QLT announces third quarter results for 2009

QLT SEPARATELY ANNOUNCES SHARE REPURCHASE PROGRAM

VANCOUVER, Oct. 27 /CNW/ - QLT Inc. (NASDAQ: QLTI; TSX: QLT) ("QLT" or the "Company") today reported financial results for the third quarter ended September 30, 2009. Unless specified otherwise, all amounts are in U.S. dollars and in accordance with U.S. GAAP.

"Our recently announced accomplishments mark a significant turning point for the Company, as we have fulfilled our vision of becoming a company focused solely in the ocular therapeutic area and will soon have a commercial presence in the U.S.," said Bob Butchofsky, President and Chief Executive Officer of QLT. "We are looking forward to advancing the punctal plug drug delivery platform and expect to report additional data in the first quarter next year."

2009 THIRD QUARTER FINANCIAL RESULTS

Financial Reporting

For the third quarter and nine months ended September 30, 2009, QLT is reporting the results of our divested QLT USA business as one line item called Income from Discontinued Operations on our statements of operations. This item captures in one line the net results of the entire QLT USA operation through September 30, 2009.

Worldwide Product Sales

Worldwide Visudyne(R) sales for the third quarter were $23.5 million, a decrease of 31.1% from sales in the third quarter of 2008. Sales in the U.S. were $6.2 million, down 32.5% from the prior-year third quarter, while sales outside the U.S. were $17.3 million, down 30.5% from the prior year. Worldwide Eligard(R) sales in the third quarter were $65.0 million, an increase of 18.8% over the third quarter of 2008. U.S. sales of $18.8 million were up 11.4% from last year, while sales outside the U.S. increased 22.1% to $46.1 million. All revenue items related to the Eligard product are included in the Income from Discontinued Operations line on the statements of operations.

QLT Revenues

Revenue is now comprised solely of revenue from Visudyne. For the third quarter, revenue of $8.8 million was down 19.2% from the third quarter of 2008 due primarily to the decrease in end-user Visudyne sales. QLT's share of profit from Visudyne sales was 28.9% in the quarter, up from 22.6% in the third quarter of 2008.

QLT Expenses

For the third quarter of 2009, Research and Development (R&D) expense was $7.4 million, up from $6.9 million in the same period of 2008 primarily due to increased spending on the punctal plug program. Selling, General and Administrative (SG&A) expense was $4.5 million, up slightly from $4.4 million last year.

Operating Income/Loss

Operating loss for the third quarter was $6.0 million, compared to operating income of $17.0 million in the prior-year third quarter. Last year's income included a $21.3 million gain from the sale of our corporate headquarters and surrounding land. Excluding that gain, the operating loss increased from last year due to the drop in Visudyne sales.

Earnings Per Share (EPS)/Loss Per Share

EPS of $0.16 in the third quarter compared to EPS of $1.97 in the prior-year quarter. The decline occurred because the 2008 third quarter results included a $134 million gain from the sale of Aczone(R) and Atrigel(R) (within discontinued operations) and the $21.3 million gain from the sale of our headquarters and land. In the third quarter, non-GAAP loss per share was $0.08, significantly lower than GAAP EPS primarily because the income from discontinued operations and a non-cash foreign exchange gain related to an intercompany loan were eliminated. A full reconciliation of GAAP to non-GAAP EPS for the third quarter and nine months is provided in Exhibits 1 and 2.

Cash and Short-Term Investments

The Company's consolidated cash and cash equivalents balance at September 30, 2009 was $194.0 million, up from $134.9 million at the end of the second quarter primarily due to collection of income tax refunds during the quarter. The cash and cash equivalents balance at September 30, 2009 did not include $20.0 million ($16.5 million net of transaction fees) that was paid to us on October 1, 2009 as the first installment of our sale of QLT USA.

2009 Guidance Update

    
    -   As previously announced, under the terms of our sale of QLT USA, we
        expect to be paid up to an additional $200 million in quarterly
        payments equal to 80% of the royalties paid to QLT USA under the
        Sanofi and Medigene agreements. As a result of this transaction:

        -  In the fourth quarter we expect to record a gain of over $100
           million within income from discontinued operations related to the
           accounting gain on the sale, which represents the excess of the
           estimated present value of all consideration expected to be
           received under the deal compared to the net book value of the net
           assets that were sold.

        -  We will have an asset on the balance sheet called Contingent
           Consideration, which represents the estimated present value of the
           expected remaining payments due from the $200 million of quarterly
           payments mentioned above.

        -  Cash collected each quarter will not be recorded as revenue,
           rather it will draw down the Contingent Consideration asset on the
           balance sheet. In the fourth quarter we expect to collect
           Contingent Consideration of approximately $8.4 million.

        -  Each period we will have to assess the fair value of the
           Contingent Consideration and any changes will flow through the P&L
           as gains or losses within Other Income and Expense.

    -   Guidance for Eligard sales was increased in our last earnings update
        to $240-255 million. Given that we will no longer be reporting any
        revenue from Eligard sales on our statements of operations, we are
        discontinuing our guidance for end-user Eligard sales. However,
        Eligard sales through the nine months ended September 30, 2009 of
        $191.1 million were in line with the previous guidance.

    -   Guidance for R&D expense is $30-33 million and for SG&A expense is
        $18-21 million, unchanged from previous guidance, although we do
        expect that both line items will be near the bottom end of the
        guidance ranges.

    -   Guidance for adjusted EBITDA (defined as operating income plus stock
        compensation and depreciation expense and adjusted for other one-time
        and non-cash items) was increased in our last earnings call to $15-20
        million. As above, given that we will no longer be reporting revenue
        from Eligard, we are discontinuing guidance for adjusted EBITDA.
        However, through the nine months ended September 30, 2009 adjusted
        EBITDA (including EBITDA associated with our discontinued operations)
        was $18.3 million.

    -   The amendment to the Visudyne agreement does not take effect until
        January 1, 2010, and therefore there is not expected to be any
        material impact to our 2009 operating results. Beginning in 2010,
        QLT's revenue from Visudyne will comprise: (i) end-user net sales of
        Visudyne in the U.S., (ii) royalties in the amount of 20% of net
        sales of Visudyne outside of the U.S., (iii) product revenue from
        selling unlabelled Visudyne product to Novartis for its sale of the
        product outside of the U.S., and (iv) reimbursement from Novartis for
        the existing third party royalties we currently pay to University of
        British Columbia and Massachusetts General Hospital for sales of
        Visudyne outside the U.S. (no reimbursement will be received for the
        ongoing damages paid to MEEI in the amount of 3.01% of Visudyne
        sales).
    

In 2010, we will provide guidance on adjusted EBITDA plus the quarterly payments due for the sale of QLT USA (calculated as 80% of the Eligard royalty payments referenced above), because we believe this to be a more reflective measure of our cash-flow for the next several years.

RECENT COMPANY ANNOUNCEMENTS

    
    -   Announced the receipt of an income tax refund of Cdn$45.3 million
        from the Canada Revenue Agency. The income tax refund resulted
        primarily from a request to carryback losses the Company incurred in
        2007 in connection with the judgment of the United States District
        Court for the District of Massachusetts in favor of Massachusetts Eye
        and Ear Infirmary.

    -   Announced the sale of all of the shares of QLT's wholly-owned U.S.
        subsidiary, QLT USA, Inc. ("QLT USA"), to TOLMAR Holding, Inc.
        ("TOLMAR") for up to an aggregate US$230 million pursuant to a Stock
        Purchase Agreement dated October 1, 2009. QLT USA's principal
        operating asset is the Eligard line of products for the treatment of
        prostate cancer. The Eligard line of products is currently
        manufactured by TOLMAR, Inc., a wholly-owned subsidiary of TOLMAR.

    -   Announced that QLT has restructured its agreement with Novartis
        Pharma AG to simplify the relationship, under which, effective
        January 1, 2010, it will, among other things, receive exclusive U.S.
        rights to the Visudyne patents to sell and market Visudyne in the
        U.S.
    

About QLT

QLT Inc. is a global biopharmaceutical company dedicated to the discovery, development and commercialization of innovative ocular therapies. We utilize two unique technology platforms, photodynamic therapy (used in the Visudyne product) and punctal plugs which are currently under development for future product opportunities. For more information, visit our web site at www.qltinc.com.

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.

    
    QLT Inc.-Financial Highlights
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    -----------------------------------------------

    (In thousands of United         Three months ended     Nine months ended
     States dollars, except             September 30,         September 30,
     per share information)            2009       2008       2009       2008
    -------------------------------------------------------------------------
    (Unaudited)
    Revenues
      Net product revenue         $   8,785  $  10,868  $  31,296  $  36,462
    -------------------------------------------------------------------------
    Costs and expenses
      Cost of sales(1)                2,202      2,989     12,693     10,663
      Research and development        7,375      6,887     20,486     23,049
      Selling, general and
       administrative                 4,500      4,422     12,484     15,519
      Depreciation                      370        464      1,061      2,566
      Litigation                        316          -        650        864
      Gain on sale of
       long-lived assets                  -    (21,289)         -    (21,289)
      Restructuring                       3        349       (144)     9,439
    -------------------------------------------------------------------------
                                     14,766     (6,178)    47,230     40,811
    -------------------------------------------------------------------------

    Operating (loss) income          (5,981)    17,046    (15,934)    (4,349)

    Investment and other
     income (expense)
      Net foreign exchange
       gains (losses)                 7,517       (296)    14,292        (58)
      Interest income                 1,853      1,853      3,818      5,789
      Interest expense                    -     (2,743)    (1,848)    (8,811)
      Other                              (9)        26         16        288
    -------------------------------------------------------------------------
                                      9,361     (1,160)    16,278     (2,792)
    -------------------------------------------------------------------------

    Income (loss) from
     continuing operations
     before income taxes              3,380     15,886        344     (7,141)

    Provision for income taxes       (1,144)    (3,749)      (472)      (144)

    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                       2,236     12,137       (128)    (7,285)
    -------------------------------------------------------------------------

    Income from discontinued
     operations, net of
     income taxes                     6,685    134,789     18,980    136,302
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income                    $   8,921  $ 146,926  $  18,852  $ 129,017
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic net income per
     common share
      Continuing operations       $    0.04  $    0.16  $   (0.00) $   (0.10)
      Discontinued operations          0.12       1.81       0.33       1.83
    -------------------------------------------------------------------------
      Net income                  $    0.16  $    1.97  $    0.33  $    1.73

    Diluted net income per
     common share
      Continuing operations       $    0.04  $    0.16  $   (0.00) $   (0.10)
      Discontinued operations          0.12       1.81       0.33       1.83
    -------------------------------------------------------------------------
      Net income                  $    0.16  $    1.97  $    0.33  $    1.73

    Weighted average number of
     common shares outstanding
     (in thousands)
      Basic                          54,624     74,620     56,844     74,620
      Diluted                        54,765     74,620     56,844     74,620
    -------------------------------------------------------------------------
    (1) Includes amount accrued on Visudyne sales pursuant to judgment
        rendered in the MEEI litigation.



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

                                                  September 30,  December 31,
    (In thousands of United States dollars)               2009          2008
    -------------------------------------------------------------------------
    (Unaudited)
    ASSETS
    Current assets
      Cash and cash equivalents                      $ 194,039     $ 165,395
      Restricted cash                                        -       124,578
      Accounts receivable                                8,209        11,151
      Income taxes receivable                              407        41,801
      Inventories                                        3,922         3,163
      Current portion of deferred income tax assets      1,279           403
      Mortgage receivable                               11,221             -
      Assets held for sale                              58,543        72,763
      Other                                              7,240        10,474
    -------------------------------------------------------------------------
                                                       284,860       429,728
    -------------------------------------------------------------------------

    Property, plant and equipment                        2,345         3,113
    Deferred income tax assets                           6,772         5,139
    Goodwill                                            23,145        23,145
    Mortgage receivable                                      -         9,834
    Long-term inventories and other assets              18,304        20,799
    -------------------------------------------------------------------------
                                                     $ 335,426     $ 491,758
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Current liabilities
      Accounts payable                               $   4,676     $   4,865
      Accrued restructuring charge                         123           314
      Accrued liabilities                                4,097       129,473
      Liabilities held for sale                          7,316         8,906
      Deferred revenue                                   4,306         4,204
    -------------------------------------------------------------------------
                                                        20,518       147,762

    Uncertain tax position liabilities                   1,447           766
    -------------------------------------------------------------------------

                                                        21,965       148,528
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Common shares                                      514,056       702,221
    Additional paid-in capital                         269,035       123,367
    Accumulated deficit                               (560,712)     (579,564)
    Accumulated other comprehensive income              91,082        97,206
    -------------------------------------------------------------------------
                                                       313,461       343,230
    -------------------------------------------------------------------------
                                                     $ 335,426     $ 491,758
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    As at September 30, 2009, there were 54,630,692 issued and outstanding
    common shares and 5,908,273 outstanding stock options.



    QLT Inc.
    CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
    ----------------------------------------------
    2009 Third Quarter Reconciliation of GAAP Earnings to
     Adjusted Non-GAAP Earnings                                    Exhibit 1
    -------------------------------------------------------------------------
                               Three months                     Three months
                                      ended                            ended
    (In millions of United     September 30,                    September 30,
     States dollars, except            2009                             2009
     per share information)            GAAP      Adjustments      Non-GAAP(1)
    -------------------------------------------------------------------------
    (Unaudited)
    Revenues
      Net product revenue           $   8.8    $     -               $   8.8
    -------------------------------------------------------------------------

    Cost and expenses
      Cost of sales                    (2.2)       0.0    (a)           (2.2)
      Research and development         (7.4)       0.2    (a)           (7.2)
      Selling, general and
       administrative                  (4.5)       0.9    (a)(b)        (3.6)
      Depreciation                     (0.4)         -                  (0.4)
      Litigation                       (0.3)       0.3    (c)              -
      Restructuring                    (0.0)       0.0    (d)              -
    -------------------------------------------------------------------------
                                      (14.8)       1.4                 (13.3)
    -------------------------------------------------------------------------

    Operating loss                     (6.0)       1.4                  (4.6)

    Investment and other
     income (expense)
      Net foreign exchange
       gains (losses)                   7.5       (8.0)   (e)           (0.5)
      Interest income                   1.9       (1.6)   (f)            0.2
      Other                            (0.0)         -                  (0.0)
    -------------------------------------------------------------------------
                                        9.4       (9.7)                 (0.3)
    -------------------------------------------------------------------------

    Income(loss) from continuing
     operations before income taxes
                                        3.4       (8.3)                 (4.9)

      Provision for income taxes       (1.1)       1.6    (g)            0.5

    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                         2.2       (6.7)                 (4.4)
    -------------------------------------------------------------------------

    Income from discontinued
     operations, net of income taxes    6.7       (6.7)   (h)              -

    -------------------------------------------------------------------------
    Net income (loss)               $   8.9    $ (13.3)              $  (4.4)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic net income (loss) per
     common share:
      Continuing operations         $  0.04                          $ (0.08)
      Discontinued operations          0.12                             0.00
      -----------------------------------------------------------------------
      Net income (loss)             $  0.16                          $ (0.08)

    Diluted net income (loss)
     per common share:
      Continuing operations         $  0.04                          $ (0.08)
      Discontinued operations          0.12                             0.00
      -----------------------------------------------------------------------
      Net income (loss)             $  0.16                          $ (0.08)

    Weighted average number of
     common shares outstanding
     (in millions):
      Basic                            54.6                             54.6
      Diluted                          54.8                             54.8

    Adjustments:
    -----------
    (a) Remove stock-based compensation.
    (b) Remove capital tax.
    (c) Remove litigation expense.
    (d) Remove restructuring expense.
    (e) Remove foreign exchange gains related to intercompany debt.
    (f) Remove interest income related to income tax refunds.
    (g) Remove income tax impact of the above adjustments.
    (h) Remove income from discontinued operations, net of income tax.

    (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
    ----------------------------------------------
    2009 Third Quarter Reconciliation of GAAP Earnings to
     Adjusted Non-GAAP Earnings                                    Exhibit 2
    -------------------------------------------------------------------------
                                Nine months                      Nine months
                                      ended                            ended
    (In millions of United     September 30,                    September 30,
     States dollars, except            2009                             2009
     per share information)            GAAP      Adjustments      Non-GAAP(1)
    -------------------------------------------------------------------------
    (Unaudited)
    Revenues
      Net product revenue           $  31.3    $     -               $  31.3
    -------------------------------------------------------------------------

    Cost and expenses
      Cost of sales                   (12.7)       4.7    (a)(b)        (8.0)
      Research and development        (20.5)       0.7    (b)          (19.8)
      Selling, general and
       administrative                 (12.5)       1.4    (b)(c)       (11.0)
      Depreciation                     (1.1)         -                  (1.1)
      Litigation                       (0.7)       0.7    (d)              -
      Restructuring                     0.1       (0.1)   (e)              -
    -------------------------------------------------------------------------
                                      (47.2)       7.3                 (39.9)
    -------------------------------------------------------------------------

    Operating loss                    (15.9)       7.3                  (8.6)

    Investment and other
     income (expense)
      Net foreign exchange gains
       (losses)                        14.3      (16.0)   (f)           (1.7)
      Interest income                   3.8       (2.7)   (g)            1.1
      Interest expense                 (1.8)         -                  (1.8)
      Other                             0.0          -                   0.0
    -------------------------------------------------------------------------
                                       16.3      (18.7)                 (2.4)
    -------------------------------------------------------------------------

    Income (loss) from continuing
     operations before income taxes     0.3      (11.3)                (11.0)

      Provision for income taxes       (0.5)       2.0    (h)            1.5

    -------------------------------------------------------------------------
    Loss from continuing operations    (0.1)      (9.3)                 (9.5)
    -------------------------------------------------------------------------

    Income from discontinued
     operations, net of income taxes   19.0      (19.0)   (i)              -

    -------------------------------------------------------------------------
    Net income (loss)               $  18.9    $ (28.4)              $  (9.5)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic net income (loss)
     per common share:
      Continuing operations         $ (0.00)                         $ (0.17)
      Discontinued operations          0.33                             0.00
      -----------------------------------------------------------------------
      Net income (loss)             $  0.33                          $ (0.17)

    Diluted net income (loss)
     per common share:
      Continuing operations         $ (0.00)                         $ (0.17)
      Discontinued operations          0.33                             0.00
      -----------------------------------------------------------------------
      Net income (loss)             $  0.33                          $ (0.17)

    Weighted average number of
     common shares outstanding
     (in millions):
      Basic                            56.8                             56.8
      Diluted                          56.8                             56.8

    Adjustments:
    -----------
    (a) Remove inventory write-down.
    (b) Remove stock-based compensation.
    (c) Remove capital tax.
    (d) Remove litigation expense.
    (e) Remove restructuring credit.
    (f) Remove foreign exchange gains related to intercompany debt.
    (g) Remove interest income related to income tax refunds.
    (h) Remove income tax impact of the above adjustments.
    (i) Remove income from discontinued operations, net of income tax.

    (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.
    

Conference call information

QLT Inc. will hold an investor conference call to discuss third quarter 2009 results on Tuesday, October 28, 2009 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 Plug Delivery, Inc. is a wholly-owned subsidiary of QLT Inc.
    Eligard is a registered trademark of Sanofi-aventis.
    Visudyne is a registered trademark of Novartis AG.
    

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."

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 expectations stated in our guidance for 2009 R&D expense and SG&A expense; our expectations for the accounting treatment of the sale of QLT USA; our expectations for fourth quarter contingent consideration from the sale of QLT USA; our expectations relating to receiving quarterly contingent consideration on the sale of QLT USA up to $200 million; our expectation that the amended Visudyne agreement will not have a material impact on our 2009 operating results; our statements concerning advancing our punctal plug platform and timing to report data; 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; the risk that future sales of Visudyne and Eligard may be less than expected; the uncertainties related to the transition of Novartis' responsibilities in the U.S. to QLT and costs associated therewith; risks and uncertainties associated with the tax treatment of a transaction by Canada Revenue Agency; uncertainties relating to the timing and results of Visudyne combination therapy; the timing, expense and uncertainty associated with clinical trials and 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 products; risks and uncertainties related to the scope, validity, and enforceability of intellectual property rights related to our products and technology and the impact of patents and other intellectual property of third parties; 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.

SOURCE QLT INC.

For further information: For further information: QLT Inc. Media Contact: Vancouver, Canada, Karen Peterson, Telephone: (604) 707-7000, or 1-800-663-5486; The Trout Group Investor Relations Contact: New York, USA, Christine Yang, Telephone: (646) 378-2929; or Marcy Nanus, Telephone: (646) 378-2927

Organization Profile

QLT INC.

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