DRAXIS Health Announces Results for the First Quarter Ended March 31, 1998.MISSISSAUGA Mississauga (mĭsĭsaw`gə), city (1991 pop. 463,388), S Ont., Canada, 12 mi (20 km) W of Toronto on Lake Ontario. A residential suburb of Toronto and a growing transportation and industrial center, it is one of Canada's fastest-growing , Ontario--(BUSINESS WIRE)--May 11, 1998-- DRAXIS Health Inc. (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :DAX) (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :DRAXF) today reported improved operating results for the first quarter of 1998 relative to the preceding quarter and same quarter of 1997. In commenting on the first quarter results Dr. Martin Barkin, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of DRAXIS stated: "Earnings in the first quarter continued the upward trend of improving financial performance that started four quarters ago. The improvement in the first quarter was achieved without a major contribution from Anipryl(r) royalties Not to be confused with Royal family. Royalties (sometimes, running royalties) are usage-based payments made by one party (the "licensee") to another (the "licensor") for ongoing use of an asset, most typically an intellectual property (IP) right. that are expecteons Product Revenues Draxis Pharma Pharma may be an abbreviation for:
S G & A Expense Cash and Cash Equivalents $15,100 $2009,723 29,597,582 29,381,351 1 Earnings (loss) before interest, taxes, depreciation and amortization. 2 Includes non-recurring expenses of $9,315,000 or $0.31 per share.
FINANCIAL REVIEW
Product revenues in the first quarter of 1998 of $5,253,000 were
$1,903,000, or 57 percent, better than in the same quarter of 1997.
First quarter 1998 revenues were $2,975,000 less than in the previous
quarter because of seasonal variations in sales patterns in
SpectroPharm Dermatology and DRAXIS Pharmaceutica including fourth
quarter stocking of dermatology products in advance of an announced
price increase and the shift in recording revenues from direct product
sales of Anipryl(r) to recording royalties based on Pfizer Inc.'s
sales of Anipryl(r).
Selling, general and administration expenses declined $1,634,000,
or 29 percent, to $4,009,000 in the first quarter of 1998 relative to
the previous quarter and $64,000 relative to the first quarter of
1997. The decline in operating expenses is attributable to the
restructured and downsized operations of Deprenyl Animal Health, Inc.
(DAHI) combined with tight cost control in DRAXIS' other three
divisions.
EBITDA for the quarter ended March 31, 1998 improved $1,350,000
from the same quarter last year and $370,000 from the previous quarter
to an EBITDA loss of $777,000.
Net financial items for the first quarter was positive $36,000,
an improvement of $736,000 relative to the fourth quarter following
the early repayment in December 1997 of borrowings incurred in
connection with the acquisition of the radiopharmaceutical division of
Merck Frosst Canada Inc.
Depreciation and amortization expense for the first quarter
declined by $609,000 to $890,000 from $1,499,000 in the fourth quarter
of 1997 as a result of the fourth quarter write-downs of DRAXIS' full
carrying value of Anipryl(r) against the first milestone payment from
Pfizer Inc. and the carrying value of DRAXIS' investment in liposome
research.
The net loss for the first quarter of 1998 improved by $3,072,000
to $1,025,000, or $0.03 per share, as compared to $4,097,000, or $0.14
per share, in the preceding quarter, before one-time items, and
improved $1,536,000 as compared to the first quarter of 1997.
Cash and cash equivalents as at March 31, 1998, aggregated
$15,100,000 which represents a decrease of $5,162,000 over the
previous quarter-end largely attributable to the payment of year-end
accrued payables. Subsequent to the quarter-end in April 1998, 300,000
warrants issued in connection with a 1996 financing were exercised
generating cash proceeds to the Company of $1,275,000. UNITED STATES
GAAP INFORMATION
The following table summarizes DRAXIS' results under both United
States and Canadian Generally Accepted Accounting Policies (GAAP):
US AND CANADIAN Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). INFORMATION (thousands of Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents except per share amounts) 1998 1997 Q1 Q4 Q3 Q2 Q1 ------- ------------------------------- US GAAP Net Income (Loss) $ (765) $ 13,377 $(8,369) $ (1,349) $(1,882) Net Income (Loss) Per Share $(0.02) $ 0.44 $ (0.28) $ (0.04) $ (0.06) Canadian GAAP Net (Loss) $(1,025) $(13,412) $(2,919) $ (2,031) $(2,561) Net (Loss) Per Share $ (0.03) $ (0.45) $ (0.10) $ ($0.07) $ (0.09)
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VETERINARY
Pfizer Inc. assumed responsibility for the sales and marketing of
Anipryl(r) in North America on January 1, 1998. DRAXIS' royalties for
the first quarter of 1998 totalled $404,000. Pfizer Inc. currently
markets and sells Anipryl(r) in Canada for both canine Cushing's
disease and canine cognitive dysfunction syndrome. In the United
States it markets and sells Anipryl(r) for canine Cushing's disease
and is awaiting regulatory approval for the cognitive dysfunction
syndrome indication.
SPECTROPHARM DERMATOLOGY
Canadian Dermatology revenues for the first quarter reflected the
impact of customer inventory adjustments in advance of and subsequent
to an increase which took effect January 1, 1998. The impact of
inventory adjustments in Canada was offset by initial pipeline sales
of SpectroDerm(r) in the United States.
SpectroDerm(r) has received widespread acceptance among
dermatologists in the United States with over 80 percent of the 7,500
practicing dermatologists in the United States having now been
introduced to the product by SpectroPharm's contracted detailing sales
force. Approximately 250,000 SpectroDerm(r) samples have been
distributed to US dermatologists many of which have been passed on to
patients. Distribution has now been achieved in approximately 45
percent of drug and pharmaceutical locations in the United States
covering all major centres.
DRAXIS PHARMACEUTICA
Strong sales in the fourth quarter of 1997 of Novo-Selegiline and
Permax(r) were followed by weaker sales in the first half of the first
quarter of 1998 which returned to their expected levels by the last
month of the quarter. This reduction for the quarter is unrelated to
any changes in consumer sales and is attributed to seasonal inventory
adjustments.
The development of Pharmaceutica's pipeline of new products is
continuing. Pharmaceutica is awaiting HPB approval of Alertec(r), the
Company's in-licensed drug for the treatment of narcolepsy, with a
launch planned for later this year.
Pharmaceutica expects to have sufficient information from Mylan
Laboratories Inc. to complete a Canadian filing for paclitaxel in the
second quarter of 1998 with regulatory approval expected to take at
least 18 months from filing.
Pharmaceutica also expects to be in a position to make a Canadian
filing for one-alpha D2 in the third quarter of 1998.
DRAXIMAGE INC.
Draximage revenues for the first quarter of 1998 were in line
with expectations despite production setbacks caused by the January
ice storm.
Development work for Draximage's three new products remains on
schedule.
ACQUISITION
On March 16, 1998, DRAXIS announced that it had entered into a
non-binding memorandum of agreement for the acquisition of a
pharmaceutical manufacturing facility.
The 238,000 ft2 facility is a world-class pharmaceutical plan
equipped to manufacture a variety of dosage forms including tablets,
liquids, small volume parenterals (injectables), creams, ointments and
sterile solutions. It is intended that the facility will become the
permanent site for Draximage and assume manufacturing
responsibilities, over time, for the SpectroPharm Dermatology line of
products and Anipryl(r). In addition, DRAXIS will actively pursue
additional third party manufacturing opportunities to complement those
already serviced by the facility.
This acquisition is now expected to be completed in mid-May 1998.
OUTLOOK
Management continues to expect a material improvement in DRAXIS'
financial results in 1998 relative to 1997. Current year's revenues
will increase over 1997 as a result of a full year's sales of
Draximage, increased sales of SpectroPharm Dermatology in Canada and
the United States, where its lead product was launched early in 1998,
and increasing revenues arising from the alliance with Pfizer Inc.
Operating expenses are expected to remain below levels
experienced in 1997.
Excluding the impact of the proposed manufacturing acquisition,
interest income is expected to exceed interest expense in 1998 due to
higher average cash balances and reduced financial expense following
the early repayment of a substantial portion of the Company's debt in
December 1997.
The receipt of approval for the cognitive dysfunction syndrome
supplementary claim in the United States will trigger a $14 million
milestone (US$10 million) from Pfizer Inc.. Other regulatory approvals
in other jurisdictions where the file has been submitted will also
trigger additional milestones. These milestones will have a
significant effect on the Company's cash resources and earnings.
Excluding the impact of the proposed manufacturing acquisition,
the Company's existing liquid holdings are expected to be sufficient
to fund current operations and their associated capital requirements
in 1998. Expenditures associated with the proposed acquisition and the
possible renewal of the Canadian marketing and distribution rights to
Permax(r) would be funded by a combination of external financing
arrangements and DRAXIS' existing cash resources.
DRAXIS Health Inc. is a diversified pharmaceutical company with
operations in four niche businesses: Deprenyl Animal Health, Inc.
researches and develops prescription pharmaceuticals for companion
animals, the lead product of which, Anipryl(r), has been licensed to
Pfizer Animal Health on a worldwide basis; SpectroPharm Dermatology
researches, develops, markets and sells prescription and
non-prescription dermatologicals; Draximage researches, develops,
manufactures, markets and sells radiopharmaceuticals for diagnostic
and therapeutic purposes; and DRAXIS Pharmaceutica markets and sells
prescription pharmaceuticals in Canada.
Except for historical information, this news release contains
certain forward-looking statements that involve risk and
uncertainties, which may cause actual results to differ materially
from the statements made. Such factors include, but are not limited
to, changing market conditions, clinical trial results, the
establishment of new corporate alliances, the impact of competitive
products and pricing, the timely development, regulatory approval and
market acceptance of the Company's products, and other risks detailed
from time-to-time in the Company's filings with the US Securities and
Exchange Commission and Canadian securities authorities.
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DRAXIS HEALTH INC. CONSOLIDATED BALANCE SHEET consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. (stated in thousands of Canadian dollars) (unaudited) March 31, --------------------------- 1998 1997 ---------- ---------- ASSETS Current Assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. Cash and cash equivalents $ 15,100 $ 12,323 Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying 5,468 2,270 Inventory 3,161 2,621 Income taxes recoverable 1,238 2,894 Prepaid expenses Prepaid Expense An asset that arises on a balance sheet because of the payment of something in advance (prepayment). Services for the payment will be received in the near future. 1,400 545 ---------- ---------- 26,367 20,653 ---------- ---------- Long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. investments 691 2,048 Fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → 3,230 770 Goodwill 10,209 11,085 Patents, licenses and other deferred charges 11,771 29,835 Deferred income taxes 3,206 336 ---------- ---------- $ 55,474 $ 64,727 ---------- ---------- ---------- ---------- LIABILITIES Current Accounts payable and accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. charges $ 3,031 $ 2,922 Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. 4,045 - ---------- ---------- 7,076 2,922 ---------- ---------- SHAREHOLDERS' EQUITY Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. Capital stock 59,329 53,349 Contributed surplus 9,701 9,701 Deficit (20,632) (1,245) ---------- ---------- 48,398 61,805 ---------- ---------- $ 55,474 $ 64,727 ---------- ---------- ---------- ---------- DRAXIS HEALTH INC. CONSOLIDATED con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: STATEMENT OF OPERATIONS See Income statement. (stated in thousands of Canadian dollars except share related data) (unaudited) For The Three Month Period Ended March 31, -------------------------------- 1998 1997 -------------- ------------- Revenues DRAXIS Pharmaceutica $ 1,564 $ 2,485 SpectroPharm Dermatology dermatology (dûrmətŏl`əjē), branch of medicine concerned with diagnosis and treatment of diseases and disorders of the skin. 1,618 671 Draximage Inc. 1,667 - Veterinary veterinary /vet·er·i·nary/ (vet´er-i-nar?e) 1. pertaining to domestic animals and their diseases. 2. veterinarian. vet·er·i·nar·y adj. 404 194 ---------- ---------- 5,253 3,350 ---------- ---------- Expenses Cost of sales 1,521 895 Selling, general and administration 4,009 4,073 Research and development 560 562 Investment tax credits on research and development (60) (49) ---------- ---------- Loss from operations before depreciation and amortization (777) (2,131) ---------- ---------- Depreciation and amortization 890 1,147 ---------- ---------- Loss from operations (1,667) (3,278) ---------- ---------- Financial Interest income 229 268 Financing expense (193) - ---------- ---------- 36 268 ---------- ---------- Loss income before income taxes and undernoted item (1,631) (3,010) Recovery of income taxes (606) (524) ---------- ---------- Loss before undernoted item (1,025) (2,486) Equity share of loss of affiliated companies Affiliated Companies A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way. Notes: An affiliated company is sometimes referred to as a subsidiary. - (75) ---------- ---------- Net loss for the period $ (1,025) $ (2,561) ---------- ---------- ---------- ---------- Net loss per share $ (0.03) $ (0.09) ---------- ---------- ---------- ---------- Weighted Average Number of Shares Outstanding 31,288,331 29,381,351 DRAXIS HEALTH INC. CONSOLIDATED STATEMENT OF CASH FLOWS (stated in thousands of Canadian dollars) (unaudited) For The Three Month Period Ended March 31, -------------------------------- 1998 1997 -------------- ------------- Cash Flows used in from Operating Activities Net loss for the period $ (1,025) $ (2,561) Non cash transactions reflected in net income Depreciation and amortization 890 1,147 Interest on long-term debt 68 - Equity share of loss of affiliated companies - 75 ---------- ---------- (67) (1,339) Changes in current assets and current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. impacting Cash flows from operations (3,437) (3,560) ---------- ---------- Net cash flows used in operating activities (3,504) (4,899) ---------- ---------- Cash Flows used in Investing Activities Acquisition of fixed assets (1,579) (61) Acquisition (net of cash acquired) - (9,014) Increase in other deferred charges (674) (67) ---------- ---------- Net cash flows from investing activities (2,253) (9,142) ---------- ---------- Cash Flows from Financing Activities Other issuances of shares 595 536 ---------- ---------- Net cash flows from financing activities 595 536 ---------- ---------- Net decrease in cash and cash equivalents (5,162) (13,505) Cash and cash equivalents at beginning of period 20,262 25,828 ---------- ---------- Cash and cash equivalents at end of period $ 15,100 $ 12,323 ---------- ---------- ---------- ---------- Cash and cash equivalents comprise To embrace, cover, or include; to confine within; to consist of. In the law governing patents—grants of an exclusive right or privilege to make, use, or sell an invention or product for a term of years—the term comprise cash, commercial paper and treasury bills. -0- CONTACT: DRAXIS Health Inc. Kendall Ken·dall , Edward Calvin 1886-1972. American biochemist. He shared a 1950 Nobel Prize for discoveries concerning the hormones of the adrenal cortex. McAlister, 905/677-5500 ext. 248 905/677-5502 (FAX) Kmcalister@draxis.com |
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