EXHIBIT 99.1
[QLT LOGO]
QLT Inc. 887 Great Northern Way t 604.707.7000
Vancouver, BC Canada V5T 4T5 f 604.707.7001
www.qltinc.com
news release
QLT ANNOUNCES Q1 RESULTS FOR 2005 AND REITERATES GUIDANCE
Initiating $50 Million Share Buy-Back Program
FOR IMMEDIATE RELEASE APRIL 28, 2005
VANCOUVER, CANADA--QLT Inc. (NASDAQ: QLTI; TSX: QLT) today reported financial
results for the first quarter ended March 31, 2005. Unless specified otherwise,
all amounts are in U.S. dollars and in accordance with U.S. GAAP.
2005 Q1 SALES
Visudyne(R) worldwide sales for the first quarter were $123.7 million, an
increase of 22.5% over the first quarter of 2004. Visudyne sales in the U.S. for
the quarter were $51.3 million, up 13% over the same period last year. Visudyne
sales in the rest of the world were $72.4 million, an increase of 30% over the
same period last year.
Eligard(R) worldwide sales for the first quarter were $17.9 million, essentially
flat from the first quarter of 2004. Eligard sales in the U.S. for the quarter
were $10.6 million, down 33% over the same period last year. Eligard sales in
the rest of the world were $7.3 million, an increase of 246% over $2.1 million
in the first quarter last year.
Sales of dermatology products for the first quarter were $2.3 million compared
to $0.3 million in the same period last year.
2005 Q1 RESULTS
DILUTED EARNINGS PER SHARE (EPS)
Non-GAAP EPS, which excludes the restructuring charge and amortization of
acquired intangible assets, was $0.19 in the first quarter, while GAAP EPS was
$0.16. A reconciliation between non-GAAP EPS and GAAP EPS is provided in Exhibit
1 of this press release.
For the first quarter 2004, non-GAAP EPS, excluding the charge for amortization
of intangibles, was $0.11, while GAAP EPS was $0.34 including the extraordinary
gain, or $0.19 excluding the gain.
Page 1 of 9
Prior year GAAP results reflect operations before our merger with Atrix
Laboratories in the fourth quarter last year, and do not necessarily provide the
most appropriate comparison for our 2005 results. Therefore, we have provided
non-GAAP (adjusted pro forma) results, which reflect ongoing results as if the
merger had occurred just prior to January 1, 2004. A reconciliation between
non-GAAP results and GAAP results for the first quarter of 2004 is provided in
Exhibit 2.
The increase from non-GAAP EPS of $0.11 in the first quarter of 2004 to $0.19 in
2005 was primarily attributable to growth in Visudyne revenue, as well as lower
operating expenses.
"We are pleased with our performance in this quarter with both Visudyne sales
and EPS and remain on track to achieve our annual financial guidance," said Paul
Hastings, President and CEO. "We are also announcing today the initiation of a
share buy-back program because we believe that the current price of the stock
does not reflect the achievements and prospects of the Company and therefore
represents an excellent investment opportunity."
QLT REVENUES
The Company's revenues reached $64 million in the first quarter, up 55% from
revenues in the same period last year, and up 18% compared to non-GAAP revenues
in the same period last year.
Revenues from Visudyne were $50 million in the quarter, up 23% from $41 million
in the first quarter last year, primarily due to strong top-line Visudyne
performance. QLT's share of profit from Visudyne sales increased from 31.8% to
33.2% compared to the same period last year.
RESEARCH AND DEVELOPMENT (R&D) EXPENSE
R&D expense in the first quarter was $16.4 million, up $7 million from R&D
expense in the first quarter last year primarily due to R&D related to former
Atrix. R&D expense was down $1.1 million from non-GAAP R&D expense of $17.5
million last year, primarily due to lower spending on clinical trials that have
been completed (Eligard six-month, Aczone).
SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSE
For the first quarter of 2005, SG&A expense was $5.4 million, up $0.6 million
from prior year first quarter expense, but down $1.8 million from 2004 non-GAAP
SG&A expense. This decrease occurred primarily due to lower compensation costs
and timing of allocations to R&D.
CASH AND SHORT-TERM INVESTMENTS
The company's cash and short-term investments increased from $380 million to
$408 million during the first quarter of 2005.
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SHARE BUY-BACK PROGRAM
Over a two-year period QLT intends to purchase up to $50 million worth of its
own common shares. The share purchases will be made as a normal course issuer
bid, whereby the Company will purchase for cancellation up to $50 million worth
of common shares, subject to regulatory requirements. The bid will commence upon
regulatory approval. All purchases will be effected in the open market through
the facilities of The Toronto Stock Exchange and/or the Nasdaq Stock Market in
accordance with the rules of those markets.
TAP LITIGATION
QLT also announces the outcome of a nullity action brought by MediGene AG, one
of our Eligard marketing partners in Europe, in the German Federal Patent Court
with respect to the German part of European Patent EP 0 202 065 (the "'065
patent"). On April 20, the Federal Patent Court nullified all the claims of the
'065 patent alleged by Takeda Chemical Industries Ltd., Wako Pure Chemical
Industries, Ltd., and Takeda GmbH to be infringed by MediGene AG and Yamanouchi
Pharma GmbH in a suit filed in the Regional Court Dusseldorf.
ABOUT QLT
QLT Inc. is a global biopharmaceutical company specializing in developing
treatments for cancer, eye diseases, 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 our web site at www.qltinc.com.
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QLT INC. -- FINANCIAL HIGHLIGHTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In accordance with United States generally accepted accounting principles)
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
(In thousands of United States dollars, except per share information) 2005 2004
- ----------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
REVENUES
Net product revenue $ 57,146 $ 40,519
Net royalties 3,708 -
Contract research and development 3,036 792
Licensing and milestones 125 -
- ----------------------------------------------------------------------------------------------------------------------------------
64,015 41,311
- ----------------------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Cost of sales 14,490 6,922
Research and development 16,436 9,410
Selling, general and administrative 5,389 4,781
Depreciation 1,734 809
Amortization of intangibles 1,871 -
Restructuring 2,515 -
- ----------------------------------------------------------------------------------------------------------------------------------
42,435 21,922
- ----------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 21,580 19,389
INVESTMENT AND OTHER INCOME (EXPENSE)
Net foreign exchange gains 584 276
Interest income 2,549 2,482
Interest expense (1,598) (1,528)
- ----------------------------------------------------------------------------------------------------------------------------------
1,535 1,230
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 23,115 20,619
PROVISION FOR INCOME TAXES (7,859) (6,990)
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE EXTRAORDINARY GAIN 15,256 13,629
- ----------------------------------------------------------------------------------------------------------------------------------
EXTRAORDINARY GAIN - 10,393
==================================================================================================================================
NET INCOME $ 15,256 $ 24,022
==================================================================================================================================
BASIC NET INCOME PER COMMON SHARE
Income before extraordinary gain $ 0.16 $ 0.20
Extraordinary gain - 0.15
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.16 $ 0.35
DILUTED NET INCOME PER COMMON SHARE
Income before extraordinary gain $ 0.16 $ 0.19
Extraordinary gain - 0.15
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.16 $ 0.34
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
(IN THOUSANDS)
Basic 93,325 69,276
Diluted 94,874 69,911
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
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QLT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In accordance with United States generally accepted accounting principles)
<Table>
<Caption>
MARCH 31, December 31,
(In thousands of United States dollars) 2005 2004 (1)
- ---------------------------------------------------------------------------------------------------------------------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $192,164 $277,087
Short-term investment securities 215,837 102,765
Accounts receivable 57,664 56,600
Inventories 41,313 45,899
Current portion of deferred income tax assets 2,291 4,753
Other 14,661 13,521
- ---------------------------------------------------------------------------------------------------------------------------
523,930 500,625
- ---------------------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT 80,793 81,674
DEFERRED INCOME TAX ASSETS 5,501 6,926
INTANGIBLES, NET 120,101 119,600
GOODWILL 402,518 402,518
OTHER LONG-TERM ASSETS 4,439 4,906
- ---------------------------------------------------------------------------------------------------------------------------
$1,137,282 $1,116,249
===========================================================================================================================
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 8,336 $ 12,993
Accrued restructuring charge 424 -
Other accrued liabilities 16,660 19,528
Current portion of deferred revenue 5,116 2,278
- ---------------------------------------------------------------------------------------------------------------------------
30,536 34,799
DEFERRED INCOME TAX LIABILITIES 53,022 52,171
DEFERRED REVENUE 3,572 -
LONG-TERM DEBT 172,500 172,500
- ---------------------------------------------------------------------------------------------------------------------------
259,630 259,470
- ---------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
COMMON SHARES 875,839 848,498
ADDITIONAL PAID IN CAPITAL 71,843 92,193
ACCUMULATED DEFICIT (158,538) (173,794)
ACCUMULATED OTHER COMPREHENSIVE INCOME 88,508 89,882
- ---------------------------------------------------------------------------------------------------------------------------
877,652 856,779
- ---------------------------------------------------------------------------------------------------------------------------
$1,137,282 $1,116,249
===========================================================================================================================
</Table>
As at March 31, 2005, there were 93,403,359 issued and outstanding common shares
and 12,245,855 outstanding stock options.
(1) Certain comparative figures have been reclassified to conform with the
current period's presentation.
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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
MARCH 31,
(In thousands of United States dollars) 2005 2004
- ----------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $15,256 $ 24,022
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of intangibles 1,871 -
Depreciation 1,734 809
Amortization of deferred financial expenses 281 239
Unrealized foreign exchange losses 1,543 2,088
Extraordinary gain - (10,393)
Deferred income taxes 5,306 6,990
Changes in non-cash operating assets and liabilities
Accounts receivable (7,191) (3,870)
Inventories 4,357 (1,646)
Other assets (991) 5,643
Accounts payable 494 (911)
Income taxes payable - -
Accrued restructuring charge 418 -
Other accrued liabilities (3,839) (8,893)
Deferred revenue 6,398 (1,728)
- ----------------------------------------------------------------------------------------------------------------------------------
25,637 12,350
- ----------------------------------------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES
Short-term investment securities (110,608) (9,220)
Purchase of property, plant and equipment (2,075) (3,169)
Purchase costs related to Atrix Laboratories, Inc. (1,210) -
Purchase of Kinetek Pharmaceuticals Inc., net of cash acquired - (2,316)
- ----------------------------------------------------------------------------------------------------------------------------------
(113,893) (14,705)
- ----------------------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES
Long-term debt (net) - (71)
Issuance of common shares 7,017 11,696
- ----------------------------------------------------------------------------------------------------------------------------------
7,017 11,625
- ----------------------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (3,684) (2,180)
- ----------------------------------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (84,923) 7,090
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 277,087 262,408
- ----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $192,164 $269,498
==================================================================================================================================
</Table>
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QLT INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
2005 FIRST QUARTER RECONCILIATION OF GAAP EARNINGS TO EXHIBIT 1
NON-GAAP EARNINGS
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------
(In millions of United States dollars, except per share data) (Unaudited)
Three months
Three months ended ended March 31,
March 31, 2005 2005 Adjusted
GAAP Adjustments Non-GAAP(1)
- -------------------------------------------------------------------------------------------------------------
REVENUES
Net product revenue $ 57.1 $ - $ 57.1
Net royalties 3.7 - 3.7
Contract research and development 3.0 - 3.0
Licensing and milestones 0.1 - 0.1
- -------------------------------------------------------------------------------------------------------------
64.0 - 64.0
- -------------------------------------------------------------------------------------------------------------
COST AND EXPENSES
Cost of sales (14.5) - (14.5)
Research and development (16.4) - (16.4)
Selling, general and administrative (5.4) - (5.4)
Depreciation (1.7) - (1.7)
Amortization of intangibles (1.9) 1.9 (a) -
Restructuring (2.5) 2.5 (b) -
- -------------------------------------------------------------------------------------------------------------
(42.4) 4.4 (38.0)
- -------------------------------------------------------------------------------------------------------------
OPERATING INCOME 21.6 4.4 26.0
INVESTMENT AND OTHER INCOME (EXPENSE)
Net foreign exchange gains 0.6 - 0.6
Interest income 2.5 - 2.5
Interest expense (1.6) - (1.6)
- -------------------------------------------------------------------------------------------------------------
1.5 - 1.5
- -------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 23.1 4.4 27.5
Provision for income taxes (7.9) (1.5) (c) (9.3)
- -------------------------------------------------------------------------------------------------------------
NET INCOME 15.3 2.9 18.2
=============================================================================================================
INCOME PER COMMON SHARE:
Basic $0.16 $ 0.19
Diluted $0.16 $ 0.19
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
(IN MILLIONS)
Basic 93.3 93.3
Diluted 94.9 94.9
Adjustments:
(a) Remove amortization of acquired intangibles resulting from our merger with
Atrix in November, 2004.
(b) Remove restructuring costs related to integration activities that followed
our merger with Atrix.
(c) Remove the income tax impact of (a) and (b).
Note 1
The adjusted non-GAAP financial measures have no standardized meaning under GAAP
and are not comparable between companies. Management believes that the adjusted
non-GAAP financial measures are useful because they exclude those
non-operational activities or transactions that are not necessarily relevant to
understanding the trends of the Company or the prospects of future performance.
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EXHIBIT 2
QLT INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
2004 FIRST QUARTER RECONCILIATION OF GAAP EARNINGS TO
NON-GAAP EARNINGS (PRO FORMA)
- -----------------------------------------------------------------------------------------------------------------------------
(In millions of United States dollars, except per share data) (Unaudited)
Atrix
pre-merger Three months
operations ended
Three months (January 1, March 31,
ended 2004 - 2004 Adjusted
March 31, 2004 March 31, Pro Forma
GAAP 2004) Adjustments Non-GAAP(1)
- -----------------------------------------------------------------------------------------------------------------------------
REVENUES
Net product revenue $ 40.5 $ 4.5 $ - $ 45.0
Net royalties - 3.6 - 3.6
Contract research and development 0.8 5.0 - 5.8
Licensing and milestones - 2.1 (2.1) (a) -
- -----------------------------------------------------------------------------------------------------------------------------
41.3 15.2 (2.1) 54.4
- -----------------------------------------------------------------------------------------------------------------------------
COST AND EXPENSES
Cost of sales (6.9) (3.2) (1.3) (b) (11.4)
Research and development (9.4) (8.1) - (17.5)
Selling, general and administrative (4.8) (2.3) (0.2) (c) (7.2)
Depreciation (0.8) (0.6) (0.2) (d) (1.6)
Amortization of intangibles - - (1.9) (e) (1.9)
- -----------------------------------------------------------------------------------------------------------------------------
(21.9) (14.2) (3.6) (39.7)
- -----------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 19.4 1.0 (5.6) 14.8
INVESTMENT AND OTHER INCOME (EXPENSE)
Net foreign exchange gains 0.3 0.3 - 0.6
Interest income 2.5 0.6 (2.3) (f) 0.9
Interest expense (1.5) - - (1.5)
Other gains - 0.9 (0.9) (g) -
- -----------------------------------------------------------------------------------------------------------------------------
1.2 1.9 (3.1) (0.0)
- -----------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 20.6 2.9 (8.8) 14.7
Provision for income taxes (7.0) - 2.0 (h) (5.0)
- -----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE EXTRAORDINARY GAIN 13.6 2.9 (6.8) 9.7
- -----------------------------------------------------------------------------------------------------------------------------
Extraordinary gain 10.4 - (10.4) (i) -
- -----------------------------------------------------------------------------------------------------------------------------
NET INCOME 24.0 2.9 (17.2) 9.7
=============================================================================================================================
BASIC NET INCOME PER COMMON SHARE:
Income before extraordinary gain $ 0.20 $ 0.11
Extraordinary gain 0.15 -
- -----------------------------------------------------------------------------------------------------------------------------
Net Income $ 0.35 $ 0.11
- -----------------------------------------------------------------------------------------------------------------------------
DILUTED NET INCOME PER COMMON SHARE:
Income before extraordinary gain $ 0.19 $ 0.10
Extraordinary gain 0.15 -
- -----------------------------------------------------------------------------------------------------------------------------
Net Income 0.34 0.10
- -----------------------------------------------------------------------------------------------------------------------------
Add back amortization of acquired intangibles net of related tax 0.01
------------------
DILUTED INCOME PER COMMON SHARE LESS EFFECT OF ACQUIRED INTANGIBLES(1) $ 0.11
------------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (MILLIONS)
Basic 69.3 91.6
Diluted 69.9 96.1
Adjustments
(a) Remove licensing fees and milestone revenue related to deferred revenue
recorded at fair value upon merger.
(b) Increase cost of sales as a result of recording inventory at fair value
upon merger.
(c) Add patent maintenance expenses.
(d) Increase depreciation as a result of recording property, plant and
equipment at fair value.
(e) Record additional amortization of acquired intangibles.
(f) Remove foregone interest income from cash consumed in the merger and
harmonization of treasury investment policies.
(g) Remove gain on sale of investments that would have been liquidated.
(h) Record tax impact of adjustments (b), (d), (e), and (f).
(i) Remove 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 8 of 9
QLT Inc. will hold an analyst and institutional investor conference call to
discuss first quarter results on April 28th at 8:30 a.m. EDT (5:30 a.m. PDT).
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
1-800-374-8183, access code 5540623.
-30-
QLT INC.:
Vancouver, Canada
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 and Eligard sales is contained in the financial statements contained in
the Company's annual and periodic reports. Visudyne sales are product sales by
Novartis under its alliance with QLT. Eligard sales are product sales by third
parties pursuant to contractual agreements with the Company.
The first 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, 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, the statements as to the Company's intention to purchase its
common shares and the Company's expectation that it is on track to achieve the
sales and revenue guidance figures previously released These statements are only
predictions and there are a number of risks , uncertainties and other factors
which could cause actual events or results may differ materially, including but
not limited to: the risk that future sales of Visudyne, Eligard and our other
products may be less than expected due to increased competition or for other
reasons, 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 our products, 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 commercialise Visudyne, Eligard and our other
products, our intention to purchase our common shares is subject to regulatory
approval and the extent to which the Company does so will be impacted by market
factors, and other factors described in detail in QLT's Annual Information Form
and Annual Report 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 assumes no obligation to update such information to reflect
later events or developments, except as required by law.
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