Exhibit 99.1
[LOGO] QLT Inc. 887 Great Northern Way t 604.707.7000
Vancouver, BC Canada V5T 4T5 f 604.707.7001
www.qltinc.com
n e w s r e l e a s e
QLT ANNOUNCES Q3 RESULTS FOR 2004
FOR IMMEDIATE RELEASE OCTOBER 21, 2004
Vancouver, Canada -- QLT Inc. (NASDAQ: QLTI; TSX: QLT) today reported financial
results for the third quarter ended September 30, 2004. Unless specified
otherwise, all amounts are in U.S. dollars and reported under U.S. GAAP.
Q3 2004 VISUDYNE(R) SALES
For the three months ended September 30, 2004, Visudyne(R) sales were $114.0
million, an increase of 27% over the third quarter of 2003 of which 5 percentage
points were attributable to positive foreign exchange effects. Visudyne sales in
the U.S. for the quarter were $56.5 million, up 22% over the same period last
year. Visudyne sales in the rest of the world were $57.5 million, an increase of
32% over the same period last year.
Q3 2004 EARNINGS PER SHARE (EPS)
GAAP EPS in the third quarter of 2004 was $0.24, up $0.05 from the prior year's
third quarter. The increase was mainly due to strong Visudyne performance in the
quarter. GAAP EPS is reported using the "not converted" basis as the company's
outstanding convertible notes did not meet the test for conversion.
2004 ANNUAL GUIDANCE
Based on recent events and current trends in Visudyne sales, QLT is narrowing
its Visudyne sales range from $430-$455 million to a new range of $435-$455
million, which represents top-line growth of 22% to 27% over 2003. The company
has also updated GAAP EPS guidance for 2004 to $0.92 to $0.97 treating the
convertible notes on a "not converted" basis or $0.87 to $0.92 on an
"if-converted" basis. This represents an increase from the previous guidance of
$0.86 to $0.96 on a "not converted" basis or $0.81 to $0.91 on an "if-converted"
basis. The annual GAAP EPS guidance is on a stand alone basis and excludes
potential effects of our pending transaction with Atrix Laboratories.
"Once again this quarter we are seeing a significant contribution to sales
growth in the U.S. due to continued Visudyne utilization by retinal specialists
for certain patients with the occult and minimally classic forms of age-related
macular degeneration (AMD)," said Paul Hastings, President and Chief Executive
Officer. "Not only has the Centers for Medicare and Medicaid Services (CMS)
reimbursement contributed to further positive growth, but also, despite the
seasonality typically seen in the third quarter, we are pleased to see continued
growth globally."
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Q3 RESULTS
QLT REVENUES
The company's revenues reached $47 million in the third quarter, growing 22%
from the third quarter of 2003. QLT's share of Visudyne net profit (excluding
the recovery of manufacturing and other costs) from the QLT/Novartis alliance
for the third quarter was 32% of Visudyne sales.
RESEARCH AND DEVELOPMENT (R&D) EXPENSE
R&D expenditures in the third quarter were $12 million, an increase of 26% from
the third quarter of 2003. The increase was due primarily to increased expenses
associated with ILK research and lemuteporfin development.
SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSE
For the third quarter of 2004, SG&A expenditures were $3.0 million, representing
a decrease of 19% over the third quarter of 2003. The decrease was due mainly to
increased absorption of direct manufacturing overheads resulting from higher
Visudyne production levels.
OTHER GAINS (AXCAN MILESTONE)
During the third quarter, the company received a milestone payment from Axcan
Pharma Inc. of CAD $2.5 million (USD $1.9 million) for European approval of
Photofrin. The same amount was received in the third quarter of 2003 for the
approval of Photofrin in the U.S. The gain had no material incremental impact
compared to the third quarter last year.
CASH AND SHORT-TERM INVESTMENTS
The company's cash and short-term investments rose from $524 million to $561
million during the third quarter of 2004.
A full explanation of how the company determines and recognizes revenue
resulting from Visudyne sales is contained in the financial statements contained
in the company's periodic reports on Forms 10-Q and 10-K, under the heading
"Significant Accounting Policies - Revenue Recognition." Visudyne sales are
product sales by Novartis under its alliance with QLT.
ABOUT VISUDYNE
Visudyne is the only drug currently approved for the treatment of a form of wet
AMD, the leading cause of legal blindness in people over the age of 50, and has
been used in more than 300,000 patients worldwide. Visudyne is commercially
available in more than 72 countries for the treatment of predominantly classic
subfoveal CNV and in over 40 countries for occult subfoveal CNV caused by AMD.
It is also approved in more than 56 countries, including the EU, U.S. and
Canada, for the treatment of subfoveal CNV due to pathologic myopia (severe
near-sightedness). In some countries Visudyne is also approved for presumed
ocular histoplasmosis or other macular diseases. QLT's revenue from Visudyne
sales consists of 50% of the Visudyne profits of the Visudyne alliance with the
Ophthalmics Business Unit of Novartis Pharma AG, and reimbursement for
manufacturing and other costs.
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QLT INC. -- FINANCIAL HIGHLIGHTS
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In accordance with United States generally accepted accounting principles)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(In thousands of United States dollars, except per share 2004 2003 2004 2003
information)
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(Unaudited)
REVENUES
Revenue from Visudyne(R) $ 45,704 $ 37,158 $ 129,359 $ 103,767
Contract research and development 849 1,124 2,904 3,495
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46,553 38,282 132,263 107,262
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COSTS AND EXPENSES
Cost of sales 7,946 6,211 22,318 17,681
Research and development 12,200 9,684 32,867 32,646
Selling, general and administrative 2,966 3,653 11,354 10,118
Depreciation 802 825 2,527 2,266
Restructuring - - - (394)
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23,914 20,373 69,066 62,317
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OPERATING INCOME 22,639 17,909 63,197 44,945
INVESTMENT AND OTHER INCOME
Net foreign exchange (losses) gains (317) 406 297 3,320
Interest income 2,620 2,443 7,370 6,087
Interest expense (1,583) (773) (4,659) (773)
Other gains 1,912 1,813 1,912 1,813
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2,632 3,889 4,920 10,447
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INCOME BEFORE INCOME TAXES 25,271 21,798 68,117 55,392
PROVISION FOR INCOME TAXES (8,570) (8,649) (23,103) (19,545)
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INCOME BEFORE EXTRAORDINARY GAIN $ 16,701 $ 13,149 $ 45,014 $ 35,847
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EXTRAORDINARY GAIN - - 10,393 -
====================================================================================================================================
NET INCOME $ 16,701 $ 13,149 $ 55,407 $ 35,847
====================================================================================================================================
BASIC NET INCOME PER COMMON SHARE
Income before extraordinary gain $ 0.24 $ 0.19 $ 0.65 $ 0.52
Extraordinary gain - - 0.15 -
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Net income $ 0.24 $ 0.19 $ 0.80 $ 0.52
DILUTED NET INCOME PER COMMON SHARE
Income before extraordinary gain $ 0.24 $ 0.19 $ 0.64 $ 0.52
Extraordinary gain - 0.15 -
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.24 $ 0.19 $ 0.79 $ 0.52
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
(IN THOUSANDS)
Basic 69,594 68,837 69,482 68,686
Diluted 69,925 69,196 70,044 68,882
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</Table>
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QLT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In accordance with United States generally accepted accounting principles)
<Table>
<Caption>
SEPTEMBER 30, December 31,
(In thousands of United States dollars) 2004 2003
- --------------------------------------------------------------------------------------------------------------------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $524,115 $262,408
Short-term investment securities 36,832 233,022
Accounts receivable 44,893 35,395
Inventories 28,531 26,808
Deferred income tax assets 5,798 11,801
Other 12,882 16,150
- --------------------------------------------------------------------------------------------------------------------------
653,051 585,584
- --------------------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT 51,395 43,262
OTHER LONG-TERM ASSETS 7,365 5,876
- --------------------------------------------------------------------------------------------------------------------------
$711,811 $634,722
==========================================================================================================================
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 7,898 $ 8,683
Other accrued liabilities 8,554 13,574
Deferred revenue 4,587 6,594
- --------------------------------------------------------------------------------------------------------------------------
21,039 28,851
LONG-TERM DEBT 172,500 172,500
- --------------------------------------------------------------------------------------------------------------------------
193,539 201,351
- --------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
COMMON SHARES 409,482 395,627
RETAINED EARNINGS (DEFICIT) 47,323 (8,084)
ACCUMULATED OTHER COMPREHENSIVE INCOME 61,467 45,828
- --------------------------------------------------------------------------------------------------------------------------
518,272 433,371
- --------------------------------------------------------------------------------------------------------------------------
$711,811 $634,722
==========================================================================================================================
As at September 30, 2004, there were 69,599,190 issued and outstanding common
shares and 6,506,641 outstanding options to purchase common shares.
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QLT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In accordance with United States generally accepted accounting principles)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
(In thousands of United States dollars) SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2003
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(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 16,701 $ 13,149 $ 55,407 $ 35,847
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 802 825 2,527 2,266
Amortization of deferred financial expenses 267 122 770 122
Unrealized foreign exchange (gain) loss (5,282) (159) 2,669 1,939
Extraordinary gain - - (10,393) -
Deferred income taxes 5,490 8,649 18,315 19,545
Restructuring - - - (394)
Changes in non-cash operating assets and liabilities
Accounts receivable (705) (935) (8,786) 94
Inventories (3,650) (791) (1,086) (1,083)
Other assets 1,243 7,310 3,982 3,093
Accounts payable 1,835 (1,759) (1,481) (4,080)
Income taxes payable (1,775) - (67) -
Accrued restructuring charge - (432) - (2,437)
Other accrued liabilities (1,002) 2,623 (4,874) 2,607
Deferred revenue (178) (1,800) (2,094) (6,398)
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13,746 26,802 54,889 51,121
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CASH PROVIDED (USED IN) BY INVESTING ACTIVITIES
Short-term investment securities 286,798 (137,636) 192,041 (139,328)
Purchase of property and equipment (2,476) (1,284) (9,381) (3,495)
Other long-term assets (1,416) - (2,134) -
Purchase of Kinetek Pharmaceuticals Inc., net of cash
acquired - - (2,316) -
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282,906 (138,920) 178,210 (142,823)
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CASH PROVIDED BY FINANCING ACTIVITIES
Long term debt (net) (18) 167,748 (123) 167,748
Issuance of common shares 186 833 13,958 3,472
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168 168,581 13,835 171,220
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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 22,355 836 14,773 21,504
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NET INCREASE IN CASH AND CASH EQUIVALENTS 319,175 57,299 261,707 101,022
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 204,940 171,861 262,408 128,138
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CASH AND CASH EQUIVALENTS, END OF PERIOD $524,115 $229,160 $524,115 $229,160
==================================================================================================================================
</Table>
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ABOUT QLT
QLT is a global pharmaceutical company specializing in the discovery,
development and commercialization of innovative therapies to treat cancer, eye
diseases, and dermatological and urological conditions. Combining expertise in
ophthalmology, oncology and photodynamic therapy, QLT has commercialized two
products to date, including Visudyne therapy which is one of the most
successfully launched ophthalmology products. For more information, visit our
web site at www.qltinc.com.
QLT Inc. will hold an investor conference call to discuss the third quarter
results on Thursday, October 21st at 8:30 a.m. ET (5:30 a.m. PT). 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 3106048.
-30-
QLT CONTACTS:
QLT Inc.:
- ---------
Vancouver, Canada
Therese Hayes / Tamara Hicks
Telephone: 604-707-7000 or 1-800-663-5486
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."
ADDITIONAL INFORMATION
In connection with QLT's proposed merger with Atrix Laboratories, Inc., QLT has
filed with the SEC a registration statement on Form S-4, containing a joint
proxy statement/prospectus and other relevant materials. INVESTORS AND SECURITY
HOLDERS OF QLT AND ATRIX ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS,
AS WELL AS OTHER RELEVANT MATERIALS BECAUSE THEY CONTAIN IMPORTANT INFORMATION
ABOUT QLT, ATRIX AND THE TRANSACTION. The joint proxy statement/prospectus and
other relevant materials and any other documents filed by QLT or Atrix with the
SEC, may be obtained free of charge at the SEC's web site at www.sec.gov. The
joint proxy statement/prospectus and other relevant materials have been mailed
to stockholders of QLT and Atrix in advance of the special meetings to consider
the transaction. In addition, investors and security holders may obtain free
copies of the documents filed with the SEC by QLT by directing a request to: QLT
Inc., Attn: Investor Relations, 887 Great Northern Way, Vancouver, BC, Canada,
V5T 4T5. Investors and security holders may obtain free copies of the documents
filed with the SEC by Atrix by contacting Atrix Laboratories, Inc., Attn:
Investor Relations, 2579 Midpoint Drive, Fort Collins, CO, 80525.
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QLT, Atrix and their respective executive officers and directors may be deemed
to be participants in the solicitation of proxies from the stockholders of QLT
and Atrix in favor of the transaction. Information about the executive officers
and directors of QLT and their ownership of QLT common shares is set forth in
the proxy statement for QLT's 2004 Annual Meeting of Shareholders, which was
filed with the SEC as Exhibit 99.1 to Form 10-K/A on April 28, 2004. Information
about the executive officers and directors of Atrix and their ownership of Atrix
common stock is set forth in the proxy statement for Atrix's 2004 Annual Meeting
of Stockholders, which was filed with the SEC on April 5, 2004. Investors and
security holders may obtain more detailed information regarding the direct and
indirect interests of QLT, Atrix and their respective executive officers and
directors in the transaction by reading the joint proxy statement/prospectus
regarding the transaction.
The third quarter financial results for QLT in this press release are
preliminary and unaudited and are not a complete disclosure of our quarterly
financial results. Certain statements in this press release constitute
"forward-looking statements" of QLT within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements include, but are not limited to,
the statements of the company's estimate of annual Visudyne sales and earnings
per share for 2004. These forward-looking statements are only predictions and
actual events or results may differ materially. Factors that could cause actual
events or results to differ materially include, but are not limited to: the risk
that future sales of Visudyne may be less than expected, our competitive
position may change in the future, currency fluctuations in our primary markets
may impact our financial results, our clinical development programs might not be
successful or regulatory approvals might not be obtained, the outcome of pending
patent litigation against the company may be unfavourable and have an adverse
impact on our financial results, the risk that the proposed merger with Atrix
will not be successfully completed or that the businesses will not be
successfully integrated, the risk that, if the merger proceeds, risk factors
relating to the business or products of Atrix will impact the combined company's
results, and other risk factors which are 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 does not assume any obligation to update such information
to reflect later events or developments, except as may be required by law.
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