Paladin Labs Reports Second Quarter 2013 Results

Paladin Labs Reports Second Quarter 2013 Results 
Achieves Record EBITDA(1) 
MONTREAL, CANADA -- (Marketwired) -- 08/14/13 -- Paladin Labs Inc.
(TSX:PLB), a leading specialty pharmaceutical company, today reported
its financial results for the quarter ended June 30, 2013.  
2013 Second Quarter Highlights 
Financial 


 
--  Adjusted(2) revenues reached $52.3 million, an increase of 41% over the
    same period last year 
--  Adjusted(2) EBITDA(1) reached $22.7 million, an increase of 32% over the
    same period last year 

 
Product Developments 


 
--  Acquired Binotal(R) from Bayer Pharma AG ("Bayer") for Latin America
    including Mexico, Brazil, Columbia, Ecuador and select countries in
    Central America 
--  Launched Silenor(R) (doxepin hydrochloride) for the treatment and
    symptomatic relief of insomnia 
--  Launched Amniosense(TM), Canada's first OTC amniotic fluid leak
    detection test 
--  Submitted a new drug application ("NDA") to the U.S. Food and Drug
    Administration (FDA) for Impavido(R) (miltefosine) and received priority
    review status 

 
Corporate Developments 


 
--  Completed a strategic collaboration to refinance and increase Bioniche's
    debt for up to US $30 million, to provide new equity of up to $0.5
    million, and to enter into a licensing agreement for Bioniche's Phase
    III bladder cancer product - Urocidin(TM) for Canada, South Africa and
    Mexico. 
--  Amended a secured loan agreement with Nuvo Research Inc. ("Nuvo") to
    issue a second tranche of $4 million, add a potential third $4 million
    loan tranche and issue up to 100,000 warrants to acquire Nuvo common
    shares 
--  Issued a combined balance of $4.2 million secured loans to two
    additional undisclosed pharmaceutical companies 
--  Entered into license agreement with Altus Formulation Inc. ("Altus") for
    certain Labopharm Inc technology in exchange for a 35% equity ownership
    interest 

 
Subsequent to the quarter  


 
--  Closed the agreements related to Bioniche and Nuvo 
--  Acquired Allon Therapeutics Inc. ("Allon") 

 
"In the second quarter, Paladin posted record EBITDA(1) while
continuing to invest in its product portfolio and pipeline. Paladin
further expanded its Latin American footprint with the acquisition of
Binotal for Latin America and select Central American countries. In
addition, we expanded our product portfolio and pipeline with the
launch of Silenor and Amniosense and the in-licensing of Phase III
product Urocidin. Furthermore, we deployed nearly $40 million through
secured strategic loans to four pharmaceutical companies" said Mark
Beaudet, interim President and CEO of Paladin Labs. 
Financial Results 
Adjusted(2) revenues increased $15.2 million or 41% to $52.3 million
for the second quarter of 2013 from $37.1 million for the same period
in 2012. The increase is mostly attributable to the proportionate
consolidation of Litha's revenues of $11.9 million for the quarter
ended June 30, 2013. Paladin's promoted products, including
Tridural(R), Trelstar(R), Testim(R), Abstral(R), Digifab(R),
Glucagen(R), Oralair(R) and Pollinex(R)-R combined increased by 30%
for the quarter compared to the same period last year. 
Consolidated revenues for the quarter ended June 30, 2013 were $67.2
million, an increase of 81% over the same period last year. The
increase is mostly attributable to the consolidation of Litha's
revenues of $26.8 million for the quarter. 
Second quarter 2013 adjusted(2) EBITDA(1) increased 32% to $22.7
million, compared to adjusted(2) EBITDA(1) of $17.2 million in the
second quarter of 2012. This increase is primarily due to the strong
sales performance of Paladin's promoted products, partially offset by
increased costs associated with the launch of new products. Litha
contributed $1.8 million to adjusted(2) EBITDA(1) which includes
impact of higher gross income margins as a result of the mix of
products sold in the quarter offset by the impact of the continued
decline in the South African Rand. 
Consolidated EBITDA(1) reached a record $24.9 million, an increase of
44% over the consolidated EBITDA(1) for the quarter ended June 30,
2012. This increase is primarily due to the consolidation of Litha,
which contributed $4.0 million in consolidated EBITDA(1) for the
quarter.  
Net income attributable to shareholders for the quarter was $13.6
million or $0.64 per fully diluted share, compared to net income
attributable to shareholders of $10.9 million or $0.52 per fully
diluted share the same quarter a year ago. 
As at June 30 2013, Paladin's cash, cash equivalents and investments
in marketable securities net of bank overdraft totaled $247.7
million. From this strong cash position, Paladin continues to pursue
business and corporate development opportunities.  
Product Developments 
During the second quarter of 2013, Paladin advanced its product
portfolio and pipeline. 
Paladin grew its international business with the acquisition of
Binotal from Bayer for Latin America and select countries in Central
America. Binotal is used for the systemic treatment of a wide range
of bacterial infections. Binotal has a strong market position in the
region and recorded sales in 2012 in excess of $11 million in Latin
America with Mexico and Brazil generating two-thirds of the revenues.
Bayer will provide certain distribution support services for an
interim period. 
During the quarter, Paladin added to its prescription and OTC
portfolio with the launch of Silenor and Amniosense. Silenor is
indicated for the treatment and symptomatic relief of insomnia and
competes in the Canadian prescription sleep aid market which in 2012
was valued at over $90 million(3). In addition, Paladin's OTC
portfolio was expanded with the launch of Amniosense, Canada's first
and only OTC amniotic fluid leak detection test. 
During the second quarter, Paladin expanded its product pipeline with
the in-licensing of Urocidin and the NDA for Impavido. Paladin
entered into an exclusive license to market and sell Bioniche's phase
III bladder cancer treatment Urocidin in Canada, South Africa and
Mexico. Furthermore, Paladin submitted a NDA to the FDA for Impavido
and was granted priority review status. If approved, Paladin will be
authorized to commercialize Impavido in the U.S. and will receive a
priority review voucher through the FDA's tropical disease priority
review voucher program.  
Corporate Developments 
During the quarter, Paladin entered into a strategic agreement with
Bioniche to refinance and increase its debt for up to US $30 million,
provide new equity of up to $0.5 million and license Urocidin.
Paladin acquired Bioniche's existing secured debt facility with
Capital Royalty Partners II L.P. and its affiliates for approximately
US $22 million. In addition, Paladin and Bioniche entered into an
amended secured loan transaction whereby Paladin provided an
additional US $8 million loan to Bioniche, US $5 million of which was
paid upon closing and the remaining US $3 million will be available
upon meeting certain conditions. The loan bears an interest rate of
13.25% and will mature on July 1, 2014. Furthermore, Paladin was
granted warrants to acquire up to 2 million common shares of
Bioniche, in addition to another 1 million warrants which may be
issued to Paladin under certain conditions. 
Paladin also amended its existing loan agreement with Nuvo and issued
a second tranche of $4 million bearing an interest rate of 15%. The
amendment includes a third $4 million tranche which may be drawn upon
achieving certain conditions, the issuance of up to 100,000 warrants
to acquire Nuvo common shares and the right to in-license WF10,
Nuvo's immune modulation drug candidate, if certain conditions are
met. 
During the second quarter, Paladin issued a combined balance of $4.2
million in secured loans to two additional unnamed pharmaceutical
companies. Paladin also entered into a license agreement for certain
intellectual property and related technology of Labopharm Inc. to
Altus Formulation Inc. ("Altus") in exchange for a 35% equity
ownership interest, option to in-license and royalty rights on future
products developed by Altus. 
Subsequent to the quarter, Paladin acquired Allon which was
restructured under the Bankruptcy and Insolvency Act (Canada) and
under the Canada Business Corporations Act. All pre-existing issued
and outstanding shares and other securities of Allon were, pursuant
to the Court Order, cancelled without payment or other consideration. 
(1) EBITDA - Non-IFRS Financial Measures  
The term EBITDA (earnings before interest, taxes, depreciation and
amortization) does not have any standardized meaning under
International Financial Reporting Standards ("IFRS") and therefore
may not be comparable to similar measures presented by other
companies. The Company defines EBITDA as earnings before interest
expense, other expense (income), taxes, depreciation and
amortization, foreign exchange gains (losses), share of net income
(loss) in associates and joint venture and unusual items; such as
write-downs and gains (losses) on intellectual property and
investments. EBITDA is calculated and presented consistently from
period to period and agrees, on a consolidated basis, with the amount
disclosed as "Earnings before under-noted items" on the consolidated
statements of income. The Company believes EBITDA to be an important
measurement that allows it to assess the operating performance of its
ongoing business on a consistent basis without the impact of
amortization expenses. The Company excludes amortization expenses
because their level depends substantially on non-operating factors
such as the historical cost of intangible assets. The Company's
method for calculating EBITDA may differ from that used by other
issuers and, accordingly, this measure may not be comparable to
EBITDA used by other issuers.   


 
(3) IMS Brogan - moving annual total for the 12 months ended December 31, 
    2012                                                                  

 
(2) Adjusted 
The term "adjusted" refers to the proportionate consolidation of
Litha and Ativa's results. Given that Litha and Ativa are being
accounted for on a consolidated basis, the consolidated results
include amounts attributable to minority shareholders. Consequently,
adjusted results have been provided to highlight Paladin's 44.54% and
50.01% economic interest in Litha and Ativa, respectively. 
Conference Call Notice  
Paladin will host a conference call to discuss its second quarter
results today at 10:00 a.m. EST. The dial-in number for the
conference call is 1-800-736-4610 or 416-981-9000. The call will be
audio-cast live and archived for 30 days at www.paladinlabs.com.  
About Paladin Labs Inc. 
Paladin Labs Inc., headquartered in Montreal, Canada, is a specialty
pharmaceutical company focused on acquiring or in-licensing
innovative pharmaceutical products for the Canadian and select
international markets. With this strategy, a focused Canadian
national sales team and proven marketing expertise, Paladin has
evolved into one of Canada's leading specialty pharmaceutical
companies. For more information, please visit the Company's web site
at www.paladinlabs.com. 
This press release may contain forward-looking statements and
predictions. These forward-looking statements, by their nature,
necessarily involve risks and uncertainties that could cause actual
results to differ materially from those contemplated by the
forward-looking statements. The Company considers the assumptions on
which these forward-looking statements are based to be reasonable at
the time they were prepared, but cautions that these assumptions
regarding the future events, many of which are beyond the control of
the Company and its subsidiaries, may ultimately prove to be
incorrect. Factors and risks, which could cause actual results to
differ materially from current expectations, are discussed in the
annual report as well as in the Company's Annual Information Form for
the year ended December 31, 2012. The Company disclaims any intention
or obligation to update or revise any forward-looking statements
whether as a result of new information or future events and except as
required by law. For additional information on risks and
uncertainties relating to these forward-looking statements, investors
should consult the Company's ongoing quarterly filings, annual report
and Annual Information Form and other fillings found on SEDAR at
www.sedar.com. 


 
INTERIM CONSOLIDATED BALANCE SHEETS                                         
(In thousands of Canadian dollars)                                          
                                                                            
As at                                       June 30, 2013 December 31, 2012 
----------------------------------------------------------------------------
ASSETS                                                                      
Current                                                                     
Cash and cash equivalents                          93,400           118,744 
Marketable securities                             160,096           146,258 
Trade and other receivables                        42,934            38,587 
Inventories                                        43,136            37,441 
Financial assets                                      988                 - 
Income tax receivable                                 533             5,479 
Other current assets                                2,171             1,661 
----------------------------------------------------------------------------
Total current assets                              343,258           348,170 
                                                                            
Investment in associates                              696               626 
Interest in a joint venture                        26,860            30,476 
Loans receivable from a joint venture              11,027            11,661 
Financial assets                                   32,534             4,561 
Investment tax credits recoverable                 22,647            24,840 
Deferred income tax assets                         21,959            25,402 
Property, plant and equipment                       8,499             9,754 
Intangible assets                                 119,764           112,851 
Goodwill                                           33,314            36,176 
----------------------------------------------------------------------------
Total assets                                      620,558           604,517 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
LIABILITIES AND EQUITY                                                      
Current                                                                     
Bank overdraft                                      5,790             7,044 
Payables, accruals and provisions                  56,266            50,165 
Current portion of finance lease                                            
 liability                                            745               796 
Deferred revenue                                    3,894             2,734 
Income tax payable                                 24,780            24,140 
Other balances payable                              2,000             2,000 
Current portion of long-term liabilities            5,349             5,804 
----------------------------------------------------------------------------
Total current liabilities                          98,824            92,683 
                                                                            
Finance lease liability                             6,201             6,843 
Deferred revenue                                    1,502             1,734 
Deferred tax liability                             21,359            24,415 
Other balances payable                                714                 - 
Long-term liabilities                              23,900            28,327 
----------------------------------------------------------------------------
Total liabilities                                 152,500           154,002 
----------------------------------------------------------------------------
                                                                            
Equity                                                                      
Share capital                                     176,964           172,282 
Other paid-in capital                               6,860             7,039 
Other capital reserves                            (10,069)           (4,076)
Retained earnings                                 232,861           208,461 
----------------------------------------------------------------------------
Attributable to shareholders of the                                         
 Company                                          406,616           383,706 
Non-controlling interests                          61,442            66,809 
----------------------------------------------------------------------------
Total equity                                      468,058           450,515 
----------------------------------------------------------------------------
Total liabilities and equity                      620,558           604,517 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                            
INTERIM CONSOLIDATED INCOME STATEMENTS                                      
                                                                            
(In thousands of Canadian dollars except for share and per share amounts)   
                                                                            
                               Three months ended          Six months ended 
                                          June 30                   June 30 
                                2013         2012         2013         2012 
----------------------------------------------------------------------------
                                                                            
Revenues                      67,216       37,136      136,176       75,693 
Cost of sales                 26,127        9,981       54,535       21,169 
----------------------------------------------------------------------------
Gross income                  41,089       27,155       81,641       54,524 
----------------------------------------------------------------------------
                                                                            
Expenses (income)                                                           
Selling, general and                                                        
 administrative               15,958        9,044       32,760       16,688 
Research and development       2,162        1,879        4,787        4,427 
Interest income               (1,898)        (993)      (3,384)      (1,889)
----------------------------------------------------------------------------
Earnings before under-                                                      
 noted items                  24,867       17,225       47,478       35,298 
----------------------------------------------------------------------------
                                                                            
Amortization of                                                             
 intangible assets             4,884        2,903        9,936        5,806 
Depreciation of                                                             
 property, plant and                                                        
 equipment                       305           26          647           51 
Other finance expense            841          340          783          895 
Other income                     (36)        (717)        (549)        (917)
Foreign exchange (gain)                                                     
 loss                           (953)         192         (402)          38 
Interest expense                 818           14        1,859           16 
Share of net (income)                                                       
 loss from a joint                                                          
 venture                        (157)           -          859            - 
Share of net income from                                                    
 an associates                   (98)        (524)         (89)        (949)
----------------------------------------------------------------------------
Income before income tax      19,263       14,991       34,434       30,358 
----------------------------------------------------------------------------
                                                                            
Provision for income                                                        
 taxes                         4,856        4,113        9,477        8,158 
----------------------------------------------------------------------------
Net income for the                                                          
 period                       14,407       10,878       24,957       22,200 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Attributable to:                                                            
Shareholders of the                                                         
 Company                      13,621       10,878       24,400       22,200 
Non-controlling                                                             
 interests                       786            -          557            - 
----------------------------------------------------------------------------
                                                                            
Attributable to                                                             
 shareholders of the                                                        
 Company                                                                    
                                                                            
Basic earnings per share        0.66         0.54         1.19         1.09 
Diluted earnings per                                                        
 share                 
         0.64         0.52         1.16         1.06 
                                                                            
Weighted number of                                                          
 shares outstanding                                                         
                                                                            
Basic                     20,574,460   20,331,736   20,511,366   20,308,241 
Diluted                   21,127,270   20,926,103   21,080,176   20,992,924 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                            
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS                               
                                                                            
(In thousands of Canadian dollars)                                          
                                                                            
                            Three months ended June   Six months ended June 
                                                 30                      30 
                                   2013        2012        2013        2012 
----------------------------------------------------------------------------
                                                                            
Operating activities                                                        
Net income for the period        14,407      10,878      24,957      22,200 
Adjustments reconciling net                                                 
 income to operating cash                                                   
 flows                                                                      
  Amortization of intangible                                                
   assets                         4,884       2,903       9,936       5,806 
  Deferred tax                      773       2,985       4,130       7,358 
  Share-based compensation                                                  
   expense                        1,197         746       1,741       1,327 
  Other finance expense             841         340         783         895 
  Other income                      (36)       (717)       (549)       (717)
  Unrealized foreign                                                        
   exchange (gain) loss          (2,292)        165      (2,188)        230 
  Depreciation of property,                                                 
   plant and equipment              353          29         730          56 
  Share of net income from                                                  
   associates                       (98)       (524)        (89)       (949)
  Share of net (income) loss                                                
   from a joint venture            (157)          -         859           - 
----------------------------------------------------------------------------
                                 19,872      16,805      40,310      36,206 
----------------------------------------------------------------------------
Net change in non-cash                                                      
 balances related to                                                        
 operations                        (139)     (5,165)      1,096      (9,683)
----------------------------------------------------------------------------
Cash inflow from operating                                                  
 activities                      19,733      11,640      41,406      26,523 
----------------------------------------------------------------------------
                                                                            
Investing activities                                                        
Disposals and maturities of                                                 
 marketable securities           33,388      75,656      69,834     115,163 
Dividends from an associate           -       1,637           -       1,637 
Proceeds from disposal of                                                   
 financial assets                    33         799          68         799 
Proceeds from disposal of                                                   
 intangible assets                   50         717          50         717 
Acquisition of subsidiaries,                                                
 net of cash acquired                 -           -           9           - 
Purchases of marketable                                                     
 securities                     (31,736)    (40,478)    (83,731)    (77,055)
Purchases of financial                                                      
 assets                         (26,908)     (4,000)    (29,408)     (4,000)
Purchases of intangible                                                     
 assets                         (22,565)        (25)    (23,680)        (25)
Purchases of property, plant                                                
 and equipment                     (167)       (106)       (332)       (123)
Payment of other balances                                                   
 payable                              -        (995)          -        (995)
----------------------------------------------------------------------------
Net cash (outflow) inflow                                                   
 from investing activities      (47,905)     33,205     (67,190)     36,118 
----------------------------------------------------------------------------
                                                                            
Financing activities                                                        
Common shares issued for                                                    
 cash                               967         598       3,420       1,169 
Increase (decrease) in bank                                                 
 overdraft                        2,436           -        (727)          - 
Repurchase of shares                  -      (1,458)          -      (2,277)
Repayment of long-term                                                      
 liabilities                     (1,070)          -      (2,188)          - 
Payment of obligation under                                                 
 finance lease                        -        (250)          -        (500)
----------------------------------------------------------------------------
Net cash inflow (outflow)                                                   
 from financing activities        2,333      (1,110)        505      (1,608)
----------------------------------------------------------------------------
Foreign exchange rate loss                                                  
 on cash and cash                                                           
 equivalents                        (42)        (55)        (65)        (66)
(Decrease) increase in cash                                                 
 and cash equivalents during                                                
 the period                     (25,881)     43,680     (25,344)     60,967 
Cash and cash equivalents,                                                  
 beginning of period            119,281      89,402     118,744      72,115 
----------------------------------------------------------------------------
Cash and cash equivalents,                                                  
 end of period                   93,400     133,082      93,400     133,082 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Paladin cash and cash    
                                                   
 equivalents                     90,107     133,082                         
Paladin marketable                                                          
 securities                     160,096     128,077                         
----------------------------------------------------------------------------
Paladin cash, cash                                                          
 equivalents and marketable                                                 
 securities                     250,203     261,159                         
----------------------------------------------------------------------------
Litha cash and cash                                                         
 equivalents                      2,846           -                         
Litha bank overdraft             (5,790)          -                         
----------------------------------------------------------------------------
Litha cash and cash                                                         
 equivalents and bank                                                       
 overdraft                       (2,944)          -                         
----------------------------------------------------------------------------
Ativa cash and cash                                                         
 equivalents                        447           -                         
----------------------------------------------------------------------------
Cash, cash equivalents and                                                  
 marketable securities net                                                  
 of bank overdraft              247,706     261,159                         
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
Reconciliation of the adjusted(2) consolidated results from
operations 


 
Three months ended June            Paladin    Litha & Ativa     Consolidated
 30, 2013                                                       results from
                                                                  operations
                                         $                $                $
----------------------------------------------------------------------------
                                                                            
Revenues                            40,376           26,840           67,216
Cost of sales                       11,348           14,779           26,127
----------------------------------------------------------------------------
Gross Income                        29,028           12,061           41,089
EBITDA(1)                           20,928            3,939           24,867
Net income before income                                                    
 taxes                              17,803            1,460           19,263
Net Income                          13,016            1,391           14,407
Net Income attributable                                                     
 to shareholders                    13,016              605           13,621
----------------------------------------------------------------------------
                                                                            
                                                                            
 
Three months ended June            Paladin    Litha & Ativa      Adjusted(2)
 30, 2013                                    (proportionate     consolidated
                                             consolidation)     results from
                                                                  operations
                                         $                $                $
----------------------------------------------------------------------------
                                                                            
Revenues                            40,376           11,955           52,331
Cost of sales                       11,348            6,583           17,931
----------------------------------------------------------------------------
Gross Income                        29,028            5,372           34,400
EBITDA(1)                           20,928            1,751           22,679
Net income before income                                                    
 taxes                              17,803              645           18,448
Net Income                          13,016              615           13,631
Net Income attributable                                                     
 to shareholders                    13,016              605           13,620
----------------------------------------------------------------------------
                                                                            
                                                                            
Six months ended June 30,          Paladin    Litha & Ativa     Consolidated
 2013                                                           results from
                                                                  operations
                                         $                $                $
----------------------------------------------------------------------------
                                                                            
Revenues                            79,036           57,140          136,176
Cost of sales                       22,190           32,345           54,535
----------------------------------------------------------------------------
Gross Income                        56,846           24,795           81,641
EBITDA(1)                           39,813            7,665           47,478
Net income before income                                                    
 taxes                              32,786            1,648           34,434
Net Income                          23,864            1,093           24,957
Net Income attributable                                                     
 to shareholders                    23,864              536           24,400
----------------------------------------------------------------------------
 
Six months ended June 30,          Paladin    Litha & Ativa      Adjusted(2)
 2013                                        (proportionate     consolidated
                                             consolidation)     results from
                                                                  operations
                                         $                $                $
----------------------------------------------------------------------------
                                                                            
Revenues                            79,036           25,451          104,487
Cost of sales                       22,190           14,407           36,597
----------------------------------------------------------------------------
Gross Income                       56, 846           11,044           67,890
EBITDA(1)                           39,813            3,409           43,222
Net income before income                                                    
 taxes                              32,786              724           33,510
Net Income                          23,864              478           24,342
Net Income attributable                                                     
 to shareholders                    23,864              536           24,400
----------------------------------------------------------------------------

Contacts:
Samira Sakhia, MBA, CPA, CA
Chief Financial Officer
Paladin Labs Inc.
Tel: 514-669-5367
514-344-4675 (FAX)
Email: info@paladinlabs.com
Website: www.paladinlabs.com
 
 
Press spacebar to pause and continue. Press esc to stop.