QLT Inc. (Nasdaq:QLTI) (TSX:QLT) ("QLT" or the "Company") is a
biotechnology company dedicated to the development and
commercialization of innovative ocular products that address the
unmet medical needs of patients and clinicians worldwide. The
Company reported financial results today for the first quarter
ended March 31, 2014. Unless otherwise specified, all amounts are
reported in U.S. dollars and in accordance with U.S. GAAP.
2014 FINANCIAL RESULTS
QLT Expenses / Other Income
Research and Development (R&D) expenses relate to QLT's
synthetic retinoid program. During the first quarter of 2014, QLT
incurred R&D expenses of $4.8 million compared to $4.1 million
for the same period in 2013. The net $0.7 million increase was
primarily due to costs incurred in connection with the Company's
current toxicity studies, the QLT091001 Phase IIa study on Impaired
Dark Adaptation and preparatory activities for the QLT091001
pivotal trial. These cost increases were partially offset by lower
R&D costs related to the Company's QLT091001 Phase Ib
retreatment study in patients with Leber Congenital Amaurosis and
Retinitis Pigmentosa, which was substantially completed in 2013,
and savings from the Company's 2012 workforce reduction and other
restructuring activities.
During the first quarter of 2014, Selling, General and
Administrative (SG&A) expenses were $2.2 million compared to
$2.1 million for the same period in 2013. The net $0.1 million
increase in SG&A expenses was primarily due to fees incurred in
connection with the exploration of certain strategic alternatives,
which were partially offset by savings from the Company's 2012
workforce reduction and other restructuring activities.
During the first quarter of 2014, Investment and Other Income
was $1.5 million compared to $0.8 million for the same period in
2013. For both periods, this primarily related to gains of $1.5
million and $0.8 million, respectively, for the Fair Value Changes
in Contingent Consideration. These fair value gains resulted from
the revaluation of the Company's contingent consideration asset,
which was recorded as the present value of future expected payments
with respect to Eligard®. The $0.7 million increase in the
Company's fair value gains is primarily due to a $17.0 million
payment (the "Sanofi Prepayment") received from TOLMAR Holding,
Inc. ("Tolmar") on March 17, 2014 in accordance with a consent and
amendment agreement (the "Consent and Amendment Agreement") to the
stock purchase agreement with Tolmar (the "2009 Stock Purchase
Agreement"), under which QLT had formerly divested the Eligard
product line to Tolmar. Pursuant to the terms of the Consent and
Amendment Agreement, in exchange for QLT's consent to certain
transactions proposed by Tolmar that would affect its license
agreement with Sanofi Synthelabo Inc. ("Sanofi License Agreement"),
QLT received the Sanofi Prepayment as pre-payment and full
satisfaction of the remaining contingent consideration owing with
respect to royalties under the Sanofi License Agreement. Under
the Consent and Amendment Agreement, Tolmar and its parent
corporation, Dodley International Ltd., also guaranteed payment of
the remaining $10.0 million of contingent consideration owing under
the 2009 Stock Purchase Agreement on or before November 30,
2014.
Operating Losses and Loss per Share
The operating loss for the first quarter of 2014 was $7.8
million, compared to a $7.2 million operating loss during the same
period in 2013. The net $0.6 million increase in operating losses
is primarily due to higher spending on the Company's current
R&D activities discussed under the QLT Expenses / Other Income
section above.
Loss per share from continuing operations was $0.13 in both the
first quarter of 2014 and first quarter of 2013.
Cash and Cash Equivalents
As at March 31, 2014, the Company's consolidated cash and cash
equivalents was $139.9 million compared to $118.5 million of cash
and cash equivalents at the end of 2013. The increase was
primarily due to $28.1 million of proceeds received from Tolmar in
connection with Eligard related contingent consideration, which
included the $17.0 million related to the Consent and Amendment
Agreement discussed under the QLT Expenses / Other Income section
above. In addition, we have approximately $10.0 million of Eligard
related contingent consideration still owing to us under the terms
of the 2009 Stock Purchase Agreement, which is expected to be
collected in full on or before November 30, 2014.
Passive Foreign Investment Company
The Company believes that it was classified as a Passive Foreign
Investment Company (PFIC) for 2008 – 2013, and that it may be
classified as a PFIC in 2014, which could have adverse tax
consequences for U.S. shareholders. Please refer to our Annual
Report on Form 10-K for additional information.
|
QLT Inc. - Financial
Highlights |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
INCOME |
In accordance with United States
generally accepted accounting principles |
(Unaudited) |
|
Three months
ended March 31, |
(In thousands of U.S. dollars
except share and per share information) |
2014 |
2013 |
|
|
|
Expenses |
|
|
Research and development |
$4,813 |
$4,080 |
Selling, general and administrative |
2,156 |
2,082 |
Depreciation |
229 |
235 |
Restructuring
charges |
571 |
822 |
|
7,769 |
7,219 |
|
|
|
Operating loss |
(7,769) |
(7,219) |
|
|
|
Investment and other
income |
|
|
Net foreign
exchange losses |
(21) |
(66) |
Interest income |
22 |
57 |
Fair value change in contingent
consideration |
1,466 |
795 |
Other gains |
55 |
-- |
|
1,522 |
786 |
|
|
|
Loss from continuing operations
before income taxes |
(6,247) |
(6,433) |
|
|
|
Provision for income taxes |
(215) |
(183) |
Loss from continuing
operations |
(6,462) |
(6,616) |
|
|
|
Income from discontinued operations, net of
income taxes |
-- |
189 |
|
|
|
Net loss and comprehensive
loss |
($6,462) |
($6,427) |
|
|
|
Basic and diluted net loss per common
share |
|
|
Continuing
operations |
($0.13) |
($0.13) |
Discontinued
operations |
$0.00 |
$0.00 |
Net loss per common
share |
($0.13) |
($0.13) |
|
|
|
Weighted average number of common
shares outstanding (thousands) |
|
|
Basic and diluted |
51,082 |
50,589 |
|
|
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(Unaudited) |
(In thousands of U.S. dollars except
share amounts) |
March 31, 2014 |
December 31, 2013 |
ASSETS |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ 139,909 |
$ 118,521 |
Accounts receivable, net of allowances
for doubtful accounts |
14,374 |
4,590 |
Contingent consideration - current |
-- |
36,582 |
Income taxes receivable |
68 |
77 |
Deferred income tax assets - current |
-- |
191 |
Prepaid and other
assets |
1,627 |
1,863 |
Total current assets |
155,978 |
161,824 |
|
|
|
Property, plant and equipment |
1,637 |
1,866 |
Deferred income tax assets -
non-current |
-- |
177 |
Total assets |
157,615 |
163,867 |
|
|
|
LIABILITIES |
|
|
Current liabilities |
|
|
Accounts payable |
$ 2,645 |
$ 2,609 |
Accrued liabilities |
859 |
1,498 |
Accrued restructuring
charge |
610 |
130 |
Total current
liabilities |
4,114 |
4,237 |
|
|
|
Uncertain tax position liabilities |
1,627 |
1,846 |
Total liabilities |
5,741 |
6,083 |
|
|
|
SHAREHOLDERS' EQUITY |
|
|
Share capital |
|
|
Authorized |
|
|
500,000,000 common shares without par
value |
|
|
5,000,000 first preference shares without
par value, issuable in series |
|
|
Issued and outstanding common shares |
$ 466,229 |
$ 466,229 |
March 31, 2014 – 51,081,878 shares |
|
|
December 31, 2013 – 51,081,878
shares |
|
|
Additional paid-in capital |
96,396 |
95,844 |
Accumulated deficit |
(513,720) |
(507,258) |
Accumulated other comprehensive
income |
102,969 |
102,969 |
Total shareholders'
equity |
151,874 |
157,784 |
Total shareholders' equity and
liabilities |
$ 157,615 |
$ 163,867 |
About QLT
QLT is a biotechnology company dedicated to the development and
commercialization of innovative ocular products that address the
unmet medical needs of patients and clinicians worldwide. We are
focused on developing our synthetic retinoid program for the
treatment of certain inherited retinal diseases.
QLT's head office is based in Vancouver, Canada and the Company
is publicly traded on NASDAQ Stock Market (symbol: QLTI) and the
Toronto Stock Exchange (symbol: QLT). For more information about
the Company's products and developments, please visit our web site
at www.qltinc.com.
Visudyne® is a registered trademark of Novartis AG
Eligard® is a registered trademark of Sanofi S.A.
Certain statements in this press release constitute
"forward-looking statements" of QLT within the meaning of the
Private Securities Litigation Reform Act of 1995 and constitute
"forward-looking information" within the meaning of applicable
Canadian securities laws. Forward-looking statements include, but
are not limited to: statements concerning our PFIC status; and
statements which contain language such as: "assuming," "prospects,"
"goal," "future," "projects," "potential," "believes," "expects,"
"hopes," and "outlook." Forward-looking statements are predictions
only which involve known and unknown risks, uncertainties and other
factors that may cause actual results to be materially different
from those expressed in such statements. Many such risks,
uncertainties and other factors are taken into account as part of
our assumptions underlying these forward-looking statements and
include, among others, the following: the Company's future
operating results are uncertain and likely to fluctuate; currency
fluctuations; the risk that we may not receive any or as much
additional contingent consideration as we might expect under our
agreements with respect to the sale of Visudyne and the PPDS
Technology; the risk that we may not receive the remaining portion
of the Eligard contingent consideration payable to us under the
2009 Stock Purchase Agreement and the Consent and Amendment
Agreement; risks and uncertainties concerning the impact that QLT's
success or failure in completing strategic initiatives will have on
the market price of our securities; risks resulting from the
potential loss of key personnel; uncertainties relating to our
development plans, timing and results of the clinical development
and commercialization of our products and technologies; assumptions
related to continued enrollment trends, efforts and success, and
the associated costs of these programs; outcomes for our clinical
trials may not be favorable or may be less favorable than
interim/preliminary results and/or previous trials; there may be
varying interpretations of data produced by one or more of our
clinical trials; risks and uncertainties associated with the safety
and effectiveness of our technology; the timing, expense and
uncertainty associated with the regulatory approval process for
products to advance through development stages; risks and
uncertainties related to the scope, validity, and enforceability of
our intellectual property rights and the impact of patents and
other intellectual property of third parties; and general economic
conditions and other factors described in detail in QLT's Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q and other
filings with the U.S. Securities and Exchange Commission and
Canadian securities regulatory authorities. Forward-looking
statements are based on the current expectations of QLT and QLT
does not assume any obligation to update such information to
reflect later events or developments except as required by law.
This press release also contains "forward looking information"
that constitutes "financial outlooks" within the meaning of
applicable Canadian securities laws. This information is provided
to give investors general guidance on management's current
expectations of certain factors affecting our business, including
our financial results. Given the uncertainties, assumptions and
risk factors associated with this type of information, including
those described above, investors are cautioned that the information
may not be appropriate for other purposes.
CONTACT: QLT Inc. Contacts:
Investor & Media Relations
Andrea Rabney or David Pitts
Argot Partners
212-600-1902
andrea@argotpartners.com
david@argotpartners.com
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