Cangene reports results for second quarter of fiscal 2008; net income up 84%



    Listed TSX, Symbol: CNJ

    TORONTO and WINNIPEG, March 13 /CNW/ - Cangene Corporation today reports
results for the quarter and six months ended January 31, 2008.
    Revenue for the second quarter of fiscal 2008 was $23.5 million compared
with $20.6 million in the same quarter of the prior year. Revenue for the six
months ended January 31, 2008 was $73.3 million compared with $45.4 million in
the same period last year. Growth in WinRho(R) SDF sales outside of North
America and HepaGam B(TM) sales in the U.S. contributed to increased product
sales for the quarter. Contract-manufacturing services from activities on the
U.S. government Botulism Antitoxin ("BAT") contract also contributed to
increased product-services revenues, and the Company continued to recognize
R&D-services revenues relating to development activities completed during the
current period on both the BAT and Anthrax Immune Globulin ("AIG") contracts.
Increased R&D-services revenues from the U.S. government contracts were
offset, however, by reduced R&D-services revenues generated through
development agreements with the Apotex Group, Cangene's majority shareholder.
Royalty revenue for the quarter was higher than the same quarter last year on
higher sales of the Ferriprox(TM), a drug which is marketed by the Apotex
Group.
    Net income for the current quarter was up 84% to $3.5 million or
$0.05 per share, compared with $1.9 million or $0.03 per share, for the same
quarter last year. Net income for the first six months of fiscal 2008 was
$7.8 million or $0.11 per share, compared with $6.4 million or $0.10 per share
in the same period last year. Gross profit in the current quarter increased by
$1.5 million from the same period last year, primarily due to increased
product sales and royalties. Higher selling, general and administrative costs,
and amortization were offset by lower independent R&D expenditures and income
tax expense.
    Non-cash working capital increased by approximately $6.4 million in the
first half of the year, with higher accounts receivable levels resulting from
billing of the AIG and BAT stockpiling contracts, coupled with a decrease in
trade accounts payable. Long-term debt decreased by $1.4 million during the
first half of the fiscal year as the Company completed repayment of the
non-revolving term loan used to finance the fractionation-plant expansion. The
further repayment of $1.3 million on Maryland Industrial Development Bonds
immediately after the end of the quarter eliminated long-term debt from the
balance sheet.
    "Cangene posted solid financial results and furthered certain key
objectives during this quarter, despite the fact that we did not make
additional product deliveries relating to the U.S. government stockpiling
contracts during this quarter," said Dr. John Langstaff, president and CEO of
Cangene. "This bodes well for the rest of the year as we do anticipate
deliveries on these contracts in the next two quarters. In addition, we once
again demonstrated our regulatory capabilities in the quarter by achieving
licensure of the convenient liquid formulation of WinRho(R) SDF for the
Canadian market and approval of our recombinant human growth hormone,
Accretropin(TM), in the U.S.," 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 to discuss these financial results on
Friday, March 14, 2008 at 10:00 a.m. E.S.T. To access the conference call by
telephone, dial 416-644-3418 or 1-800-731-6941. 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, March 21, 2008, at
midnight. To access the archived conference call, dial 416-640-1917 or
1-877-289-8525 and enter the reservation number 21265998 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)

                                                                Incorporated
                                                              under the laws
                                                                  of Ontario

                                                At January 31,    At July 31,
    in thousands of Canadian dollars                     2008           2007
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash                                         $      1,173   $          -
    Accounts receivable                                24,056         20,475
    Income and other taxes recoverable                 16,618         16,144
    Inventories                                        60,747         60,753
    Prepaid expenses and deposits                       2,854          3,105
    -------------------------------------------------------------------------
    Total current assets                              105,448        100,477
    Property, plant and equipment, net                100,845        103,571
    Future income taxes                                 8,322          9,373
    Goodwill                                           40,514         40,514
    Other assets                                        2,348          2,815
    -------------------------------------------------------------------------
                                                 $    257,477   $    256,750
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Bank indebtedness                            $          -   $      2,136
    Accounts payable and accrued liabilities           20,453         23,140
    Income and other taxes payable                        108            450
    Current portion of deferred income                  4,837          3,623
    Current portion of long-term debt                     474          1,636
    -------------------------------------------------------------------------
    Total current liabilities                          25,872         30,985
    Long-term debt                                        872          1,112
    Incentive plan liability                               87            226
    Deferred income                                     5,275          2,931
    Future income taxes                                 6,433         10,831
    -------------------------------------------------------------------------
    Total liabilities                                  38,539         46,085
    -------------------------------------------------------------------------
    Commitments
    Shareholders' equity
    Share capital                                      67,344         66,894
    Contributed surplus                                 3,239          3,239
    Accumulated other comprehensive loss               (4,467)        (4,467)
    Retained earnings                                 152,822        144,999
    -------------------------------------------------------------------------
    Total shareholders' equity                        218,938        210,665
    -------------------------------------------------------------------------
                                                 $    257,477   $    256,750
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    in thousands of   Three months  Three months    Six months    Six months
     Canadian dollars        ended         ended         ended         ended
     except share-      January 31,   January 31,   January 31,   January 31,
     related data             2008          2007          2008          2007
    -------------------------------------------------------------------------
    Revenues
    Product sales
     and services     $     14,794  $     12,786  $     38,742  $     28,672
    R&D services             6,993         6,898        31,808        13,313
    Royalties                1,680           957         2,742         3,440
    -------------------------------------------------------------------------
                            23,467        20,641        73,292        45,425
    -------------------------------------------------------------------------
    Cost of sales
    Product sales
     and services            6,842         6,276        20,941        13,152
    R&D services             5,389         4,609        22,334         8,415
    -------------------------------------------------------------------------
                            12,231        10,885        43,275        21,567
    -------------------------------------------------------------------------
    Gross profit            11,236         9,756        30,017        23,858
    -------------------------------------------------------------------------
    Expenses
    Independent R&D            795         1,501         3,421         3,365
    Selling, general
     and administrative      3,959         3,417         7,719         6,012
    Amortization             3,213         2,231         6,187         4,441
    Interest expense
     (income)
      Short-term                (3)         (156)           43          (284)
      Long-term                 17            50            72            83
    Foreign exchange
     loss (gain)              (706)         (625)          392          (661)
    -------------------------------------------------------------------------
                             7,275         6,418        17,834        12,956
    -------------------------------------------------------------------------
    Income before income
     taxes                   3,961         3,338        12,183        10,902
    -------------------------------------------------------------------------
    Income tax expense
     (recovery)
      Current                  745          (264)        7,669         2,194
      Future                  (321)        1,675        (3,309)        2,333
    -------------------------------------------------------------------------
                               424         1,411         4,360         4,527
    -------------------------------------------------------------------------
    Net income and
     comprehensive
     income for the
     period                  3,537         1,927         7,823         6,375
    Retained earnings,
     beginning of
     period                149,285       139,363       144,999       134,915
    -------------------------------------------------------------------------
    Retained earnings,
     end of period    $    152,822  $    141,290  $    152,822  $    141,290
    -------------------------------------------------------------------------
    Earnings per
     share
      Basic           $       0.05  $       0.03  $       0.11  $       0.10
      Diluted         $       0.05  $       0.03  $       0.11  $       0.09
    -------------------------------------------------------------------------
    Weighted-average
     number of
     outstanding               No.           No.           No.           No.
     shares             70,504,670    68,038,870    70,500,512    66,942,312



    CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

                      Three months  Three months    Six months    Six months
                             ended         ended         ended         ended
    in thousands of     January 31,   January 31,   January 31,   January 31,
     Canadian dollars         2008          2007          2008          2007
    -------------------------------------------------------------------------
    OPERATING
     ACTIVITIES
    Net income for
     the period       $      3,537  $      1,927  $      7,823  $      6,375
    Add (deduct)
     items not
     involving cash:
      Amortization           3,213         2,231         6,187         4,441
      Deferred income         (404)         (522)        3,558        (1,220)
      Incentive plan
       liability              (266)           (8)         (139)         (646)
      Future income
       tax expense
       (recovery)             (321)        1,675        (3,309)        2,333
      Unrealized foreign
       exchange loss
       (gain) on future
       income tax asset       (480)          164           (37)          718
    -------------------------------------------------------------------------
                             5,279         5,467        14,083        12,001
    Net change in
     non-cash working
     capital balances
     related to
     operations             (1,076)       (4,665)       (6,361)       (6,469)
    -------------------------------------------------------------------------
    Cash provided by
     operating
     activities              4,203           802         7,722         5,532
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Purchase of
     property, plant and
     equipment, net         (1,883)       (2,984)       (3,461)       (6,456)
    -------------------------------------------------------------------------
    Cash used in
     investing
     activities             (1,883)       (2,984)       (3,461)       (6,456)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Decrease in bank
     indebtedness, net      (1,076)            -        (2,136)            -
    Repayment of
     long-term debt            (83)      (25,565)       (1,402)      (26,224)
    Issuance of common
     shares, net of
     share issuance
     costs                       -        33,501             -        33,501
    Proceeds on
     exercise of stock
     options                    12            55           450           321
    -------------------------------------------------------------------------
    Cash provided by
     (used in) financing
     activities             (1,147)        7,991        (3,088)        7,598
    -------------------------------------------------------------------------
    Net increase in
     cash during the
     period                  1,173         5,809         1,173         6,674
    Cash, beginning
     of period        $          -  $      8,556  $          -  $      7,691
    -------------------------------------------------------------------------
    Cash, end of
     period           $      1,173  $     14,365  $      1,173  $     14,365
    -------------------------------------------------------------------------
    Interest paid     $         91  $        161  $        209  $        437
    Income taxes paid $      1,370  $      2,128  $      1,846  $      2,166
    


    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
Toronto, Ontario (NOTE: this office moved in January 2008, the new address is
180 Attwell Drive, Suite 360, Toronto, ON, M9W 6A9; phone 416-675-8300; fax
416-675-8301).
    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 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 labeling 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: about Cangene Corporation, 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