Stellar Pharmaceuticals Inc.
TSX VENTURE : SLX
OTC Bulletin Board : SLXCF

Stellar Pharmaceuticals Inc.

August 12, 2008 07:30 ET

Stellar Pharmaceuticals Inc. Announces Revenues Increased by 20.7% Gross Profits Up By 29.2%

LONDON, ONTARIO--(Marketwire - Aug. 12, 2008) - Stellar Pharmaceuticals Inc. ("Stellar" or the "Company") (TSX VENTURE:SLX)(OTCBB:SLXCF) today announced that for the six month period ended June 30, 2008, total operating revenues improved by 20.7%. This improvement was driven by increased international sales for NeoVisc (up 160.7%), while cost of products sold for the period improved to 23.5% of product sales compared to 27.8% of product sales in the same period in 2007. The reduction in cost of products sold was a result of a decrease in the cost of materials used in the manufacturing process, as well as healthier production yields. These positive operating changes resulted in a gross profit increase of 29.2% over the same six month period in 2007.

In the second quarter of 2008, increased sales revenue was mainly a result of the growth in international sales of NeoVisc, which grew by 184.0%, as Stellar's new European partners increased their market penetration. Total Canadian market sales for the quarter increased 10.3% compared to the same period in 2007, with Uracyst sales attributing to a 19.8% increase and BladderChek sales contributing to the increase, with a 23.4% improvement compared to the second quarter of 2007.

Peter Riehl, Stellar's President and CEO stated, "The Company is pleased with its continued growth in both revenues and gross profits during the second quarter of 2008. Gross profits during the quarter increased 14.4% over same period in 2007. This increase occurred despite the termination of the European Uracyst license agreement on March 31, 2008 and therefore, lack of royalty revenues recorded in this quarter. The Company is currently in negotiations with several potential partners for Uracyst, in the major European markets. Management believes that with these agreements in place, increased revenues from such agreements, should provide for an improved bottom line, in the latter part of 2008."

As at June 30, 2008, the Company was debt free and had working capital of $3,235,300 of which $2,764,900 was in cash or cash equivalents.

Purchasing of Equity Securities

Pursuant to the terms of the Company's normal course issuer bid, the Company, as of the date of this report, has purchased 147,500 of its common shares at an average purchase price of $0.36.

ABOUT STELLAR PHARMACEUTICALS INC.

Stellar has developed and is marketing direct in Canada and in countries around the world through out-license agreements two products based on its core polysaccharide technology: NeoVisc®, for the treatment of osteoarthritis; and Uracyst® and the Uracyst® Test Kit, its patented technology for the diagnosis and treatment of interstitial cystitis (IC), an inflammatory disease of the urinary bladder wall. Stellar also has in-licensing agreements for NMP22® BladderChek®, a proteomics-based diagnostic test for the diagnosis and monitoring of bladder cancer.



STELLAR PHARMACEUTICALS INC.

CONDENSED BALANCE SHEETS
(Expressed in Canadian Dollars)

ASSETS

As at As at
June 30, 2008 December 31, 2007
--------------------------------
CURRENT (Unaudited) (Audited)
Cash and cash equivalents $ 2,764,856 $ 3,211,126
Accounts receivable, net of allowance 236,886 272,341
Inventories 234,978 305,040
Taxes recoverable 164,714 164,714
Prepaid, deposits and sundry receivables 115,470 44,066
----------- -------------
3,516,904 3,997,287
PROPERTY, PLANT AND EQUIPMENT 964,578 822,692
OTHER ASSETS 60,816 55,430
LOAN RECEIVABLE 14,822 14,822
----------- -------------
$ 4,557,120 $ 4,890,231
----------- -------------
----------- -------------
LIABILITIES
CURRENT
Accounts payable $ 230,663 $ 214,442
Accrued liabilities 48,595 192,364
Deferred revenues 2,369 10,573
----------- -------------
281,627 417,379
----------- -------------

SHAREHOLDERS' EQUITY
CAPITAL STOCK
AUTHORIZED
Unlimited Non-voting, convertible,
redeemable, and retractable
preferred shares with no
par value

Unlimited Common shares with no par
Value

ISSUED
23,705,040 Common shares
(2007 - 23,822,540) 8,262,332 8,303,054
Additional paid-in capital
options - outstanding 67,730 123,002
- expired 691,816 623,417
----------- -------------
9,021,878 9,049,473
DEFICIT (4,746,385) (4,576,621)
----------- -------------
4,275,493 4,472,852
----------- -------------
$ 4,557,120 $ 4,890,231
----------- -------------
----------- -------------



STELLAR PHARMACEUTICALS INC.

CONDENSED INTERIM STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS AND DEFICIT
(Expressed in Canadian Dollars)
(Unaudited)


For the Three Month Period For the Six Month Period
Ended June 30 Ended June 30
2008 2007 2008 2007
---- ---- ---- ----
PRODUCT SALES $ 645,535 $ 466,624 $ 974,991 $ 795,555

COST OF PRODUCTS
SOLD
(excluding
amortization
of $14,068 for the
three month period
ended June 30, 2008
(2007 - $27,585);
and amortization
of $31,284 for the
six month period
ended June 30,2008
(2007 - $55,171)
and other items
shown below of
$nil; $nil
(2007 - $nil;
$20,145) 148,937 118,323 229,048 221,455
----------- ----------- ----------- -----------

MARGIN ON PRODUCTS
SOLD 496,598 348,301 745,943 574,100

ROYALTY AND
LICENSING
REVENUES 2,400 87,851 200,356 178,616

WRITE-DOWN OF
OBSOLETE
INVENTORY - - - (20,145)
----------- ----------- ----------- -----------

GROSS PROFIT 498,998 436,152 946,299 732,571
----------- ----------- ----------- -----------

EXPENSES
Selling, general and
administrative 551,893 496,986 1,042,883 1,009,770
Research and
development 4,424 18,876 58,242 57,488
Amortization 30,044 40,618 60,428 81,060
----------- ----------- ----------- -----------
586,361 556,480 1,161,553 1,148,318
----------- ----------- ----------- -----------

LOSS FROM OPERATIONS (87,363) (120,328) (215,254) (415,747)

INTEREST AND OTHER
INCOME 19,349 31,728 48,423 65,757
----------- ----------- ----------- -----------
NET LOSS AND
COMPREHENSIVE LOSS
FOR THE PERIOD (68,014) (88,600) (166,831) (349,990)

DEFICIT, beginning
of period (4,675,438) (4,690,570) (4,576,621) (4,429,180)

Effect of repurchase
and cancellation of
Common Shares (2,933) - (2,933) -
----------- ----------- ----------- -----------
DEFICIT, end of
period $ (4,746,385) $ (4,779,170) $ (4,746,385) $ (4,779,170)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

LOSS PER SHARE $ 0.00 $ 0.00 $ (0.01) $ (0.01)
----- ----- ------ ------
----- ----- ------ ------
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING
(Note 9) 23,755,759 23,822,078 23,788,919 23,820,568
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

STELLAR PHARMACEUTICALS INC.

CONDENSED INTERIM STATEMENTS OF CASH FLOWS
(Expressed in Canadian Dollars)
(Unaudited)

For the Three Month For the Six Month
Period Period
Ended June 30 Ended June 30
2008 2007 2008 2007
---- ---- ---- ----
CASH FLOWS USED IN
OPERATING ACTIVITIES

Net loss for the period $ (68,014) $ (88,600) $ (166,831) $ (349,990)
Items not affecting cash
Amortization 30,044 40,618 60,426 81,060
Unrealized foreign
Exchange (gain) loss (7,912) 11,750 2,317 12,670
Issuance of equity
Instruments for
services rendered 7,538 8,199 13,125 10,948
Change in non-cash
Operating asset and
liabilities 2,788 (37,308) (109,397) (165,634)
--------- --------- --------- ---------
CASH FLOWS USED IN
OPERATING ACTIVITIES (35,556) (65,341) (200,360) (410,946)
--------- --------- --------- ---------
CASH FLOWS USED IN
INVESTING ACTIVITIES

Additions to property,
plant and equipment (177,971) (8,280) (193,877) (9,382)
Increase to other assets - (1,538) (6,063) (1,523)
--------- --------- --------- ---------
CASH FLOWS USED IN
INVESTING ACTIVITIES (177,971) (9,818) (199,940) (10,905)
--------- --------- --------- ---------
CASH FLOWS USED IN
FINANCING ACTIVITIES

Purchase of shares under
normal course issuer bid (43,655) - (43,655) -
--------- --------- --------- ---------
CASH FLOWS USED IN
FINANCING ACTIVITIES (43,655) - (43,655) -
--------- --------- --------- ---------
EFFECT OF EXCHANGE RATES
ON CASH HELD IN
FOREIGN CURRENCY 7,910 (11,750) (2,315) (12,670)
--------- --------- --------- ---------
CHANGE IN CASH AND CASH
EQUIVALENTS (249,272) (86,909) (446,270) (434,521)

CASH AND CASH
EQUIVALENTS,
Beginning of period 3,014,128 3,167,581 3,211,126 3,515,193
---------- ---------- ---------- ----------
CASH AND CASH
EQUIVALENTS,
End of period $ 2,764,856 $ 3,080,672 $ 2,764,856 $ 3,080,672
--------- --------- --------- ---------
--------- --------- --------- ---------


This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of risks and uncertainties impacting the Company's business including increased competition; the ability of the Company to expand its operations, to attract and retain qualified professionals, technological obsolescence; general economic conditions; and other risks detailed from time to time in the Company's filings.

Contact Information

  • Stellar Pharmaceuticals Inc.
    Peter Riehl
    1-800-639-0643 or (519) 434-1540
    or
    Stellar Pharmaceuticals Inc.
    Arnold Tenney
    (416) 587-3200