Cangene announces third quarter financial results for fiscal 2010

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 & WINNIPEG, June 14 /CNW/ - Cangene Corporation today reports financial results for the third quarter ended April 30, 2010.

Revenues for the third quarter of 2010 were $41.1 million, 39% lower than the $67.3 million recorded during the same period last year. The higher revenue in the year-earlier quarter reflected a greater number of deliveries on U.S. government stockpiling contracts than in the current quarter. During this quarter the Company signed a contract modification with the U.S. government under which the deliveries on one U.S. government contract will be spread out over an additional two years. Biopharmaceutical product sales were also lower during the current quarter, primarily due to decreased sales of WinRho(R) SDF. The Company recently assumed the U.S. commercialization rights to this product, which had been distributed in the U.S. by Baxter Healthcare Corporation; this change took effect on June 1, 2010. In addition, R&D-services revenues declined to $5.7 million in the current quarter from $13.7 million in the prior-year quarter due to lower R&D activities in government contracts in the current quarter.

There was a net loss for the quarter of $0.3 million ($0.00 per share) compared with a net income of $11.3 million ($0.16 per share) in the same quarter last year. The lower net income is due to reduced revenues as well as lower gross margins. Gross margin for the quarter has decreased to 37% from 46% in the prior year largely due to excess production capacity, a decline in the market value of source plasma inventories to be used in development of IGIV, and plasma centre and sales force start-up costs. In addition, the current period net income was adversely affected by a $4.0-million foreign-exchange loss compared with a small gain in the comparative quarter.

"Our financial results for the quarter reflect the combination of a number of initiatives aimed at building our business for the long term. These have had the short-term effect of increasing expenses, such as the start-up costs as we build up our U.S. sales and marketing group at Cangene bioPharma, Inc., the costs associated with the expanded plasma centres, which are not yet operating at full capacity, and the costs associated with IGIV, the new anti-infective product we're developing," said Dr. John Langstaff, Cangene's president and CEO. "Nevertheless, we maintain a debt-free balance sheet and a strong cash position."

The investment in non-cash working capital balances and other assets related to operations decreased by $15.1 million during the quarter. Lower working capital levels at April 30, 2010 compared with January 31, 2010 resulted primarily from decreased inventories and contracts in progress and decreased accounts receivable. By comparison, the third quarter of 2009 included significant increases in accounts receivable and inventories and contracts in progress, although these were partially offset by higher accounts payable and accrued liabilities.

At April 30, 2010, the Company had $32.5 million in cash and no 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 on Tuesday, June 15, 2010, at 11:00 a.m. Eastern to discuss these financial results. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. The conference call will be archived for replay until Tuesday, June 22, 2010, at midnight. To access the archived conference call, dial 416-849-0833 or 1-800-642-1687 and enter the reservation number 79461007 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 (unaudited)

                                      Incorporated under the laws of Ontario

                                                              At          At
                                                        April 30,    July 31,
    in thousands of Canadian dollars                        2010        2009
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash                                               $  32,531   $  56,131
    Accounts receivable                                   33,822      34,547
    Inventories and contracts in progress                 94,154      92,430
    Income and other taxes recoverable                    14,209       6,281
    Future income taxes                                    5,515       8,231
    Prepaid expenses and deposits                          2,668       2,830
    -------------------------------------------------------------------------
    Total current assets                                 182,899     200,450
    Property, plant and equipment, net                   104,792      96,405
    Future income taxes                                    3,513           -
    Goodwill and intangible assets, net                   57,002      43,520
    Other assets                                           3,689       5,460
    -------------------------------------------------------------------------
                                                       $ 351,895   $ 345,835
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities           $  23,427   $  27,948
    Income and other taxes payable                             9       4,126
    Current portion of deferred income                     5,032       5,875
    -------------------------------------------------------------------------
    Total current liabilities                             28,468      37,949
    Deferred income                                       11,883       9,906
    Royalty liability                                      6,416           -
    Incentive plan liabilities                             2,692         122
    Deferred share units                                     161           -
    Future income taxes                                    3,492       5,522
    -------------------------------------------------------------------------
    Total liabilities                                     53,112      53,499
    -------------------------------------------------------------------------

    Shareholders' equity
    Share capital                                         65,187      65,655
    Contributed surplus                                    3,239       3,239
    Accumulated other comprehensive loss                  (4,467)     (4,467)
    Retained earnings                                    234,824     227,909
    -------------------------------------------------------------------------
    Total shareholders' equity                           298,783     292,336
    -------------------------------------------------------------------------
                                                       $ 351,895   $ 345,835
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CANGENE CORPORATION
    CONSOLIDATED STATEMENTS OF INCOME, COMPREHENSIVE INCOME AND RETAINED
    EARNINGS (unaudited)

                                   Three       Three        Nine        Nine
                                  months      months      months      months
    in thousands of Canadian       ended       ended       ended       ended
     dollars except             April 30,   April 30,   April 30,   April 30,
     share-related data             2010        2009        2010        2009
    -------------------------------------------------------------------------

    Revenues
    Product sales and services $  33,662   $  50,441   $ 101,179   $ 106,538
    R&D services                   5,677      13,721      17,623      40,309
    Royalties                      1,783       3,184       5,888       7,266
    -------------------------------------------------------------------------
                                  41,122      67,346     124,690     154,113
    -------------------------------------------------------------------------

    Cost of sales
    Product sales and services    21,970      25,841      58,103      47,856
    R&D services                   3,987      10,381      13,307      28,816
    -------------------------------------------------------------------------
                                  25,957      36,222      71,410      76,672
    -------------------------------------------------------------------------

    Gross profit                  15,165      31,124      53,280      77,441
    -------------------------------------------------------------------------

    Expenses
    Independent R&D                2,570       4,098       8,754       8,129
    Selling, general and
     administrative                5,701       6,529      18,167      17,358
    Amortization                   4,170       3,186      11,327       9,479
    Interest expense (income)
      Short-term                      (8)          3         (41)        (39)
    Foreign-exchange loss (gain)   4,001        (303)      4,740     (11,252)
    -------------------------------------------------------------------------
                                  16,434      13,513      42,947      23,675
    -------------------------------------------------------------------------
    Income (loss) before income
     taxes                        (1,269)     17,611      10,333      53,766
    -------------------------------------------------------------------------
    Income tax expense (recovery)
      Current                        471       7,442       3,520      15,680
      Future                      (1,414)     (1,083)     (2,247)        111
    -------------------------------------------------------------------------
                                    (943)      6,359       1,273      15,791
    -------------------------------------------------------------------------
    Net income (loss) and
     comprehensive income for
     the period                     (326)     11,252       9,060      37,975

    Retained earnings, beginning
     of period                   235,943     197,643     227,909     172,900
    Purchase of common shares
     in excess of average stated
     capital                        (793)       (310)     (2,145)     (2,290)
    -------------------------------------------------------------------------
    Retained earnings, end
     of period                 $ 234,824   $ 208,585   $ 234,824   $ 208,585
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted earnings
     (loss) per share          $   (0.00)  $    0.16   $    0.13   $    0.55



    CANGENE CORPORATION
    CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

                                   Three       Three        Nine        Nine
                                  months      months      months      months
                                   ended       ended       ended       ended
    in thousands of             April 30,   April 30,   April 30,   April 30,
     Canadian dollars               2010        2009        2010        2009
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net income (loss) for
     the period                $    (326)  $  11,252   $   9,060   $  37,975
    Add (deduct) items not
     involving cash:
      Amortization of property,
       plant and equipment         3,434       2,834       9,572       8,460
      Amortization of intangible
       assets                        736         352       1,755       1,019
      Deferred income                 96       1,653       1,134         303
      Incentive plan liabilities  (2,043)        434       2,570         922
      Deferred share unit
       liability                      20           -         161           -
      Amortization of royalty
       liability                    (334)          -        (660)          -
      Future income tax expense
       (recovery)                 (1,414)     (1,083)     (2,247)        111
      Unrealized foreign-exchange
       loss (gain)                 2,077         797       1,428        (309)
    -------------------------------------------------------------------------
                                   2,246      16,239      22,773      48,481
    Net change in non-cash
     working capital balances and
     other assets related to
     operations                   15,094     (19,114)    (15,632)    (49,433)
    -------------------------------------------------------------------------
    Cash provided by (used in)
     operating activities         17,340      (2,875)      7,141        (952)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Purchase of property, plant
     and equipment, net          (12,292)     (2,875)    (17,959)     (8,385)
    Acquisition of intangible
     assets                          (49)       (128)     (7,768)       (556)
    -------------------------------------------------------------------------
    Cash used in investing
     activities                  (12,341)     (3,003)    (25,727)     (8,941)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Shares repurchased for
     cancellation                   (900)       (379)     (2,613)     (2,874)
    -------------------------------------------------------------------------
    Cash used in financing
     activities                     (900)       (379)     (2,613)     (2,874)
    -------------------------------------------------------------------------
    Effect of exchange rates
     on cash                      (1,781)         18      (2,401)      2,192
    -------------------------------------------------------------------------

    Net increase (decrease)
     in cash during the period     2,318      (6,239)    (23,600)    (10,575)
    Cash, beginning of period     30,213      10,339      56,131      14,675
    -------------------------------------------------------------------------
    Cash, end of period       $   32,531  $    4,100  $   32,531  $    4,100
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Interest paid             $        -  $        8  $        1  $       54
    Income taxes paid         $      961  $    6,238  $    9,002  $   11,426
    

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 750 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 (www.cangeneplasma.com). 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 (investigational product), anthrax immune globulin (investigational product) 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 the resources of Baltimore, Maryland-based Cangene bioPharma, Inc. (a wholly owned subsidiary; formerly Chesapeake Biological Laboratories, Inc.; www.cangenebiopharma.com). Cangene's website, www.cangene.com, includes product and investor information, including past news releases.

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.

"Cangene", "WinRho" and "WinRho SDF" are trademarks belonging to Cangene Corporation.

%SEDAR: 00002351E

SOURCE Cangene Corporation

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

Organization Profile

Cangene Corporation

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890