QLT announces second quarter results for 2008



    VANCOUVER, July 29 /CNW/ - (NASDAQ:   QLTI; TSX: QLT) ("QLT" or the
"Company") today reported financial results for the second quarter ended
June 30, 2008. Unless specified otherwise, all amounts are in U.S. dollars and
in accordance with U.S. GAAP.
    "We are very pleased to report that we made steady progress on all fronts
during the second quarter of 2008," said Bob Butchofsky, President and Chief
Executive Officer of QLT. "We have made significant strides in delivering on
our corporate restructuring plans that we previously announced in January of
this year. In the second quarter, we signed agreements to divest two of our
assets, which include the land and building at our headquarters in Vancouver
as well as our former acne product, Aczone(R). Moreover, we are encouraged by
the quarter over quarter increase we saw in Visudyne(R) sales and Eligard(R)'s
performance continues to beat our internal expectations."
    "As we look forward to the rest of the year, in the fourth quarter we are
expecting data from our CORE study, which is examining our punctal plug
elution technology in controlling intraocular pressure in glaucoma patients,
as well as our Visudyne RADICAL trial. We look forward to providing you with
these updates as they become available."

    2008 2Q FINANCIAL RESULTS

    Worldwide Product Sales

    As previously announced, global Visudyne sales for the second quarter
were $40.7 million, a decrease of 31.5% from sales in the second quarter of
2007. Sales in the U.S. were $10.1 million, down 1.8% from the prior-year
second quarter, while sales outside the U.S. were $30.6 million, down 37.7%
from the prior year. The drop in Visudyne sales was primarily due to the
approval and reimbursement in Europe of alternative therapeutics for
age-related macular degeneration. However, Visudyne's sales for the second
quarter increased 11.5% over the first quarter of 2008.
    Worldwide Eligard sales in the second quarter were $60.3 million, an
increase of 34.9% over the second quarter of 2007. U.S. sales of $19.9 million
were up 3.0% from last year's second quarter, while sales outside the U.S.
increased 59.1% to $40.4 million.

    QLT Revenues

    For the second quarter, total revenue of $13.7 million was down 28.0%
from the second quarter of 2007 due primarily to the drop in worldwide
Visudyne product sales. QLT's share of profit from Visudyne sales in the
second quarter was 23.2%, down slightly from 24.2% a year ago. All royalty and
product revenues derived from Eligard product sales are now included in Income
(Loss) from Discontinued Operations.

    QLT Expenses

    For the second quarter of 2008, expenditures for research and development
(R&D) were $8.1 million compared to $8.7 million in the same period of 2007.
The decrease occurred as increased spending on the punctal plug program was
more than offset by declines related to preclinical research. Selling, general
and administrative (SG&A) expense was $4.6 million, down slightly from
$4.7 million in the second quarter of 2007.

    Operating Loss

    Operating loss for the second quarter was $7.0 million, compared to an
operating loss of $108.9 million in the prior-year quarter. The improvement
from last year was a result of a $109.9 million litigation charge reported
last year related to the trial decision in the MEEI litigation.

    Income (Loss) from Discontinued Operations

    Loss from Discontinued Operations was $0.6 million for the second quarter
compared to income of $2.1 million in the second quarter last year. The loss
in the 2008 second quarter includes a non-cash charge of $3.5 million to
write-down some raw material dapsone inventory that was not transferred to
Allergan Sales, LLC as part of the Aczone divestment. Excluding this charge,
the Income from Discontinued Operations improved primarily due to higher
revenue and contribution from Eligard.

    Earnings Per Share (EPS) / Loss Per Share

    QLT reported a loss per share of $0.10 in the second quarter of 2008
compared to a loss per share of $0.92 in the prior-year quarter. The
improvement was a result of the charge last year for the MEEI litigation.
    In the second quarter, non-GAAP EPS was $0.02, as the restructuring
charge, stock compensation, inventory charges, accrued cost of sales re: MEEI
and other charges were backed out of GAAP EPS. The full reconciliation of GAAP
to non-GAAP EPS for the second quarter is provided in Exhibit 1.

    Cash and Short-Term Investments

    The Company's consolidated cash balance at June 30, 2008 consisted of
$120.9 million of cash and cash equivalents and $123.3 million of restricted
cash. The restricted cash balance related to the bond posted to stay the
execution of the July 17, 2007 judgment, pending appeal, in the MEEI
litigation. The Company has $172.5 million of convertible notes that can be
redeemed at the option of the Company, or put back to the Company at the
option of the holders, in September 2008. The reported June 30, 2008 cash
balance does not include the $150 million received in July upon closing of the
Aczone divestment to Allergan Sales, LLC.

    RECENT EVENTS

    Based on interim clinical trial results from our lemuteporfin (QLT 0074)
injectable formulation Phase I/II study in patients with severe acne, QLT has
decided to re-evaluate continuation of its current clinical development plans
for photodynamic therapy with lemuteporfin (QLT 0074) for acne.

    
    RECENT COMPANY HIGHLIGHTS

    -   Completed enrolling 160 patients in the Company's Phase II RADICAL
        trial to determine if combination therapy with Visudyne reduces
        retreatment rates compared with an anti-VEGF antibody while
        maintaining similar vision outcomes and an acceptable safety profile.

    -   Announced proof-of-concept trial results of QLT's wholly-owned
        subsidiary, QLT Plug Delivery, Inc., punctal plug drug delivery
        technology.

    -   Signed a sale and purchase agreement to sell the land and building
        comprising its corporate headquarters and an adjacent undeveloped
        parcel of land in Vancouver, British Columbia.

    -   Entered into an asset purchase agreement with Allergan Sales, LLC, a
        wholly-owned subsidiary of Allergan, Inc. to fully divest QLT's
        worldwide rights to Aczone, a prescription topical medicine approved
        in the United States and Canada for the treatment of acne vulgaris.
        QLT received a one-time cash payment of US$150 million upon the
        transaction closing, which occurred on July 14.
    

    UPCOMING EVENTS

    On August 5, 2008 Bob Butchofsky, CEO, will be giving a corporate
presentation at the BMO Capital Markets Focus on Healthcare Conference, New
York, NY.

    About QLT

    QLT Inc. is a global biopharmaceutical company dedicated to the
discovery, development and commercialization of innovative therapies. Our
research and development efforts are focused on pharmaceutical products in the
fields of ophthalmology and dermatology. In addition, we utilize three unique
technology platforms, photodynamic therapy, Atrigel(R) and punctal plugs with
drugs, to create products such as Visudyne(R) and Eligard(R) and future
product opportunities. For more information, visit our web site at
www.qltinc.com.

    Conference call information

    QLT Inc. will hold an investor conference call to discuss second quarter
2008 results on Tuesday, July 29, 2008 at 8:30 a.m. ET (5:30 a.m. PT). The
call will be broadcast live via the Internet at www.qltinc.com. To participate
on the call, please dial 1-800-319-4610 (North America) or 604-638-5340
(International) before 8:30 a.m. ET. A replay of the call will be available
via the Internet and also via telephone at 1-800-319-6413 (North America) or
604-638-9010 (International), access code 7157, followed by the number sign.


    
    QLT Inc. - Financial Highlights
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    -----------------------------------------------
    (In accordance with United States generally accepted accounting
    principles)

    (In thousands of United        Three months ended       Six months ended
     States dollars, except             June 30,                June 30,
     per share information)         2008        2007        2008        2007
    -------------------------------------------------------------------------
    (Unaudited)
    Revenues
      Net product revenue      $  13,685   $  18,999   $  25,593   $  39,564

    Costs and expenses
      Cost of sales                3,232       3,151       5,362       6,627
      Accrued cost of sales
       re: MEEI(1)                 1,219           -       2,312           -
      Research and development     8,114       8,727      16,162      17,155
      Selling, general and
       administrative              4,556       4,676      11,097       9,991
      Depreciation                 1,080       1,283       2,101       2,576
      Litigation                     864     109,897         864     109,897
      Restructuring charge         1,656         121       9,090         494
    -------------------------------------------------------------------------
                                  20,721     127,855      46,988     146,740
    -------------------------------------------------------------------------

    Operating loss                (7,036)   (108,856)    (21,395)   (107,176)

    Investment and other
     (expense) income
      Net foreign exchange
       (losses) gains                (17)       (448)        237        (423)
      Interest income              1,619       3,442       3,936       7,345
      Interest expense            (3,040)     (1,648)     (6,068)     (3,230)
      Other                          109         111         263       1,264
    -------------------------------------------------------------------------
                                  (1,329)      1,457      (1,632)      4,956
    -------------------------------------------------------------------------

    Loss from continuing
     operations before
     income taxes                 (8,365)   (107,399)    (23,027)   (102,220)

    Recovery of income taxes       1,494      36,605       3,605      34,918

    -------------------------------------------------------------------------
    Loss from continuing
     operations                   (6,871)    (70,794)    (19,422)    (67,302)
    -------------------------------------------------------------------------

    (Loss) income from
     discontinued operations,
     net of income taxes            (567)      2,127       1,513       3,500

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net loss                   $  (7,438)  $ (68,667)  $ (17,909)  $ (63,802)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic net loss per
     common share
      Continuing operations    $   (0.09)  $   (0.94)  $   (0.26)  $   (0.90)
      Discontinued operations      (0.01)       0.03        0.02        0.05
    -------------------------------------------------------------------------
      Net loss                 $   (0.10)  $   (0.92)  $   (0.24)  $   (0.85)

    Diluted net loss per
     common share
      Continuing operations    $   (0.09)  $   (0.94)  $   (0.26)  $   (0.90)
      Discontinued operations      (0.01)       0.03        0.02        0.05
    -------------------------------------------------------------------------
      Net loss                 $   (0.10)  $   (0.92)  $   (0.24)  $   (0.85)

    Weighted average number of
     common shares outstanding
     (in thousands)
      Basic                       74,620      74,982      74,620      75,195
      Diluted                     74,620      74,982      74,620      75,195
    -------------------------------------------------------------------------

    (1) Amount accrued on Visudyne sales since June 30, 2007 pursuant to and
        pending outcome of appeal of the judgment rendered in the MEEI
        litigation.



    QLT Inc.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    -------------------------------------
    (In accordance with United States generally accepted accounting
    principles)

                                                       June 30,  December 31,
    (In thousands of United States dollars)               2008          2007
    -------------------------------------------------------------------------
    (Unaudited)
    ASSETS
    Current assets
      Cash and cash equivalents                      $ 120,890     $ 126,731
      Restricted cash                                  123,280       123,495
      Accounts receivable                               30,399        25,257
      Income taxes receivable                           54,497        48,421
      Inventories                                       11,454        18,511
      Current portion of deferred income tax assets     11,512        19,392
      Other                                             12,988        11,930
    -------------------------------------------------------------------------
                                                       365,020       373,737
    -------------------------------------------------------------------------

    Property, plant and equipment                        8,245        11,643
    Assets held for sale                                39,676        41,107
    Deferred income tax assets                           9,695         7,041
    Goodwill                                            93,755        94,903
    Long-term inventories and other assets              21,683        20,556
    -------------------------------------------------------------------------
                                                     $ 538,074     $ 548,987
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Current liabilities
      Accounts payable                               $   8,924     $   8,486
      Income taxes payable                                 181             -
      Accrued restructuring charge                       1,479           153
      Accrued liabilities                              130,007       123,294
      Convertible debt                                 172,500       172,500
      Current portion of deferred revenue                9,001         8,431
      Current portion of deferred income tax
       liabilities                                       9,421        11,291
    -------------------------------------------------------------------------
                                                       331,513       324,155

    Uncertain tax position liabilities                   2,209         2,070
    Deferred revenue                                     2,204         2,939
    -------------------------------------------------------------------------
                                                       335,926       329,164
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Common shares                                      702,221       702,221
    Additional paid in capital                         121,889       119,779
    Accumulated deficit                               (732,364)     (714,455)
    Accumulated other comprehensive income             110,402       112,278
    -------------------------------------------------------------------------
                                                       202,148       219,823
    -------------------------------------------------------------------------
                                                     $ 538,074     $ 548,987
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    As at June 30, 2008, there were 74,620,328 issued and outstanding common
shares and 6,512,901 outstanding stock options.



    QLT Inc.
    CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
    2008 Second Quarter Reconciliation of GAAP Earnings to
    Adjusted Non-GAAP Earnings                                     Exhibit 1
    -------------------------------------------------------------------------

    (In millions of
     United States       Three months                           Three months
     dollars, except    ended June 30,                         ended June 30,
     per share                   2008                                   2008
     information)                GAAP        Adjustments          Non-GAAP(1)
    -------------------------------------------------------------------------
    (Unaudited)
    Revenues
      Net product revenue     $  13.7         $  (0.4)(a)            $  13.2

    Cost and expenses
      Cost of sales              (3.2)            0.9 (a)(b)            (2.3)
      Accrued cost of sales
       re: MEEI                  (1.2)            1.2 (c)                  -
      Research and development   (8.1)            0.2 (b)               (7.9)
      Selling, general and
       administrative            (4.6)            0.4 (b)               (4.2)
      Depreciation               (1.1)            0.2 (d)               (0.9)
      Litigation                 (0.9)            0.9 (e)                  -
      Restructuring              (1.7)            1.7 (f)                  -
    -------------------------------------------------------------------------
                                (20.7)            5.5                  (15.3)
    -------------------------------------------------------------------------

    Operating loss               (7.0)            5.0                   (2.0)

    Investment and other
     (expense) income
      Net foreign exchange
       losses                    (0.0)              -                   (0.0)
      Interest income             1.6               -                    1.6
      Interest expense           (3.0)            1.4 (c)               (1.6)
      Other                       0.1               -                    0.1
    -------------------------------------------------------------------------
                                 (1.3)            1.4                    0.1
    -------------------------------------------------------------------------

    Loss from continuing
     operations before
     income taxes                (8.4)            6.4                   (1.9)

      Recovery (provision)
       for income taxes           1.5            (1.9)(g)               (0.4)

    -------------------------------------------------------------------------
    Loss from continuing
     operations                  (6.9)            4.6                   (2.3)
    -------------------------------------------------------------------------

    (Loss) income from
     discontinued operations,
     net of income taxes         (0.6)            4.1 (a)(b)(f)          3.5
    -------------------------------------------------------------------------
    Net (loss) income         $  (7.4)        $   8.7                $   1.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic net (loss) income
     per common share:
      Continuing operations   $ (0.09)                               $ (0.03)
      Discontinued operations   (0.01)                                  0.05
      -----------------------------------------------------------------------
      Net (loss) income       $ (0.10)                               $  0.02

    Diluted net (loss) income
     per common share:
      Continuing operations   $ (0.09)                               $ (0.03)
      Discontinued operations   (0.01)                                  0.05
      -----------------------------------------------------------------------
      Net (loss) income       $ (0.10)                               $  0.02

    Weighted average number
     of common shares
     outstanding (in millions)
      Basic                      74.6                                   74.6
      Diluted                    74.6                                   74.6

    Adjustments:
    ------------
    (a) Remove inventory write-down.
    (b) Remove stock based compensation.
    (c) Remove accrued cost of sales re: MEEI and related interest expense.
    (d) Remove impairment of fixed assets.
    (e) Remove litigation expense.
    (f) Remove restructuring charge.
    (g) Remove income tax impact of the above adjustments.

    (1) The adjusted non-GAAP financial measures have no standardized meaning
        under GAAP and are not comparable between companies. Management
        believes that the adjusted non-GAAP financial measures are useful for
        the purpose of financial analysis. Management uses these measures
        internally to evaluate the Company's operating performance before
        items that are considered by management to be outside of the
        Company's core operating results.



    QLT Inc.
    CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
    2008 Second Quarter Reconciliation of GAAP Earnings to
    Adjusted Non-GAAP Earnings                                     Exhibit 2
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------

    (In millions of
     United States         Six months                             Six months
     dollars, except    ended June 30,                         ended June 30,
     per share                   2008                                   2008
     information)                GAAP        Adjustments          Non-GAAP(1)
    -------------------------------------------------------------------------
    (Unaudited)
    Revenues
      Net product revenue     $  25.6         $  (0.4)(a)            $  25.2

    Cost and expenses
      Cost of sales              (5.4)            0.9 (a)(b)            (4.5)
      Accrued cost of sales
       re: MEEI                  (2.3)            2.3 (c)                  -
      Research and development  (16.2)            0.6 (b)              (15.6)
      Selling, general and
       administrative           (11.1)            0.8 (b)              (10.3)
      Depreciation               (2.1)            0.2 (d)               (1.9)
      Litigation                 (0.9)            0.9 (e)                  -
      Restructuring              (9.1)            9.1 (f)                  -
    -------------------------------------------------------------------------
                                (47.0)           14.7                  (32.2)
    -------------------------------------------------------------------------

    Operating loss              (21.4)           14.3                   (7.1)

    Investment and other
     (expense) income
      Net foreign exchange
       gains                      0.2               -                    0.2
      Interest income             3.9               -                    3.9
      Interest expense           (6.1)            2.8 (c)               (3.3)
      Other                       0.3               -                    0.3
    -------------------------------------------------------------------------
                                 (1.6)            2.8                    1.2
    -------------------------------------------------------------------------

    Loss from continuing
     operations before
     income taxes               (23.0)           17.1                   (5.9)

      Recovery (provision)
       for income taxes           3.6            (4.9)(g)               (1.3)

    -------------------------------------------------------------------------
    Loss from continuing
     operations                 (19.4)           12.2                   (7.2)
    -------------------------------------------------------------------------

    Income from discontinued
     operations, net of
     income taxes                 1.5             4.3 (a)(b)(f)          5.8

    -------------------------------------------------------------------------
    Net loss                  $ (17.9)        $  16.5                $  (1.4)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic net loss per common
     share:
      Continuing operations   $ (0.26)                               $ (0.10)
      Discontinued operations    0.02                                   0.08
      -----------------------------------------------------------------------
      Net loss                $ (0.24)                               $ (0.02)

    Diluted net loss per
     common share:
      Continuing operations   $ (0.26)                               $ (0.10)
      Discontinued operations    0.02                                   0.08
      -----------------------------------------------------------------------
      Net loss                $ (0.24)                               $ (0.02)

    Weighted average number
     of common shares
     outstanding (in millions)
      Basic                      74.6                                   74.6
      Diluted                    74.6                                   74.6

    Adjustments:
    -------------
    (a) Remove inventory write-down.
    (b) Remove stock based compensation.
    (c) Remove accrued cost of sales re: MEEI and related interest expense.
    (d) Remove impairment of fixed assets.
    (e) Remove litigation expense.
    (f) Remove restructuring charge.
    (g) Remove income tax impact of the above adjustments.

    (1) The adjusted non-GAAP financial measures have no standardized meaning
        under GAAP and are not comparable between companies. Management
        believes that the adjusted non-GAAP financial measures are useful for
        the purpose of financial analysis. Management uses these measures
        internally to evaluate the Company's operating performance before
        items that are considered by management to be outside of the
        Company's core operating results.
    


    QLT Plug Delivery, Inc. is a wholly-owned subsidiary of QLT Inc.
    Atrigel is a registered trademark of QLT USA, Inc.
    Visudyne is a registered trademark of Novartis AG.
    Eligard is a registered trademark of Sanofi-aventis.
    Aczone is a registered trademark of Allergan Sales, LLC.

    QLT Inc. is listed on The NASDAQ Stock Market under the trading symbol
"QLTI" and on The Toronto Stock Exchange under the trading symbol "QLT."
    A full explanation of how QLT determines and recognizes revenue resulting
from Visudyne sales is contained in the financial statements contained in the
periodic reports on Forms 10-Q and 10-K, under the heading "Significant
Accounting Policies - Revenue Recognition." Visudyne sales are product sales
by Novartis under its agreement with QLT.

    Certain statements in this press release constitute "forward looking
statements" of QLT within the meaning of the Private Securities Litigation
Reform Act of 1995 and constitute "forward looking information" within the
meaning of applicable Canadian securities laws. Forward looking statements
include, but are not limited to: our plans to divest certain core and non-core
assets; our expectations for timing to receive data from our CORE study and
our Visudyne RADICAL study; and statements which contain language such as:
"assuming," "prospects," "future," "projects," "believes," "expects" and
"outlook." Forward-looking statements are predictions only which involve known
and unknown risks, uncertainties and other factors that may cause actual
results to be materially different from those expressed in such statements.
Many such risks, uncertainties and other factors are taken into account as
part of our assumptions underlying these forward-looking statements and
include, among others, the following: the Company's future operating results
are uncertain and likely to fluctuate; our ability to successfully complete
the sale of one or more of our assets or operations at an acceptable price and
the time period necessary to complete such sales are uncertain; uncertainties
relating to the timing and results of the clinical development and
commercialization of our products and technologies (including Visudyne and our
punctal plug technology) and the associated costs of these programs; the
timing, expense and uncertainty associated with the regulatory approval
process for products; uncertainties regarding the impact of competitive
products and pricing; risks and uncertainties associated with the safety and
effectiveness of our technology; risks and uncertainties related to the scope,
validity, and enforceability of our intellectual property rights and the
impact of patents and other intellectual property of third parties; and
general economic conditions and other factors described in detail in QLT's
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other filings
with the U.S. Securities and Exchange Commission and Canadian securities
regulatory authorities. Forward looking statements are based on the current
expectations of QLT and QLT does not assume any obligation to update such
information to reflect later events or developments except as required by law.





For further information:

For further information: QLT Inc.: Vancouver, Canada, Therese Hayes,
Telephone: (604) 707-7000 or 1-800-663-5486, Fax: (604) 707-7001; The Trout
Group: New York, USA, Brandon Lewis, Telephone: (646) 378-2915 or Marcy
Strickler, Telephone: (646) 378-2927

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