Cangene announces strong financial results for fiscal 2008 with net income up 194% to $29.6 million or 42 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. 16 /CNW/ - Cangene Corporation today reports
financial results for the fiscal year ended July 31, 2008.
    Revenues for the year were $166.1 million, compared with $92.4 million
last year, an increase of 80%. The significant increase results primarily from
a combined $75.9 million in product and R&D-services revenue related to two
contracts with the U.S. government to supply therapeutic products to the
national stockpile. In comparison, no revenues related to these stockpiling
contracts were recorded in 2007. Improved revenues at the Company's Chesapeake
subsidiary also contributed to the increase. Total biopharmaceutical product
sales remained relatively consistent year-over-year, although the distribution
of those sales changed with WinRho(R) SDF sales increasing in Canada and
Europe, and declining in the U.S., and with HepaGam B(R) sales increasing
overall.
    "Our commitment to delivering on the U.S. government contracts for
botulism antitoxin and anthrax immune globulin has begun to pay off and
substantially improved our financial results for the year," said Dr. John
Langstaff, Cangene's president and CEO. "While the revenue flow will not be
even, we expect to continue delivering on these contracts through 2011. As
well, HepaGam B(R) sales have strengthened considerably," he said.
    Net income for the year was $29.6 million or $0.42 per share, compared
with $10.1 million or $0.15 per share a year earlier. Similar to revenues, the
increase in income is primarily due to the deliveries on government contracts
during the year. The recording in 2008 of previously unrecognized tax losses
and unrecorded timing differences relating to U.S. subsidiary operations also
contributed to the increased net income. On a percentage basis, gross margin
is lower in the current year due to the higher proportion of contract-services
activities. Higher selling, general and administrative expense for the year
resulted from increased legal and consulting costs associated with contract
bid and proposal activity, and product licensure efforts, as well as increased
compensation costs related to higher staffing levels required to support work
on the government contracts. Amortization expense rose for the year as it
included the first full year of amortization on the new fractionation
facility.
    An increase in net non-cash working capital balances related to
operations of $13.3 million resulted from increased accounts receivable, which
reflects deliveries on the stockpiling contracts, as well as increased
inventories and contracts in progress, which reflects plasma collection
activities and capitalized development costs for the stockpiling contracts.
Offsetting these increases was a decrease in taxes recoverable due to tax
refunds received in 2008 that related to prior years.
    The Company had $14.7 million in cash at the year-end, compared with Nil
last year. At July 31, 2008 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 17, 2008 at 11:00 a.m. E.D.T. To access the conference call by
telephone, dial 416-644-3414 or 1-800-732-9303. Please connect approximately
15 minutes prior to the beginning of the call to ensure participation. The
conference call will be archived for replay until Friday, October 24, 2008, at
midnight. To access the archived conference call, dial 416-640-1917 or
1-877-289-8525 and enter the reservation number 21286309 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
                                      Incorporated under the laws of Ontario

                                                        As at          As at
    in thousands of Canadian dollars            July 31, 2008  July 31, 2007
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash                                          $    14,675    $         -
    Accounts receivable                                38,383         20,475
    Income and other taxes recoverable                  5,486         16,144
    Inventories and contracts in progress              72,087         60,753
    Prepaid expenses and deposits                       2,589          3,105
    -------------------------------------------------------------------------
    Total current assets                              133,220        100,477
    Property, plant and equipment, net                 98,648        103,571
    Future income taxes                                 8,556          9,373
    Goodwill                                           40,514         40,514
    Other assets                                        1,881          2,815
    -------------------------------------------------------------------------
                                                  $   282,819    $   256,750
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Bank indebtedness                             $         -  $       2,136
    Accounts payable and accrued liabilities           26,738         23,140
    Income and other taxes payable                        654            450
    Current portion of deferred income                  5,337          3,623
    Current portion of long-term debt                       -          1,636
    -------------------------------------------------------------------------
    Total current liabilities                          32,729         30,985
    Long-term debt                                          -          1,112
    Incentive plan liability                                -            226
    Deferred income                                     5,765          2,931
    Future income taxes                                 5,705         10,831
    -------------------------------------------------------------------------
    Total liabilities                                  44,199         46,085
    -------------------------------------------------------------------------
    Commitments
    Shareholders' equity
    Share capital                                      66,948         66,894
    Contributed surplus                                 3,239          3,239
    Accumulated other comprehensive loss               (4,467)        (4,467)
    Retained earnings                                 172,900        144,999
    -------------------------------------------------------------------------
    Total shareholders' equity                        238,620        210,665
    -------------------------------------------------------------------------
                                                  $   282,819    $   256,750
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CANGENE CORPORATION
    CONSOLIDATED STATEMENTS OF INCOME, COMPREHENSIVE INCOME AND RETAINED
    EARNINGS

    in thousands of Canadian dollars               Year ended     Year ended
     except share-related data                  July 31, 2008  July 31, 2007
    -------------------------------------------------------------------------

    Revenues
    Product sales and services                    $    86,386    $    58,844
    R&D services                                       71,779         25,281
    Royalties                                           7,891          8,271
    -------------------------------------------------------------------------
                                                      166,056         92,396
    -------------------------------------------------------------------------

    Cost of sales
    Product sales and services                         45,671         27,021
    R&D services                                       42,672         15,370
    -------------------------------------------------------------------------
                                                       88,343         42,391
    -------------------------------------------------------------------------

    Gross profit                                       77,713         50,005
    -------------------------------------------------------------------------

    Expenses
    Independent R&D                                     6,028          6,709
    Selling, general and administrative                17,753         12,957
    Amortization                                       12,449         10,314
    Interest expense (income)
      Short-term                                          164           (471)
      Long-term                                            72            259
    Foreign exchange loss (gain)                         (360)         1,484
    -------------------------------------------------------------------------
                                                       36,106         31,252
    -------------------------------------------------------------------------
    Income before income taxes                         41,607         18,753
    -------------------------------------------------------------------------
    Income tax expense (recovery)
      Current                                          16,206          1,910
      Future                                           (4,224)         6,759
    -------------------------------------------------------------------------
                                                       11,982          8,669
    -------------------------------------------------------------------------
    Net income and comprehensive income
     for the year                                      29,625         10,084

    Retained earnings, beginning of year              144,999        134,915
    Purchase of common shares in excess of
     average stated capital                            (1,724)             -
    -------------------------------------------------------------------------
    Retained earnings, end of year                $   172,900    $   144,999
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
      Basic and diluted                           $      0.42    $      0.15



    CANGENE CORPORATION
    CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                   Year ended     Year ended
    in thousands of Canadian dollars            July 31, 2008  July 31, 2007
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net income for the year                       $    29,625  $      10,084
    Add (deduct) items not involving cash:
      Amortization                                     12,449         10,314
      Deferred income                                   4,548         (1,748)
      Incentive plan liability                           (226)          (534)
      Future income tax expense (recovery)             (4,224)         6,759
      Unrealized foreign exchange loss (gain)
       on future income tax asset                         (85)            49
    -------------------------------------------------------------------------
                                                       42,087         24,924
    Net change in non-cash working capital
     balances related to operations                   (13,332)       (31,122)
    -------------------------------------------------------------------------
    Cash provided by (used in) operating
     activities                                        28,755         (6,198)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Purchase of property, plant and
     equipment, net                                    (7,526)        (8,493)
    -------------------------------------------------------------------------
    Cash used in investing activities                  (7,526)        (8,493)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Increase (decrease) in bank indebtedness, net      (2,136)         2,136
    Repayment of long-term debt                        (2,748)       (29,780)
    Issuance of common shares, net of
     share issuance costs                                   -         33,501
    Shares repurchased for cancellation                (2,120)             -
    Proceeds on exercise of stock options                 450          1,143
    -------------------------------------------------------------------------
    Cash provided by (used in) financing activities    (6,554)         7,000
    -------------------------------------------------------------------------

    Net increase (decrease) in cash during the year    14,675         (7,691)
    Cash, beginning of year                                 -          7,691
    -------------------------------------------------------------------------
    Cash, end of year                             $    14,675    $         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Interest paid                                 $       403    $       563
    Income taxes received                         $    (7,806)   $      (160)
    



    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. In addition, it has a regulatory
affairs, sales and investor relations 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", "HepaGam B", "WinRho" and "WinRho SDF" are trademarks
    belonging to Cangene Corporation.

    Cautionary Note Regarding Forward-looking Information
    

    This news release may contain forward-looking statements that are
predictive in nature and 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. Forward-looking statements may include words such as "expects",
"plans", "will", "believes", "estimates", "intends", "may", "bodes" and other
words of similar meaning (including negative and grammatical variations) and
may relate to future financial performance, business strategies, or safety and
efficacy of unapproved products.
    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.

    Scientific information that relates to unapproved products or unapproved
uses of products is preliminary and investigative. No conclusions can or
should be drawn regarding the safety or efficacy of such products. Only
regulatory authorities can determine whether products are safe and effective
for the uses being investigated. Healthcare professionals are directed to
refer to approved labeling for products and not rely on information presented
in news releases. Drug names and prescribing information may differ in various
countries. Full product names: WinRho(R) SDF (Rho (D) Immune Globulin (Human)
for Injection); HepaGam B(R) (Hepatitis B Immune Globulin (Human) Injection)

    The cautionary statements referred to above 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. 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.

    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.

    %SEDAR: 00002351E




For further information:

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

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