- Company Advances Plans to Realize the Benefits of Commercialization:
Streamlines Operations to Focus on Nearer-Term Commercial Opportunities -
LAVAL, QC, Nov. 6 /PRNewswire-FirstCall/ - Labopharm Inc. (TSX: DDS; NASDAQ:
DDSS) today reported its financial results for the third quarter ended
September 30, 2009. All figures are in Canadian dollars unless otherwise
stated.
"We have made strong progress in recent months towards the commercialization
of our novel trazodone formulation in both the United States and Canada," said
James R. Howard-Tripp, President and Chief Executive Officer, Labopharm Inc.
"In the U.S., with the matters raised in the Food and Drug Administration
(FDA)'s complete response letter now resolved, we await the Agency's decision
regarding approval of our formulation and continue to prepare for
commercialization in the first half of 2010 pending such approval. In Canada,
our new drug submission (NDS) has been accepted for review by Health Canada
and we look forward to its response during the third quarter of next year."
Financial Summary
Revenue from sales of the Company's once-daily tramadol product for the third
quarter of fiscal 2009 increased to $5.2 million from $3.9 million for the
third quarter of fiscal 2008 and was composed of product sales outside of the
U.S. of $4.5 million and product sales in the U.S. of $0.7 million. Total
revenue for the third quarter of fiscal 2009 was $6.6 million compared with
$9.4 million for the third quarter of fiscal 2008, which included
non-recurring licensing revenue of $4.4 million.
Gross margin for sales outside of the U.S. for the third quarter of fiscal
2009 increased to 65% from 55% for the third quarter of fiscal 2008. Research
and development expenses, before research and development tax credits, for the
third quarter of fiscal 2009 were $3.5 million compared with $7.3 million for
the third quarter of fiscal 2008. Selling, general and administrative expenses
for the third quarter of fiscal 2009 were $8.0 million compared with $5.0
million for the third quarter of fiscal 2008 and included an accrual of $2.7
million for the Company's share of litigation costs for patent enforcement
related to its once-daily tramadol product in the U.S. Net loss for the third
quarter of fiscal 2009 was $6.9 million, or $0.12 per share, compared with
$6.0 million, or $0.11 per share, for the third quarter of fiscal 2008.
Corporate Streamlining
The Company announced it is streamlining its operations, eliminating 35
positions. Following the action, Labopharm will have 124 employees,
approximately 75 of which will be in research and development positions. The
reduction in workforce is expected to result in annual cost savings of
approximately $3 million.
"After careful consideration, Labopharm is today announcing measures that
focus the organization to better support the full commercial potential of our
products, our pipeline and our technologies," added Mr. Howard-Tripp.
The Company expects to incur a restructuring charge related to the reduction
in workforce of approximately $1 million in the fourth quarter of 2009.
Key Developments
Novel Trazodone Formulation
New PDUFA Action Date Assigned by FDA/API Manufacturing Issues Resolved -
Labopharm's response to the FDA's complete response letter was accepted as
complete and designated as a Class 2 resubmission. The FDA assigned the
Company a new Prescription Drug User Fee Act (PDUFA) action date of February
11, 2010. Subsequently, the Company was informed by Angelini, the manufacturer
of the active pharmaceutical ingredient (API), that it had received a letter
from the FDA stating that Angelini has appropriately addressed all
deficiencies cited by the FDA following its inspection of the manufacturing
facility in June and July of this year. The Company continues to prepare for
commercialization of its novel antidepressant and, pending FDA approval,
intends to launch in the U.S. in the first half of 2010.
NDS Accepted for Review by Health Canada - Labopharm's new drug submission
(NDS) was accepted for review by the Therapeutic Products Directorate (TPD) of
Health Canada. TPD has assigned a targeted action date of August 4, 2010.
Twice-Daily Tramadol-Acetaminophen Formulation
Completed Distribution and Supply Agreement with Grunenthal - Labopharm
completed a distribution and supply agreement with Grunenthal GmbH for its
twice-daily tramadol acetaminophen formulation for a number of countries in
Europe. Under the terms of the agreement, Labopharm received 3.5 million Euros
on signature and will receive up to 4 million Euros in milestone payments upon
achievement of certain regulatory and product reimbursement approvals prior to
the launch of the product.
Once-Daily Tramadol
Product Maintained Number One Position in Canada for Fifth Consecutive Month
and Moved Into Number One Position for Year-to-Date - In September,
Labopharm's product (marketed under the brand name Tridural(TM) in Canada)
held the leading market share position among all tramadol products (excluding
combination products) in Canada in terms of prescriptions for the fifth
consecutive month. Labopharm's product also moved into the number one position
in terms of market share for the 2009 year to date.
Financial Results
Three-Month Period Ended September 30, 2009
Revenue from product sales in all territories for the third quarter of fiscal
2009 increased to $5.2 million from $3.9 million for the third quarter of
fiscal 2008. Revenue from product sales to territories other than the U.S. was
$4.5 million compared with $3.9 for the third quarter of fiscal 2008. The
increase was the result of higher sales volumes in the third quarter of 2009.
Product sales to the U.S. were $0.7 million. Total revenue for the third
quarter of fiscal 2009 was $6.6 million compared with $9.4 million for the
third quarter of fiscal 2008.
Under its licensing and distribution agreement with Purdue Pharma Products
L.P. for RYZOLT(TM) in the United States, Labopharm is entitled to royalty
payments of 20% of Purdue's net sales of the product (up to 25% if Purdue
achieves certain net annual sales levels). Royalty revenue recorded on sales
of RYZOLT in the U.S., which is recognized for accounting purposes upon
dispensing of the product to the patient based on third-party prescription
data (the "sell-through" method), was $0.2 million for third quarter of 2009.
Labopharm supplies finished packaged RYZOLT product at cost to Purdue, for
which the Company records revenue from product sales that generate essentially
no gross margin. As a result, gross margin figures discussed below exclude
sales and cost of goods sold for product sold in the U.S. to provide a more
meaningful understanding of those figures. Gross margin (as a percentage of
revenue from product sales) for territories outside the U.S. for the third
quarter of fiscal 2009 was 65% compared with 55% for the third quarter of
fiscal 2008. The increase in gross margin was due to a more favourable product
mix, certain cost reduction initiatives and manufacturing efficiencies, and
lower inventory write-downs in the third quarter of 2009.
Licensing revenue for the third quarter of fiscal 2009 was $1.2 million and
represented a portion of licensing payments received from the Company's
licensing and distribution partners for once-daily tramadol. Licensing revenue
for the third quarter of fiscal 2008 was $5.6 million and included
non-recurring licensing revenue of $4.4 million related to the Company's
reacquisition of the rights to its once-daily tramadol product for the United
Kingdom from its licensing and distribution partner.
Research and development expenses, before research and development tax
credits, for the third quarter of fiscal 2009 were $3.5 million compared with
$7.3 million for the third quarter of fiscal 2008. The decrease was primarily
the result of lower clinical trial costs in the third quarter of fiscal 2009.
Research and development tax credits for the third quarter of fiscal 2009
declined to $0.3 million from $1.0 million for the third quarter of fiscal
2008, the result of a deferral in the utilization of non-refundable Canadian
federal tax credits due to a change in tax planning.
Selling, general and administrative expenses for the third quarter of fiscal
2009 were $8.0 million compared with $5.0 million for the third quarter of
fiscal 2008. The increase is primarily the result of the accrual of $2.7
million for the Company's share of litigation costs incurred by Purdue to
enforce certain of Purdue's U.S. patents related to Labopharm's once-daily
tramadol product.
Net loss for the third quarter of fiscal 2009 was $6.9 million, or $0.12 per
share, compared with $6.0 million, or $0.11 per share, for the third quarter
of fiscal 2008.
Cash, cash equivalents and marketable securities at September 30, 2009 were
$23.8 million compared with $27.9 million at June 30, 2009. During the third
quarter, the Company drew down in its entirety the $2.6 million revolving
credit facility with National Bank of Canada, which is collateralized by the
Long-Term Notes that the Company received in exchange for the Montreal
Proposal ABCP. The Company's cash position at September 30, 2009 does not
include the 3.5 million Euros (CAD$5.4 million) up-front payment that
Labopharm received under its distribution and supply agreement with Grunenthal
GmbH, which was completed subsequent to quarter end.
Nine-Month Period Ended September 30, 2009
Revenue for the first nine months of fiscal 2009 was $17.9 million compared
with $17.6 million for the first nine months of fiscal 2008. Revenue from
product sales in all territories for the first nine months of fiscal 2009
increased to $13.8 million from $9.9 million for the first nine months of
fiscal 2008. Revenue from product sales to territories other than the U.S.
increased to $11.3 million from $9.9 for the first nine months of fiscal 2008.
The increase in products sales to territories other than the U.S. is primarily
the result of a higher average selling price per tablet in the first nine
months of 2009 due to more favourable country and product dosage strength
mixes. Product sales to the U.S. were $2.5 million. Royalty revenue recorded
on U.S. sales was $0.3 million.
Gross margin (as a percentage of revenue from product sales) for territories
outside the U.S. for the first nine months of fiscal 2009 was 66% compared
with 56% for the first nine months of fiscal 2008. Gross margin for
territories outside the U.S. for the first nine months of fiscal 2009 includes
the reversal of $0.4 million of previously recorded write downs and gross
margin for the first nine months of fiscal 2008 includes an inventory write
down of $0.4 million. The increase in gross margin was also due to a higher
average selling price per tablet in the first nine months of 2009.
Licensing revenue for the first nine months of fiscal 2009 was $3.7 million
and represented a portion of licensing payments received from the Company's
licensing and distribution partners for once-daily tramadol. Licensing revenue
for the first nine months of fiscal 2008 was $7.7 million, including the
non-recurring licensing revenue of $4.4 million related to the Company's
reacquisition of the rights to its once-daily tramadol product for the United
Kingdom.
Net loss for the first nine months of fiscal 2009 was $19.8 million, or $0.35
per share, compared with $26.0 million, or $0.46 per share, for the first nine
months of fiscal 2008. The decrease in net loss is primarily the result of
lower research and development costs, a higher foreign exchange gain and the
absence of an impairment loss, which were partially offset by higher selling,
general and administrative expenses and lower interest income in the first
nine months of fiscal 2009 as compared to the same period the previous year.
Conference Call
Labopharm will host a conference call today (Friday, November 6, 2009) at
10:00 a.m. ET to discuss its third quarter results. To access the conference
call by telephone, dial 416-644-3422 or 1-877-974-0448. Please connect
approximately five minutes prior to the beginning of the call to ensure
participation. The conference call will be archived for replay until Friday,
November 13, 2009 at midnight. To access the archived conference call, dial
416-640-1917 or 1-877-289-8525 and enter the reservation number 4171872
followed by the number sign. A live audio webcast of the conference call will
be available at www.labopharm.com. 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
site for 30 days.
About Labopharm Inc.
Labopharm is an emerging leader in optimizing the performance of existing
small molecule drugs using its proprietary controlled-release technologies.
The Company's lead product, a unique once-daily formulation of tramadol, is
now available in 17 countries around the world, including the U.S., Canada,
major European markets and Australia. The Company's second product, a novel
formulation of trazodone for the treatment of major depressive disorder, is
under regulatory review in the U.S. and Canada. The Company also has a
pipeline of follow-on products in both pre-clinical and clinical development.
Labopharm's vision is to become an integrated, international, specialty
pharmaceutical company with the capability to internally develop and
commercialize its own products. For more information, please visit
www.labopharm.com.
Ryzolt(TM) is a trademark of Purdue Pharma Products L.P.
This press release contains forward-looking statements, which reflect the
Company's current expectations regarding future events. The forward-looking
statements involve risks and uncertainties. Actual events could differ
materially from those projected herein and depend on a number of factors,
including the uncertainties related to the regulatory process in various
countries for the approval of the Company's products and the successful
commercialization of the products throughout the world if they are approved.
Investors should consult the Company's ongoing quarterly filings and annual
reports for additional information on risks and uncertainties relating to
these forward-looking statements. The reader is cautioned not to rely on these
forward-looking statements. Except as required by law, the Company undertakes
no obligation and does not intend to update these forward-looking statements.
Labopharm Inc.
INTERIM CONSOLIDATED BALANCE SHEETS
(Unaudited)
As at As at
September 30, December 31,
2009 2008
(Restated)
(thousands of Canadian dollars) $ $
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ASSETS
Current
Cash and cash equivalents 14,528 8,373
Marketable securities 9,229 36,520
Accounts receivable 4,063 3,277
Research and development tax credits receivable 2,174 1,274
Income taxes receivable 224 474
Inventories 2,460 1,760
Prepaid expenses and other assets 760 641
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Total current assets 33,438 52,319
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Restricted long-term investments 139 141
Long-term investment 2,885 3,178
Property, plant and equipment 9,238 10,213
Intangible assets 1,719 1,791
Future income tax assets 128 145
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47,547 67,787
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LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIENCY)
Current
Accounts payable and accrued liabilities 16,264 13,134
Current portion of deferred revenue 5,143 4,768
Current portion of obligations under capital leases 299 271
Current portion of long-term debt 1,414 3,378
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Total current liabilities 23,120 21,551
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Deferred revenue 5,920 9,094
Obligations under capital leases 5,115 5,342
Long-term debt 21,611 20,265
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Total liabilities 55,766 56,252
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Shareholders' equity (deficiency)
Share capital
Common shares, no par value, unlimited authorized
shares, 57,411,663 and 56,826,063 issued as at
September 30, 2009 and December 31, 2008,
respectively 242,979 241,967
Warrants 797 751
Contributed surplus 16,259 14,937
Deficit (267,267) (247,515)
Accumulated other comprehensive income (loss) (987) 1,395
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Total shareholders' equity (deficiency) (8,219) 11,535
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47,547 67,787
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Labopharm Inc.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended: For the nine months ended:
September September September September
30, 30, 30, 30,
(thousands of Canadian 2009 2008 2009 2008
dollars, except share (Restated) (Restated)
and per share amounts) $ $ $ $
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REVENUE
Product sales 5,187 3,863 13,816 9,880
Licensing 1,191 5,576 3,664 7,701
Royalties 201 - 325 -
Research and
development
collaboration 46 - 46 -
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6,625 9,439 17,851 17,581
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EXPENSES
Cost of goods sold
(excluding
depreciation and
amortization) 2,154 1,755 6,151 4,389
Research and
development expenses,
net 3,209 6,267 10,097 18,264
Selling, general and
administrative
expenses 7,999 4,963 21,033 16,079
Financial expenses 1,013 733 3,010 2,153
Impairment loss on
long-term investment - 400 - 1,091
Depreciation and
amortization 442 501 1,358 1,476
Interest income (84) (351) (378) (1,554)
Foreign exchange loss
(gain) (1,215) 488 (3,679) 196
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13,518 14,756 37,592 42,094
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Loss before income
taxes (6,893) (5,317) (19,741) (24,513)
Provision for income
taxes
Current 11 700 11 1,500
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Net loss for the
period (6,904) (6,017) (19,752) (26,013)
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Net loss per share
- basic and diluted (0.12) (0.11) (0.35) (0.46)
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Weighted average number
of common shares
outstanding 57,388,302 56,824,106 57,020,122 56,821,325
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Labopharm Inc.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the three months ended: For the nine months ended:
September September September September
30, 30, 30, 30,
2009 2008 2009 2008
(thousands of Canadian (Restated) (Restated)
dollars) $ $ $ $
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OPERATING ACTIVITIES
Net loss for the
period (6,904) (6,017) (19,752) (26,013)
Items not affecting
cash:
Depreciation of
property, plant
and equipment 396 471 1,229 1,386
Amortization of
intangible assets 46 30 129 90
Amortization of
premiums and
discounts on
marketable
securities 36 6 90 33
Loss on sale of
property, plant
and equipment 65 - 65 -
Impairment loss
on long-term
investment - 400 - 1,091
Non-cash financial
expenses 206 101 496 288
Unrealized foreign
exchange loss (gain) (1,177) 647 (2,012) 386
Stock-based
compensation 136 410 1,339 1,981
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(7,196) (3,952) (18,416) (20,758)
Net change in non-cash
items 1,502 (6,623) (834) (5,906)
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(5,694) (10,575) (19,250) (26,664)
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INVESTING ACTIVITIES
Acquisition of
marketable securities - (16,962) (8,466) (40,515)
Proceeds from
maturities of
marketable securities 595 - 23,605 -
Proceeds from
disposals of
marketable securities 3,400 11,200 9,420 67,019
Acquisition of
restricted long-term
investment - - - (45)
Acquisition of
property, plant and
equipment (251) (196) (319) (1,344)
Acquisition of
intangible assets (4) (57) (57) (96)
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3,740 (6,015) 24,183 25,019
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FINANCING ACTIVITIES
Repayment of
obligations under
capital leases (68) (66) (199) (138)
Proceeds from issuance
of long-term debt 2,549 - 2,549 -
Transaction costs (8) - (362) (118)
Proceeds from issuance
of share capital 366 3 527 8
Issuance costs of
share capital (35) - (35) -
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2,804 (63) 2,480 (248)
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Foreign exchange (loss)
gain on cash held in
foreign currencies (581) (176) (1,258) 448
Net increase (decrease)
in cash and cash
equivalents during
the period 269 (16,829) 6,155 (1,445)
Cash and cash
equivalents,
beginning of period 14,259 32,557 8,373 17,173
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Cash and cash
equivalents, end of
period 14,528 15,728 14,528 15,728
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Supplemental cash
flow information:
Interest paid 802 632 2,294 1,777
Income taxes
received 128 224 216 267
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SOURCE Labopharm Inc.
At Labopharm: Mark D'Souza, Senior Vice-President and Chief Financial Officer,
Tel: (450) 686-0207; At The Equicom Group: Jason Hogan, Media and Investor
Relations, Tel: (416) 815-0700, jhogan@equicomgroup.com; French: Joe
Racanelli, Tel: (514) 844-7997, jracanelli@equicomgroup.com
