Cangene announces first quarter financial results for fiscal 2010; Contract
deliveries remain on target and the company is now increasing its focus on
the U.S. commercial market

Readers are referred to the cautionary notes regarding Forward-looking Information and non-GAAP Financial Measures at the end of this release

Listed TSX, Symbol: CNJ

TORONTO and WINNIPEG , Dec. 14 /CNW/ - Cangene Corporation today reports financial results for the first quarter ended October 31, 2009 .

Revenues for the first quarter of 2010 were $42.0 million , 20% lower than the $52.2 million recorded during the same period last year. The lower revenue in the current quarter reflects the fact that there was reduced R&D-services revenue due to reduced R&D activity on the U.S. government stockpiling contracts and the conclusion of joint R&D projects with Apotex during fiscal 2009. In total, R&D-services revenues have declined from $15.6 million in the prior-year quarter to $7.8 million in the current quarter. Consistent with the first quarter of the prior year, the current quarter included one product delivery on the U.S. government stockpiling contracts as per the current delivery schedule. Overall, $21.2 million in revenue was recognized on these stockpiling contracts in the current quarter, compared with $25.6 million in the first quarter of 2009. In addition, biopharmaceutical product sales have declined by $3.7 million relative to the first quarter of 2009, primarily due to the receipt of a non-recurring US$3.0-million milestone payment in the first quarter of 2009 under the terms of the WinRho(R) SDF distribution agreement with Baxter Healthcare Corporation. When the impact of that milestone payment is excluded, WinRho(R) SDF revenues in the U.S. market have increased in the current quarter.

"The financial results for the quarter continue to reflect our delivery on the biodefence contracts in accordance with established schedules," said Dr. John Langstaff , Cangene's president and CEO. "We have also begun to focus more directly on the U.S. commercial markets, beginning with our acquisition of the U.S. commercialization rights for HepaGam B(R) from Apotex, effective November 1, 2009 . We believe this is a growing market, which is why we made the decision to build a small U.S. sales force. In concert with this, we are changing the name of our Baltimore-based subsidiary, Chesapeake Biological Laboratories, Inc., to Cangene bioPharma, Inc., to better align it with the strong Cangene brand," he said.

Net income for the quarter was $5.3 million or $0.08 per share, compared with $21.1 million or $0.30 per share in the same quarter last year. The drop in net income resulted largely from two factors: (a) the current quarter contained a small foreign-exchange loss, compared with a $10.2-million foreign-exchange gain in the first quarter of the prior year, and (b) revenues were reduced in the current quarter as discussed above. Other less significant factors in the current quarter that contributed to lower net income were higher independent R&D expenditures and amortization.

An increase in net non-cash working capital and other asset balances related to operations of $22.0 million from the balance at July 31, 2009 resulted from increased inventories and contracts in progress, increased accounts receivable, and increased income and other taxes recoverable, combined with decreased accounts payable and accrued liabilities, and decreased income and other taxes payable. In addition, a significant increase in other assets resulted from the payment to Apotex of a US$7.0-million deposit related to the acquisition of the U.S. commercialization rights to HepaGam B(R) mentioned earlier.

The Company had $35.2 million in cash at October 31, 2009 , compared with $56.1 million at July 31, 2009 . At October 31, 2009 , Cangene had no debt.

Readers are referred to the cautionary notes regarding Forward-looking Information and non-GAAP Financial Measures at the end of this release. Certain comparative figures in the following 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 Tuesday, December 15, 2009 at 11:00 a.m. Eastern. To access the conference call by telephone, dial 416-644-3426 or 1-800-731-5319. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Tuesday, December 22, 2009 , at midnight. To access the archived conference call, dial 416-640-1917 or 1-877-289-8525 and enter the reservation number 4192381 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.

    
    CANGENE CORPORATION

    CONSOLIDATED BALANCE SHEETS (unaudited)

                                      Incorporated under the laws of Ontario

                                                            At            At
                                                    October 31,      July 31,
    in thousands of Canadian dollars                      2009          2009
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash                                            $   35,245    $   56,131
    Accounts receivable                                 39,882        34,547
    Inventories and contracts in progress               96,459        92,430
    Income and other taxes recoverable                   9,208         5,637
    Future income taxes                                  5,816         8,231
    Prepaid expenses and deposits                        3,963         2,830
    -------------------------------------------------------------------------
    Total current assets                               190,573       199,806
    Property, plant and equipment, net                  95,271        96,405
    Future income taxes                                    528             -
    Goodwill and intangible assets                      43,459        43,520
    Other assets                                        12,430         5,460
    -------------------------------------------------------------------------
                                                    $  342,261    $  345,191
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities        $   23,585    $   27,948
    Income and other taxes payable                          17         4,126
    Current portion of deferred income                   5,408         5,875
    -------------------------------------------------------------------------
    Total current liabilities                           29,010        37,949
    Deferred income                                     10,538         9,906
    Incentive plan liabilities                           2,148           122
    Deferred share units                                    60             -
    Future income taxes                                  3,954         5,522
    -------------------------------------------------------------------------
    Total liabilities                                   45,710        53,499
    -------------------------------------------------------------------------
    Commitments
    Shareholders' equity
    Share capital                                       65,557        65,655
    Contributed surplus                                  3,239         3,239
    Accumulated other comprehensive loss                (4,467)       (4,467)
    Retained earnings                                  232,222       227,265
    -------------------------------------------------------------------------
    Total shareholder's equity                         296,551       291,692
    -------------------------------------------------------------------------
                                                    $  342,261    $  345,191
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CANGENE CORPORATION

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

                                                  Three months  Three months
                                                         ended         ended
    in thousands of Canadian dollars                October 31,   October 31,
     except share-related data                            2009          2008
    -------------------------------------------------------------------------
    Revenues
    Product sales and services                      $   31,975    $   34,510
    R&D services                                         7,823        15,552
    Royalties                                            2,234         2,162
    -------------------------------------------------------------------------
                                                        42,032        52,224
    -------------------------------------------------------------------------

    Cost of sales
    Product sales and services                          15,712        12,995
    R&D services                                         6,269        10,855
    -------------------------------------------------------------------------
                                                        21,981        23,850
    -------------------------------------------------------------------------

    Gross profit                                        20,051        28,374
    -------------------------------------------------------------------------

    Expenses
    Independent R&D                                      3,461         1,547
    Selling, general and administrative                  5,053         5,215
    Amortization                                         3,289         3,076
    Interest income
      Short-term                                           (25)          (36)
    Foreign-exchange loss (gain)                           943       (10,165)
    -------------------------------------------------------------------------
                                                        12,721          (363)
    -------------------------------------------------------------------------
    Income before income taxes                           7,330        28,737
    -------------------------------------------------------------------------
    Income tax expense
      Current                                              736         7,344
      Future                                             1,274           258
    -------------------------------------------------------------------------
                                                         2,010         7,602
    -------------------------------------------------------------------------
    Net income and comprehensive
     income for the period                               5,320        21,135

    Retained earnings, beginning of period             227,265       172,900
    Purchase of common shares in excess of
     average stated capital                               (363)       (1,359)
    -------------------------------------------------------------------------
    Retained earnings, end of period                $  232,222    $  192,676
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted earnings per share            $     0.08    $     0.30



    CANGENE CORPORATION

    CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

                                                  Three months  Three months
                                                         ended         ended
                                                    October 31,   October 31,
    in thousands of Canadian dollars                      2009          2008
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net income for the period                       $    5,320    $   21,135
    Add (deduct) items not involving cash:
      Amortization                                       3,289         3,076
      Deferred income                                      165           (93)
      Incentive plan liability                           2,026             -
      Deferred share unit liability                         60             -
      Future income tax expense                          1,274           258
      Unrealized foreign-exchange gain                    (471)       (1,693)
    -------------------------------------------------------------------------
                                                        11,663        22,683
    Net change in non-cash working capital
     balances and other assets related to operations   (21,961)      (17,927)
    -------------------------------------------------------------------------
    Cash provided by (used in) operating activities    (10,298)        4,756
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Purchase of property, plant and equipment, net      (1,948)       (3,277)
    Deposit on acquisition of intangible assets         (7,550)            -
    Purchase of intangible assets                         (146)         (264)
    -------------------------------------------------------------------------
    Cash used in investing activities                   (9,644)       (3,541)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Shares repurchased for cancellation                   (461)       (1,725)
    -------------------------------------------------------------------------
    Cash used in financing activities                     (461)       (1,725)
    -------------------------------------------------------------------------
    Effect of exchange rates on cash                      (483)        1,837
    -------------------------------------------------------------------------

    Net increase (decrease) in cash
     during the period                                 (20,886)        1,327
    Cash, beginning of period                           56,131        14,675
    -------------------------------------------------------------------------
    Cash, end of period                             $   35,245    $   16,002
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Interest paid                                   $        -    $       35
    Income taxes paid                               $    6,899    $    1,074
    

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 700 employees in eight locations across North America and its products are sold worldwide. 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 branded as Cangene Plasma Resources. In addition, it has a regulatory affairs, sales and corporate communications office in Toronto , Ontario.

Cangene is focused on developing therapeutics for infectious diseases, and 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 that may arise 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 Cangene bioPharma, Inc. (a wholly owned subsidiary; formerly Chesapeake Biological Laboratories, Inc.). Cangene's website, www.cangene.com, includes product and investor information, including past news releases.

"Cangene", "HepaGam B", "WinRho" and "WinRho SDF" are trademarks belonging to Cangene Corporation.

Forward-looking and risk 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 costs 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.

Cautionary Note Regarding Non-GAAP Financial Measures

This news release may contain non-GAAP financial measures. Terms by which non-GAAP financial measures are identified include but are not limited to "net cash", "total assets", "sales" and other similar expressions. Non-GAAP financial measures are used to provide management and investors with additional measures of performance. However, non-GAAP financial measures do not have standard meanings prescribed by GAAP and are not directly comparable to similar measures used by other companies. Please refer to the appropriate reconciliations of these non-GAAP financial measures to measures prescribed by GAAP.

The preceding cautionary statements 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: about Cangene Corporation, please contact Michael Graham, at [phone], or by email at [email protected]