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Paladin Labs Inc.: Paladin Reports Record 2008 Fourth Quarter and Year End Results

^{Published on 2009-02-26 05:06:54, Last Modified on 2009-02-26 05:10:17 - Market Wire}
 

MONTREAL, CANADA--(Marketwire - Feb. 26, 2009) - Paladin Labs Inc. (TSX:PLB), a leading Canadian specialty pharmaceutical company, today reported its financial results for the fourth quarter and year ended December 31, 2008. The Company achieved record revenues for the fourth quarter of 2008 and has achieved its 13th consecutive year of record revenues.

2008 Highlights

- Revenues for 2008 totaled a record $82.7 million, a 31% increase compared to 2007

- Sales of key promoted brands in 2008 grew 41% compared to 2007 including products: Tridural^TM, Twinject^®, Plan B^®, Pennsaid^®, Metadol^®, Seasonale^TM, Testim^® and Trelstar^®

- EBITDA(1) in 2008 increased 46% to a record $29.0 million compared to $19.9 million in 2007

- Signed an agreement with GlaxoSmithKline for Dexedrine^® and marked the beginning of a new strategic relationship

- Signed agreement with ProStrakan Group plc (LSE:PSK) for Abstral^® and Sancuso^®

- Acquired ViRexx Medical Corp., a Canadian-based development-stage biotech company

- Entered a distribution agreement with Mission Pharmacal for Urocit-K^® for kidney stone treatment

"We have just closed our 13th consecutive year of record revenues and have built a diversified specialty pharma business that is dynamic, proven and high performing in all respects. Indeed, our key promoted products revenues increased over 40% in 2008 and our financial investment in new products was the largest in our corporate history. This expansion of our marketed portfolio and pipeline has been accomplished with exciting, medically important therapeutics that have the potential to drive strong, organic growth for the foreseeable future. We expect Paladin to breakthrough a significant Canadian business threshold in 2009 and become a $100 million company," said Jonathan Ross Goodman, President and CEO of Paladin Labs.

Financial Results

Revenues for the fourth quarter of 2008 increased 30% to a record $23.1 million compared to $17.7 million in the fourth quarter of 2007. Revenues from the Company's key promoted brands including: Tridural^TM, Twinject^®, Plan B^®, Pennsaid^®, Metadol^®, Seasonale^TM, Testim^® and Trelstar^® increased by 22% in the fourth quarter of 2008 compared to the same period a year ago. For the year ended December 31, 2008, revenues increased 31% to a record $82.7 million compared to $62.9 million in 2007.

EBITDA(1) for the fourth quarter in 2008 increased to $7.4 million compared to EBITDA(1) of $4.9 million in the fourth quarter 2007. For the year ended December 31, 2008, EBITDA(1) increased to a record $29.0 million compared to $19.9 million in 2007.

Net income before extraordinary gain for the fourth quarter 2008 was $2.0 million or $0.14 per fully diluted share compared to the same period in 2007 of $1.0 million or $0.07 per diluted share. Net income for the fourth quarter was $6.1 million or $0.41 per fully diluted share compared to net income of $1.0 million or $0.07 per fully diluted share in 2007. Net income before extraordinary gain for the year ended December 31, 2008 was $9.7 million or $0.65 per fully diluted share compared to $4.2 million or $0.27 per fully diluted share in 2007. Net income for the year ended December 31, 2008 was a record $13.8 million or $0.92 per fully diluted share, compared to net income of $9.0 million or $0.59 per fully diluted share in 2007.

Selling and marketing expense for the fourth quarter of 2008 decreased to $5.5 million compared to $7.4 million in the fourth quarter of 2007. Selling and marketing expense for the year ended December 31, 2008 remained constant at $22 million compared to 2007.

Amortization expense for the fourth quarter 2008 increased slightly to $3.4 million from $3.2 million in the corresponding period a year ago. For the twelve-month period ended December 31, 2008, amortization expense increased slightly to $12.6 million from $12.5 million in 2007.

As at December 31 2008, Paladin's cash, cash equivalents and investments in marketable securities totaled $21.3 million. From this strong cash position, Paladin continues to pursue product acquisition opportunities.

Financial Outlook

In 2009, Paladin expects to generate at least $100 million in revenue. This forecast excludes the impact of acquisitions that may be made by the Company between now and the end of 2009.

Conference Call Notice

Paladin will host a conference call to discuss its fourth quarter results today at 10:00 a.m. EST. The dial-in number for the conference call is 1-800-732-0232 or 416-644-3419. The call will be audio-cast live and archived for 31 days at [ www.paladinlabs.com ].

(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.

About Paladin Labs Inc.

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 Canadian 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 ].

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, 2007. 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)

 December 31 December 31
 2008 2007
 $ $
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 (unaudited) (audited(1))
ASSETS
Current
Cash 4,646 6,074
Marketable securities 14,753 26,041
Accounts receivable 17,889 11,920
Inventory 8,643 6,781
Other current assets 2,531 2,943
Income taxes receivable 4,209 -
Investment tax credits receivable 36 244
Investment tax credits recoverable 43 -
Future income tax assets 9,120 2,992
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Total current assets 61,870 56,995

Long-term marketable securities 1,943 4,101
Investment tax credits recoverable - 773
Capital assets 594 300
Pharmaceutical product licences
 and rights 58,152 24,366
Deferred charges - 1,415
Investments 4,792 4,041
Future income tax assets 4,789 6,874
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Total assets 132,140 98,905
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and
 accrued liabilities 16,464 11,582
Accounts payable to related parties 1,384 1,032
Deferred revenue 1,693 271
Income taxes payable 6,391 2,056
Balance of sale payable 10,429 89
Future income tax liabilities 90 -
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Total current liabilities 36,451 15,030

Future income tax liabilities 341 1,357
Balance of sale payable - 518
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Total liabilities 36,792 16,905
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Shareholders' equity
Capital stock 60,664 59,797
Other paid-in capital 3,155 2,019
Accumulated other comprehensive loss (1,420) (324)
Retained earnings 32,949 20,508
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Total shareholders' equity 95,348 82,000
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Total liabilities and
 shareholders' equity 132,140 98,905
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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)

 Three-month period Twelve-month period
 ended December 31 ended December 31
 2008 2007 2008 2007
 $ $ $ $
-----------------------------------------------------------------------
 (unaudited) (unaudited) (unaudited) (audited(1))

Revenues 23,051 17,697 82,744 62,941
Cost of sales 5,311 4,023 20,150 14,289
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Gross profit 17,740 13,674 62,594 48,652
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Expenses (income)
Selling and marketing 5,472 7,352 22,017 22,003
General and administrative 2,685 1,269 7,749 5,231
Research and development 2,578 515 5,527 2,989
Interest income (410) (386) (1,720) (1,484)
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Earnings before
 under-noted items 7,415 4,925 29,021 19,913
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Amortization of
 pharmaceutical product
 licenses, rights and
 deferred charges 3,367 3,175 12,598 12,504
Unrealized net loss on
 derivative instruments 536 13 531 364
Net loss (gain)
 on investments - (415) 185 (565)
Other income - (348) (330) (348)
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Income before income taxes
 and extraordinary items 3,512 2,500 16,037 7,958
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Provision for income taxes
Current 1,234 807 4,977 1,766
Future 234 663 1,334 2,033
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 1,468 1,470 6,311 3,799
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Net income before
 extraordinary gain 2,044 1,030 9,726 4,159
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Extraordinary gain
 (net of $nil taxes) 4,072 - 4,072 4,874
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Net income for the period 6,116 1,030 13,798 9,033
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Earnings per share before
 extraordinary gain
Basic 0.14 0.07 0.66 0.28
Diluted 0.14 0.07 0.65 0.27

Earnings per share
Basic 0.41 0.07 0.93 0.60
Diluted 0.41 0.07 0.92 0.59
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Weighted average number
 of shares outstanding
Basic 14,867,535 14,884,960 14,846,306 15,008,544
Diluted 15,066,475 15,154,079 15,071,283 15,319,692
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of Canadian dollars)

 Three-month period Twelve-month period
 ended December 31 ended December 31
 2008 2007 2008 2007
 $ $ $ $
-----------------------------------------------------------------------
 (unaudited) (unaudited) (unaudited) (audited(1))

Operating activities
Net income 6,116 1,030 13,798 9,033
Add items not affecting cash
 Amortization 3,447 3,205 12,814 12,600
 Future income taxes (5,821) (221) (4,721) (3,792)
 Stock-based
 compensation expense 351 228 1,400 977
 Unrealized loss on
 derivative financial
 instruments 536 13 531 364
 Write-down of investment - - 394 -
 Accreted interest income (154) (11) (273) (49)
 Gain on disposal
 of investments - (415) (209) (565)
 Gain on disposal of
 pharmaceutical product
 licenses and rights - - (200) -
 Other income - (348) - (348)
-----------------------------------------------------------------------
 4,475 3,481 23,534 18,220
-----------------------------------------------------------------------
Net change in non-cash
 balances relating to
 operations 5,959 301 1,618 (450)
-----------------------------------------------------------------------
Cash flows from
 operating activities 10,434 3,782 25,152 17,770
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Investing activities
Additions to
 pharmaceutical product
 licenses and rights,
 and deferred charges (15,227) (36) (34,562) (13,327)
Investment in
 portfolio companies - - (3,000) (801)
Business acquisition (1,446) - (1,446) (650)
Acquisition of
 capital assets (113) (123) (510) (245)
Purchases of short-term
 marketable securities (8,059) (16,367) (37,084) (42,353)
Maturities of
 marketable securities 16,859 13,470 52,576 49,626
Purchases of long-term
 marketable securities (78) (4,101) (1,973) (4,101)
Repayment of current
 balance of sale payable - - (531) (227)
Proceeds from disposal
 of investment - - 500 232
Proceeds from disposal of
 a pharmaceutical license - - 200 -
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Cash flows used in
 investing activities (8,064) (7,157) (25,828) (11,846)
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Financing activities
Repurchase of shares - (13) (2,269) (3,629)
Common shares issued for cash 563 73 1,517 1,010
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Cash flows from (used in)
 financing activities 563 60 (752) (2,619)
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Net change in cash
 during the period 2,933 (3,315) (1,428) 3,305
Cash, beginning of period 1,713 9,389 6,074 2,769
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Cash, end of period 4,646 6,074 4,646 6,074
-----------------------------------------------------------------------
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Cash 4,646 6,074
Short-term
 marketable securities 14,753 26,041
Long-term
 marketable securities 1,943 4,101
-----------------------------------------------------------------------
 21,342 36,216
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