Seasonally weak Q1 is now out of the wayReaders are referred to the cautionary notes regarding Forward-lookingInformation and non-IFRS Financial Measures at the end of this release. Unless noted otherwise, dollar amounts are in U.S. dollars
Listed TSX, Symbol: CNJ
TORONTO & WINNIPEG, Canada, Dec. 14, 2011 /CNW/ - Cangene Corporation today reports financial results for the first quarter of fiscal 2012, ended October 31, 2011, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board.
Revenues for the quarter were $21.5 million, compared with $23.0 million in the same quarter of last year, a decrease of $1.6 million or 7%. The prior-year quarter included
.9 million in royalty revenues; fiscal 2011 was the final year for this revenue stream. In the current period, a quarter-over-quarter increase in HepaGam B® sales and a sale of non-specialty plasma offset lower sales of WinRho® SDF, leading to consistent product sales in the biopharmaceutical segment, quarter over quarter. There were no deliveries on U.S. government contracts during the current or comparative quarter; however, related R&D revenues were earned in both periods. As there were no deliveries on government contracts during either the current or prior-year first quarters, the majority of product-services revenues in the contract-services segment in both fiscal periods results from commercial contract-manufacturing services at Cangene bioPharma, Inc. in Baltimore, which decreased by $1.0 million compared with the year-earlier period due largely to customer-driven scheduling changes. Partially offsetting this decrease, R&D-services revenue in this segment was
.8 million higher in the current-year quarter, compared with last year.
Independent R&D expense was $6.7 million in the current quarter, compared with $4.6 million in the prior year; an increase of $2.1 million or 47%. This increase results largely from activities aimed at development of the immune globulin intravenous ("IGIV") product. During the quarter, Cangene completed four clinical production runs and incurred additional labour and other charges related to this product.
A net loss of $4.4 million in the first quarter of 2012 compares with a net loss of $3.5 million in the comparative quarter. The net loss increased due to a combination of factors including lower gross profit due to the absence of royalty revenues, which were all profit; increased independent R&D expense and a tax expense compared with a tax benefit in the prior-year quarter. However, these impacts were partially offset by a foreign-exchange gain of $3.1 million, compared with a foreign-exchange loss of $1.4 million in the prior-year quarter, due to the strengthening U.S. dollar.
"We're now implementing strategies aimed at short-, mid- and long-term growth, and at re-creating our entrepreneurial culture. We have set up internal cross-functional teams that will work toward addressing key corporate priorities, including organizational and operational efficiencies. Going forward, we'll increase focus and work toward our redefined goals," says John Sedor, President and CEO of Cangene.
Cash used in operating activities was $5.7 million in the current quarter, compared with $12.9 million in the comparative 2011 quarter. In the comparative prior-year quarter, a net change in non-cash working capital balances of $13.2 million was the main contributor to cash used in operating activities. This compares with a net change in non-cash working capital balances of
.2 million in the current period. Cash used in investing and financing activities in the current quarter was
.8 million compared with $4.5 million last year; the use of cash in the prior-year quarter consisted primarily of capital expenditures and share repurchases. The lower capital spending in the current quarter is consistent with the Company's budget for additions to property, plant and equipment in 2012.
The Company had $38.7 million in cash at October 31, 2011 compared with $45.2 million at July 31, 2011. At October 31, 2011 and July 31, 2011, Cangene had no debt.
Readers are reminded that the full, unaudited condensed consolidated interim financial statements and associated notes, along with the management's discussion and analysis of financial condition and results of operations, will be available on SEDAR at www.sedar.com.
Readers are referred to the cautionary notes regarding forward-looking information and non-IFRS financial measures at the end of this release. Certain comparative figures in the following financial statements have been reclassified to conform with the current year's presentation.
Cangene Corporation
Incorporated under the laws of Ontario
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS (unaudited)
in thousands of U.S. dollars |
|
At
October 31, 2011 |
|
|
At
July 31, 2011 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current |
|
|
|
|
|
Cash |
$ |
38,658 |
|
$ |
45,176 |
Accounts receivable |
|
15,425 |
|
|
20,083 |
Inventories and contracts in progress |
|
71,725 |
|
|
67,177 |
Derivative financial instruments |
|
326 |
|
|
— |
Taxes recoverable |
|
12,020 |
|
|
12,220 |
Prepaid expenses and deposits |
|
3,388 |
|
|
2,334 |
Total current assets |
|
141,542 |
|
|
146,990 |
Property, plant and equipment, net |
|
72,358 |
|
|
74,175 |
Taxes recoverable |
|
16,070 |
|
|
16,288 |
Deferred tax |
|
15,147 |
|
|
16,338 |
Intangible assets, net |
|
11,793 |
|
|
12,305 |
|
$ |
256,910 |
|
$ |
266,096 |
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Current |
|
|
|
|
|
Accounts payable and accrued liabilities |
$ |
18,559 |
|
$ |
18,219 |
Derivative financial instruments |
|
— |
|
|
1,775 |
Provision for chargebacks |
|
3,715 |
|
|
3,664 |
Incentive plan liability |
|
1,163 |
|
|
— |
Taxes payable |
|
70 |
|
|
92 |
Current portion of deferred income |
|
2,822 |
|
|
3,207 |
Total current liabilities |
|
26,329 |
|
|
26,957 |
Deferred income |
|
6,300 |
|
|
6,716 |
Royalty provision |
|
2,916 |
|
|
3,316 |
Incentive plan liability |
|
1,081 |
|
|
2,844 |
Deferred share unit liability |
|
238 |
|
|
222 |
Deferred tax |
|
1,058 |
|
|
2,841 |
Total liabilities |
|
37,922 |
|
|
42,896 |
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital |
|
50,860 |
|
|
50,860 |
Contributed surplus |
|
178 |
|
|
— |
Retained earnings |
|
167,950 |
|
|
172,340 |
Total equity |
|
218,988 |
|
|
223,200 |
|
$ |
256,910 |
|
$ |
266,096 |
|
|
|
|
|
|
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (unaudited)
|
|
Three months |
|
|
Three months |
|
|
ended |
|
|
ended |
in thousands of U.S. dollars except share-related data |
|
October 31, 2011 |
|
|
October 31, 2010 |
|
|
|
|
|
|
Revenues |
|
|
|
|
|
Product sales |
$ |
11,564 |
|
$ |
11,792 |
Product services |
|
5,536 |
|
|
6,710 |
R&D services |
|
4,369 |
|
|
3,594 |
Royalties |
|
— |
|
|
946 |
|
|
21,469 |
|
|
23,042 |
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
Product sales |
|
7,578 |
|
|
8,092 |
Product services |
|
4,272 |
|
|
4,484 |
R&D services |
|
3,202 |
|
|
2,624 |
|
|
15,052 |
|
|
15,200 |
|
|
|
|
|
|
Gross profit |
|
6,417 |
|
|
7,842 |
|
|
|
|
|
|
Expenses |
|
|
|
|
|
Independent R&D |
|
6,701 |
|
|
4,557 |
Selling, general and administrative |
|
6,813 |
|
|
6,725 |
Loss on sale of assets |
|
80 |
|
|
30 |
|
|
13,594 |
|
|
11,312 |
Operating loss |
|
(7,177) |
|
|
(3,470) |
Short-term interest income |
|
2 |
|
|
11 |
Foreign-exchange gain (loss) |
|
3,139 |
|
|
(1,422) |
|
|
|
|
|
|
Loss before taxes |
|
(4,036) |
|
|
(4,881) |
Tax expense (benefit) |
|
|
|
|
|
|
Current |
|
945 |
|
|
(1,326) |
|
Deferred |
|
(591) |
|
|
(32) |
|
|
354 |
|
|
(1,358) |
Net loss and comprehensive loss for the period |
$ |
(4,390) |
|
$ |
(3,523) |
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
|
Basic and diluted |
$ |
(0.07) |
|
$ |
(0.05) |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (unaudited)
in thousands of U.S. dollars |
|
Stated share
capital |
|
|
Retained
earnings |
|
|
Contributed
surplus |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at July 31, 2010 |
$ |
51,696 |
|
$ |
173,295 |
|
$ |
— |
|
$ |
224,991 |
Net income for the year ended July 31, 2011 |
|
— |
|
|
1,509 |
|
|
— |
|
|
1,509 |
Common shares purchased and cancelled under NCIB |
|
(836) |
|
|
(2,464) |
|
|
— |
|
|
(3,300) |
Balance at July 31, 2011 |
$ |
50,860 |
|
$ |
172,340 |
|
$ |
— |
|
$ |
223,200 |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three-month period ended October 31, 2011 |
|
— |
|
|
(4,390) |
|
|
— |
|
|
(4,390) |
Stock option expense |
|
— |
|
|
— |
|
|
178 |
|
|
178 |
Balance at October 31, 2011 |
$ |
50,860 |
|
$ |
167,950 |
|
$ |
178 |
|
$ |
218,988 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at July 31, 2010 |
$ |
51,696 |
|
$ |
173,295 |
|
$ |
— |
|
$ |
224,991 |
Net loss for the three-month period ended October 31, 2010 |
|
— |
|
|
(3,523) |
|
|
— |
|
|
(3,523) |
Common shares purchased and cancelled under NCIB |
|
(250) |
|
|
(849) |
|
|
— |
|
|
(1,099) |
Balance at October 31, 2010 |
$ |
51,446 |
|
$ |
168,923 |
|
$ |
— |
|
$ |
220,369 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (unaudited)
|
|
Three months ended |
|
Three months ended |
in thousands of U.S. dollars |
|
October 31, 2011 |
|
October 31, 2010 |
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
Net loss for the period |
$ |
(4,390) |
$ |
(3,523) |
Add (deduct) items not involving cash: |
|
|
|
|
|
Depreciation of property, plant and equipment |
|
2,353 |
|
2,570 |
|
Amortization of intangible assets |
|
676 |
|
686 |
|
Deferred income |
|
(801) |
|
(633) |
|
Incentive plan liability |
|
(601) |
|
788 |
|
Deferred share unit liability |
|
16 |
|
47 |
|
Amortization of royalty provision |
|
(224) |
|
(310) |
|
Revaluation of royalty provision |
|
(176) |
|
— |
|
Deferred tax benefit |
|
(591) |
|
(32) |
|
Change in value of derivative financial instruments |
|
(2,101) |
|
676 |
|
Loss on disposal of assets |
|
80 |
|
30 |
|
Stock-based compensation expense |
|
178 |
|
— |
|
|
|
|
|
Net change in non-cash working capital balances and other assets related to operations |
|
(157) |
|
(13,155) |
Cash used in operating activities |
|
(5,738) |
|
(12,856) |
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
Purchase of property, plant and equipment, net |
|
(650) |
|
(3,400) |
Acquisition of intangible assets |
|
(130) |
|
(8) |
Cash used in investing activities |
|
(780) |
|
(3,408) |
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
Shares repurchased for cancellation |
|
— |
|
(1,099) |
Cash used in financing activities |
|
— |
|
(1,099) |
|
|
|
|
|
Net decrease in cash during the period |
|
(6,518) |
|
(17,363) |
Cash, beginning of period |
|
45,176 |
|
40,366 |
Cash, end of period |
$ |
38,658 |
$ |
23,003 |
|
|
|
|
|
Interest paid1 |
$ |
6 |
$ |
4 |
Taxes paid2 |
$ |
59 |
$ |
12 |
|
|
|
|
|
- Amounts paid and received for interest were reflected as operating cash flows in the consolidated statements of cash flows.