Stellar Pharmaceuticals Announces 2004 Financial Results.LONDON -- Stellar Pharmaceuticals, Inc., (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension VENTURE:SLX SLX Student Loan Xpress SLX Smartlet Xml SLX Secure Links SLX Super Luxe )(OTCBB OTCBB See OTC Bulletin Board (OTCBB). :SLXCF) - 2004 Highlights Versus 2003 - Revenues increased 65.2% to $1.8 million - Aggregate sales of NeoVisc(R) and Uracyst(R) up 30% - Royalties and licensing revenues reached $407,000 from $14,000 - Cash and equivalents of $3.2 million at December 31, 2004 with no long term debt Stellar Pharmaceuticals, Inc., (TSX VENTURE:SLX)(OTCBB:SLXCF), a Canadian pharmaceutical developer and marketer of high quality, cost-effective products for select health care markets, today announced financial results for the fourth quarter and year ended December 31, 2004. All amounts in this press release are in 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 , and are the result of the use of U.S. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . Peter Riehl, President and Chief Executive Officer of Stellar Pharmaceuticals, commented, "It was a busy and productive 2004 for Stellar. In addition to substantial growth in revenues, the investments we made this past year strengthened our operating infrastructure and allowed us to broaden our product portfolio. Importantly, we created a foundation for what we expect will be significant revenue growth in 2005, unencumbered Unencumbered Property that is not subject to any creditor claims or liens. Notes: For example, if a house is owned free and clear (meaning the owner owes no mortgage to anyone), it is unencumbered. by many of the expenses we incurred in 2004." Fourth Quarter 2004 Review Revenues for the three months ended December 31, 2004 increased 65.5% to $499,000 from $302,000 in the same period last year. Higher revenues for the fourth quarter of 2004 versus the fourth quarter of 2003 were led by a 46.4% rise in Canadian sales of NeoVisc(R), a viscosupplementation therapy for the treatment of osteoarthritis osteoarthritis or osteoarthrosis or degenerative joint disease Most common joint disorder, afflicting over 80% of those who reach age 70. It does not involve excessive inflammation and may have no symptoms, especially at first. . The Company attributes this to increased sales and marketing efforts, and growing safety concerns by patients and physicians regarding the safety of the Cox-2 inhibitor cox-2 inhibitor: see nonsteroidal anti-inflammatory drug. class of drugs, a popular therapy for the treatment of osteoarthritis. Royalty and licensing revenue increased to $69,000 versus $269 for the same period last year. Royalty and license revenue was derived from out-licensed sales of NeoVisc(R) and Uracyst(R) (both of which were approved for sale in their respective markets in December 2003) and, to a much lesser extent, higher in-licensed sales of Skelite(TM) and NMP NMP New Millennium Program (NASA) NMP National Military Park (National Park Service) NMP N-Methylpyrrolidone NMP Network Management Protocol NMP Not My Problem 22(R)BladderChek(R). Revenues for the fourth quarter of 2004 also increased 32% from the third quarter of 2004, reflecting the traction that Stellar realized on a consecutive quarterly basis during the year from its Canadian and out-licensed sales efforts. Regarding the latter, unit sales unit sales Sales measured in terms of physical units rather than dollars. Unit sales data are often used by financial analysts when evaluating the health of a company. of Uracyst(R) in Europe grew 72.4% in the fourth quarter of 2004 over the third quarter of 2004. Unit sales of NeoVisc(R) in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , Mexico and the Caribbean also increased in the fourth quarter of 2004 from the third quarter of 2004. Selling, general and administrative ("SG&A") expenses in the fourth quarter of 2004 increased 53% to $740,000 from the fourth quarter of 2003. This was primarily attributable to a $125,000 increase in sales and marketing expenses, and one-time, non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) of $154,000 related to share options issued to directors, employees and consultants. Research and development ("R&D") expenses increased due to higher R&D tax credits received in the 2003 fourth quarter compared to the 2004 fourth quarter, as well as higher costs incurred for the validation processes for NeoVisc(R) (a result of the Company contracting with Dalton Pharmaceuticals to manufacture this product for both the Canadian and international markets). Mr. Riehl commented, "The majority of the expenses described above were incurred in 2004, with only minimal costs expected in the first quarter of 2005. While these expenses negatively impacted our operating results in 2004, we view them as necessary investments in Stellar's future growth and continued success." Stellar reported a net loss in the fourth quarter of 2004 of $374,000, or $0.02 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, on 21.3 million weighted average common shares outstanding ("shares outstanding"), compared to a net loss of $301,000, or $0.02 per diluted share, on 15.1 million shares outstanding in the fourth quarter of 2003. The increase in shares outstanding was due to the effect of shares issued in conjunction with a private placement in March 2004 with SJ Strategic Investments LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control that raised approximately $4.1 million in working capital for Stellar. SJ Strategic Investments now owns approximately 23% of Stellar's common stock. 2004 Annual Review Revenues for 2004 rose 65.2% to $1.8 million from $1.1 million in 2003. Aggregate Canadian sales of NeoVisc(R) and Uracyst(R) in 2004 increased by 30% over the previous year. Royalty and licensing revenue increased to $407,000 versus $14,000 in 2003. Higher S,G&A and R&D expenses in 2004, primarily related to the reasons described above, contributed to a net loss for 2004 of $1.3 million, or $0.06 per diluted share, on 21.3 million shares outstanding versus a net loss of $804,000, or $0.05 per share, on 15.1 million shares outstanding in 2003. The higher share count was due primarily to the reason cited above. Mr. Riehl noted several significant additional achievements in 2004: - signed a Supply and License Agreement with Leitner Pharmaceuticals(TM) LLC for NeoVisc(R) and Uracyst(R) for the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. market. These agreements provide for U.S. $3 million in milestone payments plus a 10% royalty on U.S. sales of these products, subsequent to their approval for sale in the U.S. market. Leitner has also agreed to fund and conduct U.S. FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. Phase III clinical trials Noun 1. phase III clinical trial - a large clinical trial of a treatment or drug that in phase I and phase II has been shown to be efficacious with tolerable side effects; after successful conclusion of these clinical trials it will receive formal approval from the for NeoVisc(R) and Uracyst(R) in 2005 to secure necessary U.S. approvals. - contracted with Pharmore GmbH to sell NeoVisc(R) in Germany, once regulatory approvals are received. - entered into a licensing agreement with Triptibumis Sdn Bhd SDN BHD Sendirian Berhad (Malay equivalent to incorporated) for the sale of NeoVisc(R) in Malaysia, Singapore and Brunei. Sales commenced in October 2004. - launched Skelite(TM) and NMP22(R)BladderChek(R) in Canada, via separate in-license agreements. Skelite(TM) sales commenced in February 2004 and NMP22(R)BladderChek(R) sales began in October 2004. Initial launch expenses for these products were incurred in 2004, which Stellar believes will result in materially higher sales from these products in 2005. - purchased and upgraded a building that has provided additional office space and will allow Stellar to build its own GMP GMP (guanosine monophosphate): see guanine. packaging line. Outlook for 2005 Mr. Riehl concluded, "The two most significant, near term events we foresee for Stellar relate to the commencement of U.S. Phase III Noun 1. phase III - a large clinical trial of a treatment or drug that in phase I and phase II has been shown to be efficacious with tolerable side effects; after successful conclusion of these clinical trials it will receive formal approval from the FDA FDA clinical trials for NeoVisc(R) and Uracyst(R). We expect to commence trials for NeoVisc(R) in the second quarter of 2005 and for Uracyst(R) later this year. We are very pleased with the progress we have made with respect to both of these milestone events. Specifically, the investments we have made in developing NeoVisc(R) in preparation for these upcoming clinical trials will improve Stellar's competitiveness in the global viscosupplement market. The processes we have implemented related to the development of NeoVisc(R) should also result in Stellar realizing significant future manufacturing efficiencies. As previously announced, these trials are being conducted and funded by our strategic partner Leitner Pharmaceuticals LLC. We also expect a full year of Canadian sales for Skelite(TM) and NMP22(R)BladderChek(R). Sales of the latter should be favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by the February 2005 Journal of the American Medical Association JAMA: The Journal of the American Medical Association is an international peer-reviewed general medical journal, published 48 times per year by the American Medical Association. JAMA is the most widely circulated medical journal in the world. study, which concluded that NMP22(R)BladderChek(R) vastly outperforms cytology cytology (sītŏl`əjē), in biology, the study of the structure of all normal and abnormal components of cells and the changes, movements, and transformations of such components. , the current adjunctive test for bladder cancer bladder cancer Malignant tumour of the bladder. The most significant risk factor associated with bladder cancer is smoking. Exposure to chemicals called arylamines, which are used in the leather, rubber, printing, and textiles industries, is another risk factor. . Combined with Cystoscopy Cystoscopy Definition Cystoscopy (cystourethroscopy) is a diagnostic procedure that is used to look at the bladder (lower urinary tract), collect urine samples, and examine the prostate gland. , the standard used by Urologists, NMP22(R)BladderChek(R) raised the detection rate for malignancies to 93.7%. We look forward to our future with confidence." Conference Call Management will conduct a conference call today at 11:00 a.m. Eastern Time to discuss fourth quarter and year-end results. Interested parties may participate in the call by dialing 877-888-3490 (Domestic) or 416-695-5261 (International) approximately 10 minutes before the call is scheduled to begin and ask to be connected to the Stellar Pharmaceuticals Conference Call. The call will also be simultaneously broadcast over the Internet. Those interested in listening to the live webcast may do so by going to the Company's website at www.stellarint.com or by going to http://events.onlinebroadcasting.com/stellar/033105/index.php. Web participants are encouraged to go to either website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. The online archive will be available immediately after the live call and continue for approximately 30 days. About Stellar Pharmaceuticals Stellar Pharmaceuticals Inc. has developed and is marketing three products in Canada based on its core polysaccharide polysaccharide: see carbohydrate. polysaccharide Any of a large class of long-chain sugars composed of monosaccharides. Because the chains may be unbranched or branched and the monosaccharides may be of one, two, or occasionally more kinds, technology: NeoVisc(R), for the treatment of osteoarthritis, Uracyst(R) and the Uracyst(R) Test Kit, Stellar's patented technology for the diagnosis and treatment of Interstitial Cystitis interstitial cystitis: see cystitis. (IC), an inflammatory disease Noun 1. inflammatory disease - a disease characterized by inflammation disease - an impairment of health or a condition of abnormal functioning NEC, necrotizing enterocolitis - an acute inflammatory disease occurring in the intestines of premature infants; of the urinary bladder urinary bladder n. A musculomembranous elastic receptacle in the anterior part of the pelvic cavity serving as the temporary storage place for urine. wall. Stellar also has in-licensing agreements for Skelite(TM) a proprietary synthetic bone-grafting product and NMP22(R) BladderChek(R), a proteomics-based diagnostic test for the diagnosis and monitoring of bladder cancer which are expected to positively impact sales in 2005. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of risks and uncertainties impacting the Company's business including increased competition; the ability of the Company to expand its operations, to attract and retain qualified professionals, technological obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. ; general economic conditions; and other risks detailed time to time in the Company's filings.
Stellar Pharmaceuticals Inc.
Statement of Operations
(Canadian Funds; US GAAP)
Three Months Ended Twelve Months Ended
------------------------------------------------------
December 31, December 31, December 31, December 31,
2004 2003 2004 2003
------------------------------------------------------
Revenue
Product sales $ 414,441 $ 294,870 $ 1,380,538 $ 1,084,744
International
sales 13,768 4,585 41,622 4,585
Royalties &
licensing revenue 69,124 269 406,974 13,669
Miscellaneous
revenue 1,860 1,931 3,191 6,434
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Total revenue 499,193 301,654 1,832,325 1,109,432
Cost of goods sold 117,799 68,609 340,123 216,609
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Gross Profit 381,393 233,046 1,492,202 892,823
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Expenses:
Selling, general
and
administrative 739,717 484,752 2,185,329 1,523,815
Research and
development 107,513 27,764 659,759 100,106
Amortization 28,158 25,185 88,340 76,822
------------------------------------------------------
875,388 537,701 2,933,428 1,700,743
Loss from
operations (493,995) (304,655) (1,441,226) (807,920)
Other income 119,507 3,751 96,117 4,119
------------------------------------------------------
Net loss for
the period (374,488) (300,904) (1,345,109) (803,801)
Loss per share (0.02) (0.02) (0.06) (0.05)
------------------------------------------------------
------------------------------------------------------
Weighted average
number of common
shares
outstanding 21,312,055 15,067,036 21,312,055 15,067,036
------------------------------------------------------
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Stellar Pharmaceuticals Inc.
Balance Sheets
(Canadian Funds; US GAAP)
December 31, 2004 December 31, 2003
----------------------------------------
Assets
Current
Cash and cash equivalents $ 3,172,870 $ 255,237
Accounts receivable 143,629 43,098
Inventory 336,491 128,937
Tax recoverable 38,131 117,708
Prepaid deposits and
sundry receivables 155,972 62,949
----------------------------------------
3,847,093 607,929
Property, plant and equipment 951,860 288,880
Other assets 16,431 2,926
----------------------------------------
$ 4,815,384 $ 899,735
----------------------------------------
----------------------------------------
Liabilities
Current:
Accounts payable $ 342,624 $ 149,295
Accrued liabilities 32,503 90,871
Deferred revenues 221,320 299,846
----------------------------------------
$ 596,447 $ 540,012
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Contingencies and commitments
Shareholders' equity
Capital stock
Authorized
Unlimited Non-voting, convertible,
redeemable and retractable
preferred shares with no
par value
Unlimited Common shares with no
par value
Issued
22,802,373 Common shares
(16,350,412 in 2003) 7,720,873 2,624,239
Common shares to be issued - 27,078
Paid-in capital options and warrants
- Outstanding 374,712 239,945
- Expired 67,263 67,263
Deficit (3,943,911) (2,598,802)
----------------------------------------
4,218,937 359,723
----------------------------------------
$ 4,815,384 $ 899,735
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The TSX Venture Exchange TSX Venture Exchange Originally called the Canadian Venture Exchange (CDNX), this was a result of the merger of the Vancouver and Alberta stock exchanges. The goal of TSX Venture Exchange is to provide venture companies with effective access to capital while protecting investors. has not reviewed and does not accept responsibility for the adequacy or accuracy of this release Stellar Pharmaceuticals Inc. (TSX VENTURE:SLX) (OTC Bulletin Board OTC Bulletin Board An electronic quotation listing of the bid and asked prices of OTC stocks that do not meet the requirements to be listed on the NASDAQ stock-listing system. :SLXCF) |
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