Cangene reports results for first quarter of fiscal 2008



    Listed TSX, Symbol: CNJ

    TORONTO and WINNIPEG, Dec. 11 /CNW/ - Cangene today reports results for
the quarter ended October 31, 2007.
    Revenue for the first quarter of fiscal 2008 was $49.8 million, an
increase of $25.0 million or 101% compared to the same quarter of the prior
year. Cangene met "Usable Product" requirements on two U.S. government
contracts and subsequently delivered initial supplies of the two products,
Anthrax Immune Globulin ("AIG") and Botulism Antitoxin ("BAT"), during the
quarter. Accordingly, the Company recognized R&D-services revenues of
$18.5 million relating to development activities completed on the contracts to
date, and product revenue of $8.5 million relating to the delivery of initial
supplies of product. Comparatively lower sales of WinRho(R) SDF and reduced
royalties during the quarter were offset by increases in R&D-services revenues
from agreements with the Apotex Group and contract-manufacturing revenues from
Cangene's Chesapeake Biological Laboratories, Inc. subsidiary in Baltimore,
Maryland.
    Net income for the current quarter was $4.3 million or $0.06 per share,
compared with net income of $4.4 million or $0.07 per share, for the same
quarter last year. However, the net income reported in the first quarter of
the prior year is abnormally high, making the year-over-year comparison
unrealistic. When the results in the current quarter are viewed in comparison
to recent, more typical quarters, such as the second through fourth quarters
of 2007, and considering the unusual items in the current quarter, net income
met expectations, as both revenue and net income approximately doubled
compared to those periods. Gross profit in this first quarter increased by
$4.7 million over the same period in the prior year due to R&D-services and
product revenues from the AIG and BAT contracts, although the increase was
offset somewhat by a reduction in royalty revenue of $1.4 million. The
increase in gross profit in the current quarter was largely neutralized by
higher investment in independent research and development activities,
approximately $1.2 million of severance and related costs for the
discontinuation of R&D activities at the Mississauga location, increases in
selling, general and administrative costs, higher amortization as the new
fractionation facility is put into service, and a $1.1-million foreign
exchange loss resulting from the weaker U.S. dollar. Net income was further
affected by an increase in tax expense for the period, due partly to the
impact of foreign exchange. Conversely, the first quarter last year included a
$0.6-million reversal of incentive plan expense, a $1.7-million adjustment to
cost of sales that related to rebates and discounts on previous WinRho(R) SDF
sales in the U.S., and higher royalty revenue-all of which had favourably
impacted earnings.
    Net non-cash working capital excluding bank debt increased in the quarter
with increases in accounts receivable due to U.S. government billings; this
was partly offset by reductions in inventory as the U.S.-government-contract
product and service costs are realized. Long-term debt decreased by
$1.3 million during the current quarter as the Company completed repayment of
the non-revolving term loan used to finance the fractionation-plant-expansion.
    "The impact of the jump in revenue for the quarter has been dampened
somewhat by the short-term costs of consolidating our R&D activities and the
significant weakening of the U.S. dollar; however, this should not diminish
Cangene's significant achievement of beginning delivery on two important
biodefence products to the U.S. Strategic National Stockpile," said Dr. John
Langstaff, president and CEO of Cangene. "We are very well positioned to focus
on advancing these products to licensure and enhancing our pipeline through
product and technology development or acquisition. Meeting customer
expectations and maximizing value for our stakeholders are our key
objectives," he said.
    Certain comparative figures in the financial statements have been
reclassified to conform to the current year's presentation.

    Conference Call

    Cangene will host a conference call on Wednesday, December 12, 2007 at
11:00 a.m. E.S.T. to discuss these financial results.
    To access the conference call by telephone, dial 416-644-3416 or
1-800-731-5774. Please connect approximately 15 minutes prior to the beginning
of the call to ensure participation. The conference call will be archived for
replay until Wednesday, December 19, 2007 at midnight. To access the archived
conference call, dial 416-640-1917 or 1-877-289-8525 and enter the reservation
number 21255684 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.

    
    CONSOLIDATED BALANCE SHEETS (unaudited)

                                                At October 31,    At July 31,
    in thousands of Canadian dollars                     2007           2007
    -------------------------------------------------------------------------
    ASSETS
    Current
    Accounts receivable                          $     37,914   $     20,475
    Income and other taxes recoverable                 12,222         16,144
    Inventories                                        50,697         60,753
    Prepaid expenses and deposits                       3,002          3,105
    -------------------------------------------------------------------------
    Total current assets                              103,835        100,477
    Property, plant and equipment, net                102,175        103,571
    Future income taxes                                 7,889          9,373
    Goodwill                                           40,514         40,514
    Other assets                                        2,582          2,815
    -------------------------------------------------------------------------
                                                 $    256,995   $    256,750
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Bank indebtedness                            $      1,076   $      2,136
    Accounts payable and accrued liabilities           21,384         23,140
    Income and other taxes payable                         47            450
    Current portion of deferred income                  4,641          3,623
    Current portion of long-term debt                     572          1,636
    -------------------------------------------------------------------------
    Total current liabilities                          27,720         30,985
    Long-term debt                                        857          1,112
    Incentive plan liability                              353            226
    Deferred income                                     5,875          2,931
    Future income taxes                                 6,801         10,831
    -------------------------------------------------------------------------
    Total liabilities                                  41,606         46,085
    -------------------------------------------------------------------------
    Commitments
    Shareholders' equity
    Share capital                                      67,332         66,894
    Contributed surplus                                 3,239          3,239
    Accumulated other comprehensive loss               (4,467)        (4,467)
    Retained earnings                                 149,285        144,999
    -------------------------------------------------------------------------
    Total shareholders' equity                        215,389        210,665
    -------------------------------------------------------------------------
                                                 $    256,995   $    256,750
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (unaudited)
    -------------------------------------------------------------------------

                                                 Three months   Three months
                                                        ended          ended
    in thousands of Canadian dollars               October 31,    October 31,
    except share-related data                            2007           2006
    -------------------------------------------------------------------------
    Revenues
    Product sales and services                   $     23,948   $     15,886
    R&D services                                       24,815          6,415
    Royalties                                           1,062          2,483
    -------------------------------------------------------------------------
                                                       49,825         24,784
    -------------------------------------------------------------------------
    Cost of sales
    Product sales and services                         14,099          6,875
    R&D services                                       16,945          3,806
    -------------------------------------------------------------------------
                                                       31,044         10,681
    -------------------------------------------------------------------------
    Gross profit                                       18,781         14,103
    -------------------------------------------------------------------------
    Expenses
    Independent R&D                                     2,626          1,864
    Selling, general and administrative                 3,760          2,595
    Amortization                                        2,974          2,210
    Interest
      Short-term                                           46           (128)
      Long-term                                            55             33
    Foreign exchange loss (gain)                        1,098            (36)
    -------------------------------------------------------------------------
                                                       10,559          6,538
    -------------------------------------------------------------------------
    Income before income taxes                          8,222          7,565
    -------------------------------------------------------------------------
    Income tax expense (recovery)
      Current                                           6,924          2,458
      Future                                           (2,988)           659
    -------------------------------------------------------------------------
                                                        3,936          3,117
    -------------------------------------------------------------------------
    Net income and comprehensive income
     for the period                                     4,286          4,448

    Retained earnings, beginning of period            144,999        134,915
    -------------------------------------------------------------------------
    Retained earnings, end of period             $    149,285   $    139,363
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
      Basic and diluted                          $       0.06   $       0.07
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted-average number of outstanding
     shares                                    No. 70,496,353 No. 65,845,753



    CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

                                                 Three months   Three months
                                                        ended          ended
                                                   October 31,    October 31,
    in thousands of Canadian dollars                     2007           2006
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES

    Net income for the period                    $      4,286   $      4,448
    Add (deduct) items not involving cash:
      Amortization                                      2,974          2,210
      Deferred income                                   3,962           (698)
      Net investment tax credits                        3,470            (77)
      Incentive plan liability                            127           (638)
      Future income tax expense                        (2,988)           659
      Unrealized foreign exchange loss
       (gain) on future income tax asset                  442           (133)
    -------------------------------------------------------------------------
                                                       12,273          5,771
    Net change in non-cash working capital
     balances related to operations                    (8,650)          (599)
    -------------------------------------------------------------------------
    Cash provided by operating activities               3,623          5,172
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Purchase of property, plant and equipment          (1,682)        (3,914)
    -------------------------------------------------------------------------
    Cash used in investing activities                  (1,682)        (3,914)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Decrease in bank indebtedness, net                 (1,060)             -
    Repayment of long-term debt                        (1,319)          (659)
    Proceeds on exercise of stock options                 438            266
    -------------------------------------------------------------------------
    Cash used in financing activities                  (1,941)          (393)
    -------------------------------------------------------------------------
    Net increase in cash during the period                  -            865
    Cash, beginning of period                               -          7,691
    -------------------------------------------------------------------------
    Cash, end of period                          $          -   $      8,556
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Interest paid                                $        118   $        148
    Income taxes paid                            $        476   $         38
    


    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 650 employees in eight locations across North
America. 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
Mississauga, Ontario.
    The Company uses patented manufacturing processes to produce
plasma-derived and recombinant therapeutic proteins. Cangene has three FDA and
Health Canada-approved products and a fourth that has been approved in Canada
only. One of its recombinant protein products has received an approvable
letter from the FDA and another has been submitted for regulatory review in
Canada. 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
arising 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). An expansion in
2006 at the Winnipeg location increased the Company's capacity to fractionate
plasma to accommodate the growing manufacturing requirements. Cangene's
website, www.cangene.com, includes product and investor information, including
past news releases. Chesapeake's website is www.cblinc.com.

    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 cost 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.

    %SEDAR: 00002351E




For further information:

For further information: 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