Cangene posts highest ever quarterly revenues in third quarter of fiscal 2009; EPS of 16 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, June 11 /CNW/ - Cangene Corporation today reports
financial results for the third quarter ended April 30, 2009.
    Revenues for the quarter were $67.3 million, compared with $29.7 million
in the same period last year, an increase of 127%. The increase in revenues
resulted primarily from deliveries and activity on U.S. government contracts
but strong commercial product sales also contributed to the increase. During
this third quarter, Cangene recorded a total of $47.2 million in revenues
related to the Botulism antitoxin ("BAT") and Anthrax immune globulin ("AIG")
stockpiling contracts it has with the U.S. government. This compares with $8.1
million in the same quarter last year.
    "As we have shown in the past, the timing of deliveries on our U.S.
government contracts has a dramatic impact on our quarter over quarter
results; importantly however, strong commercial product sales contribute
stability to our overall revenues," said Dr. John Langstaff, Cangene's
president and CEO. "For instance, HepaGam B(R) sales have grown and its recent
approval in Israel is the beginning of its expansion into non-North American
markets as well."
    Net income for the quarter was $11.3 million or $0.16 per share, compared
with $3.1 million or $0.04 per share in the same quarter last year. The
increase in net income is primarily due to increased revenues and improved
gross margins. The improvement in gross margin is due primarily to
manufacturing efficiencies on higher volumes of hyperimmune products, as well
as the positive impact of higher U.S.-dollar foreign exchange rates on
revenues. Increased investment in independent R&D projects to advance the
product pipeline as well as higher SG&A costs that are primarily due to
activities supporting the BAT and AIG contracts partly offset the improved
gross profit. Income tax expense was higher in the current-year quarter due
largely to higher taxable income; however, the effective income tax rate was
also lower in the same quarter last year due to recognition of previously
unrecognized tax losses in the U.S. operations, with no similar reduction in
the current quarter.
    A $49.4-million increase in net non-cash working capital balances related
to operations over the balance at July 31, 2008, resulted primarily from
increased inventories and contracts in progress, which reflects plasma
inventory, BAT and AIG products in process, and capitalized development costs
for the stockpiling contracts. Accounts receivable increased during the
quarter due to the increased deliveries of BAT and AIG products.
    The Company had $4.1 million in cash at April 30, 2009, compared with
$14.7 million at July 31, 2008. At April 30, 2009, Cangene had 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 to discuss these financial results on
June 12, 2009 at 11:00 a.m. Eastern time. To access the conference call by
telephone, dial 416-644-3416 or 1-800-732-0232. 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, June 19, 2009, at
midnight. To access the archived conference call, dial 416-640-1917 or
1-877-289-8525 and enter the reservation number 21308269 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
websites for 90 days.

    
    CONSOLIDATED BALANCE SHEETS (unaudited)

                                      Incorporated under the laws of Ontario
                                                           At             At
    in thousands of Canadian dollars           April 30, 2009  July 31, 2008
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash                                          $     4,100    $    14,675
    Accounts receivable                                56,704         38,383
    Inventories and contracts in progress             109,653         72,087
    Income and other taxes recoverable                  5,765          4,755
    Prepaid expenses and deposits                       2,482          2,589
    -------------------------------------------------------------------------
    Total current assets                              178,704        132,489
    Property, plant and equipment, net                 98,110         98,648
    Future income taxes                                     -          2,212
    Goodwill                                           40,514         40,514
    Other assets                                       12,693          8,956
    -------------------------------------------------------------------------
                                                  $   330,021    $   282,819
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities      $    38,486    $    26,738
    Income and other taxes payable                          -            654
    Current portion of deferred income                  6,317          5,337
    -------------------------------------------------------------------------
    Total current liabilities                          44,803         32,729
    Deferred income                                     5,088          5,765
    Incentive plan liability                              922              -
    Future income taxes                                 5,487          5,705
    -------------------------------------------------------------------------
    Total liabilities                                  56,300         44,199
    -------------------------------------------------------------------------

    Shareholders' equity
    Share capital                                      66,364         66,948
    Contributed surplus                                 3,239          3,239
    Accumulated other comprehensive loss               (4,467)        (4,467)
    Retained earnings                                 208,585        172,900
    -------------------------------------------------------------------------
    Total shareholders' equity                        273,721        238,620
    -------------------------------------------------------------------------
                                                  $   330,021    $   282,819
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    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 share-       April 30,   April 30,   April 30,   April 30,
    related data                    2009        2008        2009        2008
    -------------------------------------------------------------------------
    Revenues
    Product sales and
     services                 $   50,441  $   18,379  $  106,538  $   57,121
    R&D services                  13,721       9,487      40,309      41,295
    Royalties                      3,184       1,784       7,266       4,526
    -------------------------------------------------------------------------
                                  67,346      29,650     154,113     102,942
    -------------------------------------------------------------------------
    Cost of sales
    Product sales and services    25,841      11,984      47,856      32,925
    R&D services                  10,381       6,069      28,816      28,403
    -------------------------------------------------------------------------
                                  36,222      18,053      76,672      61,328
    -------------------------------------------------------------------------
    Gross profit                  31,124      11,597      77,441      41,614
    -------------------------------------------------------------------------
    Expenses
    Independent R&D                4,098         933       8,129       4,354
    Selling, general and
     administrative                6,529       4,485      17,358      12,204
    Amortization                   3,186       3,006       9,479       9,193
    Interest expense (income)
      Short-term                       3          83         (39)        126
      Long-term                        -           -           -          72
    Foreign exchange loss
     (gain)                         (303)        (78)    (11,252)        314
    -------------------------------------------------------------------------
                                  13,513       8,429      23,675      26,263
    -------------------------------------------------------------------------
    Income before income taxes    17,611       3,168      53,766      15,351
    -------------------------------------------------------------------------
    Income tax expense
     (recovery)
      Current                      7,442         555      15,680       8,224
      Future                      (1,083)       (531)        111      (3,840)
    -------------------------------------------------------------------------
                                   6,359          24      15,791       4,384
    -------------------------------------------------------------------------
    Net income and
     comprehensive
     income for
     the period                   11,252       3,144      37,975      10,967

    Retained earnings,
     beginning of
     period                      197,643     152,822     172,900     144,999
    Purchase of common shares
     in excess of average
     stated capital                 (310)          -      (2,290)          -
    -------------------------------------------------------------------------
    Retained earnings, end of
     period                   $  208,585  $  155,966  $  208,585  $  155,966
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
      Basic and diluted       $     0.16  $     0.04  $     0.55  $     0.16
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted-average number
     of shares outstanding    69,497,403  70,505,170  69,662,231  70,502,064



    CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

                                   Three       Three        Nine        Nine
                                  months      months      months      months
                                   ended       ended       ended       ended
    in thousands of Canadian    April 30,   April 30,   April 30,   April 30,
    dollars                         2009        2008        2009        2008
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net income for the period $   11,252  $    3,144  $   37,975  $   10,967
    Add (deduct) items not
     involving cash:
      Amortization                 3,186       3,006       9,479       9,193
      Deferred income              1,653         339         303       3,897
      Incentive plan
       liability                     434         (87)        922        (226)
      Future income tax
       expense
       (recovery)                 (1,083)       (531)        111      (3,840)
      Unrealized foreign
       exchange loss
       (gain)                        797        (304)       (309)       (154)
    -------------------------------------------------------------------------
                                  16,239       5,567      48,481      19,837
    Net change in non-cash
     working capital
     balances and other
     assets related to
     operations                  (19,114)     (5,639)    (49,433)    (11,999)
    -------------------------------------------------------------------------
    Cash provided by (used in)
     operating activities         (2,875)        (72)       (952)      7,838
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Purchase of property,
     plant and equipment,
     net                          (3,003)     (2,049)     (8,941)     (5,510)
    -------------------------------------------------------------------------
    Cash used in investing
     activities                   (3,003)     (2,049)     (8,941)     (5,510)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Increase in bank
     indebtedness,
     net                               -       2,178           -          42
    Repayment of long-term
     debt                              -      (1,346)          -      (2,748)
    Shares repurchased for
     cancellation                   (379)          -      (2,874)          -
    Proceeds on exercise of
     stock options                     -           -           -         450
    -------------------------------------------------------------------------
    Cash provided by (used in)
     financing activities           (379)        832      (2,874)     (2,256)
    -------------------------------------------------------------------------
    Effect of exchange rates
     on cash                          18         116       2,192         (72)
    -------------------------------------------------------------------------

    Net decrease in cash
     during the period            (6,239)     (1,173)    (10,575)          -
    Cash, beginning of period     10,339       1,173      14,675           -
    -------------------------------------------------------------------------
    Cash, end of period       $    4,100  $        -  $    4,100  $        -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Interest paid             $        8  $       91  $       54  $      209
    Income taxes paid         $    6,238  $      370  $   11,426  $    1,846
    

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

    Forward-looking 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.
    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 labelling for products and not rely on information presented
in news releases. Drug names and prescribing information may differ in various
countries.
    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. 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.

    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
Michael Graham at (204) 275-4040 or by email at mgraham@cangene.com

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