Stellar Pharmaceuticals Inc.
OTC Bulletin Board : SLXCF

Stellar Pharmaceuticals Inc.

November 13, 2008 07:30 ET

Stellar Pharmaceuticals Inc. Announces Product Revenue Increases for Both Domestic and International Markets

LONDON, ONTARIO--(Marketwire - Nov. 13, 2008) - Stellar Pharmaceuticals Inc. ("Stellar" or the "Company") (OTCBB:SLXCF) today announced that for the three month period ended September 30, 2008, total product revenues increased by 19.6% compared to the same period in 2007. Product sales in Canada grew by 8.3% and international product sales were up 96.6% due to increased sales of NeoVisc® in Europe. For the nine month period ended September 30, 2008, product revenues increased by 21.6% over the same period in 2007, with Canadian product sales up 3.7% while international sales grew by 139.8% again due to solid growth of NeoVisc in Europe.

Total income from operations for the nine month period ended September 30, 2008, was up 4.2%, while income from operations for the three month period ended September 30, 2008 decreased 21.8% compared to the same periods in 2007. The decrease for the three month period ended September 30, 2008, was due to the termination as of March 31, 2008, of Stellar's European licence agreement for Uracyst, which resulted in significant reduction of royalty income for the past two quarters in 2008. Although it can not be certain, Stellar expects to have new licensed partners in place in the last quarter of 2008, which will greatly help to improve Uracyst® royalty income in 2009 and onward.

The Company's loss from operations for the nine month period ended September 30, 2008 was reduced by 20.9% to $303,800 compared to a loss of $384,200 for the same period in 2007. The loss from operations for the three month period ended September 30, 2008 was $88,600 or a decrease of 380.8%, compared to income from operations of $31,500 for the same period in 2007. The main decrease differential of income for the quarter and year-to-date over the prior year, is due to the decrease in royalty payments recorded in 2008 compared to 2007 and the receipt in 2007, of $216, 200 from the mediated European agreement settlement for Uracyst.

In order to accommodate the future increased manufacturing demand for our products, Stellar has currently invested $354,000 in capital expenses in order to accommodate the expansion of its manufacturing to two separate sites. This will help reduce risks associated with one supplier and greatly improve the Company's efficiencies, as well as its ability to supply the increased demand for its products. The Company's product NeoVisc® will now be manufactured at Hyaluron Inc., located in Burlington, MA. Hyaluron has a proven track record in working with highly viscous products such as NeoVisc® and therefore felt to be a good fit for this manufacturing process. DRAXIS Pharma, a division of DRAXIS Specialty Pharmaceuticals located in Kirkland Quebec, will now be manufacturing Uracyst®. DRAXIS also has a proven track record in producing sterile products and is believed to be capable of meeting Stellar's Uracyst® manufacturing requirements. Both these facilities started to manufacture Stellar's products during this quarter. With these two facilities now in place, Stellar will no longer manufacture its products at Dalton Pharma Services.

As at September 30, 2008, the Company was debt free and had working capital of $2,981,200 of which $2,594,800 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 release, has purchased 222,500 of its common shares at an average purchase price of $0.38.

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
September 30, December 31,
2008 2007
CURRENT (Unaudited) (Audited)
Cash and cash equivalents $ 2,594,811 $ 3,211,126
Accounts receivable, net of allowance 176,384 272,341
Inventories 447,276 305,040
Taxes recoverable 200,070 164,714
Prepaid, deposits and sundry receivables 49,285 44,066
---------------------------------
3,467,826 3,997,287

PROPERTY, PLANT AND EQUIPMENT 1,135,179 822,692
OTHER ASSETS 65,834 55,430
LOAN RECEIVABLE 15,899 14,822

$ 4,684,738 $ 4,890,231
---------------------------------
---------------------------------

LIABILITIES
CURRENT
Accounts payable $ 235,328 $ 214,442
Accrued liabilities 248,527 192,364
Deferred revenues 2,799 10,573
---------------------------------
486,654 417,379
---------------------------------

CONTINGENCIES AND COMMITMENTS

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
23,655,040 Common shares
(2007 - 23,822,540) 8,245,179 8,303,054
Additional paid-in
capital options - outstanding 69,633 123,002
- expired 691,816 623,417

9,006,628 9,049,473
DEFICIT (4,808,544) (4,576,621)

4,198,084 4,472,852

$ 4,684,738 $ 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 For the Nine Month
Period Ended September 30 Period Ended September 30
-------------------------------------------------------
2008 2007 2008 2007
PRODUCT SALES
(Note 8) $ 477,289 $ 399,178 $ 1,452,280 $ 1,194,733
COST OF PRODUCTS
SOLD
(excluding
amortization of
$14,314 for the
three month period
ended September
30, 2008 (2007 -
$22,803); and
amortization
of $45,598 for
the nine month
period ended
September 30,
2008
(2007 - $78,002)
and other items
shown below for
the three month
period ended
September 30,
2008 $nil
(2007 - $nil)
and for the nine
month period ended
September 30,
2008
$nil (2007- $20,145) 92,159 80,474 321,206 301,941
-------------------------------------------------------
MARGIN ON
PRODUCTS
SOLD 385,130 318,704 1,131,074 892,792
ROYALTY &
LICENSING
REVENUES 3,780 216,218 204,136 394,834
WRITE-DOWN OF
OBSOLETE
INVENTORY - - - (20,145)
-------------------------------------------------------
GROSS PROFIT 388,910 534,922 1,335,210 1,267,481

EXPENSES
Selling, general
and administrative 453,362 441,486 1,496,246 1,451,254
Research and
development (4,805) 25,662 53,437 83,150
Amortization 28,939 36,226 89,367 117,285
-------------------------------------------------------

477,496 503,374 1,639,050 1,651,689
INCOME (LOSS)
FROM OPERATIONS (88,586) 31,548 (303,840) (384,208)
INTEREST AND
OTHER INCOME 18,627 105,929 67,050 171,685
GAIN ON DISPOSAL
OF EQUIPMENT 9,676 - 9,676 -
-------------------------------------------------------

NET INCOME (LOSS)
AND COMPREHENSIVE
INCOME (LOSS)
FOR THE PERIOD $ (60,283) $ 137,477 $ (227,114) $ (212,523)

DEFICIT, beginning
of period (4,746,385) (4,779,180) (4,576,621) (4,429,180)
Effect of
repurchase
and cancellation
of Common Shares (1,876) - (4,809) -
-------------------------------------------------------

DEFICIT, end of
period $ (4,808,544) $ (4,641,703) $ (4,808,544) $ (4,641,703)
-------------------------------------------------------
-------------------------------------------------------

EARNINGS (LOSS)
PER SHARE
- Basic and
Diluted $ 0.00 $ 0.01 $ (0.01) $ (0.01)
-------------------------------------------------------
-------------------------------------------------------
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES
OUTSTANDING 23,681,779 23,822,540 23,752,790 23,821 232
-------------------------------------------------------
-------------------------------------------------------



STELLAR PHARMACEUTICALS INC.

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

(Unaudited)

For the Three Month For the Nine Month
Period Ended Period Ended
September 30 September 30
----------------------------------------------------
2008 2007 2008 2007

CASH FLOWS USED IN
OPERATING ACTIVITIES
Net income (loss) for
the period $ (60,283) $ 137,477 $ (227,114) $ (212,523)

Items not affecting
cash
Amortization 28,939 36,226 89,367 117,285
Gain on sale of asset (9,676) - (9,676) -
Unrealized foreign
exchange (gain) loss (8,042) 712 (14,399) 15,906
Issuance of equity
instruments for
services rendered 3,603 12,916 16,730 23,865
Change in non-cash
operating assets and
liabilities 35,832 (34,018) (65,808) (199,653)
----------------------------------------------------

CASH FLOWS PROVIDED BY
(USED IN) OPERATING
ACTIVITIES (9,627) 153,313 (210,900) (255,118)
----------------------------------------------------

CASH FLOWS USED IN
INVESTING ACTIVITIES
Sale of equipment
assets 10,000 - 10,000 -
Additions to property,
plant and equipment (152,373) (80,115) (354,008) (89,495)
Additions in other
assets (5,357) (5,695) (11,420) (7,219)
----------------------------------------------------
CASH FLOWS USED IN
INVESTING ACTIVITIES (147,730) (85,810) (355,428) (96,714)
----------------------------------------------------

CASH FLOWS USED IN
FINANCING ACTIVITIES
Purchase of shares
under normal course
issuer bid (20,729) - (64,384) -
----------------------------------------------------
CASH FLOWS USED IN
FINANCING ACTIVITIES (20,729) - (64,384) -
----------------------------------------------------

EFFECT OF EXCHANGE
RATES ON CASH HELD
IN FOREIGN CURRENCY 8,041 (2,820) 14,397 (18,006)
CHANGE IN CASH AND CASH
EQUIVALENTS (170,045) 64,683 (616,315) (369,838)
CASH AND CASH
EQUIVALENTS, beginning
of period 2,764,856 3,080,672 3,211,126 3,515,193
----------------------------------------------------
CASH AND CASH
EQUIVALENTS, end of
period $ 2,594,811 $ 3,145,355 $ 2,594,811 $ 3,145,355
----------------------------------------------------
----------------------------------------------------


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