Stellar Pharmaceuticals Reports Third Quarter Financial Results.LONDON -- Q3 2005 Highlights Compared to Q3 2004 - Total revenues increase 31.5% - NeoVisc(R) sales up 23.5% - Cost of sales decrease 36.9% - Gross profit increases 58.7% - Cash and equivalents of $2.3 million at September 30, 2005 and no 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. 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);, a Canadian pharmaceutical developer and marketer of high quality, cost-effective products for select health care markets, today announced financial results for the third quarter ended September 30, 2005. 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). . Licensing Agreements Expected to Increase Revenues and Lead to Profitability in 2006 Peter Riehl, President and Chief Executive Officer of Stellar, commented, "We continue to make great progress on our global out-licensing strategy. In the last six months the Company has signed the following exclusive licensing agreements: - with INNOGEN ILAC ILAC International Laboratory Accreditation Cooperation ILAC International Laboratory Accreditation Conference ILAC Institute for Latin American Concern ILAC In-Line Amplifier Card ILAC International Association of Lactation Consultants SAN. TIC. LTD LTD 1 Laron-type dwarfism 2 Leukotriene D 3 Long-term depression, see there 4. Long-term disability . STI STI systolic time intervals. . for the sale of NeoVisc(R), the Company's 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. , in Turkey. - with TECHNIMED to distribute and sell NeoVisc in Lebanon and Syria. - with SHANGHAI YA JUN MEDICAL CO. LTD. for the sale of Uracyst(R), Stellar's patented treatment for interstitial cystitis interstitial cystitis: see cystitis. ("IC"), in China. Stellar now has distribution partners in place in 27 countries, and we continue to emphasize the importance of entering new markets and demonstrating the efficacy of our products to other potential distributors. While we are currently in the process of applying for regulatory approvals in the jurisdictions covered by these new agreements, we feel that the eventual introduction of our products into these markets will enhance revenues and lead to profitability in 2006." Mr. Riehl continued, "We also recently commenced the marketing and sale of a previously licensed formulation of NeoVisc containing a 1.5 million Dalton Hyaluronate hyaluronate /hy·al·uro·nate/ (hi?ah-ldbobr´ro-nat) a salt, anion, or ester of hyaluronic acid. The sodium salt and a derivative of it are used as analgesics in the treatment of osteoarthritis of the knee. ("HA"). We expect that this change will further strengthen NeoVisc's position in both its domestic and international markets without a material increase in cost. This improved formulation is expected to increase consumer acceptance and demand for NeoVisc." 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 Update The United States is the largest pharmaceutical market and is extremely important for NeoVisc and Uracyst. Stellar anticipates that the United States viscosupplement market will surpass $600 million by the end of 2006 and the market for GAG replenishment replenishment the addition of an appropriate quantity of properly prepared solution containing the correct concentration of chemicals to the developer solutions used in radiography. therapies will exceed $400 million. As previously announced, Stellar signed a Supply and License Agreement with Leitner Pharmaceuticals(TM) LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control in February 2004 for manufacturing, marketing and distribution of NeoVisc and Uracyst for the United States market. John Gregory John Gregory may refer to:
A financial or personal stake one entity has in an asset, security, or transaction. Notes: For example, if you have a mortgage, your bank has a vested interest on the sale of your house. See also: Right in the Company's long-term success." Mr. Riehl commented, "We hold our relationship with Leitner in the highest regard, and continue to value their counsel and support." 2005 Third Quarter Results In reviewing the Company's third quarter results, Mr. Riehl stated that, "The third quarter marked the fifth consecutive quarter of double-digit increases in year-over-year product sales, and the Company has reported total revenue growth sequentially in each quarter of 2005. Canadian sales of NeoVisc remained strong. We anticipate NeoVisc's sales growth to continue due to both the launch of our high molecular weight product in September 2005, along with ongoing concerns about the safety of the Cox-2 inhibitor cox-2 inhibitor: see nonsteroidal anti-inflammatory drug. class of drugs currently used in the treatment of osteoarthritis. NeoVisc is manufactured using a synthetic hyaluronan, which eliminates the adverse reactions adverse reactions, n.pl unfavorable reactions resulting from administration of a local anesthetic; responsible factors include the drug used, concentration, and route of administration. experienced with the cock's comb cock's comb amaranthushybridus. based hyaluronan used by our competitors." Total revenues increased 31.5% in the 2005 third quarter to $497,790 from $378,441 in the third quarter of 2004, driven primarily by a 15.4% increase in product sales and higher royalty and licensing revenues. Canadian sales of NeoVisc increased 23.5% from the same period in 2004, largely as a result of continued sales and marketing efforts. Canadian sales of Uracyst decreased 29.2% during the quarter to $35,294 from $49,813 compared to the same period in 2004. Royalty and licensing revenue for the third quarter of 2005 was $92,514, up 172.5% from the 2005 period and 23.5% sequentially from the second quarter of 2005. Royalty and licensing revenue for the nine-month period ended September 30, 2005 was $233,239, compared to $337,850 for the nine months ended September 30, 2004. Royalty and licensing revenue in the first quarter of 2004 included a one-time milestone payment of $267,220 from Leitner Pharmaceuticals LLC related to NeoVisc and Uracyst. Excluding this one-time milestone payment, royalty and licensing revenue increased 230.2% in the nine-month period, largely derived from royalties on higher sales penetration of Uracyst in Germany, Netherlands, Austria and the Scandinavian countries Noun 1. Scandinavian country - any one of the countries occupying Scandinavia Scandinavian nation European country, European nation - any one of the countries occupying the European continent . The Company expects to receive enhanced royalty revenue once Uracyst is launched in the United Kingdom, which has experienced a short delay in active promotion that is presently being corrected. Costs of sales as a percentage of product revenue was 17.1% in the third quarter of 2005, an improvement from the 31.3% reported in the third quarter of 2004, and sequentially from the 21.8% reported in the second quarter of 2005. Costs of sales in the third quarter of 2005 declined 36.9% from the comparable prior year period, largely due to the benefits derived from Stellar's move to a new manufacturing facility in June 2004. The Company believes it will realize ongoing cost-savings from its investments in new manufacturing processes and economies of scale. Research and development expenses were $339,390 in the third quarter of 2005, which included $312,416 in costs associated with the development of the higher molecular weight formulation of NeoVisc. The Company does not expect to incur any significant development costs related to the completion of this formulation going forward. The Company continued to realize in-licensed sales of BladderChek, which commenced sales in October 2004. There is growing acceptance of this product among urologists following a February 2005 published study in the 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. , which concluded that BladderChek 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. . Once reimbursement approvals are in place at institutions, the Company expects greater consumer demand and accelerated sales. Stellar reported a net loss in the third quarter of 2005 of $453,165, or $0.02 per diluted share, on 23.3 million weighted average common shares outstanding ("shares outstanding"), compared to a net loss of $564,487, or $0.03 per diluted share, on 22.5 million shares outstanding in the third quarter of 2004. Balance Sheet Highlights Stellar's balance sheet is highlighted by $2.3 million in working capital and no long-term debt at September 30, 2005. The Company expects to reach operating profitability in 2006, which would allow the Company to fund its future growth from operations. Conference Call Management will conduct a conference call today at 10:00 a.m. Eastern Time to discuss third quarter results. Interested parties may participate in the call by dialing 888-789-0150 (in the United States) or 416-695-6622 (in Canada) approximately 10 minutes before the call is scheduled to begin and ask to be connected to the Stellar Pharmaceuticals Conference Call. A recorded replay of the call will be available until 11:59 pm Eastern Time on Thursday, November 17, 2005. Listeners may dial 888-509-0081 (in the United States) or 416-695-5275 (in Canada) for the replay. The call will also be simultaneously broadcast over the Internet. Those interested in listening to the live web cast may do so by going to the Company's website at www.stellarpharma.com or by going to www.ccnmatthews.com/StellarPharmaceuticalsQ3. 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 Inc. Stellar has developed and is marketing direct in Canada, and in countries around the world through out-license agreements, three products 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; and Uracyst(R) and the Uracyst(R) Test Kit, its patented technology for the diagnosis and treatment of interstitial 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 an in-licensing agreement for 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), a proteomics-based diagnostic test for the diagnosis and monitoring of bladder cancer. 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 from time to time in the Company's filings.
STELLAR PHARMACEUTICALS INC.
STATEMENTS OF OPERATIONS
(Canadian Funds; US GAAP)
(Unaudited)
For the Three For the Nine
Month Period Month Period
Ended September 30 Ended September 30
2005 2004 2005 2004
---- ---- ---- ----
REVENUE
Product sales $ 397,074 $ 344,224 $ 1,176,345 $ 994,016
Miscellaneous
Revenue 8,201 267 9,844 1,267
---------- ---------- ---------- ---------
405,275 344,491 1,186,189 995,283
COST OF GOODS
SOLD 67,957 107,614 253,577 222,324
---------- ---------- ---------- ---------
337,318 236,877 932,612 772,959
ROYALTY AND
LICENSING
REVENUES 92,514 33,950 233,239 337,850
---------- ---------- ---------- ---------
GROSS PROFIT 429,832 270,827 1,165,851 1,110,809
---------- ---------- ---------- ---------
EXPENSES
Selling, general,
and
administrative 533,026 501,847 1,789,399 1,445,612
Research and
development 339,390 329,399 624,075 552,246
Amortization 38,497 21,504 106,179 60,182
---------- ---------- ---------- ---------
910,913 852,750 2,519,653 2,058,040
---------- ---------- ---------- ---------
LOSS FROM
OPERATIONS (481,081) (581,923) (1,353,802) (947,231)
INTEREST AND
OTHER INCOME 27,916 17,436 98,670 (23,390)
---------- ---------- ---------- ---------
NET LOSS FOR
THE PERIOD (453,165) (564,487) (1,255,132) (970,621)
DEFICIT,
beginning
of period (4,745,878) (3,004,936) (3,943,911) (2,598,802)
DEFICIT,
ending
of period $ (5,199,043) $ (3,569,423) $ (5,199,043) $ (3,569,423)
LOSS PER SHARE $ (0.02) $ (0.03) $ (0.05) $ (0.05)
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
WEIGHTED AVERAGE
NUMBER OF
COMMON SHARES
OUTSTANDING 23,250,877 22,462,953 23,143,930 20,877,185
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
STELLAR PHARMACEUTICALS INC.
BALANCE SHEET
(Canadian Funds; US GAAP)
Unaudited Audited
As at As at
September 30, 2005 December 31, 2004
------------------- ------------------
ASSETS
------
CURRENT
Cash and cash equivalents $ 2,331,433 $ 3,172,870
Accounts receivable 137,199 143,629
Inventories 235,124 336,491
Tax recoverable - 38,131
Prepaid, deposits, and
sundry receivables 188,147 155,972
----------- -----------
2,891,903 3,847,093
PROPERTY, PLANT, AND EQUIPMENT 992,379 951,860
OTHER ASSETS 20,047 16,431
----------- -----------
$ 3,904,329 $ 4,815,384
----------- -----------
----------- -----------
LIABILITIES
-----------
CURRENT
Accounts payable $ 419,000 $ 342,624
Accrued liabilities 83,515 32,503
Deferred revenues 89,107 221,320
----------- -----------
591,622 596,447
----------- -----------
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
23,265,662 Common shares
(2004 - 22,802,373) 7,891,540 7,720,873
Paid-in capital options
and warrants - outstanding 537,547 374,712
- expired 82,663 67,263
DEFICIT (5,199,043) (3,943,911)
----------- -----------
3,312,707 4,218,937
----------- -----------
$ 3,904,329 $ 4,815,384
----------- -----------
----------- -----------
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 resp onsibility 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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