2003 Year - End resultsWESTAIM CORPORATION
Transmitted by Canada NewsWire on : Feburary 19, 2004 15:00
Westaim Announces 2003 Year-End Results
CALGARY, Feb. 19 /CNW/ - The Westaim Corporation announced today that for
the year ended December 31, 2003, it recorded a net loss of $34.5 million, or
44 cents per share compared to a net loss of $49.8 million, or 64 cents per
share, in the previous year. The results included income from discontinued
operations of $2.4 million in 2003 and losses from discontinued operations of
$10.7 million in 2002. Revenues from continuing operations were $17.3 million
in 2003 compared to $12.6 million in 2002.
For the three months ended December 31, 2003, the Company posted a net
loss of $17.7 million, or 23 cents per share, on revenues of $3.6 million
compared to a net loss of $9.4 million, or 12 cents per share, on revenues of
$3.6 million in the previous year. For the quarter, losses from discontinued
operations were $0.9 million in 2003 and $0.5 million in 2002.
The divisional loss from continuing operations for 2003 was $23.1
million, compared to a loss of $24.7 million in 2002. This loss primarily
reflects the planned level of investment towards research and development in
NUCRYST Pharmaceuticals and iFire Technology, Westaim's technology divisions.
At December 31, 2003, Westaim had $68.1 million in cash and equivalents,
compared to $101.3 million in 2002. The Company has no debt. In January 2004,
Westaim sold its Westaim Ambeon division for $35 million, further adding to
its strong cash position.
"Westaim has made strategic decisions to both strengthen our balance
sheet and increase focus on our two high-potential technology divisions, iFire
Technology and NUCRYST Pharmaceuticals," said Barry M. Heck, President & CEO
of Westaim. "Last year we saw NUCRYST enter its first human trials for a new
atopic dermatitis drug and iFire successfully scale its proprietary flat panel
display to 34 inches in size."
Review of Operations:
iFire Technology made important advancements with both technology
progress and partner collaborations in 2003. Early in the year, iFire added
Dai Nippon Printing Co., Ltd. (DNP) as a technology collaboration partner, and
in 2004, this relationship has expanded to include pilot production of 34-inch
iFire (TM) display modules to help iFire prove its low-cost manufacturing
model. iFire's other major technology collaboration partner, Sanyo Electric
Co., Ltd., has also contributed to the technical progress of iFire's
technology.
In early 2003, iFire progressed from its traditional triple-patterned
red, green and blue phosphors to the Color-by-Blue(TM) process where a single
blue phosphor and color conversion materials are used. This created
improvements in the display's performance and is projected to reduce future
capital and production costs by approximately 15 per cent. By the end of the
year, iFire successfully scaled its technology from 17 inches in size to 34
inches, the anticipated size of its initial product. Collaborative work with
its partners DNP and Sanyo Electric, along with the new Color-by-Blue(TM)
method made this accomplishment happen faster than anticipated.
NUCRYST Pharmaceuticals entered an important new chapter as a
pharmaceutical company in 2003 when it began Phase 2 human clinical trials for
its first drug candidate, (NPI 32101) for the treatment of atopic dermatitis,
or eczema, and other skin conditions. The company believes that its
nanocrystalline technology with dual anti-inflammatory and antimicrobial
properties addresses both the inflammation associated with atopic dermatitis
and the secondary infections that often accompany the disease.
NUCRYST's profitable wound care division continued to grow in 2003 with
revenue of $16.2 million, compared to $8.3 million in 2002. The results for
2003 include a US$3.0 million milestone payment from NUCRYST's wound care
partner Smith & Nephew plc for achievement of additional regulatory approvals
in Europe.
Strategic Review:
In 2003 the Board completed a thorough, strategic review of the company
and its businesses. As disclosed in last year's information circular, a
Strategic Review Committee was formed to help facilitate this process. As part
of this review, the Board and the Strategic Review Committee worked with
independent advisors, including GMP Securities Ltd., who also acted as the
exclusive financial advisor for the sale of Ambeon, and CIBC World Markets.
The review reaffirmed Westaim's continued focus and commitment to iFire and
NUCRYST. In its final report to the Board of Directors of Westaim, the
Strategic Review Committee reached a number of recommendations and
conclusions, which included:
iFire Technology - The Committee believes that iFire has been, and
continues to be, a significant opportunity for Westaim and that the
continued support of iFire is justified. Although there are
technology, manufacturing and marketing risks for the successful
development by iFire of a commercial product, the magnitude of the
potential rewards justifies Westaim's continued support.
NUCRYST Pharmaceuticals - The Committee believes that the NUCRYST
wound care business is a valuable asset and supports continuing to
pursue further wound care opportunities with Smith & Nephew. Although
monetizing the royalty stream of the wound care business is possible,
the Committee concluded the value of this business could be
substantially enhanced as the ability to achieve projected sales
targets is proven. The Committee affirmed that NUCRYST should continue
to fund its current Phase 2 human efficacy trials for atopic
dermatitis. With respect to all other indications, the Committee
recommends that NUCRYST's management continue to assess and develop
its pharmaceutical strategy.
As disclosed in last year's information circular, the Board of Directors
added two new members who were nominated by some of the company's large
institutional shareholders. These new Board Members were Michael B.C. Davies
and G. Wesley Voorheis, both of whom were members of the Strategic Review
Committee. Now that the strategic review is complete, Mr. Davies and Mr.
Voorheis have retired from the Board. Westaim thanks them for their
contribution. As recommended by the Strategic Review Committee, Westaim's
Board will commence a search for two new independent Board members.
Shareholder Rights Plan:
Westaim also announced today that its Board of Directors has approved the
renewal of a shareholder rights plan designed to ensure the fair treatment of
shareholders in the event of a take-over offer for the common shares of
Westaim. This action has been taken as part of the Board's fiduciary
responsibility to shareholders and is not in response to any specific effort
to acquire control of the company. The plan is subject to regulatory approval,
and must be ratified at Westaim's next annual meeting of shareholders. Full
details of the plan will be included in the proxy circular that will be sent
to all shareholders prior to the annual meeting.
The plan will provide Westaim's Board of Directors and shareholders more
time to evaluate any unsolicited take-over bid and, if appropriate, to seek
out other alternatives to maximize shareholder value. The plan will be in
effect for six years, but must be reconfirmed by shareholders after a three-
year period.
Under the plan, one right is issued and attaches to each outstanding
common share at no cost. Rights issued under the plan become exercisable only
when a person, including certain related persons, acquires or announces their
intention to acquire 20 per cent or more of Westaim's outstanding common
shares without complying with the "permitted bid" provisions of the plan or
without the approval of Westaim's Board. Should such an acquisition occur,
each right, if exercised, would entitle the holder, other than the acquiring
person and persons related to it, to purchase Westaim's common shares at a
price equal to half their current market value.
A "permitted bid" or offer for Westaim's common shares must be made to
all shareholders. The offer must remain open for at least 60 days and must be
accepted by a minimum of 50 per cent of the shares not already held by the
bidder. If this occurs, the bidder may take up and pay for tendered shares,
but must extend the offer for another 10 days. This will allow shareholders
sufficient time to consider the bid and any other available options. It also
gives Westaim's Board of Directors time to consider alternatives and make
recommendations to shareholders. Westaim's plan is similar to plans adopted by
a number of other Canadian companies.
About Westaim:
The Westaim Corporation's technology investments include: NUCRYST
Pharmaceuticals, which researches, develops and commercializes wound care and
pharmaceutical products based on its nanocrystalline silver technology; and
iFire Technology, which has developed a revolutionary low-cost flat panel
display. Westaim's common shares are listed on Nasdaq under the symbol WEDX
and on The Toronto Stock Exchange under the trading symbol WED.
This news release may contain forward-looking statements, including but
not limited to those concerning technology progress, partner collaborations,
pilot production of display modules, anticipated size of initial display
products, product development, technology, manufacturing and marketing risks,
potential rewards of product development, and pharmaceutical strategy. These
statements are based on current expectations that are subject to risks and
uncertainties, and the Company can give no assurance that these expectations
are correct. Various factors could cause actual results to differ materially
from those projected in such statements, including the risk factors set forth
in our Form 40-F as filed with the U.S. Securities and Exchange Commission.
The Company disclaims any intention or obligations to revise forward-looking
statements whether as a result of new information, future developments or
otherwise. All forward-looking statements are expressly qualified in their
entirety by this Cautionary Statement.
<<
THE WESTAIM CORPORATION
Financial Highlights
(unaudited)
(thousands of dollars except per share data)
-------------------------------------------------------------------------
Twelve Months Twelve Months
Quarter Ended Quarter Ended Ended Ended
Statement of December 31, December 31, December 31, December 31,
Operations 2003 2002 2003 2002
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Revenue $ 3,594 $ 3,564 $ 17,285 $ 12,627
Loss from continuing
operations (16,753) (8,966) (36,858) (39,110)
Net loss (17,673) (9,445) (34,498) (49,762)
Loss per common share
- basic & diluted
Continuing
operations (0.21) (0.11) (0.47) (0.50)
Net loss (0.23) (0.12) (0.44) (0.64)
Weighted average
number of
outstanding common
shares (thousands) 78,073 78,033 78,045 77,924
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Twelve Months Twelve Months
Quarter Ended Quarter Ended Ended Ended
December 31, December 31, December 31, December 31,
2003 2002 2003 2002
-------------------------------------------------------------------------
Revenue
Nucryst
Pharmaceuticals $ 3,457 $ 2,496 $ 16,212 $ 8,344
iFire Technology - 1,067 911 4,270
Other 137 1 162 13
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Continuing
operations $ 3,594 $ 3,564 $ 17,285 $ 12,627
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Divisional Loss
Nucryst
Pharmaceuticals (2,302) $ (1,897) $ (1,948) $ (6,985)
iFire Technology (6,137) (4,544) (19,861) (16,915)
Other (215) (218) (1,284) (841)
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Continuing
operations $ (8,654) $ (6,659) $ (23,093) $ (24,741)
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Balance Sheet December 31, 2003 December 31, 2002
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Cash and short-term investments $ 68,137 $ 101,302
Current assets 107,767 145,167
Other assets 37,139 39,016
Current liabilities 13,524 17,655
Shareholders' equity 123,818 158,214
>>
%SEDAR: 00002793E
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/For further information: David Wills, Investor Relations,
(416) 504-8464, info@westaim.com, www.westaim.com;
To request a free copy of this organization's annual report, please go to
https://www.newswire.ca and click on reports@cnw./