LAB International reports results for fourth quarter and fiscal 2006



    Toronto Stock Exchange Symbol: LAB

    MONTREAL, March 26 /CNW Telbec/ - LAB International Inc. (TSX: LAB,
Frankfurt: LD9.F, XETRA: LD9.DE) ("LAB"), a drug development company focused
on developing therapies for the inhalation and pain markets, today announced
financial results for the three and twelve month period ended December 31,
2006.
    LAB consolidated revenues were $1.5 million for the fourth quarter and
$29.4 million for the year. Included in the year-to-date consolidated revenues
are $26.3 million relating to LAB Research. LAB Research activities were no
longer controlled by LAB as of August 3, 2006, date of the IPO, as a result of
the disposal of a majority interest on this date.
    "2006 was a pivotal year and major step forward in the evolution of LAB
as we completed our transition into a focused integrated product development
organization for pain and CNS medicaments. We first divested from of our
Contract Research Organization (LAB Research) which had reached critical mass.
Secondly, we acquired PharmaForm, a strategic acquisition adding highly
complementary IP and technological platforms clearly showing our commitment of
becoming an integrated product development organization with a substantial US
presence. " said Dr Halvor Jaeger, Chief Executive Officer of LAB
International. "Going forward, we believe we now have in place all the
required elements to realize LAB's tremendous potential.

    
    Other Financial Highlights

    - LAB Pharma contributed revenues of $1.1 million during the fourth
      quarter of 2006, which included $0.8 million recognized from the sale
      of formulation dossiers previously accounted for as deferred revenue
      and $0.3 million from Grupo Ferrer as full and final settlement of
      amounts owed due to the Fentanyl development agreement termination.
      LAB Pharma contributed revenues of $2.5 million for 2006
    - Consolidated net loss for the fourth quarter of 2006 was $0.8 million
      or ($0.01) per share, compared with a net loss of $3.3 million or
      $(0.06) per share in the fourth quarter of 2005. The consolidated net
      loss for the year was $0.2 million or ($0.00) per share compared with a
      consolidated net loss of $13.1 million or $(0.24) per share for the
      same 2005 period.

    2006 Operational Highlights

    - LAB announced the licensing of its lead product Fentanyl TAIFUN(R) to
      Teikoku Seiyaku Co. Ltd for the Japanese market.
    - LAB announced the final and complete safety, tolerability and
      pharmacokinetics results of its Phase I CGRP clinical trial. CGRP was
      demonstrated to be safe with no serious events reported at all doses
      tested.
    - LAB announced positive Phase IIa results for its lead product
      Fentanyl TAIFUN(R). The results supported clinical efficacy at the
      lowest dose of 100 (micro)g and a trend of dose response relationship
      with no serious adverse side effects at higher doses.
    - LAB announced the closing of LAB Research Inc. Initial Public Offering
      for gross proceeds of $25 million.
    - LAB announced positive LAB CGRP Phase IIa results. The results
      demonstrated statistically significant broncho-protective effects
      compared to placebo and a similar safety profile.
    - LAB announced the exercise of the over-allotment option for gross
      proceeds of $6.0 million.
    - LAB announced a Letter of Intent to acquire PharmaForm L.L.C.
    - LAB sold its residual ownership position in LAB Research Inc. for gross
      proceeds of $25.9 million.
    - LAB announced the closing of the acquisition of PharmaForm
    - LAB announced positive results from the open-label part of its
      Fentanyl TAIFUN(R) Phase IIb clinical trial. The results demonstrating
      successful titration resulting in effective control of breakthrough
      cancer pain episodes.

    Financial Results

    The decrease in the revenues generated by LAB Pharma during 2006 is
attributable to the termination of the co-development and licensing agreement
for Fentanyl TAIFUN(R) between LAB and Grupo Ferrer Internacional.
    Consolidated SG&A expenses totaled $2.5 million for the fourth quarter of
2006, and $15.1 million for the year.
    R&D costs for the fourth quarter of 2006 were $4.4 million compared with
$2.7 million in the fourth quarter of 2005. 2006 R&D costs were $13.0 million
compared to $9.4 million for the same 2005 period The increase in spending is
primarily attributable to the costs associated with the advancement and
finalization of the Fentanyl TAIFUN(R) Phase II and the LAB CGRP Phase II
clinical trial programs.
    The consolidated net loss for the fourth quarter of 2006 was $0.8 million,
or ($0.01) per share, compared with a consolidated net loss for the fourth
quarter of 2005 of $3.3 million, or $(0.06) per share. The consolidated net
loss for 2006 was $0.2 million, or ($0.00) per share compared with a
consolidated net loss of $13.1 million, or $(0.24) per share for 2005. The
Company recognized a gain of $21.3 million in the third quarter of 2006 and
$12.4 million in the fourth quarter from the disposal of its ownership in
LAB Research Inc.
    The Company had cash and cash equivalents as of December 31, 2006 of $41.1
million. This compares with $25.1 million as of September 30, 2006 and $16.9
million as of December 31, 2005.

    About LAB International

    LAB International is an integrated drug development company focused on the
growing multi-billion dollar inhalation market. Its lead product, for the
treatment of breakthrough cancer pain, is a fast-acting Fentanyl formulation
delivered using the Company's TAIFUN(R) dry powder inhaler platform. Its
pipeline also includes therapeutics for asthma, COPD, and growth hormone
deficiencies.
    LAB's common shares trade on The Toronto Stock Exchange ("TSX") under the
symbol "LAB", on the Frankfurt Regulated Unofficial Market under the symbol
"LD9.F" and on XETRA under the symbol "LD9.DE" with 82.3 million shares
outstanding.

    THIS NEWS RELEASE CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT REFLECT
THE CURRENT VIEWS AND/OR EXPECTATIONS OF LAB INTERNATIONAL INC. WITH RESPECT
TO ITS PERFORMANCE, BUSINESS AND FUTURE EVENTS. SUCH STATEMENTS ARE SUBJECT TO
A NUMBER OF RISKS, UNCERTAINTIES AND ASSUMPTIONS. ACTUAL RESULTS AND EVENTS
MAY VARY SIGNIFICANTLY.

    Selected financial information to follow


    LAB INTERNATIONAL INC.
    Consolidated Balance Sheets

    December 31, 2006 and 2005
    (in thousands of Canadian dollars)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                      2006              2005
    -------------------------------------------------------------------------

    Assets

    Current assets:
     Cash and cash equivalents                  $   41,144        $   16,269
     Cash held in escrow                                 -               541
     Accounts receivable                             1,569             8,469
     Work in progress                                    -             2,314
     Research tax credits receivable                     -             1,333
     Prepaid expenses                                  830             1,262
    -------------------------------------------------------------------------
                                                    43,543            30,188

    Property and equipment                             462            22,748
    Intangible assets                                9,340            11,831
    Other assets                                       965             2,222
    Future income taxes                                  -             6,957
    -------------------------------------------------------------------------
                                                $   54,310        $   73,946
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
     Bank loan                                  $        -        $      432
     Accounts payable and accrued liabilities        5,372            11,046
     Income taxes payable                              323                 -
     Deferred revenue                                1,872             6,059
     Current portion of long-term debt               1,697             2,328
     Due to Scantox selling shareholders                 -               541
     Current portion of convertible debentures           -             1,509
     Deferred gain on sale of property                   -                68
     Future income taxes                               185               688
     ------------------------------------------------------------------------
                                                     9,449            22,671

    Long-term debt                                   4,951            12,496
    Deferred rent liability                              -                37
    Deferred gain on sale of property                    -             1,603
    Debt component of convertible debenture              -             2,510
    Future income taxes                              1,216             4,021

    Shareholders' equity:
     Share capital                                  63,046            54,380
     Warrants                                          556               794
     Holder conversion options                           -             1,099
     Additional paid-in capital                      9,232             8,083
     Cumulative translation adjustment                (199)           (1,662)
     Deficit                                       (33,941)          (32,086)
     ------------------------------------------------------------------------
                                                    38,694            30,608

    Commitments and contingencies
    Subsequent event
    -------------------------------------------------------------------------
                                                $   54,310        $   73,946
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    LAB INTERNATIONAL INC.
    Consolidated Statements of Operations

    Years ended December 31, 2006 and 2005
    (in thousands of Canadian dollars, except per share data)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                      2006              2005
    -------------------------------------------------------------------------

    Revenues                                    $   29,448        $   46,490

    Operating expenses:
     Direct costs                                   15,977            26,123
     Selling, general and administrative            15,087            18,201
     Research and development                       13,066             9,373
     Stock-based compensation                        1,005               802
     Amortization of property and equipment          2,349             2,968
     Amortization of intangible assets               1,453             1,663
     Interest on long-term debt and
      loss on convertible debentures                 1,629             1,816
     Foreign exchange                                1,130              (426)
     ------------------------------------------------------------------------
                                                    51,696            60,520

    -------------------------------------------------------------------------
    Loss before undernoted items                   (22,248)          (14,030)

    Other:
     Gain on disposal of Lab Research Inc.          34,149                 -
     Share in net income of a company
      subject to significant influence                 300                 -
     Restructuring                                  (4,376)                -
    -------------------------------------------------------------------------
                                                    30,073                 -

    -------------------------------------------------------------------------
    Earnings (loss) before income taxes              7,825           (14,030)

    (Provision for) recovery of income taxes :
     Current                                        (2,857)           (2,137)
     Future                                         (5,195)            3,092
    -------------------------------------------------------------------------
                                                    (8,052)              955

    Net loss                                    $     (227)       $  (13,075)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per share:
     Basic                                      $     0.00        $    (0.24)
     Diluted                                          0.00             (0.24)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    LAB INTERNATIONAL INC.
    Consolidated Statements of Deficit

    Years ended December 31, 2006 and 2005
    (in thousands of Canadian dollars)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                      2006              2005
    -------------------------------------------------------------------------

    Deficit, beginning of year                  $  (32,086)       $  (17,572)

    Net loss                                          (227)          (13,075)

    Settlement of convertible debentures            (1,672)                -

    Share issue costs                                   44            (1,439)

    -------------------------------------------------------------------------
    Deficit, end of year                        $  (33,941)       $  (32,086)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    LAB INTERNATIONAL INC.
    Consolidated Statements of Cash Flow

    Years ended December 31, 2006 and 2005
    (in thousands of Canadian dollars)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                      2006              2005
    -------------------------------------------------------------------------

    Cash flows from operating activities:
     Net loss                                   $     (227)       $  (13,075)
     Adjustments for:
      Amortization and write-off
       of property and equipment                     2,349             3,032
      Amortization of intangible assets              1,453             1,663
      Amortization of other assets                     490                72
      Accretion expense on convertible debentures      178               915
      Stock-based compensation                       1,005               802
      Restructuring                                  3,996                 -
      Gain on disposal of Lab Research Inc.        (34,149)                -
      Share in net income of a company subject
       to significant influence                       (300)                -
      Gain on disposal of long-term investment        (146)                -
      Services rendered in exchange of shares           27                 -
      Loss on settlement of convertible debenture      746                 -
      Unrealized foreign exchange loss (gain)        1,120              (605)
      Amortization of deferred
       gain on sale of property                        (64)              (12)
      Deferred rent liability                         (125)                -
      Future income taxes                            5,195            (3,092)
     Net changes in operating assets and liabilities  (111)            2,232
    -------------------------------------------------------------------------
                                                   (18,563)           (8,068)

    Cash flows from financing activities:
     Proceeds from exercise
      of stock options and warrants                    331                 -
     Proceeds from private placements                    -            14,683
     Proceeds from issue of convertible debentures       -             6,243
     Repayment of convertible debentures              (519)           (1,079)
     Share issue costs                                  44            (1,430)
     Proceeds from issuance of long-term debt        1,614             2,606
     Repayment of long-term debt                    (1,485)           (5,332)
     Repayment of capital leases                         -              (311)
     Proceeds from bank loan                           223               432
     Repayments under bank credit facilities          (432)              (53)
    -------------------------------------------------------------------------
                                                      (224)           15,759

    Cash flows from investing activities:
     Proceeds from disposal of Lab Research Inc.    56,891                 -
     Fees on sale of Lab Research Inc.              (8,680)                -
     Deferred corporate transaction costs             (965)                -
     Business acquisition, net of cash acquired          -            (6,171)
     Cash balance transferred to
      Lab Research Inc. upon sale                     (961)                -
     Payment of holdback payable                         -               (65)
     Additions to property and equipment            (2,075)           (2,847)
     Deferred financing fees                           (10)             (317)
     Additions to intangible assets                   (443)             (327)
     Proceeds from sale lease-back transaction           -             6,250
     Fees on sale lease-back transaction                 -              (303)
     Other assets                                     (170)           (1,484)
     ------------------------------------------------------------------------
                                                    43,587            (5,264)
    -------------------------------------------------------------------------
    Net increase in cash and cash equivalents       24,800             2,427
    Cash and cash equivalents, beginning of year    16,269            12,049
    Effect of exchange rate changes                     75             1,793
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of year      $   41,144        $   16,269
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    
    %SEDAR: 00003466EF c6414




For further information:

For further information: visit LAB's website at www.labinc.ca, or
contact: Frédéric Dumais, Vice-President, Investor Relations, (514) 315-3330
ext. 106, Fax: (514) 315-3325, dumaisf@labinc.ca

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