UPDATE 2-QLT hit by weak Visudyne sales, pain seen lingering

(Adds details, comments from conference call and analysts. In U.S. dollars unless noted)

By Scott Anderson

TORONTO, Feb 22 (Reuters) - QLT Inc. (QLT.TO) reported a fourth-quarter loss on Thursday, hurt by a charge related to litigation at its U.S. subsidiary and declining sales from its Visudyne anti-blindness treatment, which it said would linger for some time.

The pharmaceutical company reported a loss of $117.5 million, or $1.56 a share, for the quarter ended Dec. 31. That compares with a loss of $370.4 million, or $4.04 a share, for the same period in 2005.

The 2005 quarter included a $410.5 million non-cash charge for impairment of goodwill and other intangible assets that resulted from the acquisition of Atrix Laboratories Inc.

The 2006 quarter included a charge in connection with the settlement of a patent infringement case involving its prostate cancer drug Eligard.

On a non-GAAP basis, which excludes the charges, the company said earnings were 8 cents a share for the quarter, compared with 11 cents for the year earlier period.

Analysts had expected a loss of 5 cents a share on a GAAP basis and a profit of 3 cents a share on a non-GAAP basis, according to Reuters Estimates.

QLT said fourth-quarter sales of its key anti-blindness treatment, Visudyne, were $76.5 million, down 28.7 percent from the same time in 2005. For all of 2006, worldwide sales were $353.8 million.

"It's clear when you look at the whole world that Visudyne sales continue to decline through 2007 and possibly early 2008 due to the impact of the Lucentis approval and launch in Europe," QLT Chief Executive Robert Butchofsky said on a conference call.

Butchofsky sees worldwide sales of Visudyne, which is used in the treatment of age-related macular degeneration, slipping mainly because of competition from rival treatments.

Although the company refused to provide an outlook for 2007, Butchofsky said sales of Visudyne could fall below $250 million in 2007 and are eventually expected to settle at around $250 million in future years as European sales decline and the use of rival treatments, such as Avastin and Lucentis, grow.

As a result of the expected weakening in Visudyne sales, the company cut about 80 jobs in October, leaving it with a workforce of about 240, well down from the head count of about 585 this time last year.

"I think they are being fairly optimistic with their long-term Visudyne sales target," said Brian Bapty, an analyst at Raymond James Ltd. in Vancouver, British Columbia. "I would like to see that they hit it."

However, Bapty said he does not expect to see much of an improvement in QLT's near-term outlook "until they get a pipeline that we can wrap our arms around or get some better clarity on Visudyne sales in the context of combination use."

QLT shares were up 1 Canadian cent at C$11.05 on the Toronto Stock Exchange by midmorning.

($1=$1.16 Canadian)