Paladin Labs Inc.
TSX : PLB

Paladin Labs Inc.

May 07, 2009 07:00 ET

Paladin Reports 2009 First Quarter Financial Results

MONTREAL, QUEBEC--(Marketwire - May 7, 2009) - Paladin Labs Inc. (TSX:PLB), a leading Canadian specialty pharmaceutical company, today reported its 2009 first quarter financial results.

First Quarter Highlights

- Revenues reached $25.8 million, an increase of 53% versus last year.

- EBITDA(1) reached $11.0 million, a 103% increase over the same period last year.

- Entered into a distribution agreement under which Mission Pharmacal Company granted Paladin the exclusive Canadian rights to market and sell Urocit-K®.

- Filed a new drug submission for Trelstar® 6 month, a slow release, injectable, luteinizing hormone-releasing hormone (LHRH) agonist indicated for the palliative treatment of advanced prostate cancer.

"We are very pleased with the continued strength of the business, with our promoted products, international business and new product acquisitions all driving growth. More importantly, this strong growth in revenues was outpaced by a doubling of our EBITDA, demonstrating the leverage to our business and providing further cash to reinvest in our business. Our product portfolio is diverse, with more than sixty products worldwide, and our top 5 products represent under 50% of sales. We remain on track to achieve more than $100 million in revenues for 2009 with our current portfolio, and our team is busy identifying potential new deals to drive further growth." said Jonathan Ross Goodman, President and CEO of Paladin Labs.

Financial Results

Revenue for the first quarter of 2009 increased 53% or $9.0 million to $25.8 million, compared to $16.8 million in the first quarter of 2008. This increase is due to the acquisition and launch of Dexedrine® and the strong performance from the Company's key promoted products, including TriduralTM, Twinject®, SeasonaleTM, Plan B®, Pennsaid®, Metadol®, Trelstar®, and Testim® which combined increased by 11% in the first quarter of 2009 compared to the corresponding period a year ago.

First quarter 2009 earnings before interest expense, taxes, amortization, and unusual items (EBITDA(1)) increased 103% to $11.0 million, compared to EBITDA(1) of $5.4 million in the first quarter of 2008.

Net income for the quarter was $3.1 million or $0.20 per fully diluted share, compared to net income of $1.5 million or $0.10 per fully diluted share in the first quarter a year ago.

At March 31, 2009, Paladin's cash, cash equivalents and investments in marketable securities totalled $32.5 million. From this strong cash position, Paladin continues to pursue product acquisition and development opportunities.

Product Developments

During the Quarter, Paladin entered into a distribution agreement under which Mission Pharmacal Company granted Paladin the exclusive Canadian rights to market and sell Urocit-K®. Urocit-K® is a slow-release formulation of potassium citrate clinically proven to inhibit the formation of most kidney stones in over 90% of patients. Paladin intends to launch Urocit-K® 540 mg, which is approved for sale in Canada, and submit the 1080 mg formulation for approval in 2009.

In addition, Paladin filed a new drug submission for Trelstar® 22.5 mg (triptorelin pamoate for injectable suspension). Trelstar® 22.5 mg is a 6-month slow release, injectable, luteinizing hormone-releasing hormone (LHRH) agonist indicated for the palliative treatment of advanced prostate cancer. Paladin obtained the Canadian license for Trelstar® from Watson Pharma Inc., a subsidiary of Watson Pharmaceuticals, Inc. (NYSE:WPI) in May 2005. Paladin launched Trelstar® 11.25 mg 3 month for the treatment of advanced prostate cancer in August 2006 and launched Trelstar® 3.75 mg 1 month for the treatment of advanced prostate cancer and endometriosis in January 2007.

Corporate Developments

During the quarter Paladin received regulatory approval from the Toronto Stock Exchange to carry out a normal course issuer bid effective March 3, 2009. Paladin has been authorized to purchase up to 811,548 of its common shares in the twelve-month period following the bid's effective date. To date, Paladin has not purchased any common shares under the normal course issuer bid.

(1) EBITDA (earnings before interest, taxes, depreciation and amortization) does not have any standardized meaning under Canadian Generally Accepted Accounting Principles ("GAAP") and therefore may not be comparable to similar measures presented by other companies. The Company defines EBITDA as earnings before interest expense, taxes, amortization, and unusual items; such as write-downs and gains (losses) on intellectual property and investments. EBITDA is calculated and presented consistently from period to period and agrees, on a consolidated basis, with the amount disclosed as "Earnings before under noted items" on the consolidated statement of income. The Company believes EBITDA to be an important measurement that allows it to assess the operating performance of its ongoing business on a consistent basis without the impact of amortization expenses. The Company excludes amortization expenses because their level depends substantially on non-operating factors such as the historical cost of intangible and capital assets. The Company's method for calculating EBITDA may differ from that used by other issuers and, accordingly, this measure may not be comparable to EBITDA used by other issuers.

Conference Call Notice

Paladin will host a conference call to discuss its first quarter results on Thursday, May 7, 2009, at 8:30 a.m. EST. The dial-in number for the conference call is 1-800-589-8577 or 416-915-5765. The call will be audio-cast live and archived for 30 days at www.paladinlabs.com.

About Paladin Labs

Paladin Labs Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing innovative pharmaceutical products. With this strategy, a focused national sales team and proven marketing expertise, Paladin has evolved into one of Canada's leading specialty pharmaceutical companies. For more information, please visit the Company's web site at www.paladinlabs.com.

This news release contains forward-looking statements and predictions. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The Companies consider the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared, but caution that these assumptions regarding the future events, many of which are beyond the control of the Companies and their subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations, are discussed in the annual reports, as well as in the Companies' Annual Information Forms for the year ended December 31, 2008. The Companies disclaim any intention or obligation to update or revise any forward-looking statements whether a result of new information, future events, or except as required by law. For additional information on risks and uncertainties relating to these forward-looking statements, investors should consult the Companies' ongoing quarterly filings, annual reports and Annual Information Forms and other filings found on SEDAR at www.sedar.com.



CONSOLIDATED BALANCE SHEETS
(In thousands of Canadian dollars)

March 31 December 31
2009 2008
$ $
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(unaudited) (audited(1))
ASSETS
Current
Cash and cash equivalents 12,439 4,646
Marketable securities 18,093 14,753
Accounts receivable 17,751 17,889
Inventory 8,592 8,643
Other current assets 1,897 2,531
Income taxes receivable 4,255 4,209
Investment tax credits receivable 36 36
Investment tax credits recoverable 74 43
Future income tax asset 7,905 9,120
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Total current assets 71,042 61,870

Long-term marketable securities 1,959 1,943
Capital assets 566 594
Pharmaceutical product licences and rights 52,062 58,152
Investments 4,024 4,792
Future income tax assets 3,960 4,789
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Total assets 133,613 132,140
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 15,074 16,464
Accounts payable to related parties 1,025 1,384
Deferred revenue - 1,693
Income taxes payable 6,252 6,391
Balance of sale payable 10,526 10,429
Future income tax liabilities 94 90
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Total current liabilities 32,971 36,451

Long-term
Future income tax liabilities 64 341
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Total liabilities 33,035 36,792
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Shareholders' equity
Capital stock 60,866 60,664
Other paid-in capital 3,547 3,155
Accumulated other comprehensive income (loss) 164 (1,420)
Retained earnings 36,001 32,949
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Total shareholders' equity 100,578 95,348
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Total liabilities and shareholders' equity 133,613 132,140
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(1) Derived from the audited annual financial statements filed on SEDAR at
www.sedar.com



CONSOLIDATED STATEMENTS OF INCOME
(In thousands of Canadian dollars except for share and per share amounts)
(unaudited)

Three-month period
ended March 31
2009 2008
$ $
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Revenues 25,815 16,834
Cost of sales 6,370 3,944
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Gross profit 19,445 12,890
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Expenses (income)
Selling and marketing 5,512 5,533
General and administrative 1,915 1,442
Research and development 1,262 1,043
Interest income, net (199) (519)
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Earnings before under-noted items 10,955 5,391
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Amortization of pharmaceutical product licenses,
rights and deferred charges 6,096 2,937
Unrealized (gain) loss on derivative financial
instruments (359) 2
Net loss on disposal of investment 352 -
Foreign exchange loss (gain) 22 (28)
Other income - (3)
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Income before income taxes 4,844 2,483
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Provision for income taxes
Current 194 849
Future 1,598 157
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1,792 1,006
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Net income for the period 3,052 1,477
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Earnings per share
Basic 0.20 0.10
Diluted 0.20 0.10
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Weighted average number of shares outstanding
Basic 14,929,672 14,830,560
Diluted 15,212,910 15,083,608
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of Canadian dollars)
(unaudited)

Three-month period ended March 31
2009 2008
$ $
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Operating activities
Net income 3,052 1,477
Add items not affecting cash
Amortization 6,148 2,982
Future income taxes 1,598 157
Stock based compensation expense 402 238
Unrealized (gain) loss on derivative financial
instruments (359) 2
Net accreted interest (25) (18)
Loss on disposal of investments 352 -
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11,168 4,838
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Net change in non-cash balances relating to
operations (2,902) 2,536
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Cash flows from operating activities 8,266 7,374
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Investing activities
Additions to pharmaceutical product licenses and
rights, and deferred charges - (8,867)
Acquisition of capital assets (29) (255)
Purchases of short-term marketable securities (10,362) (11,765)
Maturities of short-term marketable securities 8,964 14,522
Purchases of long-term marketable securities (1,969) -
Proceeds from disposal of investments 2,735 -
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Cash flows used in investing activities (661) (6,365)
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Financing activities
Repurchase of shares - (1,806)
Common shares issued for cash 188 470
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Cash flows from (used in) financing activities 188 (1,336)
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Net change in cash and cash equivalents during
the period 7,793 (327)

Cash and cash equivalents, beginning of period 4,646 6,074

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Cash and cash equivalents, end of period 12,439 5,747
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Cash and cash equivalents 12,439 5,747
Short-term marketable securities 18,093 27,533
Long-term marketable securities 1,959 -
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32,491 33,280
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