Food and Drug Administration licensure of BAT™. This revenue increase was partially offset by slightly lower HepaGam B® sales in the U.S. and the fact that the prior-year quarter included product and plasma deliveries under the BAT™ contract and $1.8 million in revenue from non-specialty plasma sales (following the sale of its plasma centres in October 2012, Cangene no longer collects and sells non-specialty plasma). In the third quarter, combined WinRho® SDF revenues were consistent with the prior-year period.
Net income for the current quarter improved to $3.8 million, from a net loss of $4.6 million in the same quarter last year. The Company recorded earnings per share for the current quarter of $0.06, compared with a loss per share of $0.07 in the same quarter one year ago. The improvements were primarily driven by the revenue received upon BAT™ licensure, although this was partially offset by lower gross margins on product sales and R&D services, higher taxes, and expenses related to the acquisition and development of IB1001, the Company's late-stage hemophilia compound. On a year-to-date basis, the Company recorded net income of $5.0 million, compared with a net loss of $12.9 million in the prior year.
"The U.S. FDA licensure of our botulism antitoxin (BAT™), and the completion of our acquisition of IB1001 were the major highlights of the third quarter. These milestones underscore our progress in executing on our long-term strategy," says John Sedor, president and CEO of Cangene. "While U.S. biopharmaceutical sales have been hampered by a challenging reimbursement environment and lower dosing practices for HepaGam B® following liver transplants, we are increasing product sales in the Canadian market and abroad. Overall, we are pleased with our continuing progress in building long-term value for shareholders by diversifying and strengthening our revenue streams."
At April 30, 2013, Cangene had no debt and a cash balance of $38.6 million, compared with no debt and a cash balance of $35.9 million at the end of the 2012 fiscal year. Cash of $11.0 million was provided by operating activities during the nine-month period ended April 30, 2013, compared with $0.1 million used in operating activities during the corresponding period of 2012. The current nine-month period includes a $0.9-million increase in working capital. The increase in working capital during the period was primarily attributable to a $16.0-million increase in accounts receivable, which mainly resulted from the $18.6-million receivable related to receiving BAT™ licensure. This payment was received subsequent to the end of the third quarter. The increase in accounts receivable was offset by a $4.8-million decrease in inventory, a $6.2-million decrease in taxes recoverable and a $6.4-million increase in accounts payable.
Highlights
- Completed acquisition of a late-stage Factor IX product known as IB1001, as well as two product candidates in preclinical development, IB1007 (a recombinant FVIIa) and IB1008 (a recombinant FVIII), from Ipsen and Inspiration Biopharmaceuticals, Inc.
- Obtained commercial rights to a technology platform targeting Alzheimer's disease through an immune therapeutic treatment approach following a successful research collaboration initiated in November 2011 with Dr. Neil Cashman at the University of British Columbia
- Achieved U.S. FDA approval of BAT™ for use in the treatment of suspected or documented exposure to botulinum neurotoxin A, B, C, D, E, F or G. Cangene developed BAT™ as part of a $427-million contract with the Biomedical Advanced Research and Development Authority ("BARDA"), within the Office of the Assistant Secretary for Preparedness and Response in the U.S. Department of Health and Human Services. With the licensure of BAT™ by the FDA, the Company received a supplemental holdback payment from BARDA of $18.6 million in May 2013. Remaining product deliveries under the contract will be paid at full contract price (Cangene had received a discounted price for deliveries prior to FDA licensure).
Cangene Corporation Incorporated under the laws of Ontario
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS (unaudited)
| in thousands of U.S. dollars | At April 30, 2013 | At July 31, 2012 | ||||
| ASSETS | ||||||
| Current | ||||||
| Cash | $ | 38,559 | $ | 35,870 | ||
| Accounts receivable | 38,330 | 22,330 | ||||
| Inventories and contracts in progress | 52,833 | 57,650 | ||||
| Taxes recoverable | 250 | 4,355 | ||||
| Prepaid expenses and deposits | 4,292 | 2,221 | ||||
| Total current assets | 134,264 | 122,426 | ||||
| Property, plant and equipment, net | 57,996 | 61,467 | ||||
| Taxes recoverable | 15,447 | 17,539 | ||||
| Deferred tax | 15,855 | 14,636 | ||||
| Intangible assets, net | 61,726 | 19,249 | ||||
| Other assets | 7,767 | — | ||||
| Total assets | $ | 293,055 | $ | 235,317 | ||
| LIABILITIES AND EQUITY | ||||||
| Current | ||||||
| Accounts payable and accrued liabilities | $ | 20,158 | $ | 13,782 | ||
| Derivative financial instruments | — | 79 | ||||
| Purchase consideration payable | 665 | 759 | ||||
| Provision for chargebacks | 4,068 | 3,625 | ||||
| Incentive plan liability | 1,845 | 841 | ||||
| Taxes payable | 12 | 707 | ||||
| Current portion of deferred income | 2,544 | 1,883 | ||||
| Total current liabilities | 29,292 | 21,676 | ||||
| Deferred income | 5,860 | 5,912 | ||||
| Royalty provision | 1,258 | 2,253 | ||||
| Purchase consideration payable | 51,519 | 6,811 | ||||
| Incentive plan liabilities | 222 | 1,062 | ||||
| Deferred share unit liability | 1,339 | 481 | ||||
| Deferred tax | 3,054 | 1,770 | ||||
| Total liabilities | 92,544 | 39,965 | ||||
| Equity | ||||||
| Share capital | 50,860 | 50,860 | ||||
| Contributed surplus | 595 | 439 | ||||
| Retained earnings | 149,056 | 144,053 | ||||
| Total equity | 200,511 | 195,352 | ||||
| Total liabilities and equity | $ | 293,055 | $ | 235,317 | ||
Cangene Corporation
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME (LOSS)
AND COMPREHENSIVE INCOME (LOSS) (unaudited)
| in thousands of U.S. dollars except share-related data |
Three months ended April 30, 2013 |
Three months ended April 30, 2012 |
Nine months ended April 30, 2013 |
Nine months ended April 30, 2012 |
|||||||||
| Revenues | |||||||||||||
| Product sales | $ | 8,746 | $ | 10,473 | $ | 33,857 | $ | 35,100 | |||||
| Product services | 26,902 | 12,386 | 59,466 | 34,144 | |||||||||
| R&D services | 4,593 | 4,665 | 9,323 | 13,333 | |||||||||
| 40,241 | 27,524 | 102,646 | 82,577 | ||||||||||
| Cost of sales | |||||||||||||
| Product sales | 8,635 | 9,406 | 28,715 | 27,346 | |||||||||
| Product services | 5,870 | 8,609 | 21,815 | 22,968 | |||||||||
| R&D services | 3,626 | 3,415 | 7,998 | 9,716 | |||||||||
| 18,131 | 21,430 | 58,528 | 60,030 | ||||||||||
| Gross profit | 22,110 | 6,094 | 44,118 | 22,547 | |||||||||
| Expenses | |||||||||||||
| Independent R&D | 5,376 | 4,454 | 11,076 | 18,085 | |||||||||
| Selling, general and administrative | 9,356 | 6,455 | 25,527 | 21,272 | |||||||||
| Impairment of property, plant and equipment | — | — | — | 5 | |||||||||
| Impairment of intangible assets | — | — | — | 636 | |||||||||
| Loss (gain) on disposal of assets | 47 | 36 | (2,538) | 127 | |||||||||
| 14,779 | 10,945 | 34,065 | 40,125 | ||||||||||
| Operating profit (loss) | 7,331 | (4,851) | 10,053 | (17,578) | |||||||||
| Short-term interest income | 25 | 25 | 67 | 39 | |||||||||
| Foreign-exchange gain (loss) | — | (842) | (351) | 2,877 | |||||||||
| Income (loss) before taxes | 7,356 | (5,668) | 9,769 | (14,662) | |||||||||
| Tax expense (benefit) | |||||||||||||
| Current | 4,473 | 457 | 4,702 | 322 | |||||||||
| Deferred | (916) | (1,542) | 64 | (2,095) | |||||||||
| 3,557 | (1,085) | 4,766 | (1,773) | ||||||||||
| Net income (loss) and comprehensive income (loss) for the period | $ | 3,799 | $ | (4,583) | $ | 5,003 | $ | (12,889) | |||||
| Earnings (loss) per share | |||||||||||||
| Basic and diluted | $ | 0.06 | $ | (0.07) | $ | 0.07 | $ | (0.19) | |||||
Cangene Corporation
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (unaudited)
| in thousands of U.S. dollars | Share capital | Retained earnings |
Contributed surplus |
Total | ||||||||
| Balance as at July 31, 2011 | $ | 50,860 | $ | 172,340 | $ | — | $ | 223,200 | ||||
| Net loss for the year ended July 31, 2012 | — | (28,287) | — | (28,287) | ||||||||
| Stock option expense | — | — | 439 | 439 | ||||||||
| Balance as at July 31, 2012 | $ | 50,860 | $ | 144,053 | $ | 439 | $ | 195,352 | ||||
| Net income for the nine-month period ended April 30, 2013 | — | 5,003 | — | 5,003 | ||||||||
| Stock option expense | — | — | 156 | 156 | ||||||||
| Balance as at April 30, 2013 | $ | 50,860 | $ | 149,056 | $ | 595 | $ | 200,511 | ||||
| Balance as 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 as at April 30, 2012 | $ | 50,860 | $ | 159,451 | $ | 353 | $ | 210,664 | ||||
Cangene Corporation
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (unaudited)
| in thousands of U.S. dollars | Three months ended April 30, 2013 |
Three months ended April 30, 2012 |
Nine months ended April 30, 2013 |
Nine months ended April 30, 2012 |
|||||||||
| OPERATING ACTIVITIES | |||||||||||||
| Net income (loss) for the period | $ | 3,799 | $ | (4,583) | $ | 5,003 | $ | (12,889) | |||||
| Add (deduct) items not involving cash: | |||||||||||||
| Depreciation of property, plant & equipment | 1,635 | 2,145 | 5,326 | 6,459 | |||||||||
| Amortization of intangible assets | 1,155 | 631 | 3,105 | 1,957 | |||||||||
| Deferred income | (433) | (961) | 609 | (478) | |||||||||
| Incentive plan liabilities | 832 | 7 | 164 | (448) | |||||||||
| Deferred share unit liability | 618 | 92 | 857 | 251 | |||||||||
| Amortization of royalty provision | (198) | (193) | (582) | (642) | |||||||||
| Revaluation of royalty provision | (492) | 558 | (413) | (397) | |||||||||
| Deferred tax benefit | (916) | (1,542) | 64 | (2,095) | |||||||||
| Change in value of derivative financial instruments | — | 704 | (80) | (753) | |||||||||
| Net change in purchase consideration payable | 273 | — | 214 | — | |||||||||
| Loss (gain) on disposal of assets | 47 | 36 | (2,538) | 127 | |||||||||
| Impairment of intangible assets | — | — | — | 636 | |||||||||
| Impairment of property, plant & equipment | — | — | — | 5 | |||||||||
| Stock option expense | 45 | 89 | 156 | 353 | |||||||||
| Changes in working capital: | |||||||||||||
| Accounts receivable | (14,550) | 6,806 | (16,000) | 1,088 | |||||||||
| Inventories and contracts in progress | 1,548 | (25) | 4,817 | 2,316 | |||||||||
| Taxes recoverable | 8,607 | 8,956 | 6,197 | 6,399 | |||||||||
| Prepaid expenses and deposits | (1,860) | 793 | (2,071) | 590 | |||||||||
| Accounts payable and accrued liabilities | 4,229 | (3,231) | 6,376 | (2,325) | |||||||||
| Provision for chargebacks | (369) | (585) | 443 | (191) | |||||||||
| Taxes payable | — | 30 | (695) | (62) | |||||||||
| (2,395) | 12,744 | (933) | 7,815 | ||||||||||
| Cash provided by (used in) operating activities | 3,970 | 9,727 | 10,952 | (99) | |||||||||
| INVESTING ACTIVITIES | |||||||||||||
| Purchase of property, plant and equipment, net | (518) | (263) | (2,267) | (1,401) | |||||||||
| Acquisition of intangible assets | (88) | (49) | (91) | (240) | |||||||||
| Purchase of business | (3,701) | — | (8,701) | — | |||||||||
| Proceeds on disposal of assets | 181 | — | 2,796 | — | |||||||||
| Cash used in investing activities | (4,126) | (312) | (8,263) | (1,641) | |||||||||
| Net increase (decrease) in cash during the period | (156) | 9,415 | 2,689 | (1,740) | |||||||||
| Cash, beginning of period | 38,715 | 34,021 | 35,870 | 45,176 | |||||||||
| Cash, end of period | $ | 38,559 | $ | 43,436 | $ | 38,559 | $ | 43,436 | |||||
| Interest paid1 | $ | 50 | $ | 9 | $ | 116 | $ | 15 | |||||
| Taxes received2 | $ | (5,039) | $ | (10,411) | $ | (3,677) | $ | (10,352) | |||||
- 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 Corporation
Cangene Corporation (TSX: CNJ), headquartered in Winnipeg, Canada, is one of the nation's oldest and largest biopharmaceutical companies. It is focused on the development and commercialization of specialty therapeutics. Cangene's products are sold worldwide and include products that have been accepted into the U.S. Strategic National Stockpile. Cangene has offices in three 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 also operates a plasma-collection facility in Winnipeg, Manitoba under the name Cangene Plasma Resources. Its U.S. sales and marketing office is located in Philadelphia, Pennsylvania. For more information about Cangene, visit the Company's website at www.cangene.com.
Cautionary Note regarding Forward-Looking Information
This 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 Company'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; decisions by Health Canada, the United States Food and Drug Administration and other regulatory authorities regarding whether and when to approve drug applications that have been or may be filed, as well as their decisions regarding labelling and other matters that could affect the availability or commercial potential of drug candidates; 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 Measures
This 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.
SOURCE: Cangene Corporation
Investor Relations Contact
Jeff Lamothe
Chief Financial Officer
Tel: (204) 275-4267
Email: [email protected]
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