Exhibit 99.1
[QLT LETTERHEAD]
news release
QLT REPORTS 2002 FOURTH QUARTER AND FULL-YEAR EARNINGS PER SHARE,
EXCLUDING SPECIAL CHARGES, OF $0.16 AND OF $0.47
AND PROVIDES GUIDANCE FOR 2003
On a GAAP Basis, Fourth Quarter Loss Per Share was $0.03 with Full-Year 2002
Earnings Per Share of $0.28 Primarily Due to a Previously Announced
Restructuring Charge of $4.5 Million and the Write-Down of an Investment
of $9.7 Million
Vancouver, Canada - QLT Inc. (NASDAQ: QLTI; TSX: QLT) announced today earnings
per share, excluding special charges, for the three months and full year ended
December 31, 2002 were $0.16 and $0.47, respectively - ahead of both Company
guidance for the full year and First Call analysts' consensus estimates of
$0.43. Unless specified otherwise all amounts are in Canadian dollars.
On a reported basis, calculated in accordance with Canadian generally accepted
accounting principles (GAAP), QLT reported a loss per share of $0.03 in the
fourth quarter of 2002 versus earnings per share of $1.33 in the same quarter
last year. For the full year, QLT reported GAAP earnings of $0.28 per share in
2002, including the $4.5 million restructuring charge (outlined in the Company's
November 21, 2002 press release) and a $9.7 million write-down of QLT's equity
investment in Kinetek Pharmaceuticals common stock, versus reported earnings of
$1.78 in 2001.
2002 SALES
As previously announced, Visudyne(R) sales were US$77.0 million (CAD$120.9
million) for the quarter and US$287.1 million (CAD$450.6 million) for the year
ended December 31, 2002. Visudyne sales figures for the fourth quarter and the
full year represent increases of 25% and 29% over sales in the fourth quarter
and annual sales in 2001, respectively. Sales in the United States accounted for
approximately 59% and 63% of Visudyne sales in 2002 and 2001, respectively.
"QLT's fourth quarter and full-year results show our continued commitment to
managing our expenses to achieve our growth targets," said Paul Hastings, chief
executive officer and president. "As we begin 2003 we will further progress our
clinical development programs, and we will once again set realistic financial
targets and goals and demonstrate our ability to meet them."
Page 1 of 8
2003 GUIDANCE
Based on recent sales results and current trends in Visudyne sales, QLT is
guiding to 2003 sales in the range of US$310 million to US$335 million. EPS for
2003 are expected to range from $0.53 to $0.68 or growth over 2002, before
special charges, of 13% to 45%.
2002 RESULTS
REVENUES
The Company's revenues reached $51.8 million for the quarter and $173.4 million
for the year in 2002, growing by 18% and 34% from the prior quarter and year,
respectively. QLT's share of Visudyne net profit (excluding the recovery of
manufacturing and other costs) for the fourth quarter and the year were 32% and
27% of Visudyne sales, respectively. This compares to 2001 profit share rates of
32% in the fourth quarter and 26% for the year. Advertising and promotional
expenditures declined significantly in the second half of 2002, consistent with
the Company's expectations and consistent with the pattern experienced in 2001.
RESEARCH AND DEVELOPMENT
Gross expenditures for research and development (R&D) were $19.2 million for the
fourth quarter and $63.4 million for the full year 2002. This compares to 2001
R&D expenses of $9.9 million in the fourth quarter and $47.1 million for the
year. The increase in R&D costs for the year is due primarily to increased
clinical development costs for these projects: tariquidar (which commenced two
Phase III trials in 2002), multiple basal cell carcinoma (MBCC) (which also
commenced two Phase III trials in 2002), QLT0074 (androgenic alopecia and benign
prostatic hyperplasia) (which commenced or prepared to commence Phase I/II
trials in 2002) and Visudyne in Occult.
SG&A
Total selling, general and administrative (SG&A) expenses for the fourth quarter
and full year 2002 were $5.7 million and $25.3 million, respectively. This
compares to 2001 SG&A expenses of $1.6 million for the fourth quarter and $11.8
million for the year. 2001 SG&A expenses were exceptionally low due to the
absorption to inventory of overhead expenses associated with higher
manufacturing levels in the second half of 2001. Higher directors' and officers'
(D&O) insurance premiums, legal and consulting fees also contributed to the
increase in 2002 SG&A over 2001.
CASH
Cash and short-term investment securities increased to $327.2 million at
December 31, 2002, up from $260.4 million at the beginning of the year. The
Company has no short- or long-term debt.
Page 2 of 8
2003 OUTLOOK
REVENUES
Total revenues for the Company are expected to range from $190 million to $210
million in 2003, up 10% to 20% from 2002. The Company expects that its share of
profit from its alliance with Novartis (excluding the recovery of manufacturing
and other costs) will be approximately 28% to 30% of Visudyne sales for 2003.
RESEARCH AND DEVELOPMENT
The Company expects to increase R&D spending (net of tax credits) by
approximately 20% to 27% over 2002, due mainly to the Company's plan to complete
enrollment in 2003 of the two ongoing Phase III studies for tariquidar in
non-small cell lung cancer (NSCLC). Continued clinical studies for Visudyne to
expand labeling and to optimize the treatment outcome in the approved
indications, and additional proof-of-concept studies to progress QLT0074 in both
androgenic alopecia and benign prostate hyperplasia, are driving a lesser
portion of the increased investment in development spending.
SG&A
The Company expects to manage SG&A expenses in 2003 to remain flat to slightly
below the 2002 level.
CASH
The Company expects to continue to add to its cash reserves throughout 2003,
bringing these reserves to $380 million or more by the end of the year.
ABOUT VISUDYNE
Visudyne therapy was approved in the U.S. in April 2000, and in Europe in July
2000, for the treatment of predominantly classic subfoveal choroidal
neovascularization (CNV) due to age-related macular degeneration (AMD), the
leading cause of severe vision loss in patients over 50. The treatment has now
been approved in more than 65 countries with extended approvals in over 46
countries. QLT's revenue from Visudyne sales consists of 50% of the Visudyne
profits of the Visudyne alliance with Novartis Ophthalmics, the eye health unit
of Novartis AG and reimbursement for manufacturing and other costs.
QLT Inc. is a global biopharmaceutical company dedicated to the discovery,
development, and commercialization of innovative therapies to treat cancer, eye
diseases and immune disorders. Combining expertise in ophthalmology, oncology
and photodynamic therapy, QLT has commercialized two products to date, including
Visudyne therapy, which is the most successfully launched ophthalmology product
ever. For more information, visit our web site at www.qltinc.com
Page 3 of 8
QLT INC. - FINANCIAL HIGHLIGHTS
CONSOLIDATED STATEMENTS OF OPERATIONS
QUARTER ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
(In thousands of Canadian dollars, -------------------------------------------------------
except per share information) 2002 2001 2002 2001
- -------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
REVENUES
Revenue from Visudyne(R) $49,917 $40,848 $163,352 $123,480
Contract research and development 1,872 3,220 10,037 5,990
- -------------------------------------------------------------------------------------------------------------------------------
51,789 44,068 173,389 129,470
- -------------------------------------------------------------------------------------------------------------------------------
COSTS & EXPENSES
Manufacturing 9,110 5,915 29,968 23,126
Research and development 19,152 9,905 63,373 47,058
Selling, general and administrative 5,711 1,620 25,263 11,764
Depreciation and amortization 2,067 1,510 8,006 5,494
Restructuring charge 4,500 - 4,500 -
Prior years' investment tax credits not previously
recognized - (7,136) - (7,136)
- -------------------------------------------------------------------------------------------------------------------------------
40,540 11,814 131,110 80,306
- -------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 11,249 32,254 42,279 49,164
NET INVESTMENT AND OTHER INCOME
Net foreign exchange gains (losses) 429 923 (436) 5,860
Net interest income 2,327 1,573 7,587 10,527
(Write-down) gain on investment (9,736) 5,322 (9,736) 5,259
Other - 264 (267) 429
- -------------------------------------------------------------------------------------------------------------------------------
(6,980) 8,082 (2,852) 22,075
- -------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 4,269 40,336 39,427 71,239
- -------------------------------------------------------------------------------------------------------------------------------
(PROVISION FOR) RECOVERY OF INCOME TAXES (6,035) 50,808 (19,965) 50,808
===============================================================================================================================
NET (LOSS) INCOME (1,766) $91,144 $19,462 $122,047
===============================================================================================================================
NET (LOSS) INCOME PER COMMON SHARE
Basic $(0.03) $1.34 $0.29 $1.80
Diluted $(0.03) $1.33 $0.28 $1.78
- -------------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
(IN THOUSANDS)
Basic 68,349 67,950 68,228 67,832
Diluted 68,349 68,657 68,432 68,548
- -------------------------------------------------------------------------------------------------------------------------------
All amounts shown are in Canadian dollars and presented in accordance with
Canadian GAAP. At December 31, 2002, the exchange rate was approximately U.S.
$1.00 = Cdn. $1.5737
Page 4 of 8
QLT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, December 31,
(In thousands of Canadian dollars) 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $201,651 $112,073
Short-term investment securities 125,577 148,307
Accounts receivable 47,504 41,390
Inventories 56,484 61,509
Current portion of future income tax assets 26,898 30,111
Other 2,074 4,020
- --------------------------------------------------------------------------------------------------------------------------
460,188 397,410
- --------------------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS AND ADVANCES 6,563 14,696
PROPERTY AND EQUIPMENT 55,522 57,662
INTANGIBLE ASSETS 12,845 15,948
FUTURE INCOME TAX ASSETS 17,148 30,595
- --------------------------------------------------------------------------------------------------------------------------
$552,266 $516,311
==========================================================================================================================
CURRENT LIABILITIES
Accounts payable 15,674 $ 16,265
Accrued restructuring charge 4,140 -
Other accrued liabilities 11,058 11,967
Deferred revenue 19,951 11,977
- --------------------------------------------------------------------------------------------------------------------------
50,823 40,209
- --------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY 501,443 476,102
- --------------------------------------------------------------------------------------------------------------------------
$552,266 $516,311
==========================================================================================================================
As at December 31, 2002, there were 68,407,753 issued and outstanding common
shares and 7,800,334 outstanding options to purchase common shares.
All amounts shown are in Canadian dollars and presented in accordance with
Canadian GAAP. At December 31, 2002, the exchange rate was approximately U.S.
$1.00 = Cdn. $1.5737
Page 5 of 8
QLT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
QUARTER ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
(In thousands of Canadian dollars, ----------------------------------------------------------
except per share information) 2002 2001 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
CASH PROVIDED BY OPERATING ACTIVITIES
Net (loss) income for the period $ (1,766) $91,144 $19,462 $ 122,047
Add (deduct) items not involving a current cash flow
Depreciation and amortization 2,067 1,510 8,006 5,494
Unrealized foreign exchange (gain) loss (363) 618 (881) (1,672)
Write-down (gain) on investment 9,736 (5,322) 9,736 (5,259)
Future income tax expenses (recovery) 6,035 (50,808) 19,965 (50,808)
Benefit of investment tax credits included in
operating income (755) (9,898) (3,306) (9,898)
Changes in non-cash operating assets and liabilities
Accounts receivable and other assets (6,368) (14,097) (3,946) (21,762)
Inventories 1,229 (7,804) 5,025 (18,415)
Accounts payable 6,829 4,822 (594) (405)
Accrued restructuring charge 4,140 - 4,140 -
Other accrued liabilities 3,241 (4,319) (1,030) 5,621
Deferred revenue (1,474) 440 7,974 9,578
- ----------------------------------------------------------------------------------------------------------------------------------
22,551 6,286 64,551 34,521
- ----------------------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Proceeds from sale of investment - 11,653 - 18,122
Short-term investment securities 25,958 12,457 22,730 (138,268)
Purchase of property and equipment (1,115) 662 (3,531) (5,695)
Purchase of investments - (307) - (11,507)
Purchase of development and marketing rights - (46) - (15,542)
- ----------------------------------------------------------------------------------------------------------------------------------
24,843 24,419 19,199 (152,890)
- ----------------------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Decrease in long-term debt - - - (13,645)
Issuance of common shares on exercise of stock options 1,252 1,742 5,878 4,533
- ----------------------------------------------------------------------------------------------------------------------------------
1,252 1,742 5,878 (9,112)
- ----------------------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 74 (412) (50) 491
- ----------------------------------------------------------------------------------------------------------------------------------
(DECREASE)INCREASE IN CASH AND CASH EQUIVALENTS 48,720 32,035 89,578 (126,990)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 152,931 80,038 112,073 239,063
- ----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 201,651 $ 112,073 $ 201,651 $ 112,073
==================================================================================================================================
All amounts shown are in Canadian dollars and presented in accordance with
Canadian GAAP. At December 31, 2002, the exchange rate was approximately U.S.
$1.00 = Cdn. $1.5737
Page 6 of 8
QLT INC.
FULLY DILUTED EARNINGS PER SHARE ("EPS") ANALYSIS
(IN CAD$)
THREE MONTHS YEAR
ENDED DECEMBER 31, ENDED DECEMBER 31,
-------------------- --------------------
2002 2001 2002 2001
------- ------- ------- -------
Visudyne EPS(1) $ 0.24 $ 0.24 $ 0.74 $ 0.52
Non-Visudyne R&D $ (0.11) $ (0.05) $ (0.33) $ (0.18)
Restructuring Charge $ (0.04) $ - $ (0.04) $ -
------- ------- ------- -------
Operating EPS(2) $ 0.09 $ 0.19 $ 0.36 $ 0.34
------- ------- ------- -------
Interest Income $ 0.02 $ 0.01 $ 0.07 $ 0.09
Non-Operating FX $ 0.01 $ 0.01 $ (0.00) $ 0.05
Other Non-Operating $ (0.14) $ 0.07 $ (0.14) $ 0.07
------- ------- ------- -------
GAAP EPS(3) $ (0.03) $ 0.28 $ 0.28 $ 0.55
------- ------- ------- -------
Restructuring Charge $ 0.04 $ - $ 0.04 $ -
Other Non-Operating $ 0.14 $ (0.07) $ 0.14 $ (0.07)
------- ------- ------- -------
EPS excluding special charges(4) $ 0.16 $ 0.21 $ 0.47 $ 0.48
======= ======= ======= =======
Weighted Avg Fully Diluted
Shares (in thousands) 68,349 68,657 68,432 68,548
(1) Visudyne EPS for the full year benefited by $0.02 from the release of
validation batches of verteporfin for injection relating to qualification
of a second supplier.
(2) Operating EPS is a non-GAAP measure. Non-GAAP earnings measures do not have
any standardized meaning prescribed by GAAP and are therefore unlikely to
be comparable to similar measures presented by other issuers. The reporting
of operating EPS is intended to assist users in understanding the Company's
operations by separating earnings related to the Company's base businesses
from earnings from the Company's cash reserves and any unusual
non-operating items. The items currently being excluded from operating EPS
include interest income, foreign exchange gains/losses from foreign
currency cash holdings, gains/losses from derivatives relating to future
cash flows, and write-downs of investments (primarily Kinetek
Pharmaceuticals, Inc.). These items are excluded as they are either related
to the Company's cash holdings or not part of current operations. Operating
EPS is tax effected for comparability.
(3) 2001 GAAP EPS have been tax effected for comparability. Actual reported
GAAP EPS for 2001 were $1.33 and $1.78 for the fourth quarter and for the
year, respectively.
(4) EPS excluding special charges is a non-GAAP measure and as explained in (2)
above, non-GAAP earnings measures do not have any standardized meaning
prescribed by GAAP and are therefore unlikely to be comparable to similar
measures presented by other companies. The reporting of EPS excluding
special charges is intended to assist users in understanding the impact of
special charges on the Company's performance. The items currently excluded
are restructuring charges and investment write-downs (primarily Kinetek
Pharmaceuticals, Inc.).
Page 7 of 8
QLT Inc. will hold an analyst and institutional investor conference call to
discuss fourth quarter and full year results on Wednesday, February 5 at 4:30
p.m. EST (1:30 p.m. PST). The call will be broadcast live via the Internet at
www.qltinc.com. A replay of the call will be available via the Internet and also
via telephone at (416) 695-5800, access code 1354825.
-30-
QLT Inc.: Media Contact:
- -------- -------------
Therese Hayes Tamara Hicks
Telephone: 604-707-7000 or 1-800-663-5486 Telephone: 604-788-5144
Fax: 604-707-7001
Visudyne(R) is a trade mark of Novartis AG
QLT Inc. is listed on The Nasdaq Stock Market under the trading symbol "QLTI"
and on The Toronto Stock Exchange under the trading symbol "QLT."
Certain statements in this press release constitute "forward-looking statements"
of QLT within the meaning of the Private Securities Litigation Reform Act of
1995, which involve known and unknown risks, uncertainties and other factors
that may cause our actual results to be materially different from any future
results, performance or achievements expressed or implied by such statements.
Forward-looking statements include, but are not limited to, those with respect
to anticipated levels of sales of Visudyne(R), estimates of QLT's share of 2003
Visudyne net profits and net income, estimates of QLT's revenues and expenses
for 2003, estimates of QLT's 2003 EPS (both GAAP and Operating EPS), estimates
of QLT's cash balances in 2003, opportunities to expand the market for Visudyne,
progress of QLT's clinical development programs, opportunities for growth beyond
the Visudyne franchise and QLT's ability to manage operations and cost
structures appropriately. These statements are only predictions and actual
events or results may differ materially. Factors that could cause such actual
events or results expressed or implied by such forward-looking statements to
differ materially from any future results expressed or implied by such
statements include, but are not limited to: the risk that future sales of
Visudyne may be less than expected, our future operating results are uncertain
and likely to fluctuate, currency fluctuations in our primary markets may impact
our financial results, uncertainty of and timing of pricing and reimbursement
may limit the future sales of Visudyne, clinical development programs may not be
successful, the outcome of the pending patent and securities litigation against
us may be unfavorable and have an adverse impact on our financial results, we
are dependent on third-parties to commercialize Visudyne and other factors
described in detail in QLT's Annual Information Form on Form 10-K, quarterly
reports on Form 10-Q and other filings with the U.S. Securities and Exchange
Commission and Canadian securities regulatory authorities. Forward-looking
statements are based on our current expectations and QLT is not obligated to
update such information to reflect later events or developments.
Page 8 of 8