Paladin Labs Reports First Quarter 2013 Results: Achieves Record Revenues

Marketwired

MONTREAL, CANADA--(Marketwired - May 9, 2013) - Paladin Labs Inc. (PLB.TO), a leading specialty pharmaceutical company, today reported its financial results for the quarter ended March 31, 2013. 

2013 First Quarter Highlights

Financial

  • Adjusted(2) revenues reached a record $52.2 million, an increase of 35% over the same period last year
  • Adjusted(2) EBITDA(1) was $20.5 million, an increase of 14% over the same period last year

Product Development

  • Entered into a Canadian distribution agreement with Allergy Therapeutics plc (AGY.L) for Pollinex®-R with an option to add Sub-Saharan Africa
  • Entered into an exclusive licensing agreement with Apeiron Biologics AG for APN311, in Canada and Sub-Saharan Africa
  • Launched VagiSense™ an over-the-counter ("OTC") product used to detect bacterial vaginosis or trichomonas infections

Corporate Development

  • Announced that all closing conditions had been fulfilled relating to the acquisition of a controlling stake of 50.01% in Ativa Pharma S.A. ("Ativa") effective January 1, 2013
  • Obtained approval from the Toronto Stock Exchange ("TSX") to carry out a normal course issuer bid of up to 906,669 common shares
  • Issued a convertible debenture of $0.5 million to Immuron Limited (IMC.AX), an Australian-based biopharmaceutical company

Subsequent to the quarter

  • Issued a combined balance of $4.2 million secured loans to two pharmaceutical companies
  • Launched Amniosense™, Canada's first OTC amniotic fluid leak detection test
  • Launched Silenor® (doxepin hydrochloride) for the treatment of and symptomatic relief of insomnia
  • Entered into license agreement for certain intellectual property and related technology of Labopharm Inc to Altus Formulation Inc. ("Altus") in exchange for a 35% equity ownership interest, option to in-license and royalty rights on future products developed by Altus 

"The early part of 2013 has been marked by important business development and commercial activities. We continue to invest in our product portfolio and pipeline with the in-licensing of Pollinex-R and APN311. We also had important product launches namely Silenor and OTC products Amniosense and Vagisense. Finally, our strong quarterly financial results have contributed to Paladin's record cash position of $278 million dollars which will be leveraged to grow the Company both locally and internationally" said Mark Beaudet, interim President and CEO of Paladin Labs.

Financial Results

Adjusted(2) revenues increased $13.6 million or 35% to $52.2 million for the first quarter of 2013 from $38.6 million for the same period in 2012. The increase is mostly attributable to the proportionate consolidation of Litha's revenues of $13.5 million for the quarter ended March 31, 2013. Paladin's promoted products, including Tridural®, Trelstar®, Testim®, Abstral®, Digifab®, Glucagen® and Oralair®, combined increased by 16% for the quarter.

Consolidated revenues for the quarter ended March 31, 2013 were $69.0 million, an increase of 79% over the same period last year. The increase is mostly attributable to the consolidation of Litha's revenues of $30.3 million for the quarter.

First quarter 2013 adjusted(2) EBITDA(1) increased 14% to $20.5 million, compared to adjusted(2) EBITDA(1) of $18.1 million in the first quarter of 2012. This increase is primarily due to the acquisition of Litha, which contributed $1.7 million to adjusted(2) EBITDA(1). The increase in adjusted(2) EBITDA(1) for Paladin was driven by the strong sales performance of our promoted products, partially offset by increased costs associated with the launch of new products. Litha's adjusted(2) EBITDA(1) includes the costs associated with promotion activities in anticipation of launch of new products as well as the impact of the continued decline in the South African Rand. In addition, Litha's adjusted(2) EBITDA(1) was negatively impacted by fair value adjustments on acquisition by Paladin.

Consolidated EBITDA(1) was $22.6 million, an increase of 25% over the consolidated EBITDA(1) for the quarter ended March 31, 2012. This increase is primarily due to the consolidation of Litha, which contributed $3.8 million in consolidated EBITDA(1) for the quarter.

Net income attributable to shareholders for the quarter was $10.8 million or $0.51 per fully diluted share, compared to net income attributable to shareholders of $11.3 million or $0.54 per fully diluted share the same quarter a year ago. 

As at March 31 2013, Paladin's cash, cash equivalents and investments in marketable securities net of bank overdraft totaled a record $277.6 million. From this strong cash position, Paladin continues to pursue business and corporate development opportunities.

Product Developments

During the first quarter of 2013, Paladin demonstrated its commitment to grow its domestic and international product portfolio with the acquisition of distribution rights for Pollinex-R and an in-licensing agreement for APN311. 

Paladin obtained Canadian distribution rights with an option for Sub-Saharan Africa for Pollinex-R, an allergy vaccine for the treatment of allergic rhinitis due to ragweed pollen. Paladin will co-promote Pollinex-R through August 2013 before taking over all selling and distribution activities. Furthermore, Paladin obtained exclusive rights to market and sell APN311, a novel antibody-based immunotherapy for children with high-risk neuroblastoma, in Canada and Sub-Saharan Africa. APN 311 is undergoing phase III trial in Europe.

During the first months of 2013, Paladin advanced its product portfolio with the launch of three products. Silenor, indicated for the treatment and symptomatic relief of insomnia, will compete in the Canadian prescription sleep aid market valued at over $90 million. In addition, the OTC portfolio was expanded with the launch of Vagisense used to detect bacterial vaginosis or trichomonas infections and Amniosense which is Canada's first OTC amniotic fluid leak detection test. 

Corporate Developments

Subsequent to the quarter, Paladin issued a combined balance of $4.2 million in secured loans to two pharmaceutical companies. The loans have a maturity period of three years and are secured by the revenue generating assets of the two companies.

Furthermore, subsequent to the quarter, Paladin entered into a license agreement for certain intellectual property and related technology of Labopharm Inc. to Altus Formulation Inc. ("Altus") in exchange for a 35% equity ownership interest, option to in-license and royalty rights on future products developed by Altus. Altus will focus on specialty drug formulation and development with the aim of creating cost effective, safer to use drugs utilizing various proprietary delivery technologies.

In February 2013, Paladin received regulatory approval from the Toronto Stock Exchange to carry out a normal course issuer bid. Paladin has been authorized to purchase up to 906,669 of its common shares, or approximately 10% of its public float of 9,066,691 common shares as at February 15, 2013. No shares have been purchased to date under this normal course issuer bid.

Management team

The company also announced the following changes to its management team:

Mike Freeman, Vice President Government Affairs, has announced his departure from Paladin labs effective July 5, 2013. The entire team at Paladin expresses their thanks to Mike for all his contributions to the success of company over the last fourteen years and wish him continued success in his future endeavors.

Mark Nawacki, previously Vice President, Business, Corporate and Product Development has been promoted to Executive Vice President, Business, Corporate and Product Development. Mark joined Paladin in 2003 and over the past 10 years has led the business development team in the successful completion of many of the key business building initiatives that have accounted for Paladin's consistent growth. The promotion to Executive Vice President recognizes the increased scope and contribution of Mark's work at Paladin. 

Frank Desrosiers, previously Director of Marketing - Consumer Health Products and Market Data, has been appointed as Vice-President International Commercial Operations and Management Information Systems. Frank joined Paladin in 2009 as Associate Director, Product Planning and Market Data and was promoted to Director, Consumer Healthcare and Market Data in 2010. Prior to joining Paladin, Frank Desrosiers worked for the global strategy consulting firm Oliver Wyman, where he focused on market entry strategy, cost reduction and strategic planning for clients in North America, Europe, Africa and the Middle East. Frank will lead a newly created team that will be operationally responsible for Paladin's increasing international portfolio of product assets and investments. Frank will also retain responsibility for the market data team whose mandate moving forward will be expanded to include responsibility for all company's key management information systems and assets.

"I'd like to thank and congratulate both Mark and Frank on their promotions," said Mark Beaudet, interim President and CEO of Paladin Labs. "Our business continues grow and these changes will better position our company to continue to execute its plans with excellence."

(1) EBITDA - NON-IFRS FINANCIAL MEASURES

The term EBITDA (earnings before interest, taxes, depreciation and amortization) does not have any standardized meaning under International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similar measures presented by other companies. The Company defines EBITDA as earnings before interest expense, other expense (income), taxes, depreciation and amortization, foreign exchange gains (losses), share of net income (loss) in associates and joint venture and unusual items; such as write-downs and gains (losses) on intellectual property and investments. EBITDA is calculated and presented consistently from period to period and agrees, on a consolidated basis, with the amount disclosed as "Earnings before under-noted items" on the consolidated statements of income. The Company believes EBITDA to be an important measurement that allows it to assess the operating performance of its ongoing business on a consistent basis without the impact of amortization expenses. The Company excludes amortization expenses because their level depends substantially on non-operating factors such as the historical cost of intangible assets. The Company's method for calculating EBITDA may differ from that used by other issuers and, accordingly, this measure may not be comparable to EBITDA used by other issuers. 

(2) ADJUSTED

The term "adjusted" refers to the proportional consolidation of Litha's and Ativa's results. Given that Litha and Ativa is being accounted for on a consolidated basis, the consolidated results include amounts attributable to minority shareholders. Consequently, adjusted results have been provided to highlight Paladin's 44.54% and 50.01% economic interest in Litha's and Ativa's results respectively.

Conference Call Notice

Paladin will host a conference call to discuss its first quarter results today at 10:00 a.m. EST. The dial-in number for the conference call is 1-800-748-2715 or 416-981-9000. The call will be audio-cast live and archived for 30 days at www.paladinlabs.com.

About Paladin Labs Inc.

Paladin Labs Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing innovative pharmaceutical products for the Canadian and select international markets. With this strategy, a focused Canadian national sales team and proven marketing expertise, Paladin has evolved into one of Canada's leading specialty pharmaceutical companies. For more information, please visit the Company's web site at www.paladinlabs.com.

This press release may contain forward-looking statements and predictions. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The Company considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared, but cautions that these assumptions regarding the future events, many of which are beyond the control of the Company and its subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations, are discussed in the annual report as well as in the Company's Annual Information Form for the year ended December 31, 2012. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information or future events and except as required by law. For additional information on risks and uncertainties relating to these forward-looking statements, investors should consult the Company's ongoing quarterly filings, annual report and Annual Information Form and other fillings found on SEDAR at www.sedar.com.

INTERIM CONSOLIDATED BALANCE SHEETS  
(In thousands of Canadian dollars)  
         
As at March 31, 2013   December 31, 2012  
ASSETS        
Current        
Cash and cash equivalents 119,281   118,744  
Marketable securities 161,815   146,258  
Trade and other receivables 44,701   38,587  
Inventories 40,438   37,441  
Income tax receivable 1,554   5,479  
Other current assets 2,360   1,661  
Total current assets 370,149   348,170  
         
Investment in associates 600   626  
Interest in a joint venture 27,777   30,476  
Loans receivable from a joint venture 11,239   11,661  
Financial assets 6,555   4,561  
Investment tax credits recoverable 24,840   24,840  
Deferred income tax assets 21,009   25,402  
Property, plant and equipment 9,034   9,754  
Intangible assets 105,604   112,851  
Goodwill 34,647   36,176  
Total assets 611,454   604,517  
         
LIABILITIES AND EQUITY        
Current        
Bank overdraft 3,490   7,044  
Payables, accruals and provisions 58,159   50,165  
Current portion of finance lease liability 762   796  
Deferred revenue 4,344   2,734  
Income tax payable 23,166   24,140  
Other balances payable 2,000   2,000  
Current portion of long-term liabilities 5,524   5,804  
Total current liabilities 97,445   92,683  
         
Finance lease liability 6,468   6,843  
Deferred revenue 1,618   1,734  
Deferred tax liability 22,634   24,415  
Other balances payable 714   -  
Long-term liabilities 25,805   28,327  
Total liabilities 154,684   154,002  
         
Equity        
Share capital 175,710   172,282  
Other paid-in capital 6,315   7,039  
Other capital reserves (7,715 ) (4,076 )
Retained earnings 219,240   208,461  
Attributable to shareholders of the Company 393,550   383,706  
Non-controlling interests 63,220   66,809  
Total equity 456,770   450,515  
Total liabilities and equity 611,454   604,517  
         
         
         

INTERIM CONSOLIDATED INCOME STATEMENTS
 
(In thousands of Canadian dollars except for share and per share amounts)  
   
  Three months ended March 31  
  2013   2012  
         
Revenues 68,961   38,557  
Cost of sales 28,409   11,188  
Gross income 40,552   27,369  
         
Expenses (income)        
Selling, general and administrative 16,802   7,644  
Research and development 2,625   2,548  
Interest income (1,486 ) (896 )
Earnings before under-noted items 22,611   18,073  
         
Amortization of intangible assets 5,052   2,903  
Depreciation of property, plant and equipment 342   24  
Other finance (income) expense (58 ) 555  
Other income (513 ) (200 )
Foreign exchange loss (gain) 551   (154 )
Interest expense 1,041   3  
Share of net loss from a joint venture 1,016   -  
Share of net loss (income) from associates 9   (425 )
Income before income tax 15,171   15,367  
         
Provision for income taxes 4,621   4,045  
Net income for the period 10,550   11,322  
         
Attributable to:        
Shareholders of the Company 10,779   11,322  
Non-controlling interests (229 ) -  
         
Attributable to shareholders of the Company        
         
Basic earnings per share 0.53   0.56  
Diluted earnings per share 0.51   0.54  
         
Weighted average number of shares outstanding        
         
Basic 20,447,583   20,284,749  
Diluted 21,026,818   20,919,714  
         
         
         

CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(In thousands of Canadian dollars)    
  Three months ended March 31  
  2013   2012  
         
Operating activities        
Net income for the period 10,550   11,322  
Adjustments reconciling net income to operating cash flows        
  Amortization of intangible assets 5,051   2,903  
  Deferred tax 3,357   4,373  
  Share-based compensation expense 544   581  
  Other finance (income) expense (58 ) 555  
  Unrealized foreign exchange loss 104   65  
  Other income (292 ) -  
  Depreciation of property, plant and equipment 377   27  
  Share of net (loss) income from associates 9   (425 )
  Share of net loss from a joint venture 1,016   -  
  20,658   19,401  
Net change in non-cash balances relating to operations 1,015   (4,518 )
Cash inflow from operating activities 21,673   14,883  
         
Investing activities        
Disposals and maturities of marketable securities 36,446   39,507  
Acquisition of subsidiaries, net of cash acquired 9   -  
Purchases of marketable securities (51,995 ) (36,578 )
Purchases of financial assets (2,500 ) -  
Purchases of property, plant and equipment (140 ) (16 )
Additions to intangible assets (1,115 ) -  
Net cash (outflow) inflow from investing activities (19,285 ) 2,913  
         
Financing activities        
Common shares issued for cash 2,453   571  
Decrease in bank overdraft (3,163 ) -  
Repurchase of shares -   (819 )
Repayment of long-term liabilities (1,118 ) -  
Payment of obligation under finance lease -   (250 )
Net cash outflow from financing activities (1,828 ) (498 )
Foreign exchange loss on cash and cash equivalents (23 ) (11 )
Increase in cash and cash equivalents during the period 537   17,287  
Cash and cash equivalents, beginning of period 118,744   72,115  
Cash, cash equivalents, end of period 119,281   89,402  
Paladin cash and cash equivalents 113,584   89,402  
Paladin marketable securities 161,815   163,298  
Paladin cash, cash equivalents and marketable securities 275,399   252,700  
Litha cash and cash equivalents 5,193   -  
Litha bank overdraft (3,490 ) -  
Litha cash and cash equivalents and bank overdraft 1,703   -  
Ativa cash and cash equivalents 504   -  
Cash, cash equivalents and marketable securities net of bank overdraft 277,606   252,700  
         
         
         

Reconciliation of the adjusted(2) consolidated results from operations

                 
Three months ended
March 31, 2013
Paladin Litha & Ativa   Consolidated results from operations Paladin Litha & Ativa (proportionate consolidation)   Adjusted consolidated(2) results from operations
  $ $   $ $ $   $
                 
Revenues 38,661 30,300   68,961 38,661 13,496   52,157
Cost of sales 10,843 17,566   28,409 10,843 7,824   18,667
Gross Income 27,818 12,734   40,552 27,818 5,672   33,490
EBITDA(1) 18,885 3,726   22,611 18,885 1,658   20,543
Net income before income taxes 14,984 187   15,171 14,984 79   15,063
Net Income (loss) 10,848 (298 ) 10,550 10,848 (136 ) 10,712
Net Income (loss) attributable to shareholders
10,848

(69
)
10,779

10,848

(69
)
10,779
Contact:
Samira Sakhia, MBA, CPA, CA
Chief Financial Officer
Paladin Labs Inc.
514-344-4675
Tel: 514-669-5367
Email:info@paladinlabs.com
Website: www.paladinlabs.com

Rates

View Comments (0)