Exhibit 99.1
[QLT INC. LOGO] 887 Great Northern Way t 604.707.7000
Vancouver, BC Canada V5T 4TS f 604.707.7001
www.qltinc.com
news release
QLT ANNOUNCES 2004 RESULTS AND OUTLOOK FOR 2005
2004 Pro Forma (Non-GAAP) EPS for QLT stand-alone of $0.95
GAAP Full Year 2004 Loss Per Share of $2.26 Due to Merger-Related Accounting
Full Year 2004 Adjusted Pro Forma (Non-GAAP) Earnings Per Share of $0.54
Adjusted Pro Forma (Non-GAAP) EPS in 2005 Expected to Increase
17% to 43% Over 2004
FOR IMMEDIATE RELEASE FEBRUARY 23, 2005
VANCOUVER, CANADA -- QLT Inc. (NASDAQ: QLTI; TSX: QLT) today reported its
financial results for the fourth quarter ended December 31, 2004 and full year
2004 and issued its guidance for 2005, reflecting the merger of QLT Inc. and
Atrix Laboratories, Inc., which closed November 19, 2004. Unless specified
otherwise, all amounts are in U.S. DOLLARS AND IN ACCORDANCE WITH U.S. GAAP.
In order to provide a complete analysis of the merger's impact on QLT's
performance for the fourth quarter ended December 31, 2004 and full year 2004,
the Company reported results in three formats: results as if the transaction had
not occurred ("Pro Forma (non-GAAP) QLT stand-alone"), GAAP results including
the transaction, and adjusted pro forma (non-GAAP) results as if the two
companies had been consolidated for the full year.
All earnings per share calculations, GAAP and non-GAAP, are computed treating
QLT's outstanding convertible notes on an 'if converted' basis.
Adjusted pro forma (non-GAAP) earnings per share for the fourth quarter and full
year 2004 reflect results as if the merger occurred prior to January 1, 2004.
Beginning with reported GAAP results, we add in former Atrix results prior to
the merger, but exclude (i) certain merger-related accounting impacts such as
acquired in-process research and development and amortization of acquired
intangibles (ii) certain merger-related charges such as stock compensation
expense resulting from accelerated vesting of stock options, and (iii) the
extraordinary gain related to the Kinetek acquisition and milestone revenue
related to a former business. All adjustments are itemized and reconciled to
GAAP results in the attached exhibits.
Page 1 of 13
2004 EARNINGS PER SHARE (EPS)
Full year pro forma (non-GAAP) EPS for QLT stand-alone was $0.95 compared to
$0.59 ended December 31, 2003, an increase of 62% and three cents above the
Company's 2004 EPS guidance range of $0.87 to $0.92. Excluding the extraordinary
gain related to the acquisition of Kinetek and excluding the other gain related
to a milestone from a former business, pro forma (non-GAAP) EPS for QLT
stand-alone would have been $0.78 for 2004. Fourth quarter pro forma (non-GAAP)
EPS for QLT stand-alone was $0.21, up 58% from $0.13 in the fourth quarter of
2003.
On a GAAP basis, calculated in accordance with U.S. generally accepted
accounting principles, QLT reported a loss of $2.62 in the fourth quarter and a
loss of $2.26 for the full year 2004. The fourth quarter and full year losses
were primarily due to a $236 million charge for purchased in-process research
and development resulting from the merger with Atrix Laboratories, Inc. Exhibits
1 and 2, attached, show the components of GAAP EPS.
Adjusted pro forma (non-GAAP) EPS for the fourth quarter was $0.13 and full year
was $0.54, reflecting the post transaction fully diluted 105.2 million
outstanding shares. Exhibits 3 and 4, attached, reconcile from GAAP EPS to
adjusted pro forma (non-GAAP) EPS.
2004 ANNUAL SALES
As previously announced, Visudyne(R) sales for the fourth quarter were $124
million, an increase of 29% over sales in the fourth quarter of 2003. Worldwide
Visudyne sales were $448 million for the full year 2004, 26% higher than for
2003. Foreign exchange effects accounted for six percentage points of the full
year gain.
For the full year 2004, Eligard(R) sales were $84 million worldwide, an increase
of 100% over nine months of sales in 2003. This figure represents sales through
our marketing partners.
2005 ANNUAL GUIDANCE
Based on recent events and current trends in Visudyne sales, QLT is projecting
that Visudyne sales will range from $500 million to $530 million in 2005. The
Company is projecting Eligard sales will range from $140 million to $160 million
in 2005. Total 2005 sales from all QLT products, including dermatology, are
forecasted to be between $650 and $700 million, assuming exchange rates remain
approximately the same.
The Company projects its 2005 adjusted pro forma (non-GAAP) EPS (excluding
amortization of acquired intangible assets and restructuring charges) will be
$0.63-$0.77 or 17-43% growth over the adjusted pro forma (non-GAAP) combined
company full year EPS of $0.54.
"The key achievement of the year has been the successful integration of our
merger, transforming QLT into a stronger more diversified company," said Paul
Hastings, President and Chief Executive Officer. "We now have a broader marketed
products portfolio with stronger growth prospects, a full pipeline of products
and three drug delivery platforms from which high value therapeutics can be
developed with both strategic alliances and by QLT alone. Investing in our
future by increasing our focus on advancing promising products through our
pipeline ensures continued growth that will benefit shareholders as well as
physicians and their patients."
Page 2 of 13
2004 RESULTS
REVENUES
Revenues reached $186 million in 2004, growing by 27% from the prior year. The
profit share of the Company's Visudyne Alliance with Novartis increased to 31.1%
from 30.2% in 2003, driven largely by the top-line Visudyne growth.
RESEARCH AND DEVELOPMENT (R&D) EXPENSES
Expenditures for R&D in 2004 were $50 million compared to $45 million for the
same period in 2003. Company's R&D spending in 2004 was focused on its Phase III
clinical trial evaluating Visudyne as a treatment for the occult form of wet
age-related macular degeneration (AMD), on research in integrin linked kinase
(ILK) early-stage targets, and on product candidate Lemuteporfin. Also, there
were $2 million of expenditures to include Atrix's R&D spend from November 19th
through December 31st.
For the fourth quarter of 2004, expenditures for R&D of $17 million compared to
$12 million in the same period of 2003. The increase in spending for the fourth
quarter of 2004 was primarily attributable to R&D related to former Atrix and
ILK research.
SELLING, GENERAL & ADMINISTRATIVE (SG&A) EXPENSES
For 2004, selling, general and administrative (SG&A) expenditures were $17
million, an increase of 4% from 2003 due to the inclusion of Atrix's SG&A from
November 19th through December 31st. For the fourth quarter of 2004, SG&A
expenditures were $6 million, down $0.6 million from the fourth quarter of 2003.
CASH AND SHORT-TERM INVESTMENTS
The Company's cash and short-term investments at December 31, 2004 were $380
million, compared with $495 million at December 31, 2003 and $561 million at
September 30, 2004.
2005 OUTLOOK
REVENUES
Total revenues for the Company are expected to range from $255 million to $280
million in 2005 compared to adjusted pro forma (non-GAAP) results of $236
million in 2004.
RESEARCH AND DEVELOPMENT EXPENSES
The Company expects research and development spending in the range of $75
million to $85 million.
SELLING, GENERAL &ADMINISTRATIVE (SG&A) EXPENSES
The Company expects SG&A expenses in 2005 to be in the range of $20 million to
$23 million.
CASH AND SHORT-TERM INVESTMENTS
The Company expects to continue to add to its cash throughout 2005, bringing the
cash balance to $425 million to $450 million by the end of the year.
MEEI LITIGATION UPDATE
QLT also reported today that the United States Courts of Appeals has issued a
ruling that affirms judgment in favor of QLT on 5 of 8 claims brought by
Massachusetts Eye and Ear Infirmary ("MEEI") in the lawsuit commenced by MEEI
against QLT in 2000. The remaining three claims were remanded to the trial court
for further proceedings. No trial in the matter has been scheduled. This lawsuit
is one of two filed by MEEI against QLT. In January of this year QLT announced a
favorable ruling in the second suit, in which the court ordered that the patent
at issue there be corrected to name a QLT scientist as a joint inventor, making
QLT a co-owner of the patent.
Page 3 of 13
QLT INC.--FINANCIAL HIGHLIGHTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In accordance with United States generally accepted accounting principles)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------------------- ------------------------
(In thousands of United States dollars, except per
share information) 2004 2003 2004 2003
----------- -------- ---------- ---------
(Unaudited)
REVENUES
Revenue from Visudyne(R) $ 48,098 $ 38,358 $ 177,457 $ 142,125
Revenue from Atrix 4,179 - 4,179 -
Contract research and development 1,532 1,130 4,436 4,625
----------- -------- ---------- ---------
53,809 39,488 186,072 146,750
----------- -------- ---------- ---------
COSTS AND EXPENSES
Cost of sales 11,059 6,647 33,377 24,328
Research and development 17,192 12,259 50,059 44,905
Selling, general and administrative 6,110 6,702 17,464 16,820
Depreciation 1,188 875 3,715 3,141
Amortization of intangibles 852 - 852 -
Purchased in-process research and development 236,000 - 236,000 -
Restructuring (recovery) - - - (394)
----------- -------- ---------- ---------
272,401 26,483 341,467 88,800
----------- -------- ---------- ---------
OPERATING (LOSS) INCOME (218,592) 13,005 (155,395) 57,950
INVESTMENT AND OTHER INCOME (LOSS)
Net foreign exchange gains 540 25 837 3,345
Interest income 2,766 2,494 10,136 8,581
Interest expense (1,602) (1,586) (6,261) (2,359)
Write-down of investment - (560) - (560)
Other (loss) gain (7) - 1,905 1,813
----------- -------- ---------- ---------
1,697 373 6,617 10,820
----------- -------- ---------- ---------
(LOSS) INCOME BEFORE INCOME TAXES (216,895) 13,378 (148,778) 68,770
PROVISION FOR INCOME TAXES (6,345) (4,408) (29,448) (23,953)
----------- -------- ---------- ---------
(LOSS) INCOME BEFORE EXTRAORDINARY GAIN $ (223,240) $ 8,970 $ (178,226) $ 44,817
----------- -------- ---------- ---------
EXTRAORDINARY GAIN 2,124 - 12,517 -
=========== ======== ========== =========
NET (LOSS) INCOME $ (221,116) $8,970 $ (165,709) $ 44,817
=========== ======== ========== =========
BASIC NET (LOSS) INCOME PER COMMON SHARE
(Loss) income before extraordinary gain $ (2.64) $ 0.13 $ (2.43) $ 0.65
Extraordinary gain 0.02 - 0.17 -
----------- -------- ---------- ---------
Net (loss) income $ (2.62) $ 0.13 $ (2.26) $ 0.65
----------- -------- ---------- ---------
DILUTED NET (LOSS) INCOME PER COMMON SHARE *
(Loss) income before extraordinary gain $ (2.64) $ 0.13 $ (2.43) $ 0.59
Extraordinary gain 0.02 - 0.17 -
----------- -------- ---------- ---------
Net (loss) income $ (2.62) $ 0.13 $ (2.26) $ 0.59
----------- -------- ---------- ---------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
(IN THOUSANDS)
Basic 84,513 68,874 73,240 68,733
Diluted 84,513 78,976 73,240 78,665
----------- -------- ---------- ---------
* In accordance with EITF Issue No. 04-08, The Effect of Contingently
Convertible Debt on Diluted Earnings per Share, the diluted earnings per share
for the quarter and year ended December 31, 2003 have been restated to include
the dilutive effect of convertible debt previously excluded.
Page 4 of 13
QLT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In accordance with United States generally accepted accounting principles)
DECEMBER 31, December 31,
(In thousands of United States dollars) 2004 2003
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 366,037 $ 262,408
Short-term investment securities 13,815 233,022
Accounts receivable 56,600 35,395
Inventories 45,899 26,808
Current portion of deferred income tax assets 4,753 11,801
Other 13,521 16,150
----------- ---------
500,625 585,584
----------- ---------
PROPERTY, PLANT AND EQUIPMENT 81,674 43,262
DEFERRED INCOME TAX ASSETS 6,926 -
INTANGIBLES, NET 119,600 -
GOODWILL 402,518 -
OTHER LONG-TERM ASSETS 4,906 5,876
----------- ---------
$ 1,116,249 $ 634,722
=========== =========
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 12,993 $ 8,683
Other accrued liabilities 19,528 13,574
Deferred revenue 2,278 6,594
----------- ---------
34,799 28,851
DEFERRED INCOME TAX LIABILITIES 52,171 -
LONG-TERM DEBT 172,500 172,500
----------- ---------
259,470 201,351
----------- ---------
SHAREHOLDERS' EQUITY
COMMON SHARES 848,498 395,627
ADDITIONAL PAID IN CAPITAL 92,193 -
ACCUMULATED DEFICIT (173,794) (8,084)
ACCUMULATED OTHER COMPREHENSIVE INCOME 89,882 45,828
----------- ---------
856,779 433,371
----------- ---------
$ 1,116,249 $ 634,722
=========== =========
As at December 31, 2004, there were 92,021,572 issued and outstanding common
shares and 12,401,263 outstanding options and an outstanding stock warrant to
purchase 1,000,000 common shares.
Page 5 of 13
QLT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In accordance with United States generally accepted accounting principles)
THREE MONTHS ENDED YEAR ENDED
(In thousands of United States dollars) DECEMBER 31, DECEMBER 31,
------------------------- ------------------------
2004 2003 2004 2003
---------- -------- --------- --------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income $ (221,116) $ 8,970 $(165,709) $ 44,817
Adjustments to reconcile net income to net cash provided by
operating activities:
Purchased in-process research and development 236,000 - 236,000 -
Amortization of intangibles 852 - 852 -
Depreciation 1,188 875 3,715 3,141
Write-down of investment - 560 - 560
Amortization of deferred financial expenses 283 275 1,053 397
Unrealized foreign exchange gain (15,065) (10,314) (12,396) (8,375)
Extraordinary gain (2,124) - (12,517) -
Deferred income taxes 1,297 4,408 19,612 23,953
Restructuring (recovery) - - - (394)
Changes in non-cash operating assets and liabilities
Accounts receivable (596) 1,160 (9,382) 1,254
Inventories 1,835 3,250 749 2,167
Other assets 3,237 891 7,219 3,984
Accounts payable 2,230 3,042 749 (1,038)
Income taxes payable - - (67) -
Accrued restructuring charge - - - (2,437)
Other accrued liabilities 5,036 2,596 162 5,203
Deferred revenue (2,751) (1,853) (4,845) (8,251)
---------- -------- --------- --------
10,306 13,860 65,195 64,981
---------- -------- --------- --------
CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
Short-term investment securities 27,483 11,609 219,524 (127,719)
Purchase of property, plant and equipment (2,276) (2,188) (11,657) (5,683)
Purchase of Atrix Laboratories, Inc., net of cash
acquired (218,492) - (220,626) -
Purchase of Kinetek Pharmaceuticals Inc., net
of cash acquired - - (2,316) -
---------- -------- --------- --------
(193,285) 9,421 (15,075) (133,402)
---------- -------- --------- --------
CASH PROVIDED BY FINANCING ACTIVITIES
Long-term debt (net) - (54) (123) 167,694
Issuance of common shares 1,247 430 15,205 3,903
---------- -------- --------- --------
1,247 376 15,082 171,597
---------- -------- --------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 23,654 9,592 38,427 31,094
---------- -------- --------- --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (158,078) 33,249 103,629 134,270
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 524,115 229,159 262,408 128,138
---------- -------- --------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $366,037 $262,408 $366,037 $262,408
========== ======== ========= ========
Page 6 of 13
EXHIBIT 1
QLT INC.
2004 FOURTH QUARTER CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions of United States dollars, except per share data) (Unaudited)
Three months Atrix post merger Three months ended
ended December operations (November 20 December 31, 2004
31, 2004 - December 31, 2004) Intangible GAAP
QLT Atrix Adjustments Consolidated
-------------- ----------------------- ----------- -----------------
REVENUES
Revenue from Visudyne(R) $ 48.1 $ - $ - $ 48.1
Revenue from Atrix - 4.2 - 4.2
Contract research and
development 0.7 0.8 - 1.5
------- ------ -------- --------
48.8 5.0 - 53.8
------- ------ -------- --------
COST AND EXPENSES
Cost of sales (9.2) (1.8) - (11.1)
Research and development (14.9) (2.2) - (17.2)
Selling, general and
administrative (5.0) (1.1) - (6.1)
Depreciation (0.9) (0.2) - (1.2)
Amortization of intangibles - - (0.9) (0.9)
Purchased in-process
research and development - - (236.0) (236.0)
------- ------ -------- --------
(30.1) (5.4) (236.9) (272.4)
------- ------ -------- --------
OPERATING INCOME (LOSS) 18.7 (0.4) (236.9) (218.6)
INVESTMENT AND OTHER INCOME (LOSS)
Net foreign exchange gains 0.5 - - 0.5
Interest income 2.5 0.3 - 2.8
Interest expense (1.6) - - (1.6)
Other gains - - - -
------- ------ -------- --------
1.4 0.3 - 1.7
------- ------ -------- --------
INCOME (LOSS) BEFORE INCOME TAXES 20.1 (0.2) (236.9) (216.9)
(Provision for) recovery of
income taxes (6.9) 0.3 0.3 (6.3)
------- ------ -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY GAIN 13.2 0.1 (236.5) (223.2)
------- ------ -------- --------
Extraordinary gain 2.1 - 2.1
------- ------ -------- --------
NET INCOME (LOSS) $ 15.3 $ 0.1 $ (236.5) $ (221.1)
======= ====== ======== ========
INCOME (LOSS) PER COMMON SHARE:
Basic $ 0.22 $ (2.62)
Diluted $ 0.21 $ (2.62)
Page 7 of 13
EXHIBIT 2
QLT INC.
2004 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions of United States dollars, except per share data) (Unaudited)
Atrix post merger
Year Ended operations Year Ended December
December 31, (November 20 - 31, 2004
2004 December 31, 2004) Intangible GAAP
QLT Atrix Adjustments Consolidated
------------ ------------------ ----------- -------------------
REVENUES
Revenue from Visudyne(R) $ 177.5 $ - $ - $ 177.5
Revenue from Atrix - 4.2 - 4.2
Contract research and development 3.6 0.8 - 4.4
------- ----- -------- --------
181.1 5.0 - 186.1
------- ----- -------- --------
COST AND EXPENSES
Cost of sales (31.5) (1.8) - (33.4)
Research and development (47.8) (2.2) - (50.1)
Selling, general and
administrative (16.4) (1.1) - (17.5)
Depreciation (3.5) (0.2) - (3.7)
Amortization of intangibles - - (0.9) (0.9)
Purchased in-process research and
development - - (236.0) (236.0)
------- ----- -------- --------
(99.2) (5.4) (236.9) (341.5)
------- ----- -------- --------
OPERATING INCOME (LOSS) 81.9 (0.4) (236.9) (155.4)
INVESTMENT AND OTHER INCOME (LOSS)
Net foreign exchange gains 0.8 - - 0.8
Interest income 9.8 0.3 - 10.1
Interest expense (6.3) - - (6.3)
Other gains 1.9 - - 1.9
------- ----- -------- --------
6.4 0.3 - 6.6
------- ----- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES 88.2 (0.2) (236.9) (148.8)
(Provision for) recovery of
income taxes (30.1) 0.3 0.3 (29.4)
------- ----- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY GAIN 58.2 0.1 (236.5) (178.2)
------- ----- -------- --------
Extraordinary gain 12.5 - - 12.5
------- ----- -------- --------
NET INCOME (LOSS) $ 70.7 $ 0.1 $ (236.5) $ (165.7)
======= ===== ======== ========
INCOME (LOSS) PER COMMON SHARE:
Basic $ 1.02 $ (2.26)
Diluted $ 0.95 $ (2.26)
Page 8 of 13
EXHIBIT 3
QLT INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
2004 FOURTH QUARTER RECONCILIATION OF GAAP EARNINGS TO
ADJUSTED PRO FORMA NON-GAAP EARNINGS
(In millions of United States dollars, except per share data) (Unaudited)
Atrix pre-merger Three months
Three months operations ended
ended (October 1, 2004 - December 31,
December 31, November 19, 2004 Adjusted
2004 2004) Pro Forma
GAAP Atrix Adjustments Non-GAAP(1)
------------ ----------------- ----------- -------------
REVENUES
Revenue from Visudyne(R) $ 48.1 $ - $ - $ 48.1
Revenue from Atrix 4.2 4.3 - 8.5
Contract research and development 1.5 1.6 - 3.2
Licensing, marketing rights, and - 1.3 (1.1) (a) 0.2
milestones
------- ------- ------ ------
53.8 7.3 (1.1) 60.0
------- ------- ------ ------
COST AND EXPENSES
Cost of sales (11.1) (2.3) (0.3) (b) (13.6)
Research and development (17.2) (12.7) 10.9 (c) (19.0)
Selling, general and administrative (6.1) (3.2) 1.5 (d) (7.8)
Depreciation (1.2) (0.4) (0.1) (e) (1.7)
Amortization of intangibles (0.9) - (1.0) (f) (1.9)
Purchased in-process research and (236.0) - 236.0 (g) -
development
------- ------- ------ ------
(272.4) (18.6) 247.0 (44.0)
------- ------- ------ ------
OPERATING (LOSS) INCOME (218.6) (11.4) 245.9 15.9
INVESTMENT AND OTHER INCOME (LOSS)
Net foreign exchange gains (losses) 0.5 (0.0) - 0.5
Interest income 2.8 0.4 (1.2) (h) 2.0
Interest expense (1.6) - - (1.6)
Other gains - - - -
------- ------- ------ ------
1.7 0.5 (1.2) 1.0
------- ------- ------ ------
(LOSS) INCOME BEFORE INCOME TAXES (216.9) (10.9) 244.7 16.9
(Provision for) recovery of income (6.3) - 0.9 (i) (5.5)
taxes
------- ------- ------ ------
INCOME (LOSS) BEFORE EXTRAORDINARY GAIN (223.2) (10.9) 245.5 11.4
------- ------- ------ ------
Extraordinary gain 2.1 - (2.1) (j) -
------- ------- ------ ------
NET (LOSS) INCOME (221.1) (10.9) 243.4 11.4
======= ======= ====== ======
(LOSS) INCOME PER COMMON SHARE:
Basic $ (2.62) $ 0.12
Diluted $ (2.62) $ 0.12
Add back amortization of acquired 0.01
intangibles net of related tax
------
DILUTED INCOME PER COMMON SHARE LESS EFFECT OF ACQUIRED
INTANGIBLES(1) $ 0.13
------
Adjustments:
(a) Removes licensing fees and milestone revenue related to deferred
revenue recorded at fair value upon merger.
(b) Increases cost of sales as a result of recording inventory at fair
value upon merger.
(c) Removes pre-merger compensation expenses related to terminated
employees and accelerated vesting of stock options recorded by Atrix.
Page 9 of 13
(d) Removes merger-related expenses, patent maintenance expenses, and
compensation expenses related to terminated employees and accelerated
vesting of stock options recorded by Atrix in the pre-merger period.
(e) Increases depreciation as a result of recording property, plant and
equipment at fair value.
(f) Records additional amortization of acquired intangibles.
(g) Removes purchased in-process research and development charge as a
non-recurring item.
(h) Removes foregone interest income from cash consumed in the merger and
harmonization of treasury investment policies.
(i) Removes tax impact of adjustments (b), (e), (f) and (h).
(j) Removes extraordinary gain related to Kinetek acquisition as a
non-recurring item.
Note 1
The adjusted pro forma non-GAAP financial measures presented above are
utilized by QLT's management to gain an understanding of the performance of
the Company as a result of the merger. The adjusted pro forma non-GAAP
financial measures have no standardized meaning under GAAP and are not
comparable between companies. The Company believes that the adjusted pro
forma non-GAAP financial measures are useful because they provide
information that may be relevant to obtaining an understanding of the
trends of the Company or the prospects of future performance.
Page 10 of 13
EXHIBIT 4
QLT INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
2004 RECONCILIATION OF GAAP EARNINGS TO ADJUSTED PRO FORMA
NON-GAAP EARNINGS
(In millions of United States dollars, except per share data) (Unaudited)
Atrix
pre-merger
operations Year Ended
(January 1, December
Year Ended 2004 - 31, 2004
December 31, November 19, Adjusted
2004 2004) Pro Forma
GAAP Atrix Adjustments Non-GAAP(1)
------------ ------------ ----------- -----------
REVENUES
Revenue from Visudyne(R) $ 177.5 $ - $ - $ 177.5
Revenue from Atrix 4.2 34.4 - 38.6
Contract research and development 4.4 15.3 - 19.8
Licensing, marketing rights, and - 7.8 (7.4) (a) 0.4
milestones
------- ----- ------ -------
186.1 57.5 (7.4) 236.2
------- ----- ------ -------
COST AND EXPENSES
Cost of sales (33.4) (15.5) (1.0) (b) (49.9)
Research and development (50.1) (35.9) 10.9 (c) (75.1)
Selling, general and administrative (17.5) (11.3) 2.8 (d) (25.9)
Depreciation (3.7) (2.4) (0.8) (e) (6.9)
Amortization of intangibles (0.9) - (6.6) (f) (7.5)
Purchased in-process research and (236.0) - 236.0 (g) -
development
------- ----- ------ -------
(341.5) (65.2) 241.3 (165.4)
------- ----- ------ -------
OPERATING (LOSS) INCOME (155.4) (7.7) 233.9 70.8
INVESTMENT AND OTHER INCOME (LOSS)
Net foreign exchange gains 0.8 0.3 - 1.2
Interest income 10.1 2.4 (8.0) (h) 4.6
Interest expense (6.3) - - (6.3)
Other gains (losses) 1.9 0.7 (2.7) (i) (0.1)
------- ----- ------ -------
6.6 3.5 (10.6) (0.5)
------- ----- ------ -------
(LOSS) INCOME BEFORE INCOME TAXES (148.8) (4.2) 223.3 70.3
(Provision for) recovery of income taxes (29.4) - 6.3 (j) (23.2)
------- ----- ------ -------
(LOSS) INCOME BEFORE EXTRAORDINARY GAIN (178.2) (4.2) 229.5 47.1
------- ----- ------ -------
Extraordinary gain 12.5 - (12.5) (k) -
------- ----- ------ -------
NET (LOSS) INCOME (165.7) (4.2) 217.0 47.1
======= ===== ====== =======
Page 11 of 13
Atrix
pre-merger
operations Year Ended
(January 1, December
Year Ended 2004 - 31, 2004
December 31, November 19, Adjusted
2004 2004) Pro Forma
GAAP Atrix Adjustments Non-GAAP(1)
------------ ------------ ----------- -----------
(LOSS) INCOME PER COMMON SHARE:
Basic $ (2.26) $ 0.51
Diluted $ (2.26) $ 0.50
Add back amortization of acquired 0.04
intangibles net of related tax
------
DILUTED INCOME PER COMMON SHARE LESS
EFFECT OF ACQUIRED INTANGIBLES(1) $ 0.54
-------
Adjustments:
(a) Removes licensing fees and milestone revenue related to deferred revenue
recorded at fair value upon merger.
(b) Increases cost of sales as a result of recording inventory at fair value
upon merger.
(c) Removes pre-merger compensation expenses related to terminated employees
and accelerated vesting of stock options recorded by Atrix.
(d) Removes merger-related expenses, patent maintenance expenses, and
compensation expenses related to terminated employees and accelerated
vesting of stock options recorded by Atrix in the pre-merger period.
(e) Increases depreciation as a result of recording property, plant and
equiment at fair value.
(f) To record full year of amortization of acquired intangibles.
(g) Removes purchased in-process research and development charge as a
non-recurring item.
(h) Removes foregone interest income from cash consumed in the merger and
harmonization of treasury investment policies.
(i) Removes milestone payment from former business and gain on sale of
investments that would have been liquidated.
(j) Removes tax impact of adjustments (b), (e), (f) and (h).
(k) Removes extraordinary gain related to Kinetek acquisition as a
non-recurring item.
Note 1
The adjusted pro forma non-GAAP financial measures presented above are utilized
by QLT's management to gain an understanding of the performance of the Company
as a result of the merger. The adjusted pro forma non-GAAP financial measures
have no standardized meaning under GAAP and are not comparable between
companies. The Company believes that the adjusted pro forma non-GAAP financial
measures are useful because they provide information that may be relevant to
obtaining an understanding of the trends of the Company or the prospects of
future performance.
Page 12 of 13
QLT Inc. will hold an investor conference call to discuss year-end results and
2005 guidance on Wednesday, February 23 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 1-800-395-0403,
access code 3471375.
ABOUT QLT INC.
QLT Inc. is a global biopharmaceutical company specializing in developing
treatments for cancer, eye diseases and dermatological and urological
conditions. We have combined our expertise in the discovery, development,
commercialization and manufacture of innovative drug therapies with our unique
technology platforms to create highly successful products such as Visudyne(R)
and Eligard(R).
For more information, visit the company Web site at www.qltinc.com.
-30-
QLT INC.:
Vancouver, Canada
Therese Hayes / Tamara Hicks
Telephone: 604-707-7000 or 1-800-663-5486
Fax: 604-707-7001
Visudyne is a registered trademark of Novartis AG.
Eligard is a registered trademark of sanofi-aventis.
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."
A full explanation of how the Company determines and recognizes revenue from
Visudyne sales is contained in the financial statements contained in the
Company's periodic reports on Form 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.
Certain statements in this press release constitute "forward-looking statements"
of QLT within the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements include, but are not limited to: the Company's
projections of: 2005 sales of Visudyne, 2005 sales of Eligard, total annual 2005
sales and 2005 adjusted (non-GAAP) earnings per share; the statements setting
out the Company's expectations as to: 2005 revenues, 2005 research and
development expenses, 2005 selling, general & administrative expenses and 2005
year end cash reserves; and statements which contain language such as:
"assuming", "prospects", "future", "projects", "expects" and "outlook".
Forward-looking statements are predictions only which involve known and unknown
risks, uncertainties and other factors that may cause actual results to be
materially different from those expressed in such statements. Factors that could
cause actual events or results to differ materially include, but are not limited
to: the risk that future sales of Visudyne, Eligard and other products of the
Company may be less than expected, the Company's future operating results are
uncertain and likely to fluctuate, currency fluctuations in primary markets
might impact financial results, uncertainty of and timing of pricing and
reimbursement might limit the future sales of Visudyne, Eligard and other
products of the Company, clinical development programs might not be successful,
the timing, expense and uncertainty associated with the development and
regulatory approval process for the Company's products and technologies, the
Company's dependence on third parties to develop and commercialize certain
product candidates, the ability of the Company to manufacture certain of its
products at its facility in Fort Collins, Colorado, the Company's reliance on
third-parties for the manufacture of Visudyne and other products, the Company's
reliance on third-parties for the continued supply of light source and light
delivery devices for Visudyne therapy, the timing and impact of new products
launches by competitors, the outcome of the pending patent litigation against
the Company might be unfavorable and have an adverse impact on the Company's
financial results, the Company's dependence on third-parties to market Visudyne,
Eligard and other products, general competitive conditions within the
biotechnology and drug delivery industry, general economic conditions 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 the current expectations of QLT and QLT
does not assume any obligation to update such information to reflect later
events or developments except as required by law.
Page 13 of 13