Cangene announces highest-ever financial results for fiscal 2009 with net
income up 102% to $59.9 million or 86 cents per share

    
    Readers are referred to the cautionary notes regarding Forward-looking
    Information and non-GAAP Financial Measures at the end of this release

    Listed TSX, Symbol: CNJ
    

TORONTO and WINNIPEG, Oct. 21 /CNW/ - Cangene Corporation today reports financial results for the fiscal year ended July 31, 2009.

Revenues for the year were $238.8 million, compared with $166.1 million last year, an increase of 44%. The dramatic increase results primarily from the strength of the Company's contract-services segment, which included $147.1 million in revenue from two contracts with the U.S. government to supply therapeutic products to the Strategic National Stockpile. In comparison, in 2008 the Company recognized $75.9 million related to these contracts. Strong commercial products sales also added to the increase in revenue. Partially offsetting the increases were decreased R&D-services revenues as work on joint development agreements with Apotex came to a close during 2009.

Net income for the year was $59.9 million or $0.86 per share, compared with $29.6 million or $0.42 per share a year earlier. Similar to revenues, the increase in net income is primarily due to the deliveries on government contracts during the year. Higher gross margin, a significant foreign exchange gain and the recognition of the gain from bargain purchase related to the acquisition of Twinstrand Therapeutics Inc. also contributed to the increase in net income. Higher selling, general and administrative expense for the year includes higher compensation costs (largely due to increased staffing necessary to support work on the government contracts), as well as higher consulting, licensing and director's fees.

"Our strong financial performance in 2009 means we are well positioned with the cash resources to drive R&D and take advantage of investment opportunities. We are also increasingly focused on developing our commercial brands - our recent acquisition of the U.S. commercialization rights for HepaGam B(R) is a positive step in that strategy," said Dr. John Langstaff, president and CEO of Cangene.

An increase in net non-cash working capital balances and other assets related to operations of $9.5 million resulted mainly from increased inventories and contracts in progress, which primarily reflects plasma-collection activities, and work-in-process and finished-goods inventories for the stockpiling contracts.

The Company had $56.1 million in cash at the year-end, compared with $14.7 million last year. At July 31, 2009 Cangene had no long-term debt.

Readers are referred to the cautionary notes regarding Forward-looking Information and non-GAAP Financial Measures at the end of this release. Certain comparative figures in the following financial statements have been reclassified to conform to the current year's presentation.

Conference Call

Cangene will host a conference call to discuss these financial results on October 22, 2009 at 11:00 a.m. Eastern time. To access the conference call by telephone, dial 416-644-3425 or 1-800-594-3790. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Thursday, October 29, 2009, at midnight. To access the archived conference call, dial 416-640-1917 or 1-877-289-8525 and enter the reservation number 4175691 followed by the number sign.

A live audio webcast of the conference call will be available at www.cangene.com and www.newswire.ca. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived at the above web sites for 90 days.

    
    Cangene Corporation

    CONSOLIDATED BALANCE SHEETS

    As at July 31
    in thousands of Canadian dollars                      2009          2008
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash                                            $   56,131    $   14,675
    Accounts receivable                                 34,547        38,383
    Inventories and contracts in progress               92,430        72,087
    Income and other taxes recoverable                   5,637         4,755
    Future income taxes                                  8,231             -
    Prepaid expenses and deposits                        2,830         2,589
    -------------------------------------------------------------------------
    Total current assets                               199,806       132,489
    Property, plant and equipment, net                  98,411        98,648
    Future income taxes                                      -         2,212
    Goodwill and intangible assets                      41,514        40,514
    Other assets                                         5,460         8,956
    -------------------------------------------------------------------------
                                                    $  345,191   $   282,819
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities        $   27,948   $    26,738
    Income and other taxes payable                       4,126           654
    Current portion of deferred income                   5,875         5,337
    -------------------------------------------------------------------------
    Total current liabilities                           37,949        32,729
    Deferred income                                      9,906         5,765
    Incentive plan liability                               122             -
    Future income taxes                                  5,522         5,705
    -------------------------------------------------------------------------
    Total liabilities                                   53,499        44,199
    -------------------------------------------------------------------------

    Shareholders' equity
    Share capital                                       65,655        66,948
    Contributed surplus                                  3,239         3,239
    Accumulated other comprehensive loss                (4,467)       (4,467)
    Retained earnings                                  227,265       172,900
    -------------------------------------------------------------------------
    Total shareholders' equity                         291,692       238,620
    -------------------------------------------------------------------------
                                                    $  345,191    $  282,819
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Cangene Corporation

    CONSOLIDATED STATEMENTS OF INCOME, COMPREHENSIVE INCOME AND
    RETAINED EARNINGS

    Years ended July 31
    in thousands of Canadian dollars except
     share-related data                                   2009          2008
    -------------------------------------------------------------------------

    Revenues
    Product sales and services                      $  177,790    $   86,386
    R&D services                                        51,882        71,779
    Royalties                                            9,079         7,891
    -------------------------------------------------------------------------
                                                       238,751       166,056
    -------------------------------------------------------------------------

    Cost of sales
    Product sales and services                          82,129        45,671
    R&D services                                        36,697        42,672
    -------------------------------------------------------------------------
                                                       118,826        88,343
    -------------------------------------------------------------------------

    Gross profit                                       119,925        77,713
    -------------------------------------------------------------------------

    Expenses
    Independent R&D                                     12,735         6,028
    Selling, general and administrative                 23,117        17,753
    Amortization                                        12,979        12,449
    Interest expense (income)
      Short-term                                           (41)          164
      Long-term                                              -            72
    Foreign exchange gain                              (11,709)         (360)
    Gain from bargain purchase                          (3,470)            -
    -------------------------------------------------------------------------
                                                        33,611        36,106
    -------------------------------------------------------------------------
    Income before income taxes                          86,314        41,607
    -------------------------------------------------------------------------
    Income tax expense (recovery)
      Current                                           26,241        16,206
      Future                                               205        (4,224)
    -------------------------------------------------------------------------
                                                        26,446        11,982
    -------------------------------------------------------------------------
    Net income and comprehensive income
     for the year                                       59,868        29,625

    Retained earnings, beginning of year               172,900       144,999
    Purchase of common shares in excess of
     average stated capital                             (5,503)       (1,724)
    -------------------------------------------------------------------------
    Retained earnings, end of year                  $  227,265    $  172,900
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
      Basic and diluted                             $     0.86    $     0.42



    Cangene Corporation

    CONSOLIDATED STATEMENTS OF CASH FLOWS

    Years ended July 31
    in thousands of Canadian dollars                      2009          2008
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net income for the year                         $   59,868    $   29,625
    Add (deduct) items not involving cash:
      Amortization                                      12,979        12,449
      Deferred income                                    4,679         4,548
      Gain from bargain purchase                        (3,470)            -
      Incentive plan liability                             122          (226)
      Future income tax expense (recovery)                 205        (4,224)
      Unrealized foreign exchange gain                  (4,340)         (164)
    -------------------------------------------------------------------------
                                                        70,043        42,008
    Net change in non-cash working capital balances
     and other assets related to operations             (9,452)      (13,332)
    -------------------------------------------------------------------------
    Cash provided by operating activities               60,591        28,676
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Acquisition, net                                    (1,707)            -
    Purchase of property, plant and equipment, net     (12,742)       (7,526)
    -------------------------------------------------------------------------
    Cash used in investing activities                  (14,449)       (7,526)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Decrease in bank indebtedness, net                       -        (2,136)
    Repayment of long-term debt                              -        (2,748)
    Shares repurchased for cancellation                 (6,796)       (2,120)
    Proceeds on exercise of stock options                    -           450
    -------------------------------------------------------------------------
    Cash used in financing activities                   (6,796)       (6,554)
    -------------------------------------------------------------------------
    Effect of exchange rates on cash                     2,110            79
    -------------------------------------------------------------------------

    Net increase in cash during the year                41,456        14,675
    Cash, beginning of year                             14,675             -
    -------------------------------------------------------------------------
    Cash, end of year                               $   56,131    $   14,675
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Interest paid                                   $       63    $      403
    Income taxes paid (received)                    $   12,945    $   (7,806)
    

About Cangene Corporation

Cangene is one of Canada's largest and earliest biopharmaceutical companies. It was founded in 1984 and is headquartered in Winnipeg, Manitoba. Cangene has approximately 700 employees in eight locations across North America and its products are sold worldwide. It operates three large manufacturing facilities - two in Winnipeg, Manitoba and one in Baltimore, Maryland - where it produces its own products and undertakes contract manufacturing for a number of companies. Cangene operates three U.S. and one Canadian plasma-collection facilities branded as Cangene Plasma Resources. In addition, it has a regulatory affairs, sales and corporate communications office in Toronto, Ontario.

Cangene is focused on developing therapeutics for infectious diseases, and the Company uses patented manufacturing processes to produce plasma-derived and recombinant therapeutic proteins. Cangene has five FDA and/or Health Canada-approved products. In addition, the Company has several more products in development at various stages. Three of Cangene's products have been accepted into the U.S. Strategic National Stockpile - botulism antitoxin, anthrax immune globulin and vaccinia immune globulin, a product used to counteract certain complications that may arise from smallpox vaccination.

Capitalizing on its drug manufacturing expertise, Cangene also operates a significant contract research and manufacturing business using its Winnipeg facilities and the resources of Baltimore, Maryland-based Chesapeake Biological Laboratories, Inc. (a wholly owned subsidiary). Cangene's website, www.cangene.com, includes product and investor information, including past news releases. Chesapeake's website is www.cblinc.com.

    
    "Cangene" and "HepaGam B" are trademarks belonging to Cangene
    Corporation.
    

Forward-looking and risk information

The reader should be aware that Cangene's businesses are subject to risks and uncertainties that cannot be predicted or quantified; consequently, actual results may differ materially from past results and those expressed or implied by any forward-looking statements. Factors that could cause or contribute to such risks or uncertainties include, but are not limited to: the regulatory environment including the difficulty of predicting regulatory outcomes; changes in the value of the Canadian dollar; the Company's reliance on a small number of customers including government organizations; the demand for new products and the impact of competitive products, service and pricing; availability and cost of raw materials, especially the cost, availability and antibody concentration in plasma; fluctuations in operating results; government policies or actions; progress and cost of clinical trials; reliance on key strategic relationships; costs and possible development delays resulting from use of legal, regulatory or legislative strategies by the Company's competitors; uncertainty related to intellectual property protection and potential costs associated with its defence; the Company's exposure to lawsuits; and other matters beyond control of management. Risks and uncertainties are discussed more extensively in the MD&A section of the Company's most recent annual report and annual information form, which are available on the Company's website or on SEDAR at www.sedar.com.

Cautionary Note Regarding Non-GAAP Financial Measures

This news release may contain non-GAAP financial measures. Terms by which non-GAAP financial measures are identified include but are not limited to "net cash", "total assets", "sales" and other similar expressions. Non-GAAP financial measures are used to provide management and investors with additional measures of performance. However, non-GAAP financial measures do not have standard meanings prescribed by GAAP and are not directly comparable to similar measures used by other companies. Please refer to the appropriate reconciliations of these non-GAAP financial measures to measures prescribed by GAAP.

The preceding cautionary statements should be considered in connection with all written or oral statements, especially forward-looking statements, that are made by the Company or by persons acting on its behalf and in conjunction with its periodic filings with Securities Commissions, including those contained in the Company's news releases and most recently filed annual information form. Forward-looking statements can be identified by the use of words such as "expects", "plans", "will", "believes", "estimates", "intends", "may", "bodes" and other words of similar meaning (including negative and grammatical variations). Should known or unknown risks or uncertainties materialize, or should management's assumptions prove inaccurate, actual results could vary materially from those anticipated. The Company undertakes no obligation to publicly make or update any forward-looking statements, except as required by applicable law.

%SEDAR: 00002351E

SOURCE Cangene Corporation

For further information: For further information: about Cangene Corporation, please contact Michael Graham at (204) 275-4040 or by email at mgraham@cangene.com

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