QLT Inc. (Nasdaq:QLTI) (TSX:QLT) ("QLT" or the "Company") is a
biotechnology company dedicated to the development and
commercialization of innovative ocular products that address the
unmet medical needs of patients and clinicians worldwide. The
Company today reported financial results for the second quarter
ended June 30, 2013. Unless specified otherwise, all amounts are in
U.S. dollars and in accordance with U.S. GAAP.
2013 SECOND QUARTER FINANCIAL RESULTS
Discontinued Operations Reporting
On September 24, 2012, the Company announced that it completed
the sale of its Visudyne® business to Valeant Pharmaceuticals
International, Inc. On April 3, 2013, the Company completed the
sale of its punctal plug delivery system technology (the "PPDS
Technology") to Mati Therapeutics Inc. In accordance with the
accounting standard for discontinued operations, the results of
operations relating to both the Visudyne business and the PPDS
Technology have been excluded from continuing operations and
reported as discontinued operations for the current and prior
periods.
QLT Expenses / Other Income
Research and Development (R&D) expenses relate to QLT's
synthetic retinoid program. During the second quarter of 2013,
R&D expense was $4.4 million compared to $7.5 million for the
same period in 2012. The $3.1 million decrease was primarily due to
savings from the Company's 2012 restructuring initiatives and
higher spending in 2012 related to the completion of certain early
stage safety studies and manufacturing activities required to
support clinical studies.
During the second quarter of 2013, Selling, General and
Administrative (SG&A) expense was $1.8 million compared to $5.9
million for the same period in 2012. The $4.1 million decrease was
primarily due to savings from the Company's 2012 restructuring
initiatives.
Investment and Other Income was $1.2 million for the second
quarter of 2013. This primarily consists of a $1.0 million
gain related to the Fair Value Change in the Contingent
Consideration asset. This gain occurred primarily because our
contingent consideration assets are recorded as the present value
of future expected payments with respect to Eligard® and Visudyne,
and therefore as each quarter elapses, even if no changes are made
to the underlying Eligard and Visudyne contingent consideration
forecasts, a gain will be booked related to the time value of money
as we move closer to realizing the full face value of the future
expected payments.
Operating Loss
The operating loss for the second quarter of 2013 was $7.1
million, compared to a $13.7 million operating loss incurred during
the same period in the prior year. The $6.6 million improvement in
operating results is primarily due to savings from our 2012
restructuring initiatives and reduced spending on our synthetic
retinoid program offset by $0.7 million of restructuring costs
incurred during the quarter.
(Loss) Income from Discontinued Operations, Net of
Income Taxes
For the second quarter of 2013, we incurred a $0.2 million loss
from discontinued operations, net of income taxes, compared to a
$4.1 million loss from discontinued operations for the same period
in 2012.
Loss Per Share
Loss per share was $0.12 in the second quarter of 2013 compared
to a $0.33 loss per share in the second quarter of 2012. The
improvement was primarily due to restructuring savings and lower
spending on the synthetic retinoid program, partially offset by
restructuring charges and a lower gain from the Fair Value Change
in Contingent Consideration in the current period.
Cash and Cash Equivalents and Restricted
Cash
The Company's consolidated cash balance at June 30, 2013
consisted of $103.2 million of cash and cash equivalents and $7.5
million of restricted cash, down from $307.4 million of cash and
cash equivalents and $7.5 million of restricted cash at the end of
2012. The decrease was largely due to the $200 million special cash
distribution to the Company's shareholders, which was completed on
June 27, 2013, and $13.5 million of common share repurchases
completed in the first quarter of 2013. During the second
quarter of 2013, proceeds received in connection with collection of
the Eligard Contingent Consideration totaled $8.0 million ($18.9
million collected during the six months ended June 30, 2013). In
addition, we still have up to $57.9 million of Eligard Contingent
Consideration remaining to be collected.
"During our first year as your fiduciaries, QLT's Board of
Directors is very pleased to have reduced SG&A and non-retinoid
development expenses by approximately 70% and returned significant
capital to shareholders in such a tax-efficient manner; while
simultaneously advancing the development of our
orphan-disease-focused synthetic oral retinoid
program. Throughout the balance of 2013, your Board will
continue its efforts to maximize value for our shareholders,
including further advancing QLT091001. We look forward to
updating you on our development plans for QLT091001 by year-end
2013," said Jason M. Aryeh, Chairman of the Board.
Passive Foreign Investment Company
The Company believes that it was classified as a Passive Foreign
Investment Company (PFIC) for 2008 – 2012, and that it may be
classified as a PFIC in 2013, which could have adverse tax
consequences for U.S. shareholders. Please refer to our Annual
Report on Form 10-K for additional information.
QLT Inc. - Financial
Highlights |
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CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
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In accordance with United States
generally accepted accounting principles |
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(Unaudited) |
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Three
months ended |
Six months
ended |
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June
30, |
June
30, |
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(In thousands of U.S. dollars except
share and per share information) |
2013 |
2012 |
2013 |
2012 |
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Expenses |
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Research and development |
$4,392 |
$7,465 |
$8,472 |
$13,981 |
Selling, general and
administrative |
1,810 |
5,872 |
3,892 |
9,980 |
Depreciation |
252 |
326 |
487 |
689 |
Restructuring
charges |
671 |
-- |
1,493 |
-- |
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7,125 |
13,663 |
14,344 |
24,650 |
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Operating loss |
(7,125) |
(13,663) |
(14,344) |
(24,650) |
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Investment and other
income |
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Net foreign exchange gains
(losses) |
84 |
(32) |
18 |
(150) |
Interest income |
80 |
56 |
136 |
88 |
Fair value change in contingent
consideration |
1,038 |
1,650 |
1,833 |
3,591 |
Other
gains |
36 |
29 |
36 |
83 |
|
1,238 |
1,703 |
2,023 |
3,612 |
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Loss from continuing operations
before income taxes |
(5,887) |
(11,960) |
(12,321) |
(21,038) |
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Provision for income
taxes |
(142) |
(251) |
(325) |
(548) |
Loss from continuing
operations |
(6,029) |
(12,211) |
(12,646) |
(21,586) |
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(Loss) Income from discontinued
operations, net of income taxes |
(170) |
(4,093) |
20 |
(4,995) |
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Net loss and comprehensive
loss |
($6,199) |
($16,304) |
($12,626) |
($26,581) |
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Basic and diluted net loss per common
share |
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Continuing operations |
($0.12) |
($0.25) |
($0.25) |
($0.44) |
Discontinued
operations |
($0.00) |
($0.08) |
$0.00 |
($0.10) |
Net loss per common
share |
($0.12) |
($0.33) |
($0.25) |
($0.54) |
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Weighted average number of common
shares outstanding (thousands) |
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Basic and diluted |
50,883 |
49,191 |
50,736 |
49,088 |
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QLT Inc. |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
In accordance with United States
generally accepted accounting principles |
(Unaudited) |
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(In thousands of U.S. dollars) |
June 30,
2013 |
December 31, 2012 |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
$103,180 |
$307,384 |
Restricted cash |
7,502 |
7,500 |
Accounts receivable |
684 |
3,960 |
Contingent consideration -
current |
40,627 |
41,255 |
Income taxes receivable |
600 |
554 |
Deferred income tax assets -
current |
362 |
644 |
Assets held for sale |
-- |
300 |
Prepaid and
other |
2,396 |
1,442 |
Total current assets |
155,351 |
363,039 |
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Property, plant and
equipment |
2,235 |
2,655 |
Deferred income tax assets -
non-current |
230 |
370 |
Contingent consideration -
non-current |
18,743 |
35,154 |
Total assets |
176,559 |
401,218 |
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LIABILITIES |
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Current liabilities |
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Accounts payable |
3,319 |
$6,121 |
Accrued liabilities |
1,189 |
2,515 |
Accrued restructuring
charge |
666 |
1,933 |
Deferred
income |
-- |
456 |
Total current
liabilities |
5,174 |
11,025 |
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Uncertain tax
position liabilities |
1,813 |
1,875 |
Total liabilities |
6,987 |
12,900 |
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SHAREHOLDERS' EQUITY |
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Share capital |
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Authorized |
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500,000,000 common shares
without par value |
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5,000,000 first preference
shares without par value, issuable in series |
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Issued and outstanding |
466,229 |
471,712 |
Common shares |
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June 30, 2013 – 51,081,878
shares |
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December 31, 2012 – 51,589,405
shares |
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Additional paid-in
capital |
95,387 |
296,024 |
Accumulated deficit |
(495,013) |
(482,387) |
Accumulated other
comprehensive income |
102,969 |
102,969 |
Total shareholders'
equity |
169,572 |
388,318 |
Total shareholders' equity and
liabilities |
$176,559 |
$401,218 |
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About QLT
QLT is a biotechnology company dedicated to the development and
commercialization of innovative ocular products that address the
unmet medical needs of patients and clinicians worldwide. We are
focused on developing our synthetic retinoid program for the
treatment of certain inherited retinal diseases.
QLT's head office is based in Vancouver, Canada and the Company
is publicly traded on NASDAQ Stock Market (symbol: QLTI) and the
Toronto Stock Exchange (symbol: QLT). For more information about
the Company's products and developments, please visit our web site
at www.qltinc.com.
Visudyne® is a registered trademark of Novartis AG
Eligard® is a registered trademark of Sanofi S.A.
Certain statements in this press release constitute
"forward-looking statements" of QLT within the meaning of the
Private Securities Litigation Reform Act of 1995 and constitute
"forward-looking information" within the meaning of applicable
Canadian securities laws. Forward-looking statements include, but
are not limited to: statements concerning our ability to maximize
the value of our assets, including further progressing QLT091001;
statements concerning our PFIC status; and statements which contain
language such as: "assuming," "prospects," "goal," "future,"
"projects," "potential," "believes," "expects," "hopes," 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. Many such risks, uncertainties and
other factors are taken into account as part of our assumptions
underlying these forward-looking statements and include, among
others, the following: the Company's future operating results are
uncertain and likely to fluctuate; currency fluctuations; the risk
that sales of Visudyne or Eligard may be less than expected thereby
impacting our contingent consideration; the risk that we may not
receive any or as much additional contingent consideration as we
might expect under our agreements with respect to the sale of
Visudyne, Eligard and the PPDS Technology; risks and
uncertainties concerning the impacts that QLT's strategic
initiatives will have on the market price of our securities; risks
resulting from recent changes in personnel; uncertainties relating
to our development plans, timing and results of the clinical
development and commercialization of our products and technologies;
assumptions related to continued enrollment trends, efforts and
success, and the associated costs of these programs; outcomes for
our clinical trials may not be favorable or may be less
favorable than interim/preliminary results and/or previous trials;
there may be varying interpretations of data produced by one or
more of our clinical trials; risks and uncertainties associated
with the safety and effectiveness of our technology; the timing,
expense and uncertainty associated with the regulatory approval
process for products to advance through development stages; risks
and uncertainties related to the scope, validity, and
enforceability of our intellectual property rights and the impact
of patents and other intellectual property of third parties; and
general economic conditions and other factors described in detail
in QLT's 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 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.
This press release also contains "forward looking information"
that constitutes "financial outlooks" within the meaning of
applicable Canadian securities laws. This information is provided
to give investors general guidance on management's current
expectations of certain factors affecting our business, including
our financial results. Given the uncertainties, assumptions and
risk factors associated with this type of information, including
those described above, investors are cautioned that the information
may not be appropriate for other purposes.
CONTACT: QLT Inc. Contacts:
Investor & Media Relations
Andrea Rabney or David Pitts
Argot Partners
212-600-1902
andrea@argotpartners.com
david@argotpartners.com
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