LAB International announces 2003 second quarter results


    - FIRST HALF OF FISCAL YEAR HIGHLIGHTED BY ACHIEVEMENT OF SEVERAL 
    DRUG DEVELOPMENT MILESTONES AND STRATEGIC ACQUISITION -
    
    www.labinc.ca
    Toronto Stock Exchange Symbol: LAB


LAVAL, QC, Aug. 26 /CNW/ - LAB International Inc. (TSX: LAB) today
announced second quarter financial and operational results for the period
ended June 30, 2003. 
Revenue for the second quarter ended June 30, 2003 was $3.0 million,
unchanged from the $3.0 million reported in the corresponding period in the
prior year. For the second quarter of 2003, the Company incurred a
consolidated net loss of $351,000 compared to earnings of $110,000 for the
same period in the previous fiscal year. The net loss during the quarter was
the result of the strengthening Canadian dollar, higher operating costs and
continued investment in research and development activities related to the
Company's line of proprietary therapeutic drugs. Growth Hormone Releasing
Hormone remains on schedule to enter phase I-II clinical trials in the fourth
quarter of this year while the Company advances its Dry Powder Inhalation
device, the LABHaler(TM), towards a commercial design. 
Direct costs increased $0.2 million, from $1.7 million in the prior year
period to $1.9 million in the current quarter. The increase in direct costs
was primarily due to expansion in technical staff and infrastructure costs, as
the Company has increased capacity in its research service facilities in
anticipation of future growth. This expansion includes the addition and
qualification of two new departments (Clinical Pathology and Histopathology)
that enable the internal execution of previously outsourced requirements. 
Selling, general and administrative expenses increased by $0.4 million
during the quarter, from $0.8 million in the prior year period to $1.2 million
in the current quarter. The increase was primarily due to corporate
development initiatives including the review of a number of potential
acquisitions and additional costs associated with LAB becoming a public
company. 
On the Balance Sheet, cash, cash equivalents and short-term investments,
at June 30, 2003, were $5.5 million compared with $8.3 million at December 31,
2002. Working capital was $7.0 million compared to $7.9 million as at December
31, 2002. Long-term debt, including the current portion, stood at $5.7 million
on June 30, 2003. 
"Looking at the quarterly results, excluding the impact of the
strengthening Canadian dollar, revenue from our research services business
would have demonstrated year-over-year growth consistent with our internal
budgets," said Dr. Halvor Jaeger, CEO of LAB. "While we continue to grow our
service business, our strategy of building a portfolio of proprietary
therapeutics by leveraging our core research competencies advanced
significantly during the quarter." 
Consistent with its strategy to enhance the Company's drug development
capabilities and its operational effectiveness, subsequent to the end of the
quarter, LAB acquired the Toxicological Research Centre ("TRC") in Hungary.
The acquisition, which closed on July 10, 2003 strengthens LAB's development
and research service platforms and is anticipated to enhance the Company's
margins and revenue growth. At a price, subject to future adjustments, of not
more than US$2.25 million, the purchase price for TRC is less than its
approximate annual revenue on a historical basis. TRC is expected to be an
accretive acquisition in its first year of integrated results. 
"TRC's capabilities in inhalation toxicology will play a key role in
supporting LAB's broadened inhalation development strategy, in addition to
expanding service revenue. As we begin to develop novel formulations based on
our LABHaler(TM) platform, the cost savings of having in-house capabilities in
inhalation toxicology alone will exceed the cost of the TRC acquisition,"
added Dr. Jaeger. 


    Completed Milestones
    Novel Formulations:


The Company continues to develop its inhalation delivery platform with
the goal of generating new products based on novel formulations of known
substances and new chemical entities. During the quarter, the Company entered
into a development agreement with Wilden Ag ("Wilden") (www.wilden.com), one
of the 50 largest injection-molding companies in Europe. 
The Company also entered into a worldwide exclusive license agreement
(the "DPIS Agreement") with the University of Alberta for the rights to a dry
powder inhalation system ("The De-agglomerator"). The DPIS Agreement provides
for co-development of products or devices to be manufactured in connection
with the De-agglomerator, providing the Company with an additional inhalation
drug delivery technology system. 
New Chemical Entities: 
Development of the Company's first new chemical entity, Growth Hormone
Releasing Hormone (GHRH) continues to progress on schedule. The Company has a
worldwide exclusive license agreement with the Universite de Montreal and the
Centre Hospitalier de l'Universite de Montreal covering the patent rights to
the analogue product. The Company anticipates GHRH to enter phase I-II
clinical trials in the last quarter of 2003. 
Drug Development - Dechra Pharmaceuticals PLC: 
In May 2003, LAB signed a drug development partnership agreement with
London Stock Exchange listed Dechra Pharmaceuticals PLC (www.dechra.com). LAB
will provide research studies on selected therapeutic agents and Arnolds
Veterinary Products, a subsidiary of Dechra, will be responsible for the
regulatory submissions of these products, which will be marketed and sold in
the agreed countries under the Arnolds brand. 
About LAB 
LAB International Inc. is a drug development company focused on
developing promising new and generic therapeutics, while generating revenue
and cash flow from its base of research services in Europe and North America.
By leveraging the expertise, infrastructure and stable revenue stream of its
research services, LAB offsets the costs and avoids the risks associated with
traditional drug research and development. LAB employs an experienced
scientific team of more than 210 employees operating in more than 180,000 sq.
ft. of facilities. 
LAB's common shares trade on The Toronto Stock Exchange ("TSX") under the
symbol "LAB" with 28.3 million shares outstanding. 
This news release contains certain forward-looking statements that
reflect the current views and/or expectations of LAB International Inc. with
respect to its performance, business and future events. Such statements are
subject to a number of risks, uncertainties and assumptions. Actual results
and events may vary significantly. 


    Financial statements to follow:
    <<
    LAB INTERNATIONAL INC.
    Consolidated Balance Sheets
    (Unaudited)
    June 30, 2003 and December 31, 2002
    (in thousands of Canadian dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                        June 30, December 31,
                                                           2003         2002
    -------------------------------------------------------------------------
                                                                    (Audited)
    Assets
    Current assets:
      Cash and cash equivalents                      $    5,477   $    2,772
      Short-term investments                                  -        5,500
      Accounts receivable                                 3,106        2,406
      Unbilled receivables                                1,040        1,357
      Income taxes and research tax
       credits receivable                                 1,909        1,151
      Prepaid expenses                                      426          330
      -----------------------------------------------------------------------
                                                         11,958       13,516
    Property and equipment                                8,859        8,930
    Other assets                                            845          827
    Future income taxes                                   1,820        1,282
    -------------------------------------------------------------------------
                                                     $   23,482   $   24,555
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable and accrued liabilities       $   2,303    $    3,503
      Deferred revenue                                   1,754         1,199
      Current portion of long-term debt                    537           391
      Future income taxes                                  390           510
      -----------------------------------------------------------------------
                                                         4,984         5,603
    Long-term debt                                       5,141         4,720
    Shareholders' equity:
      Share capital                                     12,823        12,866
      Warrants                                           1,935         1,935
      Additional paid-in capital                         2,098         1,927
      Deficit                                           (3,499)       (2,496)
      -----------------------------------------------------------------------
                                                        13,357        14,232
    Subsequent event
    -------------------------------------------------------------------------
                                                    $   23,482    $   24,555
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LAB INTERNATIONAL INC.
    Consolidated Statements of Earnings
    (Unaudited)
    Periods ended June 30, 2003 and 2002
    (in thousands of Canadian dollars, except per share data)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                Three months ended         Six months ended
                                      June 30,                 June 30,
                          ------------------------- -------------------------
                                 2003         2002         2003         2002
    -------------------------------------------------------------------------
    Revenues               $    2,995   $    2,965   $    6,166   $    6,445
    Direct costs (including
     depreciation of $191
     and $358 in 2003;
     2002 - $65 and $66)        1,909        1,668        4,089        3,033
    -------------------------------------------------------------------------
                                1,086        1,297        2,077        3,412
    Expenses:
      Selling, general and
       administrative           1,223          824        2,483        1,411
      Research and
       development                188          200          701          352
      Depreciation and
       amortization                57           25          106           40
      Interest on long-
       term debt                   73            6          169            7
      -----------------------------------------------------------------------
                                1,541        1,055        3,459        1,810
    -------------------------------------------------------------------------
    (Loss) earnings before
     income taxes                (455)         242       (1,382)       1,602
    Provision for (recovery
     of) income taxes:
      Current                      95          243          279          830
      Future                     (199)        (111)        (658)           -
      -----------------------------------------------------------------------
                                 (104)         132         (379)         830
    -------------------------------------------------------------------------
    Net (loss) earnings    $     (351)  $      110   $   (1,003)  $      772
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (Loss) earnings per
     share:
      Basic                $    (0.01)  $     0.00   $    (0.04)  $     0.04
      Diluted                   (0.01)        0.00        (0.04)        0.04
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number
     of shares outstanding:
      Basic                28,336,880   22,166,666   28,338,423   17,916,666
      Effect of dilutive
       options and warrants         -    1,241,220            -      620,610
    -------------------------------------------------------------------------
      Diluted              28,336,880   23,407,886   28,338,423   18,537,276
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LAB INTERNATIONAL INC.
    Consolidated Statements of Retained Earnings
    (Unaudited)
    Periods ended June 30, 2003 and 2002
    (in thousands of Canadian dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                Three months ended         Six months ended
                                      June 30,                 June 30,
                          ------------------------- -------------------------
                                 2003         2002         2003         2002
    -------------------------------------------------------------------------
    (Deficit) retained
     earnings, beginning
     of period             $   (3,148)  $    2,055   $   (2,496)  $    1,393
    Net (loss) earnings          (351)         110       (1,003)         772
    Share issue costs               -       (2,134)           -       (2,134)
    -------------------------------------------------------------------------
    (Deficit) retained
     earnings, end of
     period                $   (3,499)  $       31   $   (3,499)  $       31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LAB INTERNATIONAL INC.
    Consolidated Statements of Cash Flows
    (Unaudited)
    Periods ended June 30, 2003 and 2002
    (in thousands of Canadian dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                              Three months ended         Six months ended
                                    June 30,                 June 30,
                          ------------------------- -------------------------
                                 2003         2002         2003         2002
    -------------------------------------------------------------------------
    Cash flows from
     operating activities:
      Net (loss) earnings  $     (351)  $      110   $   (1,003)  $      772
      Adjustments for:
        Depreciation and
         amortization             248           90          464          106
        Stock-based
         compensation              64            -          128            -
        Future income
         taxes                   (199)        (111)        (658)           -
      Net changes in
       operating assets
       and liabilities           (900)          29       (1,882)         434
      -----------------------------------------------------------------------
                               (1,138)         118       (2,951)       1,312
    Cash flows from
     financing activities:
      Proceeds from
       reverse acquisition          -        7,340            -        7,340
      Share issue costs             -         (654)           -         (654)
      Increase in long-
       term debt                  652        2,817          652        2,813
      Repayment of long-
       term debt                  (34)         (40)         (85)         (40)
      -----------------------------------------------------------------------
                                  618        9,463          567        9,459
    Cash flows from
     investing activities:
      Acquisition of property
       and equipment             (208)      (3,959)        (393)      (5,033)
      Maturity of short-
       term investments             -        1,953        5,500          699
      Other assets                 11            -          (18)           -
      -----------------------------------------------------------------------
                                 (197)      (2,006)       5,089       (4,334)
    -------------------------------------------------------------------------
    Net increase in cash
     and cash equivalents         717        7,575        2,705        6,437
    Cash and cash
     equivalents, beginning
     of period                  6,194          115        2,772        1,253
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end
     of period             $    5,477   $    7,690   $    5,477   $    7,690
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash and cash
     equivalents are
     comprised of:
      Cash balances with
       banks                                         $    1,867   $    1,290
      Short-term
       investments,
       yielding 3.27%
       (June 30, 2002 -
       ranging from 2.5%
       to 2.55%)                                          3,610        6,400
    -------------------------------------------------------------------------
                                                     $    5,477   $    7,690
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental cash flow
     disclosure
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>
    -0-                           08/26/2003


/For further information: For further information visit LAB's website at 
www.labinc.ca, or contact: James Smith, Investor Relations, Tel: 
(416) 815-0700 ext. 229, Fax: (416) 815-0080, jsmith(at)equicomgroup.com/ 
(LAB.) 
CO:  Lab International Inc.
ST:  Quebec
IN:  MTC 
SU:  ERN  
-30- 
-0- Aug/26/2003 20:30 GMT
 
 
Press spacebar to pause and continue. Press esc to stop.